A foreclosure market report for the first quarter of 2022 shows that New Jersey ranked second in the nation for the number of foreclosures per housing unit (1 in every 792), behind only Illinois (1 in every 791). The report, compiled by ATTOM Data Solutions, showed that one in every 1,795 housing units were under foreclosure nationally. New Jersey’s rates marked an increase of over 300 percent from the first quarter of 2021.
Residential mortgage foreclosures were substantially limited in 2020 and 2021 due to Covid-19 protections and relief afforded to homeowners through the CARES Act and promulgations from the Consumer Financial Protection Bureau (CFPB). Those protections included a foreclosure moratorium for most residential mortgages, updated mortgage servicing guidelines and a mortgage forbearance program. Additionally, during this period, the CFPB relaxed its supervisory and enforcement activity toward servicers in recognition of the strains associated with the pandemic on the mortgage servicing market.
Many pandemic-related protections expired on January 1, 2022, including the foreclosure moratorium. As a result, it is not surprising that foreclosure filings would increase. In this respect, however, the report notes that national foreclosure rates from the first quarter of 2022 were 57 percent lower than the first quarter of 2020. Accordingly, while there has been a sharp increase in foreclosure filings, the rate is still below pre-Covid levels. Second and third quarter data for foreclosure rates will be informative as to the impact of loss mitigation provisions. Some within the industry speculate that increased housing values and the availability of revised mortgage serving guidelines may keep foreclosure rates from returning to pre-pandemic levels.
Several developments within the consumer financial services field may contribute to increased consumer claims associated with mortgage servicing and foreclosure. First, the aforementioned pandemic-related protections may give rise to new claims under the Real Estate Settlement Procedures Act (RESPA). Those provisions relaxed loan modification guidelines but expired on January 1, 2022. Further, in November 2021, the CFPB warned that it would no longer relax compliance requirements and regulatory activity in the mortgage-servicing field. Second, on November 30, 2021, the CFPB implemented Regulation F, which amends and interprets various regulations imposed through the Fair Debt Collection Practices Act (FDCPA). Mortgage servicers that began servicing mortgages already in default and attorneys handling foreclosure claims will need to balance increased volume while assuring compliance with new the requirements of Regulation F.
A link to the ATTOM Foreclosure Report is available here.