Even though experts agree there’s no chance of a large-scale foreclosure crisis, there are a number of homeowners who may be coming face-to-face with foreclosure as a possibility.
With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago.
At the onset of the economic disruptions caused by the COVID pandemic, the government quickly put into place forbearance plans to allow homeowners to remain in their homes without making their monthly mortgage payments.
RealtyTrac recently released their Q1 2013 U.S. Foreclosure & Short Sales Report™. One of the more interesting revelations in the report was the decrease in the number of short sales being completed. According to the report, properties not in foreclosure that sold as short sales in the first quarter accounted for an estimated 15% of all residential sales. This is down 10% from the last quarter (4th quarter of 2012) and down 35% from the first quarter of 2012.
With home values falling dramatically from 2006 boom prices, many homeowners have found themselves in what is called a ‘negative equity’ or ‘underwater’ situation. This means the value of their home is currently less than the mortgage amount on that home.
Many of these homeowners have been ‘locked’ into their houses because they were unable to sell it without bringing cash to the closing table. The good news is this situation is improving as prices begin to rise.