Home foreclosures dropped to record low in 2021

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Forbearance programs helped, but so did proactive mortgage lenders

The 2008 financial crisis was marked by a tidal wave of home foreclosures that devastated the housing market for years.

The COVID-19 pandemic of 2020 hammered the economy and cost millions of jobs, but foreclosures remained surprisingly low. In fact, Black Knight, a housing data firm, reports that 2021 ended with a record low number of home foreclosures.

The company reports that just 0.24% of mortgage loans were in active foreclosure in December. Economists looking for a reason for the drop in foreclosures usually point to mortgage forbearance programs that the government put in place at the start of the pandemic. Those forbearance programs ended months ago, yet foreclosures keep falling. 

Unlike during the financial crisis, mortgage companies appear to be taking proactive steps to help their customers avoid losing their homes. Barbara, of Kaneohe, Hawaii, tells us her mortgage company, PHH, helped her family obtain a mortgage modification and get out of foreclosure.

“We have been able to stay current with our mortgage payments since then,” Barbara wrote in a ConsumerAffairs review. "The agents we worked with were very helpful in guiding us through this process."

Helpful mortgage agent

Diane, of Firestone, Colo., works for a builder who took steps to help a resident who was critically ill. This allowed the homeowner to sell his home before it fell into foreclosure. She credits the lender, 21st Mortgage Corp., and one of its employees with saving the man’s home.

“I was working with Shavronna and I want to let you know she went above and beyond to help get this deal through!” Diane told ConsumerAffairs. “I could not have helped this resident without her help on 21st' end.”

In the future, more help may be required from lenders. Black Knight reports that over half a million serious delinquencies remain on the books. The number of borrowers who are 90 or more days past due on their mortgages, including those in active forbearance, is more than twice as high when compared to pre-pandemic levels.

Louisiana is the state with the highest percentage of non-current home loans, at more than 7%. Mississippi is second at 6.91%, and West Virginia is third at 5.37%.

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