But, while this is a significant increase from December, it is still some 20% below January 2020 levels, prior to the pandemic. The starts were split about evenly between folks who were already delinquent before the pandemic and those who became so as a result of it. This pushed the national foreclosure rate off its all-time-record low and to its highest level since May 2021 (0.28%), which is still nearly 40% below its pre-pandemic level. Meanwhile, despite a 21% month-over-month increase, foreclosure sales (completions) remained 70% below January 2020 levels.

Given the backlog of post-forbearance loans in active loss mitigation, plus another 379,000 that finished loss mitigation (but are still past due), its worth watching foreclosure metrics moving forward. While foreclosure activity has increased, the national delinquency rate continues to fall, with both early and later stage delinquencies seeing improvement. Likewise, the number of seriously past due mortgages fell by 87,000 (-9%) as borrowers left forbearance plans and returned to making payments.

Finally, prepayment activity hit a more than two-year low, falling by 24% from the previous December as rising rates continue to put sharp downward pressure on refinance incentive (and refis historically driving the vast majority of prepayment activity).