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Thursday, September 15, 2022

Q2 Update: Delinquencies, Foreclosures and REO

by Calculated Risk on 9/15/2022 09:30:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Q2 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

Last year, I pointed out that the foreclosure moratorium, combined with the expiration of a large number of forbearance plans, would NOT lead to a surge in foreclosures and impact house prices (as happened following the housing bubble).
Here is some data on REOs through Q2 2022 …
Case-Shiller House Prices IndicesWe will probably see an increase in REOs in late 2022 and into 2023 following the end of the moratoriums.

This graph shows the nominal dollar value of Residential REO for FDIC insured institutions. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) decreased slightly from $788 million in Q1 2022 to $784 million in Q2 2022. (Probably declined in 2020 and 2021 due to foreclosure moratoriums, forbearance programs and house price increases).
The bottom line is there will be an increase in foreclosures late this year and next (from record low levels), but it will not be a huge wave of foreclosures as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.
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