Lenders learned their lesson last time – instead of foreclosing on non-payers and risk losing money, it’s better to extend and pretend. There won’t be a time coming where we are flooded with REOs….ever again:
Mortgage forbearances for homeowners affected financially by the pandemic declined slightly over the past week. Black Knight said that there were 200,000 plans scheduled to expire at the end of November, probably accounting for the majority of the 39,000-loan downturn in the various forbearance programs. Another 1 million plans are due to expire at the end of this month.
As of December 1, there were a total of 2.76 million loans remaining in plans, 5.2 percent of the 53 million active mortgages in servicer portfolios and representing $561 billion in unpaid principal. Eighty-one percent of those loans have had their terms extended at some point since March.
The number of GSE (Fannie Mae and Freddie Mac) loans in forbearance dropped by 25,000 during the week, leaving a total of 967,000 homeowners remaining in plans. This is 3.5 percent of the companies’ combined portfolios. FHA and VA loans decreased by 14,000 units to a total of 1.118 million or 9.2 percent of those loans. Loans serviced for bank portfolios or private label securities held steady at 677,000 loans or 5.2 percent of the total. There are 91,000 fewer loans in forbearance plans than one month ago, a 3.2 percent decline.
Do you think these are different than the bubble 100% financing victims? I only know one old lady friend that took a forbearance. She had 30% equity and was a therapist at Scripps who was furloughed. She couldnt pay her mortgage in April, May or June. By July she was back to work with sufficient hours to resume paying. She had some interest added to here balance on the back end. After 3 months of on time payments she is now in the midst of a refi that will lower her payment by $300/month. Do you think most of these loans will get back to current like she did unlike the bubble nonsense?
Yes, I think most of these loans will get back to some form of current – loan modifications are the solution and will fix everything.
If all of the neg-am borrowers would have just hung on and not walked away, they would have gotten a loan mod a couple of years later.