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With moratoriums in place, foreclosures were nearly non-existent last year. Even as pandemic protections have lifted, a foreclosure wave—which was an industry concern—has not occurred.
“The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening,” says Rick Sharga, executive vice president at RealtyTrac, an ATTOM company. “Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022.”
Foreclosure starts also were at a record low nationwide in 2021, according to the ATTOM Data Solutions report. The states that saw the largest declines in foreclosure starts compared to the previous year were Maryland (down 81%), Oklahoma (down 70%), Idaho (down 64%), Nebraska (down 63%), and Connecticut (down 60%).
“The government’s foreclosure moratorium, the mortgage forbearance program, and the mortgage servicing guidelines enacted by the CFPB in August have kept foreclosure starts artificially low over the past year,” Sharga says. “While the recovering economy should prevent a huge increase in defaults, we should see a gradual increase in foreclosure activity as these programs expire, and servicers exhaust all loan modification options for delinquent borrowers.”