New Foreclosures Multiply by Eight in January

Despite the increase, there were still fewer than before the pandemic began

An upset woman looks at paperwork.

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Maybe it’s not a flood yet, but it’s at least a surge: The country saw a sharp increase in the number of homes that went into foreclosure in January, as the era of government programs to protect people from losing their homes started to end, a new report showed this week.

Eight times as many foreclosures were initiated in January compared with December—32,900 vs. 4,100—mortgage data company Black Knight said Thursday. It was the most in two years, but still about 23% fewer than the 42,800 foreclosures that were started in January 2020, right before the pandemic hit. 

The surge came after certain government safeguards protecting homeowners from foreclosure expired at the end of December. Those safeguards required banks to take extra steps to help homeowners avoid foreclosure before starting any foreclosure proceedings. 

Other government programs had already ended for most people: A moratorium that banned foreclosures altogether expired in July, and many homeowners ran out the clock on a special forbearance option that lets people skip payments without penalty for up to 18 months. The end of the moratorium prompted an uptick in foreclosures, but it was not nearly as dramatic as the latest one.

Interestingly, only about half of the latest batch of foreclosures were among homeowners who fell behind on payments during the pandemic—the other half had already been delinquent by March 2020, Black Knight said.

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  1. Black Knight. “Foreclosure Starts Surge Sevenfold in January, Hitting Highest Level in Two Years; Though Volumes Rising, Still 20% Below Pre-Pandemic Levels.”

  2. Bureau of Consumer Financial Protection. “Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA).”

  3. Federal Housing Finance Agency. “FHFA Extends COVID-19 Foreclosure and REO Eviction Moratoriums.”

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