AZ Forbearance Update 3/24/2021

In this 10 minute video, Lydia Wietsma and I discuss the latest in forbearance, declining sales, inventory levels, buyer confidence, and a surprising move for landlords.

Forbearance Update:

This week’s forbearance numbers are good, we dropped from 5.14% to 5.05% of loans are in forbearance which drops the total number of loans in forbearance by 100,000 to about 2.5 million, which is the lowest number since last March. However, more than 11% of those still in forbearance have exceeded the 12-month mark, and Mike Fratantoni, MBA’s chief economist, says many of those could opt for the recent extensions, allowing up to 18 months in forbearance for government-backed loans. Remember the specific timelines are based on the servicer and loan type.

Forbearance by Stage:

• 13.9% are in the initial stage, down from last week’s 14.1%.
• 83.5% are on extension, up from last week’s 83.3%
• 2.6% are re-entries, which is the same for the past two weeks.

Forbearance exits from June 1, 2020, through March 14, 2021:

• 42% continued making their payments or got caught up upon plan exit. This is down from last week’s 42.3%.
• 14.2% of borrowers exited their plan while still behind on their payments and without a loss mitigation plan in place. This is down from last week’s 14.1%.

Buyer Confidence:

A recent study from Freddie Mac showed that borrowers are more confident in their ability to pay their mortgage. Confidence in the housing market has bottomed in April at 48%, peaked in October at 69%, and averaged 60% in 2020. In February 2021, confidence reached 66%!

Sales & Inventory:

NAR’s existing-home sales report just came out and due to low inventory, there was a sales decline of 6.6% in February. The significance of the low inventory is why we are seeing a 20% appreciation, which is very unhealthy.

To illustrate the point on January 1, 2019 we had 18,000 active listings. On January 1, 2021 we had 6,000 active listings and today we have about 4,000.

Landlords:

A surprising number of landlords are declining funds from the latest stimulus package’s $50 billion in emergency rental assistance. The landlords are concerned about the additional restrictions – like not being able to get rid of difficult tenants, paperwork, documentation required.