Showing posts with label Foreclosures. Show all posts
Showing posts with label Foreclosures. Show all posts

Saturday, July 31

Housing Boom Over

A crash in the housing market seemed inevitable during the early weeks of the COVID-19 recession. However, that bust didn't come to fruition, in fact, the opposite happened: A combination of government support, recession-induced low interest rates, and eager homebuyers set off a housing boom. 

Since the onset of the crisis, median home prices are up a staggering 24%.

But much of that government aid and support is about to go away. The foreclosure moratorium, which prevents foreclosures of federally-backed mortgages, will come to an end on July 31. 

Then on Sept. 30, the mortgage forbearance program, which allows some borrowers to pause their payments, will lapse. Since the beginning of the pandemic, over 7 million homeowners have been enrolled in the forbearance program. 

However, as the economy has improved that number has fallen. As of July 11, there are still 1.75 million borrowers, or 3.5% of U.S. mortgages, enrolled in the forbearance program.

The foreclosure crisis following the 2008 housing crash was so bad, in part, because tens of millions of financially strained homeowners were underwater (meaning a borrower's remaining mortgage balance is greater than the home's value) and had no choice but foreclosure. 

That's unlikely to be the case for financially strapped homeowners this year. These homeowners are likely sitting on sizable home equity (home value minus the outstanding mortgage), and if they can't repay the mortgage they can simply sell into the currently red-hot housing market.  READ MORE