Surprising Trends Emerge as Homeowners Defy Predictions
By Peter Miller, CTW Features
Question: With an end to the foreclosure and eviction moratoriums have we seen an increase in the number of people losing their homes or apartments?
Answer: During the pandemic, the federal government as well as many state and local governments established foreclosure and eviction moratoriums. Covid-related programs at the federal level came to an end as the result of a Supreme Court decision handed down in August 2021 and many other moratoriums also ended.
An end to the foreclosure and eviction bans raised the possibility that many people would lose their housing. In March 2021, the Consumer Financial Protection Bureau (CFPB) issued a report saying that an end to the moratoriums could produce massive foreclosure and eviction levels.
It warned that there might be “widespread evictions and foreclosures once federal, state, and local pandemic protections come to an end, absent additional public and private action. Over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent. Homeowners alone are estimated to owe almost $90 billion in missed payments. The last time this many families were behind on their mortgages was during the Great Recession.”
In fact, very little happened.
The government tracks delinquent mortgages. Thirty days late is a problem that can generally be resolved; 60 days behind and there will likely be lots of phone calls and letters from lawyers, and when loans are 90 days late the foreclosure process generally begins.
In the fourth quarter of 2019, just before the pandemic began, .76% of the mortgage loans held by big banks – less than 1% – were at least 90 days delinquent. As of the first quarter of 2023, the 90-day delinquency level fell to .50%.
Part of the reason for the lack of foreclosures and evictions is that the government tried to compensate lenders and landlords for missed mortgage payments and rent. For instance, under the Emergency Rental Assistance (ERA) program the government set aside $46 billion for lost rent. This is a huge amount but it’s also true that property owners had massive income losses. For example, the National Apartment Association (NAA) said landlords were owed an additional $26.6 billion. (At this writing the matter has been argued in the Court of Appeals, but a decision has not been announced.)
Another reason for few foreclosures and evictions is that landlords and lenders are likely to offer forbearance; essentially, opportunities to work out a pay-off or loan extension, something where both parties avoid big costs.
The bottom line: Evictions and foreclosures have not been a significant problem to this point. That said, the economy is in flux with worries about both inflation and recession, so it will be interesting to see what happens next.
Email your real estate questions to Mr. Miller at email@example.com.