Philadelphia Real Estate BlogRecently posted or modified blog posts by tag - forbearance https://www.reidrosenthalgroup.com/blog/Copyright ReidRosenthalGroup.com2022-08-08T07:28:49-07:00tag:reidrosenthalgroup.com,2012-09-20:9839Why the Forbearance Program Changed the Housing MarketWhy the Forbearance Program Changed the Housing Market
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When the pandemic hit in 2020, many experts thought the housing market would crash. They feared job loss and economic uncertainty would lead to a wave of <a href="https://www.wsj.com/articles/many-who-lost-homes-to-foreclosure-in-last-decade-wont-return-nar-1429548640" title="foreclosures" target="_blank" rel="noopener noreferrer">foreclosures</a> similar to when the housing bubble burst over a decade ago. Thankfully, the forbearance program changed that. It provided much-needed relief for homeowners so a foreclosure crisis wouldn’t happen again. Here’s why forbearance worked.
Forbearance enabled nearly five million homeowners to get back on their feet in a time when having the security and protection of a home was more important than ever. Those in need were able to work with their banks and lenders to stay in their homes rather than go into foreclosure. Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association(MBA), <a href="https://www.mba.org/news-and-research/newsroom/news/2022/06/21/share-of-mortgage-loans-in-forbearance-decreases-to-085-in-may" title="notes" target="_blank" rel="noopener noreferrer">notes</a>:
“Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options."
As the graph below shows, with modification, deferral, and workout options in place, four out of every five homeowners in forbearance are either paid in full or are exiting with a plan. They’re able to stay in their homes.
<a href="https://files.mykcm.com/2022/08/05150742/20220808-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-103806" src="https://files.mykcm.com/2022/08/05150742/20220808-MEM-Eng-1.png" alt="Why the Forbearance Program Changed the Housing Market | MyKCM" width="600" height="450" /></a>
What does this mean for the housing market?
Since so many people can stay in their homes and work out alternative options, there won’t be a wave of foreclosures coming to the market. And while rising slightly since the foreclosure moratorium was lifted this year, <a href="https://www.simplifyingthemarket.com/2022/05/12/what-you-actually-need-to-know-about-the-number-of-foreclosures-in-todays-housing-market/?a=587890-c6f39386e5c0b35edc66223c4d17abc9" title="foreclosures" target="_blank" rel="noopener noreferrer">foreclosures</a> today are still nowhere near the levels seen in the housing crisis.
Forbearance wasn’t the only game changer, either. Lending <a href="https://www.simplifyingthemarket.com/2022/06/01/why-home-loans-today-arent-what-they-were-in-the-past/?a=587890-c6f39386e5c0b35edc66223c4d17abc9" title="standards" target="_blank" rel="noopener noreferrer">standards</a> have improved significantly since the housing bubble burst, and that’s one more thing keeping foreclosure filings low. Today’s borrowers are much more qualified to pay their home loans.
And while the majority of homeowners are exiting the forbearance program with a plan, for those who still need to make a change due to financial hardship or other challenges, today’s record-level of <a href="https://www.simplifyingthemarket.com/2022/07/08/why-growing-home-equity-is-great-news-if-you-plan-to-move-infographic/?a=587890-c6f39386e5c0b35edc66223c4d17abc9" title="equity" target="_blank" rel="noopener noreferrer">equity</a> is giving them the opportunity to sell their houses and avoid foreclosure altogether. Homeowners have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Thanks to their equity and the current <a href="https://www.simplifyingthemarket.com/2022/08/02/3-graphs-to-show-this-isnt-a-housing-bubble/?a=587890-c6f39386e5c0b35edc66223c4d17abc9" title="undersupply" target="_blank" rel="noopener noreferrer">undersupply</a> of homes on the market, homeowners can sell their houses, make a move, and not have to go through the foreclosure process that led to the housing market crash in 2008.
Thomas LaSalvia, Chief Economist with Moody’s Analytics, <a href="https://www.newsweek.com/housing-market-crash-could-see-values-homes-plummet-these-11-states-1720651" title="states" target="_blank" rel="noopener noreferrer">states</a>:
“There's some excess savings out there, over 2 trillion worth. . . . There are people that have ownership of those homes right now, that even in a downturn, they'd still likely be able to pay that mortgage and won't have to hand over keys. And there won't be a lot of those distressed sales that happened in the 2008 crisis.”
Bottom Line
The forbearance program was a game changer for homeowners in need. It’s one of the big reasons why we won’t see a wave of foreclosures coming to the market.
2022-08-08T05:17:00-07:002022-08-08T07:28:49-07:00Reid Rosenthaltag:reidrosenthalgroup.com,2012-09-20:66524 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures
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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 <a href="https://economics.cmail20.com/t/ViewEmail/d/6DD5AA0E9F6529292540EF23F30FEDED/5323CD85A2087AFD22947492D9797BBC" title="9.3 million" target="_blank" rel="noopener noreferrer">9.3 million</a> 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 <a href="https://blog.firstam.com/economics/this-time-its-different-why-a-wave-of-foreclosures-is-unlikely" title="30% of all mortgage holders" target="_blank" rel="noopener noreferrer">30% of all mortgage holders</a> would enter the forbearance program. Only 8.5% actually did, and that number is now <a href="https://www.mba.org/2021-press-releases/july/share-of-mortgage-loans-in-forbearance-decreases-to-350-percent" title="down to 3.5%" target="_blank" rel="noopener noreferrer">down to 3.5%</a>.
As of last Friday, the total number of mortgages still in forbearance stood at <a href="https://www.blackknightinc.com/blog-posts/forbearances-flat-for-second-consecutive-week/" title="1,863,000" target="_blank" rel="noopener noreferrer">1,863,000</a>. 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 <a href="https://cdn.blackknightinc.com/wp-content/uploads/2021/06/BKI_MM_Apr2021_Report.pdf" title="10% equity" target="_blank" rel="noopener noreferrer">10% equity</a> 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 <a href="https://www.newyorkfed.org/microeconomics/hhdc.html" title="annual foreclosure numbers" target="_blank" rel="noopener noreferrer">annual foreclosure numbers</a> 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 <a href="https://www.nar.realtor/newsroom/existing-home-sales-expand-1-4-in-june" title="3 months of inventory" target="_blank" rel="noopener noreferrer">3 months of inventory</a> on the market.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), <a href="https://magazine.realtor/daily-news/2020/11/18/yun-real-estate-could-see-best-winter-ever" title="explains" target="_blank" rel="noopener noreferrer">explains</a>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 <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/23/fact-sheet-biden-administration-announces-additional-actions-to-prevent-foreclosures/" title="fact sheet" target="_blank" rel="noopener noreferrer">fact sheet</a> 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, <a href="https://www.tomferry.com/our-podcast/experience-91/" title="notes" target="_blank" rel="noopener noreferrer">notes</a>:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
2021-07-28T05:38:00-07:002021-07-28T07:42:17-07:00Reid Rosenthaltag:reidrosenthalgroup.com,2012-09-20:6044It’s Not Too Late To Apply For Forbearance
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Over the past year, the pandemic made it challenging for some homeowners to make their mortgage payments. Thankfully, the government initiated a <a href="https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/learn-about-forbearance/" title="forbearance" target="_blank" rel="noopener noreferrer">forbearance</a> program to provide much-needed support. Unless they’re extended once again, some of these plans and the corresponding mortgage payment deferral options will expire soon. That said, there’s still time to request assistance. If your loan is backed by HUD/FHA, USDA, or VA, you can apply for initial forbearance by June 30, 2021.
Recently, the Consumer Finance Institute of the Federal Reserve Bank of Philadelphia <a href="https://www.philadelphiafed.org/-/media/frbp/assets/consumer-finance/reports/21_02_cfi_research-brief-mortgage-forbearance.pdf" title="surveyed" target="_blank" rel="noopener noreferrer">surveyed</a> a national sample of 1,172 homeowners with mortgages. They discussed their familiarity with and understanding of lender accommodations that might be available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The results indicate that some borrowers didn’t take advantage of the support available through forbearance:
“Most borrowers who had not used forbearance during the pandemic reported that it was because they simply did not need it. However, among the remainder, a lack of understanding about available accommodations may also be playing a role. Around 2 out of 3 in this group reported not seeking forbearance because they were unsure or pessimistic about whether they would qualify — even though a high fraction of borrowers are eligible for forbearance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.”
Here are some of the reasons why those borrowers didn’t opt for forbearance:
They were concerned forbearance may be costly
They didn’t understand how to request forbearance
They didn’t understand how the plans worked and/or whether they would qualify
If you have similar questions or concerns, the following answers may ease your fears.
If you’re concerned forbearance may be costly:
The Consumer Financial Protection Bureau (CFPB) <a href="https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/learn-about-forbearance/" title="explains" target="_blank" rel="noopener noreferrer">explains</a>:
“For most loans, there will be no additional fees, penalties, or additional interest (beyond scheduled amounts) added to your account, and you do not need to submit additional documentation to qualify. You can simply tell your servicer that you have a pandemic-related financial hardship.”
It’s important to contact your mortgage provider (the company you send your mortgage payment to every month) to explain your current situation and determine the best plan available for your needs.
If you’re not sure how to request forbearance:
Here are <a href="https://www.mykcm.com/2020/12/14/5-steps-to-follow-when-applying-for-forbearance/" title="5 steps">5 steps</a> to follow when requesting mortgage forbearance:
Find the contact information for your servicer
Call your servicer
Ask if you’re eligible for protection under the CARES Act
Ask what happens when your forbearance period ends
Ask your servicer to provide the agreement in writing
If you don’t understand how the plans work and/or whether you will qualify:
This is how the Consumer Financial Protection Bureau (CFPB) explains the <a href="https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/learn-about-forbearance/" title="program" target="_blank" rel="noopener noreferrer">program</a>:
“Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited time while you build back your finances…
Forbearance doesn’t mean your payments are forgiven or erased. You are still obligated to repay any missed payments, which, in most cases, may be repaid over time or when you refinance or sell your home. Before the end of the forbearance, your servicer will contact you about how to repay the missed payments.”
The CFPB also addresses who qualifies for forbearance relief:
“You may have a right to a COVID hardship forbearance if:
You experience financial hardship directly or indirectly due to the coronavirus pandemic.
You have a federally backed mortgage, which includes HUD/FHA, VA, USDA, Fannie Mae, and Freddie Mac loans.
For mortgages that are not federally backed, servicers may offer similar forbearance options. If you are struggling to make your mortgage payments, servicers are generally required to discuss payment relief options with you, whether or not your loan is federally backed.”
Bottom Line
Like many Americans, your home may be your biggest asset. By acting quickly, you might be able to take advantage of critical relief options to help keep you in your home. Even if you tried to apply at the beginning of the pandemic and for some reason it didn’t work out, try again. Contact your mortgage provider today to determine if you qualify. If you have additional concerns, let’s connect to answer your questions and determine if there are other <a href="https://www.usa.gov/states-and-territories" title="mortgage relief" target="_blank" rel="noopener noreferrer">mortgage relief</a> options in our area as well.
2021-05-12T05:44:00-07:002021-05-12T05:48:35-07:00Reid Rosenthaltag:reidrosenthalgroup.com,2012-09-20:57394 Major Reasons Households in Forbearance Won’t Lose Their Homes to Foreclosure
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There has been a lot of discussion as to what will happen once the 2.3 million households currently in forbearance no longer have the protection of the program. Some assume there could potentially be millions of foreclosures ready to hit the market. However, there are four reasons that won’t happen.
1. Almost 50% Leave Forbearance Already Caught Up on Payments
According to the Mortgage Bankers Association (MBA), <a href="https://www.mba.org/2021-press-releases/april/share-of-mortgage-loans-in-forbearance-decreases-to-490-percent" title="data" target="_blank" rel="noopener noreferrer">data</a> through March 28 show that 48.9% of homeowners who have already left the program were current on their mortgage payments when they exited.
6% made their monthly payments during their forbearance period
7% brought past due payments current
6% paid off their loan in full
This doesn’t mean that the over two million still in the plan will exit exactly the same way. It does, however, give us some insight into the possibilities.
2. The Banks Don’t Want the Houses Back
Banks have learned lessons from the crash of 2008. Lending institutions don’t want the headaches of managing foreclosed properties. This time, they’re working with homeowners to help them stay in their homes.
As an example, about <a href="https://www.integritylending.com/understanding-what-a-federally-backed-mortgage-loan-means/" title="50% of all mortgages" target="_blank" rel="noopener noreferrer">50% of all mortgages</a> are backed by the Federal Housing Finance Agency(FHFA). In 2008, the FHFA offered 208,000 homeowners some form of <a href="https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/4Q2020FPR.pdf" title="Home Retention Action" target="_blank" rel="noopener noreferrer">Home Retention Action</a>, which are options offered to a borrower who has the financial ability to enter a workout option and wants to stay in their home. Home retention options include temporary forbearances, repayment plans, loan modifications, or partial loan deferrals. These helped delinquent borrowers stay in their homes. Over the past year, the FHFA has offered that same protection to over one million homeowners.
Today, almost all lending institutions are working with their borrowers. The report from the MBA reveals that of those homeowners who have left forbearance,
5% have worked out a repayment plan with their lender
5% were granted a loan deferral where a borrower does not have to pay the lender interest or principal on a loan for an agreed-to period of time
9% were given a loan modification
3. There Is No Political Will to Foreclose on These Households
The government also seems determined not to let individuals or families lose their homes. Bloomberg recently <a href="https://www.bloomberg.com/news/articles/2021-04-01/mortgage-firms-warned-to-prepare-for-a-tidal-wave-of-distress" title="reported" target="_blank" rel="noopener noreferrer">reported</a>:
“Mortgage companies could face penalties if they don’t take steps to prevent a deluge of foreclosures that threatens to hit the housing market later this year, a U.S. regulator said. The Consumer Financial Protection Bureau (CFPB) warning is tied to forbearance relief that’s allowed millions of borrowers to delay their mortgage payments due to the pandemic…mortgage servicers should start reaching out to affected homeowners now to advise them on ways they can modify their loans.”
The CFPB is proposing a new set of guidelines to ensure people will be able to retain their homes. Here are the major points in the proposal:
The proposed rule would provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.
The proposed rule would permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application.
The proposal rule wants temporary changes to certain required servicer communications to make sure borrowers receive key information about their options at the appropriate time.
A final decision is yet to be made, and some do <a href="https://www.housingwire.com/articles/does-cfpb-have-authority-to-postpone-foreclosures/" title="question" target="_blank" rel="noopener noreferrer">question</a> whether the CFPB has the power to delay foreclosures. The entire report can be found <a href="https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing_nprm_2021-04.pdf" title="here" target="_blank" rel="noopener noreferrer">here</a>: Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X.
4. If All Else Fails, Homeowners Will Sell Their Homes Before a Foreclosure
Homeowners have record levels of equity today. According to the latest CoreLogic <a href="https://www.corelogic.com/insights/homeowner-equity-report.aspx?WT.mc_id=crlgins_210308_XfafK" title="Home Equity Report" target="_blank" rel="noopener noreferrer">Home Equity Report</a>, the average equity of mortgaged homes is currently $204,000. In addition, 38% of homes do not have a mortgage, so the level of equity available to today’s homeowners is significant.
Just like the banks, homeowners learned a lesson from the housing crash too.
“In the same way that grandparents and great grandparents were shaped by the Great Depression, much of the public today remembers the 2006 mortgage meltdown and the foreclosures, unemployment, and bank failures it created. No one with any sense wants to repeat that experience…and it may explain why so much real estate equity remains mortgage-free.”
What does that mean to the forbearance situation? According to <a href="https://cdn.blackknightinc.com/wp-content/uploads/2021/03/BKI_MM_Jan2021_Report.pdf" title="Black Knight" target="_blank" rel="noopener noreferrer">Black Knight</a>:
“Just one in ten homeowners in forbearance has less than 10% equity in their home, typically the minimum necessary to be able to sell through traditional real estate channels to avoid foreclosure.”
Bottom Line
The reports of massive foreclosures about to come to the market are highly exaggerated. As Ivy Zelman, Chief Executive Officer of Zelman & Associates with roughly 30 years of experience covering housing and housing-related industries, recently <a href="https://www.tomferry.com/podcast/experience-91/" title="proclaimed" target="_blank" rel="noopener noreferrer">proclaimed</a>:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
2021-04-12T06:13:00-07:002021-04-12T06:16:02-07:00Reid Rosenthaltag:reidrosenthalgroup.com,2012-09-20:4987Will Forbearance Plans Lead to a Tsunami of Foreclosures?
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At the onset of the economic disruptions caused by the COVID pandemic, the government quickly put into place forbearance plans to allow homeowners to remain in their homes without making their monthly mortgage payments. Today, almost three million households are actively in a forbearance plan. Though <a href="https://www.corelogic.com/blog/2020/12/one-third-of-forbearance-loans-have-not-made-payment-since-may.aspx" title="29.4%" target="_blank" rel="noopener noreferrer">29.4%</a> of those in forbearance have continued to stay current on their payments, many have not.
Yanling Mayer, Principal Economist at CoreLogic, recently <a href="https://www.corelogic.com/blog/2020/12/one-third-of-forbearance-loans-have-not-made-payment-since-may.aspx" title="revealed" target="_blank" rel="noopener noreferrer">revealed</a>:
“A distributional analysis of forborne loans’ payment status reveals that more than one third (39.1%) of all forborne loans are now 150+ days behind payment, while as many as 1-in-4 (25.5%) are 180+ days past due.”
These homeowners have been given permission to not make their payments, but the question now is: how many of them will be able to catch up after their forbearance program ends? There’s speculation that a forthcoming wave of foreclosures could be the result, and that could lead to another crash in home values like we saw a decade ago.
However, today’s situation is different than the 2006-2008 housing crisis as many homeowners have tremendous amounts of <a href="https://www.mykcm.com/2021/01/06/the-importance-of-home-equity-in-building-wealth/" title="equity">equity</a> in their homes.
What are the experts saying?
Over the last 30 days, several industry experts have weighed in on this subject.
<a href="https://www.blackknightinc.com/blog-posts/as-inland-markets-start-to-mimic-coastal-home-price-trends-potential-warning-signs-emerge/" title="Michael Sklarz, President at Collateral Analytics" target="_blank" rel="noopener noreferrer">Michael Sklarz, President at Collateral Analytics</a>:
“We may very well see a meaningful increase in the number of homes listed for sale as these borrowers choose to sell at what is arguably an intermediate top in the market and downsize to more affordable homes rather than face foreclosure.”
<a href="https://blog.firstam.com/economics/will-record-equity-levels-prevent-a-foreclosure-tsunami" title="Odeta Kushi, Deputy Chief Economist at First American" target="_blank" rel="noopener noreferrer">Odeta Kushi, Deputy Chief Economist at First American</a>:
“The foreclosure process is based on two steps. First, the homeowner suffers an adverse economic shock…leading to the homeowner becoming delinquent on their mortgage. However, delinquency by itself is not enough to send a mortgage into foreclosure. With enough equity, a homeowner has the option of selling their home, or tapping into their equity through a refinance, to help weather the economic shock. It is a lack of sufficient equity, the second component of the dual trigger, that causes a serious delinquency to become a foreclosure.”
<a href="https://www.jchs.harvard.edu/blog/extraordinary-and-unexpected-pandemic-increase-house-prices-causes-and-implications" title="Don Layton, Senior Industry Fellow at the Joint Center for Housing Studies of Harvard University" target="_blank" rel="noopener noreferrer">Don Layton, Senior Industry Fellow at the Joint Center for Housing Studies of Harvard University</a>:
“With a greater cushion of equity, troubled homeowners have dramatically improved options: a greater ability to access funding (e.g. home equity lines) to keep paying monthly expenses until family finances might recover, improved ability to qualify for and support a loan modification, and, if push comes to shove, the ability to sell the home and monetize their increased net worth while reducing monthly payment obligations. So, what should lenders and servicers expect: a large number of foreclosures or only a modest increase? I believe the latter.”
With today’s positive equity situation, many homeowners will be able to use a loan modification or refinance to stay in their homes. If not, some will go to foreclosure, but most will be able to sell and walk away with their equity.
Won’t the additional homes on the market impact prices?
Distressed properties (foreclosures and short sales) sell at a significant discount. If homeowners sell instead of going into foreclosure, the impact on the housing market will be much less severe.
We must also realize there is currently an unprecedented lack of inventory on the market. Just last week, realtor.com <a href="https://news.move.com/2021-01-07-Realtor-com-R-December-Housing-Report-Number-of-Homes-for-Sale-Hits-an-All-Time-Low" title="explained" target="_blank" rel="noopener noreferrer">explained</a>:
“Nationally, the number of homes for sale was down 39.6%, amounting to 449,000 fewer homes for sale than last December.”
It’s important to remember that there weren’t enough homes for sale even then, and inventory has only continued to decline.
The market has the potential to absorb half a million homes this year without it causing home values to depreciate.
Bottom Line
The pandemic has led to both personal and economic hardships for many American households. The overall residential real estate market, however, has weathered the storm and will continue to do so in 2021.
2021-01-13T06:28:00-07:002021-01-13T07:30:41-07:00Reid Rosenthaltag:reidrosenthalgroup.com,2012-09-20:47935 Steps to Follow When Applying for Forbearance
<img width="750" height="410" src="https://files.mykcm.com/2020/12/11140512/20201214-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="5 Steps to Follow When Applying for Forbearance | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/12/11140512/20201214-KCM-Share.jpg 750w, https://files.mykcm.com/2020/12/11140512/20201214-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/12/11140512/20201214-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
If you’re currently feeling the stress of affording your mortgage payment, or if you know someone who is, there’s still time to get help. For homeowners experiencing financial hardship this year, the <a href="https://home.treasury.gov/policy-issues/cares" title="CARES Act" target="_blank" rel="noopener noreferrer">CARES Act</a> provides mortgage payment deferral options, creating much-needed relief in these challenging times.
It’s important, however, to understand how forbearance works. It’s not automatic. You need to take action now and apply for the program before these options expire.
A <a href="https://www.urban.org/urban-wire/broader-outreach-strategy-would-help-400000-needlessly-delinquent-mortgage-borrowers" title="study" target="_blank" rel="noopener noreferrer">study</a> by the Urban Institute determined:
“Approximately 400,000 homeowners who became delinquent after the pandemic began have forgone forbearance and become delinquent. These borrowers may not know they are eligible for forbearance.”
Thankfully, there’s still time to apply for forbearance, even if you’re just learning about it now. Doing so may be the game-changer you need to stay in your home, just when you need it most. Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association (MBA), <a href="https://www.housingwire.com/articles/share-of-mortgage-loans-in-forbearance-ticks-up-for-second-week/" title="explained" target="_blank" rel="noopener noreferrer">explained</a>:
“The increase in new forbearance requests may be the result of additional outreach to homeowners who had previously not taken advantage of forbearance opportunities.”
If you need to apply for forbearance but aren’t sure how to begin the process, the Consumer Financial Protection Bureau (CFPB) published <a href="https://www.youtube.com/watch?v=0UzmTxYmw94&app=desktop" title="5 steps" target="_blank" rel="noopener noreferrer">5 steps</a> to follow when requesting mortgage forbearance:
1. Find the contact information for your servicer
Look at your mortgage statement to find the phone number for your servicer (the company you send your mortgage payment to every month). The Consumer Financial Protection Bureau encourages you to use the number on your statement to avoid scams.
2. Call your servicer
Explain your situation so your servicer can determine your best course of action. Be sure to ask any questions you have about the process.
3. Ask if you’re eligible for protection under the CARES Act
The CARES Act protects homeowners with federally backed loans (FHA, VA, USDA, Fannie Mae, and Freddie Mac). In addition, some private servicers are also providing forbearance programs.
4. Ask what happens when your forbearance period ends
Depending on the plan available to you, there are different <a href="https://www.mykcm.com/2020/10/21/why-todays-options-will-save-homeowners-from-foreclosure/" title="options">options</a> you may be able to consider. Your servicer will help you get a better understanding of what’s available.
The CFPB also recommends asking questions like:
What happens to the payments I miss?
What are my repayment options?
When will repayment be due?
Are there any fees?
5. Ask your servicer to provide the agreement in writing
A written agreement allows you to see exactly what type of program you’re agreeing to. It also helps you make sure it matches what you discuss with your provider over the phone.
Bottom Line
Help is out there for homeowners in need, but it’s important to apply now while this benefit is still available. The Consumer Financial Protection Bureau says: don’t wait, forbearance is not automatic. It must be requested. Reach out to your mortgage provider today in Philadelphia and the Main Line so you can get the assistance you need to protect the hard-earned investment you’ve made in your home.
2020-12-14T07:27:00-07:002020-12-14T07:31:41-07:00Reid Rosenthaltag:reidrosenthalgroup.com,2012-09-20:4649Chances of Another Foreclosure Crisis? “About Zero Percent.”
<img width="750" height="410" src="https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="Chances of Another Foreclosure Crisis? “About Zero Percent.” | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share.jpg 750w, https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/11/16165023/20201118-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" />
There seems to be some concern that the 2020 economic downturn will lead to another foreclosure crisis like the one we experienced after the housing crash a little over a decade ago. However, there’s one major difference this time: a robust forbearance program.
During the housing crash of 2006-2008, many felt homeowners should be forced to pay their mortgages despite the economic hardships they were experiencing. There was no empathy for the challenges those households were facing. In a 2009 Wall Street Journal article titled <a href="https://www.wsj.com/articles/BL-DVB-7851" title="Is Walking Away From Your Mortgage Immoral?" target="_blank" rel="noopener noreferrer">Is Walking Away From Your Mortgage Immoral?</a>, John Courson, Chief Executive of the Mortgage Bankers Association, was asked to comment on those not paying their mortgage. He famously said:
“What about the message they will send to their family and their kids?”
Courson suggested that people unable to pay their mortgage were bad parents.
What resulted from that lack of empathy? Foreclosures mounted.
This time is different. There was an immediate understanding that homeowners were faced with a challenge not of their own making. The government quickly jumped in with a mortgage forbearance program that relieved the financial burden placed on many households. The program allowed many borrowers to suspend their monthly mortgage payments until their economic condition improved. It was the right thing to do.
What happens when forbearance programs expire?
Some analysts are concerned many homeowners will not be able to make up the back payments once their forbearance plans expire. They’re concerned the situation will lead to an onslaught of foreclosures.
The banks and the government learned from the challenges the country experienced during the housing crash. They don’t want a surge of foreclosures again. For that reason, they’ve put in place <a href="https://www.mykcm.com/2020/10/21/why-todays-options-will-save-homeowners-from-foreclosure/" title="alternative ways">alternative ways</a> homeowners can pay back the money owed over an extended period of time.
Another major difference is that, unlike 2006-2008, today’s homeowners are sitting on a record amount of <a href="https://www.mykcm.com/2020/10/02/rising-home-equity-can-power-your-next-move-infographic/" title="equity">equity</a>. That equity will enable them to sell their houses and walk away with cash instead of going through foreclosure.
Bottom Line
The differences mentioned above will be the reason we’ll avert a surge of foreclosures. As Ivy Zelman, a highly respected thought leader for housing and CEO of Zelman & Associates, said:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
2020-11-18T08:03:00-07:002020-11-18T08:14:43-07:00Reid Rosenthal