AZ Forbearance Update (Video) 9/30/2020

Lydia Wietsma and I discuss the latest news in forbearance trends and where borrowers can go for help. Freddie Mac shared some interesting info this week!

Today’s Takeaways:

Unemployment:

The national unemployment rate is 8.4%. Weekly initial claims have dropped below 1 million but remain high. Our continuing unemployment has dropped below 13 million.

Some headlines read “25 million American remain unemployed.” Those numbers are based on all of the different unemployment categories. We mostly talk about initial and continuing claims. There is also the Pandemic Unemployment Assistance program which, for the first time ever, provides unemployment benefits to independent contractors who otherwise are not eligible for regular benefits. There are about 12 million people on this program. (US Department of Labor)

Arizona has regained 60% of the jobs lost since in March and April and the state’s unemployment rate of 5.9%. Which is #3 for best performing state job market, behind Utah and Idaho. (Elliott Pollack)

Most of the unemployment is focused in service sectors, which the largest group in leisure & hospitality including restaurants. Also, in this group are non-life threatening medical services like dentist offices. The average weekly income of these sectors is $400. This means that today’s level of unemployment benefits do replace lost wages. (Wells Fargo)

An unemployment rate of 4.1%-4.7% is considered full employment. The US Bureau of Labor Statistics and Wall Street Journal survey of economists projects 2023 to be the year we get back to being, at least close to full employment. (KCM)

Demand:

Real estate demand is pushing prices higher giving owners more equity and more options should they refinance, modify, or sell. If homeowners need to sell they will be able to do so easily and quickly without going into foreclosure or doing a short sale.

28.7% of Redfin’s users looked to move to another area, up from 27.4%, and is the highest percentage yet. Sacramento, Austin, and Phoenix topped the charts for destination cities; affordability being one the biggest drivers.

Our demand is 26% above normal.

Given the unexpected, continued demand, despite high unemployment rates, major real estate companies adjusted their future price projections significantly. Zillow initially predicted a 3% decrease in home prices and now is predicting a 3.6% increase. Corelogic the outlier from the start went from a 6.6% decrease to a 0.6% increase. (must have missed the 16% appreciation in greater Phoenix!)

Forebearance:

• Total loans in forbearance dropped to 6.93%, down from 7.01% last week, continuing the 5-month decline. Roughly 3.5 million loans are in forbearance programs. (MBA)
• Roughly 680,000 homeowners are late on their mortgage and are eligible for a forbearance plan but are not in a forbearance plan. A recent survey shows the lack of participation is due to confusion, fear, and lack of awareness of such options. (Wall Street Journal)
• The CFPB, FHFA, HUD, VA, and USDA created a joint effort mortgage and rental assistance platform, for more information visit https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/

Freddic Mac & Forbearance:

• In order to be approved for new forbearance programs, borrowers must show evidence of being negatively affected by COVID
• Forbearance prevents foreclosure proceedings for a time period only. Borrowers in forbearance will have a hit to their credit score.
• Freddie Mac is not contacting borrowers directly; it expects servicing companies and Realtors need to get the message out.
• To find out if a loan is with Freddie Mac, click here https://ww3.freddiemac.com/loanlookup/
• To find out if a loan is with Fannie Mae, click here https://www.knowyouroptions.com/loanlookup