In early 2020 as the COVID pandemic evolved, I was skeptical of mainstream news stating we wouldn’t face a risk of foreclosures “because it’s NOT 2008!” Well, yes I agree it’s not 2008 but that simplistic response ignored the facts of a different crisis that could also put home owners at risk of foreclosure. The last thing I wanted was to be “right.”
Almost 18 months later some of the same news sources who provided confusing and misleading information about forbearances stating there wouldn’t be an increase in foreclosure are now reporting “Foreclosures Are Shooting Up” and so on (see article links below).
As an example of the misinformation circulated in early COVID, check out my video below from May of 2020 which includes clips from Dr. Lawrence Yun, economist for the National Association of Realtors along with CEO’s of a major brokerage and a mainstream mortgage company. I don’t have a PhD but all it takes is a quick research of “forbearance” to find info showing these statements were blatantly false.
Since realtors across the country count on information and guidance from industry leaders such as these, I could easily tell the fallout from the CARES ACT forbearance offerings would yield an increase in foreclosures. Often with homeowners who didn’t understand the impact or terms, and may not have needed the forbearance in the first place.
Knowing the stress and negative impact being at risk of foreclosure means for home owners and their families, nothing is more irritating than pundits reporting misinformation, putting consumers at risk of foreclosure. That, in fact, is similar to 2008 when homeowners were talked into ARM refinances at terms they clearly couldn’t afford. Bad information and advise can be extremely costly!
I work diligently with home owners at risk of foreclosure to help them resolve their situation, navigate a solution and move on to the next phase of their lives. Sometimes with increased equity a traditional sale is possible if they can no longer afford their mortgage. Other times, a combination of forbearance, application for a loan modification and if none of that works, a successful short sale may be the best option. For more info check out The Truth About Short Sales.
Where are we now? What’s the status of the Foreclosure Market in 2021?
- Foreclosures Are Shooting Up—Is It a Repeat of the Early 2000s Housing Crisis? – Realtor.com
- A ‘Tick to Torrent’ of Foreclosures Expected in 2022 – RIS Media
- Illinois, New Jersey and Delaware Have Most Markets At Elevated Risk From Pandemic Fallout – AttomData.com
- Foreclosure Up Post-Moratorium – PA Association of Realtors
“…According to ATTOM, 45,517 U.S. properties had foreclosure filings in the third quarter of 2021, up 34% from the second quarter of 2021 and an increase of 68% from the second quarter of 2020, when there was still an active moratorium. In September alone, there were 19,609 U.S. properties with foreclosure filings, an increase of 24% from August and up 102% from September 2020. However, foreclosure rates are nearly 70% below September 2019, and down 60% from the third quarter of 2019 before the COVID-19 pandemic….
The commonwealth ranked 31st in terms of foreclosure numbers. In the third quarter, 1,269 properties, or just under 3% of the national total, had foreclosure filings in Pennsylvania.
Foreclosure rates were up 9.68% from the 2nd quarter of 2021 and up 21.43% year over year. One in every 4,486 homes in PA had a foreclosure filing.”
- A Tale of Two Crises: What 2008 Foreclosures Can Teach Us About Attorney General Enforcement Following COVID
“In the months leading up to that foreclosure crisis, the financial services industry was faced with implementing new processes related to loss mitigation efforts that were complicated by ever-changing guidance. Aided by a bad economy and never-before-seen rates of foreclosure, those circumstances resulted in unprecedented enforcement actions by regulatory entities, the largest of which was the National Mortgage Settlement (NMS), a $25 billion consent order involving the federal government, attorneys general from 49 states and the District of Columbia, and the five largest mortgage servicers at the time: Bank of America, Citi, JPMorgan Chase, Ally (formerly known as GMAC), and Wells Fargo.
Over the last 18 months, the COVID-19 pandemic has brought about different, but still unprecedented, circumstances for the financial services industry. The financial services industry has again been called on to be nimble in implementing new processes involving loss mitigation, foreclosure actions and borrower outreach, with guidance and requirements changing constantly, all while employees work from home. Now, as COVID-19-related foreclosure moratoriums expire, the financial services industry, and its regulators, are bracing to see if a repeat of that 2008 foreclosure crisis is on the horizon. As the expected rates of foreclosure actions increase, the industry can examine and learn from the regulatory actions taken during the 2008 foreclosure crisis, particularly by state attorneys general, to prepare for and avoid those same regulatory enforcement actions.”
Reviewing statistics, news reports and opinions can be extremely frustrating! Analyzing the market for your goals, we start “macro” then get super “micro” as each neighborhood, even each development can have a different market reality.
Home sales are never negotiated in a vacuum. Market dynamics, interest rates and most importantly consumer confidence all play a part in what buyers are willing to pay. That’s what sets market values, not sellers or realtors.
Real estate statistics have perhaps the largest gap in timing of any high value asset. Sales data reflects contracts negotiated 6-12 weeks earlier, not today’s trading like the stock market.
Other news of interest;
- Year-End Outlook: Real Estate Braces for Inflation, Supply Chain Disruptions
- US Economy Loses it’s Bounce as Recovery Turns into a Grind – Bloomberg.com
“Just a few months ago, the U.S. economy looked like it was roaring back from the pandemic slump. Now the recovery is starting to look more like a grind….Supply chains are still creaking and Hurricane Ida, which caused havoc in petrochemicals hub Louisiana as well as roughly $20 billion of flooding damage in the Northeast, may have made them worse. And high inflation is stretching household budgets.
The Atlanta Federal Reserve’s real-time estimate of economic activity now predicts growth of 1.2% in the quarter that ended in September. Two months ago it was forecasting 6%….”
“The Michigan consumer survey found that only 44% of Americans expect their financial situation to improve, the lowest reading in seven years.
Sentiment among small-business owners deteriorated in September, with the number who expect better business conditions over the next six months falling to the lowest since December 2012. A CEO confidence measure compiled by Chief Executive magazine has also declined for three straight months –- to a level that means all of the gains earlier in 2021 are now gone….”
Should I buy or sell in today’s market?
That’s a very good question! There’s no right or wrong answer. It’s a good time to pursue your real estate goals, but please do so with abundant support and information relative to your particular situation. That’s the passion and commitment of Lux Living Group. We’re here to help!