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69 just 4.6% of loans in impacted areas that initially became delinquent after the hurricane were still delinquent two years later. In other words, about 95% were current or prepaid. A similar analysis by Black Knight found that just 5% of loans that became seriously delinquent following Hurricane Harvey were still seriously delinquent in February 2020. NO FLOOD OF DAMMED-UP DISTRESS e Black Knight analysis also found that only 1% of loans that became seriously delinquent in the wake of Hurricane Harvey had gone to foreclosure sale by February 2020. Similarly, data from the Auction.com platform shows a relatively mild uptick in foreclosure auctions after the moratoriums were lifted. Completed foreclosure auctions rose above pre-hurricane levels starting nine months after the hurricane, in May 2018, but fell back below pre-hurricane levels starting in December 2018, 15 months after the hurricane. e combination of a relatively brief foreclosure moratorium paired with robust forbearance and loan modification helped Houston prevent crisis-induced foreclosures while also avoiding a massive flood of dammed-up distress crashing into the housing market down the road. is approach also helped home values in Houston stay afloat: home price appreciation in the metro area slowed to 1% in September 2018, in the midst of the post-moratorium foreclosure uptick, but never went negative, according to an analysis of public record data from ATTOM Data Solutions. Since that low point in September, home price appreciation in Houston has averaged a healthy 4% each month. THE COVID-19 RESPONSE e COVID-19-triggered crisis is neither a natural disaster nor a repeat of the Great Recession, but lessons from the 2008 and 2017 crises can still be applied, including the lesson of how to achieve effective foreclosure prevention without inflicting long-term harm to the housing market. e COVID-19-related forbearance policies put in place thus far by the Federal Housing Finance Administration (FHFA), which oversees Fannie Mae and Freddie Mac, as well as FHA, have laid a solid foundation for effective foreclosure prevention in the aftermath of this crisis. ese forbearance programs were introduced quickly and pro-actively by the CARES Act, signed into law exactly two weeks after the national emergency declaration relating to the COVID-19 crisis. Since then, both FHA and FHFA have introduced sensible plans that allow many borrowers to exit forbearance without experiencing an immediate deferred payment shock. Furthermore, these forbearance-exit plans will prevent borrowers from experiencing negative credit ramifications when they refinance their loan or buy another home. With these robust forbearance programs in place, the foreclosure moratorium that now extends through August 31, 2020, can safely be lifted, preventing a large backlog of deferred distress from building up even while the forbearance programs provide ample foreclosure protection for homeowners impacted by the COVID-19 crisis. e longer that deferred distress backlog builds, the more uncertainty it creates for the mortgage and housing markets, resulting in tighter lending and weaker demand. Furthermore, the bigger the backlog, the bigger the shock to the housing market when it is eventually lifted. Daren Blomquist is VP of Market Economics at Auction.com. In this role, Blomquist analyzes and forecasts complex macro- and microeconomic data trends within the marketplace and greater industry to provide value to both buyers and sellers using the Auction.com platform. Blomquist's reports and analysis have been cited by thousands of media outlets nationwide—including all the major news networks and leading publications such as the Wall Street Journal, the New York Times, and USA TODAY. Blomquist has been quoted in hundreds of national and local publications and has appeared on many national network broadcasts, including CBS, ABC, CNN, CNBC, FOX Business, and Bloomberg. "With these robust forbearance programs in place, the foreclosure moratorium ... can safely be lifted, preventing a large backlog of deferred distress from building."

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