Will Foreclosures Soon Surge Higher?

The foreclosure eviction moratorium was extended another month last week to the end of July. Here are some facts about the number of loans in forbearance—
· According to the Mortgage Bankers Association the number of borrowers in forbearance is down to 2 million, down about 60% from a year ago.
· 24% of all borrowers that have exited forbearance had continued to make their payments in forbearance.
· According to CoreLogic only about 2.5% of mortgage borrowers have negative equity as of March.
· According to Black Knight only 4% of mortgage borrowers have less than 10% equity in their homes.

This is why Ivy Zelman and her team said last week, “We still believe the increased rhetoric of late related to foreclosure risk is overhyped.” I agree, especially for metro Denver. Why? Here are 3 reasons—
· The meteoric rise in home values the last 8 years has created massive amounts of equity that homeowners will do everything they can to protect this wealth.
· For the last 8 years of Bidding Wars, “who has won the large majority of Bidding Wars?” It’s been buyers with great credit and jobs, strong income, and large down payments.
· During the Pandemic the vast majority of job losses were in the retail, restaurant, and hospitality sectors and very few of those people owned a home due to our very high home prices.