Data: Black Knight Sees Foreclosure Starts Surge Sevenfold In January

February 28, 2022 PROGRESS In Lending

Black Knight data showed that foreclosure starts rose sharply in January as borrower protections in place throughout the economic recovery begin to roll off, with 32,900 loans referred to foreclosure in the month. While up significantly from December’s 4,100, January’s start volume was still more than 20% below the 42,800 in January 2020, prior to the onset of the COVID-19 pandemic.

Roughly half of the month’s starts were among borrowers who were already delinquent prior to the economic impacts of COVID-19, and half from borrowers who became past due in March 2020 or later. In turn, the national foreclosure rate rose to its highest level since May 2021 (0.28%) – still nearly 40% below its pre-pandemic level, with foreclosure sales (completions) 70% below January 2020 levels.

At the same time, the national delinquency rate continued to improve, and the number of seriously past due mortgages fell by 87,000 (-9%) as borrowers leaving forbearance plans returned to making payments. A backlog of post-forbearance loans in active loss mitigation – plus another 379,000 that have finished loss mitigation but remain past due – calls for a close watch on foreclosure metrics in coming months. Prepayment activity hit a more than two-year low, falling by 24% from the month prior as rising rates continue to put sharp downward pressure on refinance incentive.