The rate at which retail and lodging loans are moving into foreclosure is far short of the levels predicted when the pandemic gripped the country last March, with just 12 loans representing $270 million of outstanding balance officially beginning the process.

A new analysis from Moody's Analytics REIS also shows that the rate at which loans for those sectors are being modified has also decreased markedly after reaching a peak early last summer. A temporary spike in the rate in December yielded to a sharp decrease early in 2021.

Moody's Thomas LaSalvia and David Salz note that "we typically see a lag between when a loan is modified and when the trustee reports the modification," typically in the range of 30 to 90 days. "Nonetheless, we can be confident that the decline in new modifications in January and February is real, although the figures for March through May might change. This decline in the rate of new modifications may indicate that special servicers are finding that modifications may not be sufficient to cure the remaining troubled loans. In those cases, special servicers may opt for foreclosures."