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e million-dollar questions that everyone in the industry is asking
right now are: "What are foreclosures going to look like once the
foreclosure moratoria and forbearance programs come to end? And will we
see all those borrowers in forbearance end up in default?"
e short answer is "there probably won't be
a foreclosure tsunami." But mortgage servicers
and other default servicing professionals should
prepare themselves nonetheless.
Some industry analysts have predicted a
huge wave of foreclosures once the forbearance
program comes to an end. Popular opinion at
the start of the pandemic was if there were 4
million people in forbearance, we'd ultimately
have 4 million people in foreclosure. But the
way the program has worked so far suggests
that's simply not the case. e Federal Reserve
Bank of St. Louis estimated that 500,000
borrowers avoided foreclosure during the
fourth quarter of 2020 due to coordinated
relief efforts, which makes the CARES
Act forbearance program is one of the best
examples we've ever seen of the government
and the industry working hand in hand to
accomplish such a positive outcome.
e program has done exactly what it was
supposed to do: allowed millions of people
to get through the pandemic and recession
without losing their homes while giving them
time to get back on their feet financially once
COVID-19 is under control. But there are
still millions of borrowers in the forbearance
Feature By: Rick Sharga
FORECLOSURES
2021
Not the Great Recession 2.0, but a critical challenge for default servicers.
