Today, I talk about the fact that there are people in the industry are talking about how we are going to see record-high foreclosures as well as Real Estate crash. I spend about 1 1/2 to 2 hours a day researching our industry and I am of the opinion this will not happen as it did back during the last housing crisis. Here is why:
1) If you look at the Bureau of Labor Statistics (BLS) Weekly unemployment filings in the millions week ending 10/17/2020 there were 800,000 to 900,000 filings down from 6.9 million on 3/28/2020.
2) Those currently receiving Unemployment Insurance according to the Department of Labor is 8.4 million down from 24.9 million in May 2020.
3) The Number of mortgages in active forbearance decreased dramatically. Week ending 10/15/2020 is 2.99 million are in forbearance down from 4.76 million on 5/29/2020 (Source: McDash Flash Forbearance Tracker)
4) The Percentage of Overall Forebearances is decreasing according to the Mortgage Banker Association (MBA). Currently, that number is 6.32% vs. 8.47% in May 2020
5) The Percentage of Forbearances is decreasing with Fannie/Freddie, Ginnie Mae, and Private label according to the MBA.
6) Of the5, 289,000 families granted forbearance, this is what happened upon the expiration of the plan: Source: Blacknight
- 2,801,000 Forebearance Extended
- 1,804,000 Removed while Performing
- 363,000 Paid off a mortgage through resale and or ended the life of their mortgage
- 267,000 expired / delinqueent in loss mitgation
- 54,000 expired or were delinquent
7) Quote by Rick Sharga EVP of RealtyTrac: "We'll certainly see more repossessions by lenders once the foreclosure moratoria have ended, but maybe not as many as people might expect. Given the record amount of homeowner equity, it seems likely that many homeowners in financial distress will opt to take advantage of strong demand among home buyers and sell their property rather than risk losing it to a foreclosure auction."
8) Distribution of Loans in Active Forbearance by Current combined loan to value (91% of at least 11% equity) Source: Blacknight
- 62% less than 70%
- 17% between 70-79%
- 12% between 80-90%
- 8% between 90-99%
- 1% are 100% or Higher
Finally, I close with a quote from Ivy Zelman Founder of Zelman and Associates:
"The Likelihood of us having a foreclosure crisis again is about zero percent."
