inception-app-prod/MTI2Mjg4MzMtODY3Yy00M2RmLTgyNGItOTY4ZDc2NzJmNWEy/content/2021/01/bXRpMm1qZzRtem10b2R5M3l5MDBtMnJtbHRneW5naXRvdHk0.jpg
  • Home
  • About
  • Blog
  • Contact
  • Listings Search
    • Silver Lake
    • Echo Park
    • Hollywood Hills
    • West Hollywood
    • Los Feliz
  • Why we like Karen
  • Financial Options
  • GET YOUR FREE HOME SELLER’S GUIDE
Karen Numme
the collective
01705405
inception-app-prod/OWViMDYyMWItZjYwNy00MDQ4LThiNTQtZmQ3Mzc5MGY5YTdi/content/2021/12/00d58228bcc5019e85e84dd77e21bd99f3efd4b4.png
323.804.2008
Sign In
Sign Up
inception-app-prod/MTI2Mjg4MzMtODY3Yy00M2RmLTgyNGItOTY4ZDc2NzJmNWEy/content/2021/01/bXRpMm1qZzRtem10b2R5M3l5MDBtMnJtbHRneW5naXRvdHk0.jpg
  • Home
  • About
  • Blog
  • Contact
  • Listings Search
    • Silver Lake
    • Echo Park
    • Hollywood Hills
    • West Hollywood
    • Los Feliz
  • Why we like Karen
  • Financial Options
  • GET YOUR FREE HOME SELLER’S GUIDE
inception-app-prod/MTI2Mjg4MzMtODY3Yy00M2RmLTgyNGItOTY4ZDc2NzJmNWEy/content/2021/01/bXRpMm1qZzRtem10b2R5M3l5MDBtMnJtbHRneW5naXRvdHk0.jpg
inception-app-prod/MTI2Mjg4MzMtODY3Yy00M2RmLTgyNGItOTY4ZDc2NzJmNWEy/content/2021/07/ScreenShot2021-07-28at10.20.09AM.png

End of Forbearance WILL NOT Lead to a Wave of Foreclosures

inception-app-prod/OWViMDYyMWItZjYwNy00MDQ4LThiNTQtZmQ3Mzc5MGY5YTdi/content/2021/12/00d58228bcc5019e85e84dd77e21bd99f3efd4b4.png
Karen Numme,07/28/2021

4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures


With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago. Here are four reasons why that won’t happen.

1. There are fewer homeowners in trouble this time

After the last housing crash, about 9.3 million households lost their home to a foreclosure, short sale, or because they simply gave it back to the bank.

As stay-at-home orders were issued early last year, the overwhelming fear was the pandemic would decimate the housing industry in a similar way. Many experts projected 30% of all mortgage holders would enter the forbearance program. Only 8.5% actually did, and that number is now down to 3.5%.

As of last Friday, the total number of mortgages still in forbearance stood at  1,863,000. That’s definitely a large number, but nowhere near 9.3 million.

2. Most of the 1.86M in forbearance have enough equity to sell their home

Of the 1.86 million homeowners currently in forbearance, 87% have at least 10% equity in their homes. The 10% equity number is important because it enables homeowners to sell their houses and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.

The remaining 13% might not all have the option to sell, so if the entire 13% of the 1.86M homes went into foreclosure, that would total 241,800 mortgages. To give that number context, here are the annual foreclosure numbers of the three years leading up to the pandemic:

  • 2017: 314,220
  • 2018: 279,040
  • 2019: 277,520

The probable number of foreclosures coming out of the forbearance program is nowhere near the number of foreclosures coming out of the housing crash 15 years ago. The number does, however, draw a similar comparison to the three years prior to the pandemic.

3. The current market can absorb any listings coming to the market

When foreclosures hit the market in 2008, there was an excess supply of homes for sale. The situation is exactly the opposite today. In 2008, there was a 9-month supply of listings for sale. Today, that number stands at less than 3 months of inventory on the market.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains when addressing potential foreclosures emerging from the forbearance program:

“Any foreclosure increases will likely be quickly absorbed by the market. It will not lead to any price declines.”

4. Those in power will do whatever is necessary to prevent a wave of foreclosures

Just last Friday, the White House released a fact sheet explaining how homeowners with government-backed mortgages will be given further options to enable them to keep their homes when exiting forbearance. Here are two examples mentioned in the release:

  • “For homeowners who can resume their pre-pandemic monthly mortgage payment and where agencies have the authority, agencies will continue requiring mortgage servicers to offer options that allow borrowers to move missed payments to the end of the mortgage at no additional cost to the borrower.”
  • “The new steps the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA), and Department of Veterans Affairs (VA) are announcing will aim to provide homeowners with a roughly 25% reduction in borrowers’ monthly principal and interest (P&I) payments to ensure they can afford to remain in their homes and build equity long-term. This brings options for homeowners with mortgages backed by HUD, USDA, and VA closer in alignment with options for homeowners with mortgages backed by Fannie Mae and Freddie Mac.”

When evaluating the four reasons above, it’s clear there won’t be a flood of foreclosures coming to the market as the forbearance program winds down.

Bottom Line

As Ivy Zelman, founder of the major housing market analytical firm Zelman & Associates, notes:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

Print Details
Previous post
You Need an Expert in This Market
Realtor
SRES
Realtor
SRES
Realtor
SRES
Realtor
SRES
Realtor
SRES
Realtor
SRES
Realtor
SRES
Realtor
SRES

Office

the collective
8278 1/2 Santa Monica BlvdWest Hollywood
CA 90046
(310) 569-1335
anthony@thecollectiverealty.com

Essentials

  • Home
  • About
  • Blog
  • Contact
  • Listings Search
  • Why we like Karen
  • Financial Options

Consumer Protection & Privacy

  • Accessibility
  • DMCA Compliance
For ADA assistance, please email compliance@placester.com. If you experience difficulty in accessing any part of this website, email us, and we will work with you to provide the information.
inception-app-prod/MTI2Mjg4MzMtODY3Yy00M2RmLTgyNGItOTY4ZDc2NzJmNWEy%2Flogo%2F2015%2F06%2Fthe collective realty logo.jpg
CREATING WEALTH THROUGH REAL ESTATE

© 2022 All rights reserved

Created with Placester

Sign in

Sign In
Forgot your password?
Create an account
You have been successfully logged in
The page will reload automatically.
Go to the homepage
Sorry something went wrong
Login or password are incorrect. Please try again.
Try again

Sign Up

Sign Up
Already a User? Sign In
You have been successfully registered
Please check your email.
Go to the homepage
Sorry something went wrong
Please try again.
Try again

Reset password

Reset password
Return to Log In
Reset password email has been sent.
Go to the homepage
Sorry something went wrong
Please try again.
Try again

Change password

Change password
Sign Up
Your password has been successfully reset.
Go to the homepage
Sorry something went wrong
Please try again.
Try again

Contact Form

Send
Succes! Your message was sent!
Back to homepage
Oops! Error occurred.
Please try again.
Back to form
Already a User? Sign In

Account verification in progress

Account Verified!
You may now log in into your account
Go to the homepage
Verify your email address
In order to log in to your account, you need to confirm your email address. Please check your inbox!
Go to the homepage

Share this listing

Copy Link