According to the latest report from Black Knight, Inc., a well-respected provider of data and analytics for mortgage companies, 6.48 million households have entered a forbearance plan as a result of financial concerns brought on by the COVID-19 pandemic.
Here’s where these homeowners stand right now:
2,543,000 (39%) are current on their payments and have left the program.
625,000 (9%) have paid off their mortgages.
434,000 (7%) have negotiated a repayment plan and have left the program.
2,254,000 (35%) have extended their original forbearance plan.
512,000 (8%) are still in their original forbearance plan.
116,000 (2%) have left the program and are still behind on payments.
This shows that of the almost 3.72 million homeowners who have left the program, only 116,000 (2%) exited while they were still behind on their payments. There are still 2.77 million borrowers in a forbearance program. No one knows for sure how many of those will become foreclosures. There are, however, three major reasons why most experts believe there will not be a tsunami of foreclosures as we saw during the housing crash over a decade ago:
Almost 30% of borrowers in forbearance are still current on their mortgage payments.
Banks likely don’t want to repeat the mistakes of 2008-2012 when they put large numbers of foreclosures on their books. This time, many will instead negotiate a modification plan with the borrower, which will enable households to maintain ownership of the home.
With the significant equity homeowners have today, most can sell their home, rather than get foreclosed.
Will there be foreclosures coming to the market? Yes. There are hundreds of thousands of foreclosures in this country each year. People experience economic hardships, and in some cases, are not able to meet their mortgage obligations.
Here’s the breakdown of new foreclosures over the last three years, prior to the pandemic:
Through the first three quarters of 2020 (the latest data available), there were only 114,780 new foreclosures. If 10% of those currently in forbearance go to foreclosure, 275,000 foreclosures would be added to the market in 2021. That would be an average year as the numbers above show.
Health, unemployment, stairs, taxes, finances, politics…….selling your home is becoming the answer for everything!
More than 2.5 million American homeowners have stopped paying their mortgages, taking advantage of penalty-free forbearance periods offered by lenders.
What happens when the free pass fades away next year?
Not much, and certainly nothing approaching the flood of foreclosures that defined the Great Recession, according to the emerging consensus among economists. While some homeowners are sure to feel the pain of forced sales, housing experts increasingly expect the end of forbearance to be a non-event for the gravity-defying housing market.
That’s largely because home prices have risen sharply during the coronavirus pandemic. As a result, homeowners who find themselves unable to pay their mortgages when their forbearance periods end likely will be able to sell for a profit, rather than going into foreclosure.
“If they have equity, they can always sell off the house and pay the mortgage,” says Ralph DeFranco, global chief economist at mortgage insurance company Arch Capital Services. “It’s not a great outcome, but it’s less terrible than letting the bank take it and sell it.”
An online auction to sell real estate? Maybe it will catch on!
Gone are the days of the quick talking auctioneer, paddles and shouted bids. Today, San Diego County Treasurer-Tax Collector Dan McAllister announced he is moving the annual property tax sale auction online.
“With this new system, people sitting at home can browse and bid on more than 1,600 properties currently available, including timeshares starting at $900,” said McAllister. “The online auction aligns with our ‘e-nitiative’ to make it easier and more efficient to do all business with us electronically.”
The online tax sale auction will take place May 5-10. Interested buyers can register as a bidder beginning April 5, and registration will end April 27. Bidders must put up a $1,000 advance and a nonrefundable $35 bid processing fee.
“Moving this tax sale online will cut our operation costs compared to a live auction,” said McAllister. “We also hope to sell more properties as we open the auction up to bidders outside the San Diego region – even around the world.”
All sales are final, so this is a buyer beware sale. Before April, the Treasurer-Tax Collector’s Office (TTC) encourages everyone to research the selection of available properties by clicking here.
Right now, there are about 1,600 parcels available, roughly four times the number we have put up for auction in previous years. The majority – 1,231 – are timeshares, many with minimum bids as low as $900.
The remaining 393 parcels are improved and unimproved properties, 39 of which have owners living in them. Owners of the for-sale properties can redeem them by paying owed taxes and fees until 5 p.m. on May 4. Over the past five years, TTC notices and late bills to these owners have not been responded to. In early April, each of the properties will be personally contacted by TTC staff who will warn them of the impending sale.
The TTC has not held a tax sale auction since 2015, and on average, sales have generated more than $1.1 million each year.
For those wondering if there will ever be any more bank-owned properties for sale, here is the list of 38 houses between La Jolla and Carlsbad that are owned by lenders, or 3rd parties who purchased them at the trustee sale:
A few are listed for sale, and others are still waiting for occupants to vacate or lawsuits to be settled. This Bressi Ranch home was foreclosed in April, 2014, and just hit the open market last week at what most would consider to be pretty close to retail price:
The former owners had worked the system – they had been in default since 2008, and endured four different trustee-sale dates before finally giving up the ship. In the meantime, the lender probably did everything they could to modify the loans?
I don’t think anybody has to worry about getting foreclosed unless they have significant equity.
Usually WaMu would have a REO agent do the normal routine – vacate, paint, and then list the home on the open market for just under retail.
The bank has already foreclosed – but instead selling of the old-fashioned way, they chose to make it an auction.com exclusive listing.
The house is tenant-occupied and can’t be shown, the buyer is responsible for evicting the tenant, plus the buyer has to pay a 5% premium but there’s no buyer-broker commission is offered (it’s not on the MLS) – and oh, by the way, you have to pay cash:
The opening bid is 42% of the previous value, which looks attractive:
P.S. This was foreclosed in 2011 – the trustee sale’s price that nobody wanted to pay then was $459,088.
What will the sales price be? (assuming the reserve price is reached)
The closest guesser will get 4 tickets to Padres vs Rockies on August 13th!
Here is a video tour of a few houses in the shadow inventory – ones that are bank-owned, but not listed for sale, but presumably coming to market at some point.
Yes, you could consider the 412 SFRs on the NOD and NOT lists as part of the shadow, but who knows if they will ever get foreclosed. The same goes for those in default but not noticed – starting January 1st they can’t receive a notice until they have been through the entire loan-mod process.
As recently as the first half of 2010, there were 270 homes on average being foreclosed every week in San Diego County. Now it’s down to around 100 or so per week:
There are only 16 SFRs in our La Jolla-to-Carlsbad region that are bank-owned, but not on the market. Occupants were probably offered cash-for-keys, but those who prefer to pay lawyer fees instead can probably extend their stay for quite a while.
Here are five off-market REOs, and one listed for $699,900, well under it’s opening bid of $967,632: