The End of Forbearance Will Not Lead To a Wave of Foreclosures
Here are four reasons why we’re not headed for a crash.
After the last housing crash, 9.3 million homeowners gave their homes back to the bank and went into foreclosure or short sale. To put that in perspective, only around 8.5% of mortgages both this year and last year went into any type of forbearance program.
Are we currently heading towards a wave of foreclosures in the near future? We don’t think so, and here are four reasons why:
1. Far fewer homeowners are in distressed situations. About 1.86 million homeowners are currently enrolled in some type of forbearance program
2. 80% of homeowners in forbearance have at least 10% equity in their homes. This is a key difference between today’s market and that of the crash. Today, if you need to exit your mortgage and you have equity in your property, you can sell it instead of relinquishing it back to the bank.
" Today’s market is very different from that of the crash in the 2000s. "
3. Right now, the market is desperate for inventory. Because of that, any distressed inventory that does appear on the market will be quickly absorbed by buyers.
4. Banks and lenders do not want foreclosures. The housing crash is still fresh on a lot of people’s minds, especially higher-ups in the lending industry. They’ve been introducing programs this time around to help people avoid the same thing happening again.
If you have any questions about the market or real estate in general, feel free to reach out to us via phone or email.