Opinion: Forbearance Will Not Lead to a Huge Wave of Foreclosures

Opinion: Forbearance Will Not Lead to a Huge Wave of Foreclosures

Industry Update
September 8, 2021

Source: CalculatedRisk Newsletter by Bill McBride

 

With house prices up sharply year-over-year … very few borrowers will have negative equity, and most seriously delinquent borrowers will be able to sell their house, as a last resort, and avoid foreclosure.

So, although foreclosures will increase from the record low levels, it will take some time (probably in 2022), and there will not be a huge wave of foreclosures like following the housing bubble.

 

Of borrowers still in plans as of mid-August, some 98% have at least 10% equity in their home – a drastically different dynamic than during the worst of the Great Recession, when more than 40% of all mortgage holders had less than 10% equity and 28% were fully underwater.

The bottom line is that most homeowners in forbearance have sufficient equity in their homes, and there will not be a huge wave of foreclosures like following the housing bubble.

 

For full report, please click the source link above.