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Foreclosure Tragedy of 2022

2008 Equity Crisis vs 2022 Economic Crisis

For the past two years, conversations in mainstream media, Clubhouse or broker meetings have been focused on a lack of foreclosure risks due to the fact “it’s not 2008.” However, that discussion ignores the current tragedy of 2022.

American homeowners with equity are losing their homes to foreclosure. In 2008 we had an equity problem. In 2022, we have an economic problem. Equity doesn’t equal liquidity. And a refinance isn’t possible with an active forbearance. Add to that a higher mortgage balance combined with increasing interest rates and you have a complex, seemingly impossible situation. For an in-depth discussion check out the Clubhouse Real Estate Real Stories replay highlight.

2008 vs 2022 – What’s similar? What’s Different?

There are some similar dynamics, with different elements;

  • Wall Street Impact on Main Street
    The 2008 Mortgage Crisis was based on trading and mortgages; in 2022, we have a massive movement of capital from Wall Street to Main Street acquisitions, including pre-foreclosure and bank owned properties – before they are publicly listed for sale. The “rentification of America” dynamic is unlike anything we’ve seen before, however the Wall Street institutional acquisition wave is a strong underlying cause.
  • Escalating Values and “Easy Money”
    In 2008, money flowed ceaselessly funded by toxic lending practices, both for new home acquisitions and pulling out equity from existing homes. In 2022, the additional capital from CARES ACT funding sources, has added to consumer confidence in paying above asking price on home purchases.
  • Mortgage Misinformation
    In 2008, we all know the story now of toxic, predatory lending practices and the resulting foreclosure crisis. In 2022, misinformation about the terms and consequences of their forbearance causes homeowners to be stuck in a pre-foreclosure pipeline.

What’s significantly different?

  • Foreclosures
    In 2008, foreclosures were driven by lack of equity. In 2022, they are driven by economic impacts of COVID. The number of foreclosures in 2022 is smaller, and they are cycling through in streams and bursts vs a huge wave.
  • U Shaped Economy vs. K Shaped Economy
    Two years ago, there was talk about what type of economic recovery we could expect. What was predicted, and what has played out is a “K Shaped Economic Recovery” from COVID. It’s not discussed much in the news, as it’s an unpleasant reality. We have not only the “Upper K” and “Lower K” but many micro-dynamics as offshoots of those stronger trends. The complexity of today’s market makes it impossible to simplify into a sound byte.
  • Inventory
    During the mortgage crisis and recovering years, there was a massive inventory of homes with very few sales. Some areas had as much as 2 years of inventory. During 2022, inventory remains at historic lows, supporting higher values based on supply and demand.
  • Luxury Market
    In 2008, the luxury market was hit hard and early in the mortgage crisis. Homes suddenly lost equity and were upside down in value. During 2022, the luxury market remains strong. This is the upper branch of the “K shaped economy.” Dynamics that have evolved such as mobile lifestyles, increase in wealth and crypto currency and to the sustaining demand for luxury homes.

Losing Homes, Equity and Generational Wealth

Amidst a massive buy up of residential real estate by Wall Street institutional buyers in 2022, homeowners going to foreclosure are losing their homes and their equity. American families face a loss of generational wealth as well as losing their homes. As we discuss the long-tail impact of COVID, we can’t ignore the multi-generational long-tail impact for families going to foreclosure who have equity.


As detailed in the update below, there are over 1.25 Million homeowners in forbearance. Historically, 50-70% of homeowners in forbearance end up in foreclosure. Forbearances initiated during COVID are coming due at different times and will be an issue rolling forward throughout the year. Many homeowners face unexpected surprises when the forbearance ends. Some were initiated with balloon payment terms. Homeowners who were able to adjust to deferments face a larger loan balance and higher monthly payments. Higher mortgages, interest rates and monthly payments combined with job losses creates a seemingly impossible situation.

During the CARES ACT moratorium on foreclosure auctions, institutional lenders streamlined their internal processes and with advanced artificial intelligence they know where the equity opportunities are within their distressed asset pipeline. Auctions are not being postponed as they were in years past. Once a notice of foreclosure is received, time is of the essence.


Ignoring the suffering of these homeowners because “it’s not 2008” is tragic. There are options to try to stop foreclosure and save the home. However, time is of the essence as the banks have sped up the speed of foreclosure since the lifting of the moratoriums in 2021.

Help for Today’s Homeowners

While it may seem the needs of homeowners facing foreclosure are being ignored, there are realtors dedicated to helping our neighbors and friends explore all options to save their homes, and their equity. Personally, I’m connected to a nationwide referral network of agents and HUD counselors ready to help!

If you’d like to learn how to serve the pre-foreclosure market, please contact me. I’m hosting classes for realtors and investors to understand how short sales work and where the opportunities are.

2022 Foreclosure Market Insights

What’s going on NOW – homes with equity going to foreclosure

Pre-foreclosures with Equity Not on MLS

Metro Area / StateMedian Price# of homes
w/ equity
Total #
% with
Los Altos$3.5M4666%
Los Angeles$865K46967170%
San Bernardino$469K8738722%
San Francisco$1.4M6929124%
Miami Beach$437K11618563%
Palm Beach County$626K2,3222,60089%
Atlantic City$160K10411590%
Bergen County$548K1,4741,73085%
Cherry Hill$367K15616893%
New Jersey State18,02024,17175%
New York City$1.49M51954895%
Boston, MA$1.5M42615%
Boise, ID$566M345661%
Cambridge, MA$1.3M41921%
Hartford, CT$219K11012191%
Indianapolis, IN$223K76277199%
Omaha, NE$196K25229486%
Philadelphia, PA$212K3,4433,97387%
Portland, OR$386K1713413%
Seattle, OR$590K305951%
Source: RealtyTrac as of May 2022

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Susanna Kunkel

Susanna Kunkel brings her skills from a career in the executive offices of major corporations to her real estate business - treating each client like a VIP. With 18 years of experience as a real estate advisor, you can be confident in knowledgeable, personalized, confidential service. Hear what her clients say -

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