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70 PUMPING THE BRAKES Here's why the housing slowdown could prove to be a boon for mortgage servicing. Foreclosure volumes are beginning to tick up as government- mandated moratoriums and forbearance grace periods wear off. Despite these changes and the light they bring to the end of a long tunnel for many mortgage-related service providers, the reality is that homeowners are still struggling to meet their debt obligations. During the pandemic, millions of homeowners entered into forbearance programs to avoid default as lockdowns impacted their earning capacity. Most of these homeowners have since shed their forbearance status, with approximately 1.6 million borrowers leaving forbearance since the beginning of October 2021. Only about 10% of these borrowers have returned to delinquency. However, with 18% still in some sort of loss mitigation status, the impact of these forbearance programs remains to be seen. According to Black Knight, this population— central to potential 2022 foreclosure risk—is worth watching, given the number of ways they may impact the housing market. When we talk about foreclosures, it's hard not to flashback to the most recent housing crisis of 2008. e foreclosure carnage that ensued saw millions of Americans lose their homes and left a long-lasting stain on the mortgage industry. Here's the good news: lenders learned valuable lessons and lending standards tightened. Today's housing market, though uncertain, does have some bright spots. e post- pandemic labor market is strong, and many homeowners are sitting on a good amount of equity in their homes. is scenario results from a record hot housing market driven by strong demand and limited housing supply. According to CoreLogic, home prices have increased by almost 21% since March 2021, pushing negative equity levels to the lowest in over a dozen years, with just 1.1 million homeowners underwater on their mortgages. According to data reported by the Federal Reserve, American homeowners have gained more than $6 trillion in housing wealth during the pandemic. e 2008 financial crisis created the opposite economic effect, wherein economic retrenchment by households and firms tanked spending and sent median home sales prices down 19% in two years. Millions of homeowners lost jobs when housing prices collapsed in 2007, and the credit supply contracted, causing mortgage delinquency rates to triple. Homeowners routinely lost years of accrued wealth when they were forced to sell for far less than they owed. THE SLOW RAMP HAS CLEAR ADVANTAGES FOR DEFAULT SERVICING ere is no doubt that the current job market has better-positioned homeowners to deal with financial distress. is is good news Feature By: Jim Albertelli and Stacy Mestayer