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"Foreclosure rates & market analysis" with our special guest Daren Blomquist

The highly anticipated foreclosure boom has failed to materialize, leaving many in the industry scratching their heads. According to Daren Blomquist, Vice President of Market Economics at Auction.com, foreclosure volume is currently running 30-50% below 2019 levels. This unexpected trend has sparked a lively discussion on the current state of the default market, geopolitics, macroeconomics, and capital market environments.

In a recent market update, Blomquist sat down with Alex Goldovsky, CEO of ProTitleUSA, to dissect the factors contributing to this surprising phenomenon. The conversation revealed that home equity, loan quality, and aggressive loss mitigation programs are the primary drivers behind the low foreclosure volume.

Blomquist presented data from the distress market funnel, which shows that while 30-day delinquencies are above 2019 levels, seriously delinquent loans and foreclosure inventory are below 2019 levels. This suggests that homeowners are taking advantage of available equity to sell their properties rather than going through the foreclosure process.

The Homeowner Assistance Fund, established to provide relief to struggling homeowners, has only distributed 40% of its allocated funds. Blomquist believes that this fund has the potential to further reduce foreclosure rates, but its impact remains to be seen.

Pre-foreclosure sales have become a dominant force in the distress market, accounting for 65% of the market share. This trend is largely driven by homeowners with equity who are choosing to sell their properties rather than risk foreclosure.

The conversation also touched on the relationship between mortgage rates and affordability. Blomquist presented data showing that affordability is at an all-time high, despite home prices being higher than they should be relative to incomes. This has led to concerns about the sustainability of the current housing market.

The commercial default market was also discussed, with Blomquist highlighting an increase in commercial filings, particularly in the warehouse and office building categories. Rising home insurance and property tax costs are putting pressure on the housing market, and the risk of government intervention is a growing concern.

The update concluded with a discussion on the trends in the market for borrowers, including an increase in seriously delinquent credit card and auto loans. Blomquist emphasized the need for lenders to be proactive in addressing these issues to prevent a potential crisis.

In conclusion, the foreclosure market is not behaving as expected, and the factors driving this trend are complex and multifaceted. As the industry continues to navigate these uncharted waters, it is essential to stay informed and adapt to the changing landscape

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