If you need assistance, please call 925-236-0915

Two Reasons We Won’t See a Rush of Foreclosures This Fall

Wednesday, July 22, 2020   /   by Kayla Nelson

Two Reasons We Won’t See a Rush of 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: forbearance 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.


Under the CARES Act, the CFPB notes:



 “If you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days. You also have the right to request and obtain an extension for up to another 180 days (for a total of up to 360 days).” 



2. Strong Homeowner Equity


Equity is also working in favor of 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 indicates that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes (See graph below):Two Reasons We Won’t See a Rush of Foreclosures This Fall | MyKCMBlack Knight notes:



“The high level of equity provides options for homeowners, policymakers, mortgage investors and servicers in helping to avoid downstream foreclosure activity and default-related losses.”



Bottom Line


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 2008 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.

Range Real Estate
39 Quail Ct. Ste 200
Walnut Creek, CA 94596
925-236-0915
Mark Pages-Oliver, MBA DRE #2020349
Lisa Caldwell DRE #01267745

 photo combinedLogo_zps6tkjf92d.jpg © Bay East ©2021. CCAR ©2021. bridgeMLS ©2021. Information Deemed Reliable But Not Guaranteed. This information is being provided by the Bay East MLS, or CCAR MLS, or bridgeMLS. The listings presented here may or may not be listed by the Broker/Agent operating this website. This information is intended for the personal use of consumers and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data last updated at 4/19/2021 8:08 AM CST. Displays of minimum information (e.g. a one-line or thumbnail search result, text messages, “tweets”, etc. of two hundred (200) characters or less) are exempt from this requirement but only when linked directly to a display that includes the required disclosure. Audio delivery of listing content is exempt from this disclosure requirement only when all required disclosures are subsequently delivered electronically to the registered consumer performing the property search or linked to through the device’s application.
This site powered by CINC: www.cincpro.com