Serious offenses are slowly declining as the decision to ban foreclosures looms

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The number of mortgages, which are usually on the verge of foreclosure, decreased by another notch in May, but remains relatively high, and this may affect the decisions of the federal authorities related to when collections can move forward and whether it is necessary to add additional relief to the housing.

In May, nearly 1.67 million mortgages were outstanding in 90 days or more, up from 1.77 million. previous month, according to Black Knight’s First Look report. The number for May, which includes payments temporarily suspended for up to 18 months due to dire conditions associated with the pandemic, rose from 631,110 in the same month a year ago; but it is still far from its 2009 peak after the Great Recession, when it approached 3 million. In addition, more than 2 million mortgages were withdrawn at that time. (Fewer than 148,000 loans were withdrawn in May due to bans, which generally only allow vacant properties to be promoted.)

The fact that there are fewer problem loans now than during the Great Financial Crisis, and both market conditions and the ability to handle large volumes of problem mortgages are generally taken into account. more favorable nowFederal officials may be tempted to minimize the number of borrowers displaced from their homes, further extending the foreclosure moratorium. (Although, of course, they want to avoid a situation where mortgage servicing organizations have such a backlog of problem borrowers that leads to counterproductive erosion of equity.)

“I think the point to keep in mind is that most of these loans … are in active deferral or loss mitigation, so they will be largely protected from foreclosures even if the federal moratorium ends,” said Andy Walden, an economist and market director. research in the Black Knight. “Of course, there is some risk of foreclosures for borrowers who are not participating in loss reduction with their service providers if the moratorium ends, but the CFPB could extend the deadline with additional protection until the end of the year.”

The federal bail moratorium has been extended several times, most of which expired on June 30 at the time of publication. The Consumer Financial Protection Bureau also suggested supplementary housing relief this could include a new or expanded prohibition on foreclosure. As of Wednesday afternoon, the CFPB was still working on finalizing its proposal.

“We continue to strive to work with both service companies and homeowners to prevent foreclosures as much as possible. The economic recovery risks leaving behind some communities and no one should lose their home without being able to explore options, ”a CFPB spokesman said in an email.

Without getting involved, Walden predicts that maintenance staff could have a “huge workload” by the end of this year, as the first wave of borrowers who received the maximum 18-month prepayment for the pandemic have expired. He estimates that almost 900,000 borrowers could fall into this category.

On the other hand, without this event, the gradual recovery seen in the case of serious offenses could have been delayed, Walden said.

“If we continue to act the way we intend, it will take about 36 months for the crime rate to return to normal to pre-pandemic levels,” he said.



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