Where foreclosure risk infiltrates a historically hot housing market

The coronavirus era brought radical change to the housing market, driving interest rates to all-time lows, home value appreciation to a pace not seen since the 1970s and loan distress to millions of borrowers.

Overall mortgage health increased as the economy recovered but nearly 2 million forbearance plans remain. In 2020, most servicers had a high percentage of borrowers in forbearance who used it as an insurance policy while staying current on their loans. Borrowers still under plans have a higher risk of ending up in foreclosure.

“You’re going to see a lot of scrambling where people find out they have a very big ticket expense,” said Thomas Showalter, founder and CEO of Candor Technology. “It’s going to be a bit chaotic and I seriously doubt the average delinquent borrower is prepared because I think most of them thought the past due interest payments were forgiven as opposed to forborne.”

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