Will the end of Forbearance lead to more Foreclosures?
September 1, 2021 | Jessica Catapano
The forbearance plans are coming to an end, naturally many are concerned the housing market will experience a wave of foreclosures and will it be similar to what happened after the housing market bubble 15 years ago? Insiders are saying, there are considerable reasons why this will NOT happen. In, 2008 when the foreclosures hit, there was an excess supply of homes for sale. Current market conditions are the exact opposite. Truthfully, the current market can absorb any listings coming to the market. Most of the 1.86 M in forbearance have enough equity in their home to sell. Having a 10% of equity number is so important because it will enable homeowners to sell with related expenses included at no additional cost. This will allow homeowners in trouble the ability to sell while avoiding the credit hit a foreclosure or short sale would incur. Lastly, the White House recently released a fact sheet explaining how government backed mortgages will have further options to keep their homes. Examples include tacking on missed payments to the end of the mortgage with no additional cost. When evaluating these key pieces of information, its clear the lift of forbearance will very unlikely head toward an abundance of foreclosures. Additionally, insiders are hopeful adding more listings could help correct the nationwide sellers’ market.