Foreclosures

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.

Inflation and higher interest rates are hurting distressed borrowers, but low unemployment, remaining forbearance and loss mitigation options are still blunting their impacts, recent loan-performance numbers suggest.

New starts in the first half of the year came in 19% higher than early 2020, but primarily affected long-delinquent properties protected by moratoriums.

The government-sponsored enterprises divested themselves of the largest share of these loans since they first began selling them in 2014, a Federal Housing Finance Agency report found.

The court found the sale of a property held by a limited liability company violated bankruptcy-related restrictions because a resident with a Chapter 7 petition was involved.

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

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.

However, higher property values are likely to mitigate any potential large increase in abandonments because troubled borrowers are less likely to walk away.