What’s Happening with the Massive Delinquencies of FHA High Risk & Subprime Mortgages Now that Foreclosure Bans Ended? | Wolf Street

The table shows the 15 metros with the highest foreclosure rates among FHA-backed mortgages at the end of September. It also shows the number of FHA mortgages in those metros, and the number of those mortgages that are in foreclosure (data via the AEI Housing Center):

So foreclosures will continue to surge as more FHA mortgages come to the end of their forbearance plans, but they’re surging from the historically low levels during the foreclosure moratorium, and given the massive amount of home-price inflation during the pandemic, are not going to build into the tsunami of foreclosures seen during the Financial Crisis.

The Fed engineered this home price inflation with its $4.5 trillion in asset purchases, including purchases of mortgage-backed securities, to repress long-term interest rates, including mortgage rates to record lows, thereby driving up prices. It also created an enormous amount of excess liquidity that needed a place to go, and some of it piled into the housing market, driving up prices. And the Fed thereby bailed out mortgage lenders and their guarantors once again.

What’s Happening with the Massive Delinquencies of FHA High Risk & Subprime Mortgages Now that Foreclosure Bans Ended? | Wolf Street

But what happens if this huge real estate values bubble bursts, due to unsustainable prices and values?