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Pandemic-Paused Foreclosures at Record Low, But Lull Could be Temporary

[Updated: Aug 17, 2020 ] May 16, 2020 by Marc Rapport
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In another "calm before the storm" lagging indicator, home foreclosures have hit record lows amidst the COVID-19 pandemic, according to ATTOM Data Solutions.

The 14,148 foreclosure filings recorded in April marked the lowest since the property data analysis and reporting firm began tracking them in April 2005, the Irvine, California-based firm said Tuesday, May 12.

The major reason: moratoriums on foreclosures on mortgages backed by the federal government put into place by the CARES Act as pandemic-related shutdowns put more than 30 million Americans out of work.

But it's not clear that's the only cause of such low foreclosure activity. States and municipalities also have enacted their own restrictions against foreclosures and evictions, and stay-at-home orders also have slowed real estate and court activity of all kinds.

It will "almost certainly" be temporary

Foreclosures would seem to be the natural follow to the rise in delinquencies now being recorded by industry observers such as the Mortgage Bankers Association.

Foreclosure filings dropped 70% from March to April and were down 75% from April 2019, but ATTOM Data chief product officer Todd Teta acknowledged the data doesn't say whether recent job losses or previous filings were responsible for each case counted.

"What can be said," Teta said, "is that the drop-off will almost certainly be temporary. And when it's lifted, we should be able to more clearly measure how deeply the pandemic fallout is affecting homeowners."

Georgia leads the decline on the state level

Those measurements to come will pick up new cases, such as the 8,552 property owners who were targeted in foreclosures begun by lenders in April 2020, a figure that's down 69% from March and 72% from April 2019.

The sharpest year-over-year decline by state was recorded in Georgia at 85%, followed by North Carolina (84%), Florida (83%), Michigan (82%) and Colorado (81%), according to ATTOM Data.

States with the worst foreclosure rates in April were Delaware at one in every 2,745 housing units, ATTOM Data said, followed by Maryland (1/3,809), Illinois (1/5,353), Connecticut (1/5,519), and Florida (1/6,171).

Some counties see a rise; forbearance, moratoriums set to expire

Conversely, the data firm said, there were areas that saw annual increases in foreclosure starts in April 2020, perhaps a sign of things to come. Three of the highest rates were recorded in California, with Marin County, up 76%; Monterey County, up 42%; and Solano County, up 36%. The company also cited Mesa County, Colorado, with a 40% year-over-year increase in foreclosure starts, and Hillsborough County, Florida, at 18%.

Nationally, one in every 9,639 U.S. properties received a foreclosure filing in April, ATTOM Data said. But with nearly eight out of every 100 residential mortgages currently in forbearance, that number may be poised to rise as forbearance agreements and the foreclosure moratoriums come to an end.

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