MARKET & TRENDS
FORECLOSURES
After a Two-Year Hiatus, Will Foreclosure Volume Return in 2022?
AFTER TWO YEARS OF FORECLOSURE FAMINE, MANY WONDER WHETHER A FORECLOSURE FEAST IS IN STORE FOR 2022.
by Daren Blomquist
ata from Auction.com and other sources suggest that foreclo-
D
GRADUALLY RISING TIDE OF FORECLOSURE VOLUME
sure volume will increase substan- tially in 2022 off a record low in 2021, while staying safely below pre-pan- demic levels. The trend of gradually rising fore- closure volume was already estab- lished leading into 2022. Completed foreclosure auctions on the Auction. com platform in the fourth quarter of 2021 increased 19% from the previ- ous quarter and were up 98% from a year ago to a new pandemic high. Despite the sharp percentage increases, fourth-quarter foreclo- sure auction volume was still 62% below pre-pandemic volume in third quarter 2019. Auction.com handles about 40% of all completed foreclosure auctions nationwide. Completed foreclosure auctions include properties sold to third-party buyers at the foreclosure auction and properties reverting to foreclosing lender as real estate owned (REO). SUPPLYOF SERIOUSLY DELINQUENTMORTGAGES There’s an ample supply of serious- ly delinquent mortgages—many of them no longer protected by foreclo- sure moratoria or mortgage forbear- ance—to fuel continued increases in completed foreclosure volume in
PCT OF Q3 2019 VOLUME
100%
93%
83%
38%
32%
27% 27%
17% 19%
4%
2019-Q3 2019-Q4 2020-Q1 2020-Q2 2020-Q3 2020-Q4 2021-Q1 2021-Q2 2021-Q3 2021-Q4
SOURCE: AUCTION.COM
2022. Data from Black Knight shows 12 million seriously delinquent mortgages as of the end of November 2021, on track to drop to about 1.1 million by the end of December. The seriously delinquent mortgage supply is down dramatically, by 1.5 million, from the recent peak of 2.6 million in August 2020. But the 1.1 million remaining still represents enough supply to fuel a foreclosure volume increase in 2022, especially considering that many of those 1.1 million are deeply delinquent and are no longer protected by foreclosure moratoria or forbearance. The 1.1 million seriously delin- quent mortgages are an average
of 399 days delinquent, the highest average days delinquent since 2017, according to Black Knight. This deep delinquency hold will be harder for distressed homeowners to dig out off. More than half a million of those seriously delinquent loans (567,013) are no longer protected from fore- closure by mortgage forbearance or loss mitigation, according to a recent report from the Federal Reserve Bank of Philadelphia. Of the more than half million seriously delinquent mortgages in that unprotected bucket, about 261,000 were portfolio loans and another 106,000 were in private-label mortgage-backed securities. Neither
52 | think realty magazine :: march – april 2022
Made with FlippingBook Online newsletter