The federal government’s foreclosure moratorium—designed to help homeowners weather the pandemic—is ending later this month. But that doesn’t mean foreclosures are about to come roaring back, Axios reports.
As the moratorium is ending, the Consumer Financial Protection Bureau is proposing a new rule, called Regulation X, that would effectively ban foreclosures until the end of 2021, while also making it easier to keep borrowers in their homes.
About 7.2 million homeowners entered pandemic-related forbearance plans, but most of them have already successfully left that purgatory. According to data from Black Knight, 46% are now reperforming on their loans, and another 17% have paid off their mortgage entirely, either by refinancing or by selling their house into the strong housing market.
About 2.1 million homeowners remain in forbearance. Even if they’re behind on both mortgage payments and property taxes, the overwhelming majority of those homeowners still have substantial positive equity in their homes, says Black Knight economist Andy Walden.
“It’s almost the exact opposite of what we saw during the last financial crisis,” Walden says.
Back then, millions of homeowners were underwater on their mortgages, “which really limited the options and created a snowball of distress.” Now, by contrast, rising prices create a lot more space for servicers to work out deals that keep borrowers in their homes. Read the full story.