June 27, 2023 | Written by Michael Famiglietti
Foreclosure filings in the United States have increased 14% in the last year, according to a market report released in May from ATTOM. The data solutions company reported default notices, auctions or bank repossessions affected 35,196 current properties. Illinois, Maryland, and New Jersey posted the highest foreclosure rates, while Florida, California and Texas had the greatest number of new foreclosures in May.
While the increase may seem alarming given current inflation concerns, new foreclosures rates are consistent with rates before the pandemic in 2020. Since the end of the foreclosure moratorium, lenders have started the process with loans that may have gone into default already if not for the forbearances.
Many who sought assistance due to suspended or lower wages are facing foreclosure if they have not secured new employment or higher income. The unemployment rate remains low, but many report having trouble keeping up with rising costs in the last few years. Some industries, including mortgage lending and tech, have also seen mass layoffs in the last year, which may be contributing to the foreclosure rate.
Those layoffs came after years of hiring and wage increases in those fields due to increased demand for working at home and relocation. Mortgage lending saw a slew of company or service line closures when the Federal Reserve raised interest rates to combat inflation. Homeowners who obtained their interest rates before the increase are unlikely to refinance until things change.
The foreclosure rate may not reach the levels of the 2007 recession, despite all the dire social media predictions, but it will likely climb as the market stabilizes. As foreclosure or repurchase requests are filed with lenders, completing prompt fraud reviews will be essential. The influx may pose a burden to smaller quality control and compliance teams affected by recent layoffs. They may need to outsource these fraud reviews to a mortgage investigation team that can complete both desktop and field reviews.
Teams with a strong presence in the affected states will be the best prepared to visit properties and interview the borrowers. A regional presence in certain parts of the country will also help if multiple properties were originated by the same lender or broker. It would help track down potential fraud schemes and to corroborate witnesses. With a robust desktop team behind them, mortgage field investigators could be on the front lines of a burgeoning mortgage crisis, however widespread it turns out to be.
Our licensed investigators provide timely fraud reviews and field investigations to lenders, insurance companies and agencies.
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