End Of VA Foreclosure Moratorium Sends Starts, Sales Surging

The end of the VA’s foreclosure moratorium pushed starts and sales up in January.

Foreclosure starts increased 30% last month while sales rose 25%, the result of the expiration of the VA foreclosure moratorium, according to new data from ICE. Active foreclosure inventory surged 7% on the month.

The Department of Veterans Affairs extended a moratorium on foreclosures for vets with GI Bill home loans last year. The goal was to give lenders time to instate a new plan for veteran homeowners in trouble through the Veterans Affairs Servicing Purchase program.

They had until the end of 2024 to put it together.

Delinquencies keep moving lower overall.

Nationally, delinquencies were down 24 bps to 3.47%, 10 bps higher than the same time last year but still 33 bps lower than before the pandemic.

The numbers reveal a complicated landscape of suffering homeowners. Fewer borrowers were past due last month, as victims of last year’s hurricanes continue to rebuild their lives, but the LA wildfires are beginning to have an impact. 

ICE estimates that 680 borrowers missed their January mortgage payment due to the fires. As many as 3,300 could miss their February payment.

Forbearance data from the Mortgage Bankers Association reports similar estimates, with the total number of loans now in forbearance down 7 bps.

“This outcome was somewhat surprising given the recent events in California, but it speaks to recovery in other parts of the country affected by natural disasters and the movement of aged government loans out of forbearance,” Marina Walsh, MBA Vice President of Industry Analysis, commented.