Hi Ya'llIt has been a while since my last blog post because I've been so busy in this years crazy market!I don't have to blog to let you know that we have no doubt been in a HOT real
Will There Be A Ton Of Foreclosures This Year
Dated: June 30 2021
It has been a while since my last blog post because I've been so busy in this years crazy market!
I don't have to blog to let you know that we have no doubt been in a HOT real estate market this past year, as often noted on the news, and as seen by the increase in home prices!
This hot market has been brought on by historically low interest rates, low inventory, high rental rates, and the need for a lot of buyers to finally find a home after waiting to see what was going to happen last year. Home prices have risen in the past couple of months, in some areas as high as 14%, over last year!! And the year is only half over.
With the rising home prices and shortages of homes, people have been concerned that there will be a flood of Foreclosures coming to the housing market in the coming months. Their concern stems from the fact that Mortgage Services will no longer be required to allow borrowers, who have been in forbearance during the Pandemic, to remain in forbearance. Those borrowers will either have to pay their past due mortgages up to date, negotiate a loan modification, or go into foreclosures once they exit forbearance in July/August.
I have been speaking with many people in the industry, including mortgage brokers, other realtors, closing attorneys, etc, to get a feel of what may possibly happen next with forbearance ending. Although no one can accurately predict the future, the majority of the people I have spoken with, along with the articles I have read and research I have done, don't feel like this will be anything like the mortgage breakdown/recession of 2008-2013.
Here is an excerpt from an article I read today on Housing Wire. This will give you an idea of what is currently going on with the mortgage servicing industry and the forbearance situation;
"The Consumer Financial Protection Bureau(CFPB) today (June 29, 2021) released extensive mortgage servicing regulations it hopes will prevent “unwelcome surprises” for borrowers exiting forbearance.
Across more than 200 pages, the CFPB laid out the rules for mortgage servicers to follow in the coming months.
According to today’s final rule, mortgage servicers can initiate a foreclosure action, but only after the borrower has submitted a loss mitigation application, and either isn’t eligible for, breaks or rejects a loss mitigation agreement. Servicers can skip those caveats if the borrower was already six months past-due by March 2020 or if the property is abandoned.
The CFPB rule also clarifies that escrow shortages — which servicers are keen to recover — can be included in a loss mitigation option. The rule also places a limit on how much servicers can require borrowers to deposit in an escrow account over the next year.
Servicers can offer streamlined loan modifications to borrowers, as long as the modification does not increase the monthly payments, or stretch the mortgage term out beyond 40 years. Servicers, however, can’t charge any extra fees for the loan modifications, and if a borrower accepts a loan modification, the servicer must waive any late charges.
The CFPB wants servicers to be proactive about communicating with borrowers about their options, especially if they are not in a forbearance plan.
If borrowers are still delinquent, servicers must contact them well ahead of the end of their forbearance period to give them the option to complete a loss mitigation application.
Lastly, the rule adds clarity to the definition of financial hardship to mean any hardship that the pandemic brought on, either indirectly or directly, from March 2020 to February 2021.
The rule will take effect at the end of August.
Dave Uejio, the CFPB’s acting director, said the agency cannot “cannot be complacent” about the dangers still present.
“We are giving homeowners the time and opportunity to make informed decisions about the best course of action for them and their families, whether that is seeking a loan modification or selling their home,” Uejio said.
As economic restrictions lessen and federal and state-level protections expire, the housing market is entering a critical period for the 900,000 people the CFPB estimated will leave forbearance before the end of the year.
The bureau is by no means trying to prevent every foreclosure. Borrowers who were already more than six months behind before the pandemic started will no longer be spared, and the CFPB noted that “some foreclosures are unavoidable.”
The regulatory measures are meant to ease the transition for borrowers, said Diane Thompson, senior advisor to the CFPB’s acting director, during a call with reporters.
“This work is done in concert by work with other federal agencies, all actively in the process of figuring out what better options there are for people as they exit forbearance plans,” Thompson said. “This gives people a bridge to get into those loan modifications and figure out what the best path forward for them and their families is.”
I, along with many people in the industry that I have spoken with, do feel like there may be some foreclosures coming soon, but not a wave like there was during the mortgage meltdown years ago.
One reason I believe this is that the majority of those homes in forbearance, probably have a good bit of equity in their homes because of the current market. Those homeowners who do not choose to do a loan modification, will probably choose to list their homes in order not to lose that equity. I also feel like the mortgage services will be making sure that those homeowners receive some sort of loan modification if they can not catch up their past due payments.
Another Reason I don't believe we will see a lot of foreclosures in our market area is because I believe that the homeowners who are currently still in forbearance, are in areas of the country that have been very slow to open up. Those places in California, New York, etc, where businesses have been shut down for more than a year.
Real Estate is, and has always, been local. So whatever is going on in the California market may not be happening in the Georgia market and visa versa. Also, what is going on in different counties or cities in Georgia is not going on in all of Georgia. The demand to live in a certain area/city/county depends on location, schools, shopping, dining, jobs, etc.
I do have access to a paid website where I can check on pending foreclosures in our area. As of the end of June, I have yet to see any increase yet in foreclosure notices. In fact, there was only 2 in all of Cherokee county Georgia that I saw last week.
If you currently are a home owner in forbearance, Please call me or shoot me an email so that we can discuss options for you. There ARE many options out there and we can help guide you!
Donna Broadus, Broker
Broadus Realty Group
DIRECT - 404-583-8856
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