4 Major Reasons Households in Forbearance Wont Lose Their Homes to Foreclosure

There has been a lot of discussion as to what will happen once the 2.3 million households currently in forbearance no longer have the protection of the program. Some assume there could potentially be millions of foreclosures ready to hit the market. However, there are four reasons that wont happen.

1. Almost 50% Leave Forbearance Already Caught Up on Payments

According to the Mortgage Bankers Association (MBA), data through March 28 show that 48.9% of homeowners who have already left the program were current on their mortgage payments when they exited.

• 26.6% made their monthly payments during their forbearance period
• 14.7% brought past due payments current
• 7.6% paid off their loan in full

This doesn't mean that the over two million still in the plan will exit exactly the same way. It does, however, give us some insight into the possibilities.

2. The Banks Don't Want the Houses Back

Banks have learned lessons from the crash of 2008. Lending institutions don't want the headaches of managing foreclosed properties. This time, they're working with homeowners to help them stay in their homes.

As an example, about 50% of all mortgages are backed by the Federal Housing Finance Agency (FHFA). In 2008, the FHFA offered 208,000 homeowners some form of Home Retention Action, which are options offered to a borrower who has the financial ability to enter a workout option and wants to stay in their home. Home retention options include temporary forbearances, repayment plans, loan modifications, or partial loan deferrals. These helped delinquent borrowers stay in their homes. Over the past year, the FHFA has offered that same protection to over one million homeowners.

Today, almost all lending institutions are working with their borrowers. The report from the MBA reveals that of those homeowners who have left forbearance,

• 35.5% have worked out a repayment plan with their lender
• 26.5% were granted a loan deferral where a borrower does not have to pay the lender interest or principal on a loan for an agreed-to period of time
• 9% were given a loan modification

3. There Is No Political Will to Foreclose on These Households

The government also seems determined not to let individuals or families lose their homes. Bloomberg recently reported:

Mortgage companies could face penalties if they don't take steps to prevent a deluge of foreclosures that threatens to hit the housing market later this year, a U.S. regulator said. The Consumer Financial Protection Bureau (CFPB) warning is tied to forbearance relief that's allowed millions of borrowers to delay their mortgage payments due to the pandemic mortgage servicers should start reaching out to affected homeowners now to advise them on ways they can modify their loans.

The CFPB is proposing a new set of guidelines to ensure people will be able to retain their homes. Here are the major points in the proposal:

• The proposed rule would provide a special pre-foreclosure review period that would generally prohibit servicers from starting foreclosure until after December 31, 2021.
• The proposed rule would permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application.
• The proposal rule wants temporary changes to certain required servicer communications to make sure borrowers receive key information about their options at the appropriate time.

A final decision is yet to be made, and some do question whether the CFPB has the power to delay foreclosures. The entire report can be found here: Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X.

4. If All Else Fails, Homeowners Will Sell Their Homes Before a Foreclosure

Homeowners have record levels of equity today. According to the latest CoreLogic Home Equity Report, the average equity of mortgaged homes is currently 204,000. In addition, 38% of homes do not have a mortgage, so the level of equity available to todays homeowners is significant.

Just like the banks, homeowners learned a lesson from the housing crash too.

In the same way that grandparents and great grandparents were shaped by the Great Depression, much of the public today remembers the 2006 mortgage meltdown and the foreclosures, unemployment, and bank failures it created. No one with any sense wants to repeat that experience…and it may explain why so much real estate equity remains mortgage-free.

What does that mean to the forbearance situation? According to Black Knight:

Just one in ten homeowners in forbearance has less than 10% equity in their home, typically the minimum necessary to be able to sell through traditional real estate channels to avoid foreclosure.

Bottom Line

The reports of massive foreclosures about to come to the market are highly exaggerated. As Ivy Zelman, Chief Executive Officer of Zelman & Associates with roughly 30 years of experience covering housing and housing-related industries, recently proclaimed:

The likelihood of us having a foreclosure crisis again is about zero percent.

 

Some Buyers Prefer Smaller Homes

Over the past year, we've had plenty of opportunities to reflect on what we consider most important in our lives. The place we call home is one of the biggest things many of us are reevaluating. George Ratiu, Senior Economist at realtor.com, shares:

The very nature of the pandemic, through the health implications, social distancing, and need to isolate, has really brought a central focus on the importance of home for most Americans In a sense, it has elevated real estate markets as a centerpiece of our lives.

For some, this has spurred an interest in making a move to a home that better suits our changing needs. In a recent study on todays homebuyer preferences, the National Association of Home Builders (NAHB) states:

When asked more specifically how the pandemic may have impacted their preference for home size21% or about 1 out of every 5 buyers, do want a larger home now as a direct result of the health crisis, while another segment 12% would prefer a smaller one instead.

While you might expect more time at home to lead to a need for more space, its interesting that a significant portion of homeowners actually want less. For those who own larger homes right now and have a desire to move, todays housing market is full of opportunities. Danielle Hale, Chief Economist at realtor.com, explains:

In a real estate market that is tipped in the favor of sellers, boomers and older homeowners are really the ones holding the cards Those who are selling homes can use the profits to help them buy new ones.

As a homeowner today, you likely have equity that can be put toward the purchase of your next home. With the equity growth homes have seen over the past year, you may have more than you think, which can help significantly as you make a move into your next home. According to a report from the National Association of Realtors (NAR):

Home sellers cited that they sold their homes for a median of 66,000 more than they purchased it. Sellers 22 to 30 years gained the least at 33,400 in equity compared to sellers 66 to 74 years gained 100,000 in equity as they likely had lived in their homes for a longer period of time.

Despite the benefits of growing home equity, some homeowners are still hesitant to move and could be considering remodeling or making changes to their current space instead. However, if you've thought about aging in place rather than downsizing, you may want to reconsider. The U.S. Census Bureau points out:

Of the nations 115 million housing units, only 10% are ready to accommodate older populations.

If your house is no longer the best fit for your evolving needs, it may be time to put your equity to work for you and downsize to the home you really want.

Bottom Line

Todays housing market favors homeowners who are ready to sell their houses and make a move. If you're thinking about downsizing this year, lets connect to discuss your options in our local market.

 

 Outdoor Structures Make Your Yard More Fun!

Although it’s barely spring, summer is right around the corner. And nothing says summer like better outdoor spaces to play and work in! Now is the time to plan and install outdoor structures so you can spend the hottest days of the year taking advantage of the breeze and shade, while still being able to spend time in the great outdoors.

A Short List of Outdoor Structures

Outdoor structures offer endless possibilities when it comes to sizes, shapes, construction materials, and intended uses. However, there are a few that are hardcore backyard staples, to the point that some might argue a home is completely bare without them. Of course, the outdoor structures you choose will depend greatly on how you use your home, but here’s a short list to get you started.

• Patio covers. Already have a patio, but the sun’s putting the kibosh on your outdoor plans? It’s time for a patio cover. These very simple structures are essentially a roof for your patio, designed to seamlessly marry with your existing rooflines and structures. If a permanent roof isn’t possible, consider adding a shade sail, which can provide a great deal of shade with very little cost or maintenance.
• Pergolas and trellises. Looking for a fancy place to run some plants for natural shade with the added benefit of flowers, fruits, or foliage? Pergolas and trellises provide spaces for plants to climb, as well as providing broken shade throughout the day. The tighter the construction, the more shade you’ll have, but if you plan to train vines on your structure, leave ample room for growth.
• Decks. Of course, not all the best structures are aerial. There’s absolutely nothing like a nice deck. You get all the benefits of sitting outside without all the mud, grass, and bugs. What’s not to like? Decks allow for a lot of creativity and customization, too, with common add-ons like benches, fancy railings, and multiple levels to create even more interest.
• Screen porches. If you already have a deck or a patio that you like, and a roof on it, you can easily convert it to a screen porch with a few weekends’ worth of effort. With a screen porch, you can still enjoy the great outdoors, but without having to worry about stinging insects or debris that may be blowing on the wind.
• Gazebos. Looking for a freestanding structure away from your house? A gazebo or shelter may be a good choice. These largely open buildings feature a floor and a roof, and not a lot else, making them ideal for shady spots or poolside buildings. Hang a hammock inside and you’ve got the ideal summer relaxation spot.
• Recreational sheds. By now, most of us have heard of the “she shed,” but freestanding recreational sheds can be hideouts for anyone. Not a garage and not a house, a freestanding shed is a structure that allows you to create any kind of year-round space you can imagine. Add electricity and a heater, and even winter’s chill is no match for your outdoor studio space or reading room.
• Greenhouses. If you’ve got a green thumb, a greenhouse may be the perfect addition to your garden space. Even a small greenhouse structure will give you more room for plant-based experiments and somewhere to house your sensitive plants through the cold of the winter. Be sure to choose a model with excellent ventilation!

93% of Americans Believe a Home Is a Better Investment Than Stocks

A recent Survey of Consumer Finances study released by the Federal Reserve reveals the net worth of homeowners is forty times greater than that of renters. If you're wondering if homeownership is a good investment, the study clearly answers that question, and the answer is yes.

Do Americans believe a home is a better investment than stocks?

In a post on the Liberty Street Economics blog, the Federal Reserve Bank of New York notes that 93.3% of Americans believe buying a home is definitely or probably a better investment than buying stocks.

Here's how the results break down:The survey also shows a wide range of reasons why Americans feel that way (respondents were able to pick more than one answer):

Bottom Line

The data show how strongly Americans believe in homeownership as an investment. That belief is warranted. The Liberty Street Economics blog put it best by saying:

Housing represents the largest asset owned by most households and is a major means of wealth accumulation, particularly for the middle class.

 

Why This Is a Great Year to Sell Your Vacation Home

As vaccines are administered and travel resumes, many of us are beginning to plan for those long-awaited vacations we missed out on over the past year. Some households are focusing their efforts on buying a vacation home rather than staying in a hotel, too. The National Association of Home Builders (NAHB) reports:

Second homes (i.e., homes sold to buyers who are not going to occupy the home year-round, but use it as a vacation home, investment property, etc.) account for 15 percent of new single-family home sales.

Its not surprising that there's an increase in demand for vacation homes. The majority of Americans are realizing they prefer to be around small groups, as shown in a recent survey from The Harris Poll:

Social distancing taught consumers new things about how they like to socialize; (75%) said, during COVID social distancing I realized I preferred smaller social gatherings at home or at friends place.

Not only are vacation homes seen as a potentially more pandemic-friendly way to travel and socialize, but they can also serve as an extended home-away-from-home. With more Americans being given the option to continue working remotely or retire earlier than expected, vacation homes can be used year-round. The NAHB explains:

Remote work arrangements have made it possible for some wealthier Americans to move to alternate locations that are not just small, suburban shifts from within their current metro area. More fundamentally, second home demand may also be benefitting by an acceleration of retirement plans, as well as stock market gains.

Bottom Line

The demand for vacation homes has increased and will continue to rise as we head into summer. If you own a house in a destination area and have thought about selling, now is a great time to take advantage of todays high buyer interest. Lets connect to discuss your opportunities in our local market.

 

Is Your Yard Equipment Ready for Spring?

As spring finally starts to arrive, there are likely a number of tasks around the house that will be kicking off in the coming weeks. Whether you’re mowing the lawn, prepping the garden, or refreshing those flower beds, it’s time to break out your equipment and get to work. One question, though: Is all your yard equipment actually ready for spring?

If you’re like a lot of people, at the end of the year you just clean up your equipment a bit and put it into storage. If you don’t do anything else with it, though, this can actually shorten your equipment’s life and increase the likelihood of breakdown during the busy spring period. Before you dive into all those spring tasks, here are a few things you should do to keep your mowers, tillers, and everything else running smoothly.

Change Those Fluids

When was the last time you changed the oil in your mower? How old is the gas in your trimmer? As the spring arrives, you should start your equipment out with fresh fluids. Not only will this ensure that your engine is properly lubricated when you start your various spring tasks, but it will also prevent potential problems that can result from old gas breaking down over the long winter months.

Depending on the equipment you use, this can also be a great time to lubricate other moving parts or grease any bearings that might have dried out while things were in storage. Check your owner’s manuals to see if there are any other fluid or lubrication recommendations for your equipment while you’re working on your spring prep. If you can’t find the owner’s manual, check the manufacturer’s website or other online resources for tips.

Sharpen Your Blades

There are many pieces of yard equipment that feature blades or other cutting surfaces. These can get dull as time goes by, and in some cases may even pick up a little bit of rust over the winter depending on where you live. This can cause some serious problems heading into a new year, resulting in uneven cuts and potentially even contributing to blade damage or other failures. Before you fire things up for the first time this spring, spend a little time sharpening those edges to make sure that everything’s working like it should.

Of course, not all blades can be revived by simple sharpening. While you’re checking them out, look for cracks or other signs of damage in the blades that can’t simply be buffed out or sharpened away. If a blade is cracked or damaged, replace it completely instead of trying to sharpen it. Cracked or damaged blades can break while under the stress of use, potentially causing damage or injuries in the process. The cost of a new blade is a small price to pay for staying safe while working around the house.

Other Equipment Maintenance

Depending on the equipment you have, there may be other maintenance tasks you need to perform as well. Changing oil filters, fuel filters, and spark plugs are great beginning-of-spring maintenance activities that go a long way toward getting your year off on the right foot. If you use electric equipment, test-charge any batteries to make sure that they can still hold a good charge after being in storage for the winter. Pneumatic and water hoses should be checked for leaks before use, and any nozzles or sprayers should be cleaned to remove dust and other gunk.

If you find that there’s more to do than you have time for this spring, you might also consider hiring a landscaper or other professional to cover a few of your normal spring tasks. HomeKeepr can help you find the perfect pro to meet your needs. Sign up for a free account today to find professionals who have the skills (and the equipment) to take some of these tasks off your plate… and you can bet that their equipment will be well-maintained and ready to roll.

Home Is Where the Heart Is

Some Highlights

• There's no doubt about it: homeowners love their homes, and that feeling has become even more important over the past year.
• The vast majority of homeowners say they're emotionally attached to their home and that it has kept them safe during the COVID-19 pandemic.
• Owning a home provides a sense of safety, security, and accomplishment. Lets connect to move your homeownership goals forward today.