The moratorium on foreclosures that kept banks from initiating foreclosures will come to an end after repeated extensions. Some foreclosure proceedings were halted, while others were put on a back burner. Owners of single-family homes that were backed by federal loans and are in arrears will now be in jeopardy of being foreclosed on.
There is no doubt the courts will be backed up and overwhelmed and the foreclosures will take time. Some will be rectified through auctions, short-sales, or loan modifications. With the rise in property values, the lenders have big incentives to foreclose, as they will make more money from a new buyer. Many of the foreclosures that were in process and halted, could be started up as early as August 1.
Another option that owners have is to take advantage of mortgage forbearance, which would allow them an extension to get back on their payment track. This needs to be arranged directly with lender.
FloridaRealtors.org reported that about 2.7 million homeowners are in arrears on their mortgages. But 77% of homeowners in forbearance programs already have a repayment plan in place. With the increase in home prices, chances are owners will sell their homes and pay off their mortgages before they are foreclosed on. If just 1 in 10 borrowers are opting to list their homes, just about 133,000 homes will go on the market, which is only an 8-day supply of homes in the current market.
Will the influx of all these homes on the market drive the prices down? Will the current housing shortage readjust itself for new buyers? What will happen to all the displaced families that had to move from their homes that were foreclosed on?
If you find yourself in a house or mortgage too big for your current situation, now is the time to sell. You will avoid foreclosure, most likely pay off your current mortgage, and begin a new on a brighter path.
Contact me to get your home sold quick – and find another one that is more manageable based on your circumstances.