Federal protections, combined with a white-hot housing market, have kept a lid on foreclosures in Washington.
Even so, counselors who try to help homeowners avoid foreclosure say they're gearing up for a spike in need later this year.
Washington ranked 42nd among the 50 states for the rate of foreclosures in the first quarter of this year, according to data released this week by ATTOM Data Solutions. One homeowner was foreclosed on for every 10,086 households in the state, compared to one in every 1,705 in Delaware, the state with the highest rate of foreclosures.
Nationally, foreclosures have dropped dramatically since the start of the pandemic, in large part due to ongoing moratoriums on certain foreclosures. Rates are starting to tick back up, likely due to some states beginning to allow foreclosures on vacant and abandoned properties, said Rick Sharga, executive vice president of marketing at RealtyTrac, a subsidiary of ATTOM Data Solutions.
Washington's foreclosure numbers were low even before the pandemic, Sharga said.
"The economy in the state has been strong. ... The demand for housing has been higher than the available supply, especially in the Seattle metro area. That tends to keep the numbers down," Sharga said. The state also has strong consumer-protection laws, he said.
Across Western Washington, home shoppers are eager to buy, but inventory is slim, creating a seller's market where a Seattle-area homeowner at risk of foreclosure may be able to sell their house and walk away with a profit. That's a stark difference from the Great Recession, when homeowners were under water.
Even so, "most people want to stay in their houses," said Marc Coté, executive director of Parkview Services, a Shoreline-based nonprofit that provides housing counseling for people in danger of losing their homes. "It's wrong to think the market is hot so we don't have to worry. No. These are people's lives and they're devastated."
During the pandemic, many struggling homeowners have been able to enter forbearance, allowing them to pause their mortgage payments.
Nationally, about 5% of loans are in forbearance, according to a survey by the Mortgage Bankers Association.
In Washington, estimates vary on the share of delinquent loans, including those in forbearance, ranging from 3.5% to about 5%, according to CoreLogic and the Mortgage Bankers Association. A U.S. Census Bureau survey estimates about 5% of households are not caught up on their mortgage payments, amounting to nearly 111,000 households across the state.
In the wake of the Great Recession, a state law gave Washington homeowners access to free housing counseling and mediation in hopes of helping them avoid foreclosure. Homeowners in need of help can access free counseling by calling 1-877-894-4663.
Coté said his organization is nearly tripling its number of housing counselors in preparation for the end of the federal foreclosure moratorium. The moratorium is set to end June 30, though some protections could be extended.
Washington's low rate of foreclosures shows "the federal moratorium and forbearance programs are very effective," said Denise Rodriguez, executive director of the Washington Homeownership Resource Center. "I'm very worried about what will happen when those programs end."
Some borrowers will be able to return to paying their usual mortgage amount or pay more on each month to catch up on what they missed. Others may have trouble making the same payment they made before. The exact scale of that need is still unknown.
With many people still unemployed after the pandemic downturn, "what percentage of the people in forbearances right now are not going to be just bouncing back like nothing happened?" Rodriguez said.