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65 March 2025 J O U R N A L March 2025 » at 39% of the Q1 2020 level, up slightly from 37% in the previous quarter, and unchanged from 39% in Q4 2023. REO auction volume bottomed out at just 16% of the Q1 2020 level in Q3 2021—amid a nationwide foreclosure moratorium on government-backed mortgages. REO auction volume increased steadily following the lifting of the mor- atorium in 2022, peaking at 44% of Q1 2020 levels before plateauing at around 40% in 2023 and 2024. Distressed Market Waterfall Distressed loan volume up-funnel from completed foreclosure auctions did show a shift in Q3 2024, with the esti- mated inventory of seriously delinquent (SDQ) mortgages increasing 10% from the previous quarter, and exceeding Q1 2020 levels for the first time since Q2 2023 (according to an analysis of data from the Mortgage Bankers Association). The number of overall delinquent mortgages also increased in Q3 2024, up 1% from the previous quarter, although still 2% below the Q1 2020 level. However, the upward shifts in delinquencies are not yet translating into substantive increases in foreclosure inventory or the volume of properties brought to foreclosure auction. Foreclosure inventory in Q3 2024 was still 34% below the Q1 2020 level, and completed foreclosure auction volume nationwide was 64% below the Q1 2020 level. "While the number of distressed homeowners has returned to pre-pan- demic levels, many are avoiding foreclo- sure thanks to ample home equity that allows them to sell through a pre-foreclo- sure sale," said Ali Haralson, Auction.com President. "These homeowners can now leverage the power of Auction.com's trans- parent marketplace to sell, furthering our mission of protecting homeowner equity." 2025 Foreclosure Outlook "Some emerging risks in the econ- omy and housing market are pushing delinquencies higher, but those higher delinquencies will not likely translate into higher foreclosure auction volume until at least early 2026," added Daren Blomquist, Auction.com VP of Market Economics. A regression-based model using home price appreciation and unemployment rates (imputed from seriously delinquent mortgage rates) as the primary inputs forecasts 2025 U.S. foreclosure auction volume decreasing 8% from 2024 to about 69,000, as a baseline scenario. That baseline scenario assumes home price appreciation continuing at its current pace of about 4% and the unemployment rate averaging 3.8% for the year, slightly below the average of 4.0% so far in 2024. With the same home price ap- preciation of 4%, but a slightly higher unemployment rate of 3.9%, the model forecasts 2025 foreclosure auction vol- ume increasing by 10% to about 85,000 in 2025. With home price appreciation cut in half to 2% and an unemployment rate of 4%, the model forecasts overall foreclosure auction volume increasing 32% to approximately 99,000 for 2025. Q4 FHA AND VA DELINQUENCIES ON THE RISE A ccording to the latest Mortgage Bankers Association's (MBA) National Delinquency Survey, the delinquency rate for mortgage loans on one- to four-unit residential properties increased to a seasonally adjusted rate of 3.98% of all loans outstanding at the end of Q4 2024. The delinquency rate was up six basis points from Q3 2024, and up 10 basis points from one year ago. The percentage of loans on which foreclosure actions were started in Q4 rose by one basis point to 0.15%. "Although mortgage delinquencies rose only 10 basis points in the fourth