The New Mexico Housing Agency Concerned About the Rise in Foreclosures

By Elias DaSilva | September 12, 2024.

A representative of the New Mexico Mortgage Finance Authority fears that the number of mortgage loans ending in foreclosure could double by 2024. Last year, he argues, out of 13,000 properties managed, 36 families experienced foreclosure, and their homes were subsequently sold to new buyers. He attributes this situation to the gradual elimination of federal pandemic protections, high interest rates, and other factors.

The Authority’s Director of Services, Theresa Lloyd, informed the board that some New Mexicans with subsidized loans are “already on the brink of collapse” trying to avoid foreclosure proceedings and that their situation will worsen if they face the end of the programs currently helping them keep their homes. This, in turn, will also lead to an increase of between 60 and 75 foreclosures this year.

Lloyd pointed out that this figure represents a small fraction when considering all the mortgage loans issued for housing since 2016 to low- and middle-income individuals. However, given this new and worrying trend, it is important to investigate the situation more closely to understand the circumstances of those who lost their homes and analyze what could have been done to prevent it. Currently, they are unable to identify a common factor among the homeowners who lost their homes, nor can they determine if private investors bought the homes at a recent auction.

The potential increase in foreclosures may be due to the large number of homeless people across the state or the housing affordability crisis throughout New Mexico.

During a legislative session, lawmakers approved nearly $200 million for housing investments. The Mortgage Finance Authority, for its part, received a one-time payment of $50 million for a housing affordability trust fund, and the New Mexico Finance Authority received $125 million for infrastructure loans for housing-designated properties.

Lloyd stated that the lifting of laws implemented during the pandemic, which prohibited foreclosures on owner-occupied homes, is a significant factor behind the increase. She also declared that many homeowners on the verge of foreclosure have already exhausted several programs created by the MFA to help defer payments or establish new payment plans; however, high interest rates make it difficult to use refinancing programs.

Another cause worsening the situation is that direct mortgage assistance applications, which provided homeowners with up to $30,000 for their mortgage if they experienced income losses related to the health crisis, are no longer being accepted. Lloyd said that the authority currently lacks funds, as at the beginning of the COVID-19 pandemic, assistance programs distributed more than $45 million to approximately 4,410 applicants. She also stated that the authorities have no flexibility to prevent foreclosures and must comply with their rules.