MINT HILL, NC – The COVID-19 pandemic has led to moratoriums on evictions and foreclosures. However, these moratoriums won’t last forever and many might be facing hardship in the months ahead.
As the pandemic starts to bleed into 2021, it’s likely a surge in mortgage delinquencies is coming. According to CoreLogic, a surge of mortgages overdue by 90 days or more has already happened, which could lead to a foreclosure crisis.
The pandemic caused late payments on mortgages of 90 and 119 days to quadruple during May and June of this year. They rose to the highest level in more than two decades. While these homeowners benefited from the moratoriums suspending foreclosures in many areas, they may not be able to catch up on their mortgage payments in time.
Delinquencies Up, Unemployment Down
A foreclosure crisis is likely to hit the nation in 2021, but it might not be as bad as some think. Some positive things are happening to help homeowners behind on their mortgage avoid foreclosure.
For starters, the unemployment rate is at a six-month low and continues to drop. As homeowners return to work, they will have the ability to catch up on their mortgage payments before it’s too late.
In addition, as the election comes to a close, it’s possible another stimulus package could help American homeowners catch up on their mortgage. If a stimulus similar to the first one comes through, it could mean those two or four mortgage payments behind could catch up pretty quickly.
Foreclosures Will Likely Impact the Market for 2021
Even with the help, some homeowners will receive, not all will be able to dig out of the hole. Some homeowners were behind before the pandemic hit and fell even further behind. Others may have suffered other types of financial issues making it very difficult to catch up.
Many experts are predicting foreclosures will have some type of impact on the real estate market through most of 2021. Some think it will even continue into the beginning of 2022.
More than 6 million homeowners have entered into some type of COVID-19 forbearance program for their mortgage. So far, about 41% have exited the program successfully leaving more than 3.5 million still in active forbearance, according to HousingWire.com About 75% had to extend the original three-month forbearance program offered.
The numbers coming out of the forbearance for homeowners will tell the story. If more homeowners can complete the program and come out successfully, it could keep the foreclosure numbers down. However, for homeowners unable to get back to regular mortgage payments, foreclosure might become the only option.
Forbearance Expires, Foreclosures Take Over
As forbearance programs tart to expire, a better picture of how foreclosures will take over the real estate market will become apparent. While foreclosures will likely be a bigger part of the market in 2021, it may not be as bad as some predict. The next few months will be rather telling as some of the safeguards begin to expire.
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