Tag Archives: #mortgageforbearance

Don’t Believe Everything You Read About the Housing Market

Many potential buyers and sellers have questions right now regarding the real estate market as we head into 2022. The forbearance program is coming to an end and mortgage rates are beginning to rise.

With this uncertainty, anyone with a megaphone – from the talking heads on your favorite cable news network to a lone blogger – understands that bad news is good for their business. So, we’ll be seeing a rash of troublesome and frequently uninformed headlines over the next few months.

Here are two recent ones you may have seen.

1. Foreclosures Are Spiking Today

There are a number of stories circulating that highlight the rising rate of foreclosures. Those stories focus on an overly narrow view on that topic: the current volume of foreclosures as compared to 2020. They emphasize that we’re seeing far more foreclosures this year compared to last.

That seems rather daunting. However, though it’s true foreclosures have been up over the 2020 numbers, it’s important to realize that there were virtually no foreclosures last year because of the forbearance plan. If we compare this September to September of 2019 (the last normal year), foreclosures were down 70% according to ATTOM.

Even Rick Sharga, an Executive Vice President of the firm that issued the report referenced in the above article, says: “As expected now that the moratorium has been over for three months, foreclosure activity continues to increase. But, it’s increasing at a slower rate, and it appears that mot of the activity is primarily on vacant and abandoned properties, or loans in foreclosure prior to the pandemic.”

2. Rising Mortgage Rates Will Slow the Housing Market

Another topic that’s generating headlines is the rise in mortgage rates.

Some people are expressing concern that rising rates will negatively impact the housing market by causing home sales to dramatically decline. The resulting headlines are raising unneeded alarm bells. To counteract those headlines, we need to take a look at what history tells us. Looking at data over the last 20 years, there’s no evidence that an increase in rates dramatically forces sales to come to a halt. Nor does home price appreciation come to a screeching stop.

Let’s look at home sales first: The last three times rates increased sales remained rather consistent. It’s true that sales fell rather dramatically from 2007 through 2010, but mortgage rates were also falling at the time.

We can also look at home price appreciation (see graph below). Again, we see that a rise in rates didn’t cause prices to depreciate. Outside of the years following the crash, prices continued to appreciate, just at a slower rate.

Don't Believe Everything You Read: The Truth Many Headlines Overlook | MyKCM

As we head towards the end of the year, there will no doubt be more misinformation as so called experts make their predictions for 2022.

If you have questions, please don’t hesitate to contact us at 508-568-8191or msennott@todayrealestate.com. We’re happy to be sure you have the correction information.

After a hiatus due to the virus crisis, we were able to resume our Client Appreciation Thanksgiving Pie Social on the Sunday before the holiday.

Our thanks to all our clients/friends who attended the event held at JDs Burger and Sushi in Sandwich. Always hospitable hosts, they kept the hors d’oeuvres coming as strangers became friends. One of the aspects of this event that we enjoy most is seeing people who didn’t know each other make plans to meet for dinner or visit at a later date.

We also donated any extra pies to the Sandwich Food Pantry, one of our favorite local non-profits.

We hope you enjoyed the holiday.

Mari and Hank

Why a Wave of Foreclosures Is Not on the Way

There are several reasons why potential buyers tell us that they are waiting to make their move.

One theory is that with forbearance plans coming to an end, there will be a wave of foreclosures similar to what happened after the housing bubble 15 years ago. These buyers are figuring that they will then swoop in and purchase a home at a discounted price.

Here are a few reasons why that won’t happen.

There are significantly fewer homeowners in trouble this time

After the last housing crash, about 9.3 million households lost their homes 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 fear was the pandemic would impact the housing industry in a similar way. Many projected up to 30% of all mortgage holders would enter the forbearance program. In reality, only 8.5% actually did, and that number is now down to 2.2%.

As of about two weeks ago, the total number of mortgages still in forbearance stood at  1,221,000. That’s far fewer than the 9.3 million households that lost their homes just over a decade ago.

Most of the mortgages in forbearance have enough equity to sell their homes

Due to rapidly rising home prices over the last two years, of 1.22 million homeowners currently in forbearance, 93% have at least 10% equity in their homes. This 10% equity is important because it enables homeowners to sell their homes and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.

The remaining 7% might not have the option to sell, but if the entire 7% of those 1.22 million homes went into foreclosure, that would total about 85,400 mortgages. To give that number context, here are the annual foreclosure numbers for 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 that impacted the housing crash 15 years ago. It’s actually less than one-third of any of the three years prior to the pandemic.

The current market can absorb listings coming to the market

When foreclosures hit the market back in 2008, there was an oversupply of houses for sale. It’s exactly the opposite today. In 2008, there was over a nine-month supply of listings on the market. Today, that number is less than a three-month supply. Here’s a graph showing the difference between the two markets.

Why a Wave of Foreclosures Is Not on the Way | MyKCM

Bottom Line

The data indicates why Ivy Zelman, founder of the major housing market analytical firm Zelman and Associates, was on point when she stated: “The likelihood of us having a foreclosure crisis again is about zero percent.”

With housing prices continuing to rise and mortgage interest rates inching up, waiting to make your move is simply not a solid financial strategy.

Curious about your options? We’d be happy to answer your questions. Let’s connect at 508-568-8191 or msennott@todayrealestate.com.

We’re often asked about whether it’s a good idea to market your home during the holidays. As part of her 30 Days, 30 Questions series, Mari explained why it’s not such a bad idea.

Enjoy your week…

Mari and Hank

It’s Not Too Late to Apply for Forbearance

With so much focus on lack of housing inventory — while a record number of buyers are seeking homes on Cape Cod — not enough time has been spent talking about those homeowners, who have found it it challenging to make their mortgage payments because of the virus crisis.

The government initiated a forbearance program to provide much-needed support for these homeowners. But, many who are eligible have not used it, because they’re simply not familiar with it or pessimistic or unsure that they qualify.

But, there’ still time. Unless extended again, some of these plans and corresponding mortgage payment deferral options will expire soon. If your loan is backed by HUD/FHA, USDA, or VA, you can apply for initial forbearance by June 30, 2021.

Here’s what you need to know.

Who can apply.

This is how the Consumer Financial Protection Bureau (CFPB) explains the program:

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.

According to the CFPB, you may have a right to a COVID hardship forbearance if:

  • You’re experiencing 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, lenders are generally required to discuss payment relief options with you, whether or not your loan is federally backed.

Forbearance is not expensive.

According to CFPB: “For most loans, there will be no additional fees, penalties, or additional interest (beyond scheduled amounts) added to your account.” You also do not need to submit additional documentation to qualify. You can simply tell your servicer that you have a pandemic-related financial hardship.

But, 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.

The process to apply is rather simple.

  1. Find the contact information for your servicer
  2. Call your servicer
  3. Ask if you’re eligible for protection under the CARES Act
  4. Ask what happens when your forbearance period ends
  5. Ask your servicer to provide the agreement in writing

Our homes are our biggest asset. If you are having difficulty making your mortgage payments, there’s still time to take advantage of critical relief options to help keep you in your home.

You need to contact your mortgage provider to determine if you qualify. If you have other concerns or questions about the housing market, please don’t hesitate to contact us at 508-568-8191 or msennott@todayrealestate.com. We’re happy to assist you in any way we can.

Don’t wish for it; go for it!

Mari and Hank