Data: Black Knight; Graphic: Axios Visuals

The federal government’s foreclosure moratorium – designed to help homeowners weather the pandemic – is end later this month. But that doesn’t mean the foreclosures are about to come back in force.

Why is this important: The housing market is very tight and people who are losing their homes at this time may be struggling to find another place to live. The good news, however, is that it is almost certain that foreclosures will remain extremely rare until 2022 at the earliest.

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Driving the news: As the White House moratorium comes to an end, the Consumer Financial Protection Bureau proposes new rule, called Regulation X, which would effectively ban foreclosures until the end of 2021, while making it easier for borrowers to stay at home.

The big picture: About 7.2 million homeowners have signed up to pandemic-related forbearance plans, but most of them have already successfully left purgatory.

  • In numbers : According to Black Knight data, 46% are now repaying their loans and 17% have fully paid off their mortgage, either refinancing or selling their home in the strong housing market.

  • About 2.1 million homeowners remain in the abstention. Even though they are behind on mortgage payments and property taxes, the overwhelming majority of these homeowners still have substantial positive equity in their homes, says Black Knight economist Andy Walden.

What they say : “It’s almost the exact opposite of what we saw in the last financial crisis,” Walden told Axios.

  • At the time, millions of homeowners were underwater on their mortgages, “which really limited options and created a snowball of distress.”

  • Today, on the other hand, rising prices create much more space for service providers to make deals that keep borrowers at home.

“Next year there will be a lot of effort to provide abstentions and practices, ”adds Jorge Newbery, CEO of AHP Servicing, which focuses on low-income borrowers most at risk of foreclosure. “Additional foreclosure activity will be modest.

The bottom line: There is a strong possibility that foreclosures will exceed their pre-pandemic levels in 2023, once all other options have been tried and the current backlog of court cases begins to clear. Right now, however, foreclosure is something most homeowners don’t have to worry about.

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