Why Foreclosures are on the Rise Recently

A foreclosure is the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments. Therefore, when a resident or property owner fails to pay their mortgage, their property is seized and put up for sale by the mortgage lending company. A foreclosed home is a riskier buy than typical homes on the market, yet they should not be completely avoided. There can be beautiful, undamaged, near problem-free homes on the foreclosure market that are being listed as a result of solely personal financial issues. A major reason that foreclosures were on the decline until recently was because of the tremendous amounts of money that the COVID-Relief funds put back into the hands of the people. In fact, millions of Americans were granted mortgage forbearance, putting their mortgage payments on hold during the desperate financial times of the early pandemic. Unfortunately, there are still people in these forbearances today; these people are becoming less likely to pay off their mortgage everyday, and may be suffering permanent financial hardships. Therefore, once all COVID-related forbearances are discontinued, we may see an influx of foreclosures on the housing market. The risk of one being unable to pay their mortgage decreased significantly because of these financial stimuli. Now that many of these programs are coming to an end, or at least decreasing the range of who is eligible, the rate of foreclosures is on the rise once again. The rate of foreclosures in January 2022 was 40% less than the value before the pandemic, and although interest rates are on the rise, they are still relatively very low. There are a lot of factors that will contribute to rising foreclosure rates in the upcoming years. The question is, how long will we be able to maintain pre-pandemic levels?