What Post-COVID Forbearance Means For The Real Estate Market

The mortgage forbearance and eviction moratoriums, which were part of the CARES Act, are set to expire at the end of June, as it comes to an end, what happens next?

Home Owners

If you are one of the millions of homeowners who are nearing the end of your forbearance period, you may be wondering what your options are. The payments and interest you missed while in forbearance will be due unless you are granted another extension. You do have options as to how you repay.

You can:

Pay the amount in full

Break up the amount into smaller payments that you will make over a predetermined amount of time. This amount will be in addition to your regular monthly payment.

Defer payment. This means you won’t pay the missed amount until you sell the home.

Modify or lengthen your loan.

Refinance. If you’re able to refinance, this could be a smart move for you. Most lenders will require you to have three months of on-time payments before you can qualify for a refinance.

It is of utmost importance that you keep in touch with your lender to discuss your options. Getting back on track is crucial to avoid foreclosure.

Landlords

Many landlords have not been paid since the beginning of the pandemic and eagerly await the end of the eviction moratorium. Hopefully, your tenant has been keeping in touch with you and trying to work out a solution that works for both of you. If not, you will likely need to proceed with the eviction process. You may want to consult with an attorney to make sure you are doing everything in compliance with the CARES Act in order to avoid huge fines.

Lenders

Believe it or not, lenders do not want to foreclose on homes. They lose more money through the foreclosure process than they would through loan modifications or even forbearances. But, as the loosened forbearance requirements come to an end, lenders may need to move forward with foreclosures.

It is reported that 2.1 million mortgages are currently in forbearance, with close to another 2 million mortgages behind at least 60 days in payments. Does that mean that banks are going to foreclose on all of them? Probably not. Wells Fargo has already said that they will not move forward with foreclosures until 2022 and have agreed to extend forbearance periods through the end of the year. Other major banks have not made comments about how they plan to proceed but were happy to report that at least 90% of the mortgages that were previously in forbearance are now back on track.

Real Estate Market

Real estate prices around the country have been skyrocketing mainly due to low inventory. The low inventory can be blamed on a slowdown in home construction, people choosing not to sell their homes during a pandemic, and the lack of bank-owned properties on the market. Bank-owned properties make up a small percentage of real estate listings and have been absent last year. More listings on the market will slow down the appreciation of home values which is great news for buyers. Experts do not predict that the small increase of homes on the market will cause any sort of real estate crash, so everyone can remain calm.

If you have any real estate questions or concerns, The Villa Group at PAK Realty is here for you. Give us a call!