Two Main Reasons Why We Won't See Foreclosures This Fall
The health crisis we face as a country has led businesses all over the nation to reduce or discontinue their services altogether. This pause in the economy has greatly impacted the workforce and as a result, many people have been laid off or furloughed. Naturally, that would lead many to believe we might see a rush of foreclosures like we saw in 2008. The market today, however, is very different from 2008.
The concern of more foreclosures based on those that are out of work is one that we need to understand fully. There are two reasons we won't see a rush of foreclosures this fall: forbearances extension options and strong homeowner equity.
1.) Forbearance Extension
Forbearance, according to the Consumer Financial Protection Bureau (CFPB) is, "when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage." This is an option for those who need immediate relief. In today's economy, the CFPB has given homeowners a way to extend their forbearance, which will greatly assist those families who need it at this critical time.
2.) Strong Homeowner Equity
Equity is also working in favor or today's homeowners. This savings is another reason why we won't see substantial foreclosures in the near future. Today's homeowners who are in forbearance actually have more equity in their homes than what the market experienced in 2008.
The Mortgage Monitor report from Black Knight indicated that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes.
Many think we may see a rush of foreclosures this fall, but the facts just don't add up in this case. Today's real estate market is very different from 2007 when we saw many homeowners walk away when they owed more than their homes were worth. This time, equity is stronger and plans are in place to help those affected weather the storm. Should you have any questions or concerns, as always The Price Group is here to assist you.
