Distressed

A few studies released Tuesday add to expectations that the small number of mortgages remaining in forbearance will contribute to a higher foreclosure rate in the future.

But many expect only a slight increase in completions, with the rate at which delinquent mortgages cure outperforming the historic average, according to Auction.com.

The increase in late payments ends three consecutive months of declines to record lows, but the uptick could be an aberration.

The jump for second mortgages and bank cards was even more pronounced, according to indices published by Standard & Poor’s and Experian.

A Federal Reserve Bank of Philadelphia research group called the early indication of outcomes “concerning given overall strong market conditions.”

Most distressed borrowers who obtained adjustments to their payment amounts saved more than 20% in the first quarter, according to the Federal Housing Finance Agency.

Foreclosure starts also fell, coming in below pre-pandemic pace, according to Black Knight.

Rising interest rates and emergence from pandemic contingencies could put increased strain on the ability to repay, but signs of near-term loan performance stress have been limited.

But a slower-than-anticipated rate of repossessions suggest distressed homeowners are finding solutions.

The opinion heightens the need for servicers to be careful about billing communications, particularly when a distressed loan or foreclosure is involved.

While the government-sponsored enterprise’s single-family mortgages are still not performing as well as they did before the pandemic, the most recent vintages are getting there.

But re-entries crept up, while the percentage of borrowers exiting plans without loss mitigation in place increased.

This move is in addition to the recent notice filed by the Department of Housing and Urban Development about its interest in creating a permanent 40-year option.

The numbers suggest depositories are finding it easier than non-depositories to qualify their borrowers for foreclosure prevention programs as forbearance recedes.

The move would align the Federal Housing Administration with other agencies, including Fannie Mae, Freddie Mac, the USDA, and the National Credit Union Administration.

The scheme highlights a risk that could grow as distressed borrowers exit forbearance.

The Federal Housing Administration confirmed the exclusion of real estate taxes and hazard insurance premiums, and discussed timelines.

More than half of the seriously delinquent mortgages that did not have this type of payment relief were originated prior to ability-to-repay requirements enacted following the Great Recession, the latest Federal Reserve Bank of Philadelphia study found.

Emergency legislation written early in the pandemic changed how things were done to protect borrowers with accommodations for hardships, and mortgage companies need to be careful as things return to normal.

The number of people that have paid late in the near term has increased, according to multiple recent reports.