What Happened to Those Homeowners Whose Mortgages Went into COVID-era Forbearance?
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When COVID hit in 2020, millions of homeowners received forbearance under the CARES Act, allowing them to temporarily pause or reduce their mortgage payments. There were very few hoops to jump through for homeowners to qualify - for many, they simply told their servicer that they had a pandemic-related financial hardship and the loan went into forbearance.
Two years later, 92% of the 8.2 million homeowners who sought forbearance protection [have] exited those plans (Black Knight). It's a telling sign of the financial strength of homeowners today!
Here are some key takeaways from the Mortgage Bankers Association’s survey on foreclosures and forbearances for the first quarter of 2022:
37% of the loans exiting forbearance programs were paid in full, 44.6% of those loans in forbearance were refinanced or set on repayment plans
The seasonally adjusted mortgage delinquency rate decreased for ALL loans outstanding
By loan type, the total delinquency rate for conventional loans decreased 55 basis points to 3.03 percent over the previous quarter - the lowest level since the fourth quarter of 2019
The foreclosure starts rate remains below the quarterly average of 0.41 percent dating back to 1979
The reality is that even if homeowners are struggling to meet their mortgage payments today, there's a very (very) good chance that the value of their home skyrocketed over the past 18 months and they could put their home on the market and sell it instead of having the bank foreclose.
Some buyers were curious whether all of those loans would eventually foreclose, leading to another market crash, and possibly a hot buying opportunity. These numbers paint a totally different picture! If you were waiting to buy because you were expecting another huge downfall due to these COVID-era forbearances, it may be a good idea to reconsider that strategy. Click below to schedule a call with me to explore your buying options!
Alternatively, if you’re struggling to make your monthly mortgage payments, please contact me for ways I may be able to assist you. I am happy to refer you to a mortgage lender to explore refinancing options or we can discuss what it would look like to sell your home. Just click the button below to schedule a consult!