Loan servicers and banks are expecting a wave of foreclosures to inbound. The foreclosures over the past two years have built up due to the foreclosure and eviction moratorium.
Data from the Mortgage Bankers Association conclude that when there is a spike in defaults, typically there also is an increase in foreclosures; but in 2020 to 2021, as defaults increased, the number of foreclosures continued to trend downward.
The reasons for the halt in foreclosures were due to the eviction and foreclosure moratoriums. Along with these measures, banks were forced to extend forbearance periods even after the moratorium periods ended.
This process constricted foreclosures to hit the market, to the point of foreclosure inventory being even lower than what was in 2018 and 2019. Overall, the forbearance and moratorium periods contributed to an increase in housing prices, also due to the limited supply of housing….