Foreclosure activity in the Tri-Cities dropped to an all-time low last year. Even when the federal pandemic protections were lifted, the wave of foreclosures some pundits expected didn’t happen. And they are not expected to return to normal levels this year. ATTOM Data Solutions’ analysis has the same status and outlook on the national level.
With the local housing market setting sales and appreciation records there were only 200 properties with foreclosures in 2021. There were 1,219 at the peak of the foreclosure market in 2015.
“The COVID-19 foreclosure tsunami that some people had anticipated is clearly not happening,” says Rick Sharga, executive vice president at RealtyTrac, an ATTOM Data Solutions company. “Government and mortgage industry efforts have prevented millions of unnecessary foreclosures, and while it’s likely that we’ll see a slight increase in the first quarter, we probably won’t see foreclosure activity back to normal levels before the end of 2022.”
The number of foreclosures in the four-county Kingsport metro area (135) last year was double the 65 in the three-county Johnson City metro area.
Bank repossessions have been steadily decreasing in both Tri-Cities metro areas since 2015 and 2016. That’s the year residential resales took off on their record-setting pace. Current outlooks call for that frantic sales pace to continue slowing. The same slower growth rate is predicted for prices as mortgage rates and an inventory increase.
The primary reason local foreclosure wave predictions didn’t materialize was strong equity building between 2015 and last year. The same was the overall situation on the national level. “The government’s foreclosure moratorium, the mortgage forbearance program, and the mortgage servicing guidelines enacted by the CFPB in August have kept foreclosure starts artificially low over the past year,” Sharga says. “While the recovering economy should prevent a huge increase in defaults, we should see a gradual increase in foreclosure activity as these programs expire, and servicers exhaust all loan modification options for delinquent borrowers.”
Signs for a gradual local increase can be found in the most current loan performance reports. They are not back to pre-pandemic levels yet, but they are trending toward them.
Kingsport-Bristol has a current 30-days or more delinquency rate of 4.3%. That’s down 2% from last year.
The Johnson City metro area rate is 3.5%, down 1.7%.
The pre-pandemic level for both metro areas was in the 4.8% range.
The current foreclosure rate in both metro areas is 0.2%.
Better economic security and the benefits of disciplined underwriting standards since the Great Recession and housing crash have and continue helping reduce mortgages delinquencies. That and the equity gains for even troubled mortgages give owners the option of selling into a still-hot market rather than going to foreclosure and wrecking their credit.
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