With moratoriums on foreclosures and evictions from both the U.S. Department of Housing and Urban Development (HUD) and the Centers for Disease Control and Prevention (CDC) poised to come to an end in the next few weeks, some analysts have feared that the end of such moratoriums could bring about a wave of foreclosures as property owners and mortgage lenders look to make up lost ground from the pandemic. However, such fears may end up being overblown, according to reporting from Axios.
“The housing market is very tight, and people who lose their homes right now can find it very hard to find somewhere else to live,” the story reads. “The good news, however, is that foreclosures are almost certain to remain extremely uncommon until 2022 at the earliest.”
While the foreclosure moratorium is currently set to expire on June 30, a wave of new foreclosures and eventual displacement of residents from the home might be avoided due to a rule proposal by the Consumer Financial Protection Bureau (CFPB) known as “Regulation X.” According to CFPB documentation published in April, Regulation X would codify the process of seeking loss mitigation options to help people remain in their homes.
“[The proposed rule would] help ensure that borrowers impacted by the COVID-19 pandemic have an opportunity to be evaluated for loss mitigation before the initiation of foreclosure,” the document reads. “The proposed amendments would establish a temporary COVID-19 emergency pre-foreclosure review period until December 31, 2021, for principal residences.”
However, since the regulation is still only a proposition from the CFPB, there is a chance that mortgage servicers could jump on the chance to initiate a foreclosure proceeding. The newly-bolstered enforcement posture of the Bureau may cause them to think twice, however.
“Reg X is not yet in force, but state regulators and the CFPB have made it clear to servicers that they will take a very dim view of any attempts to foreclose on houses in the interim period,” the reporting at Axios explains.
In addition to the possible implementation of a new regulation from the CFPB, there is also signs of positive momentum for certain mortgage borrowers who have entered into forbearance agreements with their servicers, the story says.
“About 7.2 million homeowners entered pandemic-related forbearance plans, but most of them have already successfully left that purgatory,” the story reads. “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.”
Additionally, the performance of the current housing market indicates while a little over 2 million homeowners remain in forbearance, the overwhelming majority of those even behind on their mortgage payments and/or property taxes will still see “substantial positive equity” built up in their homes due to current levels of home price appreciation.
Read the story at Axios.