Forbearance, Foreclosures, & Property Availability Into 2022

Forbearance: What is forbearance? How is forbearance impacting the housing market?

As the forbearance program comes to an end and foreclosures begin, how will it affect the availability of property into 2022? In another segment, we will be talking about construction costs in the United States. Why has the cost of lumber gone up and what are the long-term effects on its overall cost? We also discuss ways in which construction in the United States may need to change. 

 

More details about real estate investing and this episode may be found at:

https://epmrealestate.com/podcast/forbearance-foreclosures-property-availability-into-2022

 

 

Brett: In this segment, we're going to be talking about the forbearance program. The foreclosure crisis that is inevitably facing Americans is that it's going to be beginning here, actually, in two days, when the foreclosure moratorium ends on federally backed mortgages. Let’s be clear about that. Federally backed mortgages. If you've got a conventional mortgage with a lender, you probably didn't receive any benefit from the government's moratorium, because those conventional loans from lenders can do whatever they want to do. But if you're loan is backed by the US government and the taxpayers and we say U.S. government as if they are the taxpayers. Actually, your loans are insured by Me, Glenn, Richard, and everybody else in America that pays taxes. If it is underneath that program, then you have a moratorium where they cannot foreclose on you for any circumstance. It doesn't matter why, until after July 31st. Then after September 30th, the forbearance programs end, and we're going to get into that talk about forbearances and what those are, and how that will impact the foreclosure crisis that's coming. I say crisis. This is not 2008. I believe at the end of the day you're going to have about 3% of mortgage holders, maybe 3.5% facing foreclosure, and the majority of those will be able to pull themselves out of it. Back in the crash of '08, you had tens of millions of people in foreclosure and their homes were upside down in values. So we're nowhere near 2008, 2009. So, anybody listening here: Don’t panic.

 

Glenn: Not only that, but the banks learned a lot about how to handle these situations with loan modifications, short sales, etc. They learned a lot about that back in 2008, 2009 up through, 2012 and 2013. So, those programs are going to be a lot smoother than they were.  You and I used to fight that battle every day.

 

Brett: Yeah. For those investors are listening, and your mouth’s watering because you're thinking, oh, here we go, we're gonna have a closure crisis and we're gonna be buying houses for pennies on a dollar. Remember, the housing market is up 20 almost 24%, right? They expected a crash this year. Everybody expected a crash. I remember one specific genius real estate agent locally here in Memphis who said, no, it's not gonna crash, it's gonna go the opposite direction, and it did. It did exactly what I thought it would do.

 

Glenn: It must have been me.

 

Richard: I don't know anybody like that.

 

Brett: It’s because you're from Britain. There are no people like that in Britain. But yes, it went the opposite direction. There's a varying list of factors that cause that issue caused the growth, and there are different opinions about it, but at the end of the day, it went up 24%. So, when the foreclosure process begins on a lot of these homeowners, there's the argument that they're just going to put it on the market, they've got an increase of 24%, if you have a $200,000 house that you bought and have a mortgage on, and your house is worth $240k to $250 now. So, you’ve got equity. So let's throw it on the market and sell it for $235k quickly, to get out of it, and pay the bank off to stave off all foreclosure. Because listen, when the foreclosure clock starts ticking, the bank doesn't care if you have a buyer