the AZ market

Tag: #forbearanceupdate

  • AZ Forbearance Update 2/17/2021

    AZ Forbearance Update 2/17/2021

    In this 16 minute video, Lydia Wiestma and I discuss the latest in forbearance, delinquencies, extensions, and inventory.

    We do these videos to share the real information with real estate professionals and consumers about what is going on in this sector of real estate. There is a lot of fear behind forbearance and the moratoriums, and bad advice being given. While there is no reason to panic, it is important to be informed.

    CFPB & Servicers:

    As we discussed recently, the CFPB is breathing down the necks of the loan servicers and they know in order not to be fined, they have to follow all of the rules by the book. That is a good thing for struggling borrowers. The days of the lax info on forbearance from the servicers are numbered. The one piece of advice I would give any borrower when they call their servicer, get everything discussed in writing. Track and document EVERYTHING.

    Forbearance Numbers:

    The latest forbearance numbers show improvement. The total number of loans in a forbearance program is around 5.29% or about 2.6 million, a decrease of about 100,000 in the last 2 weeks.

    Mike Fratantoni with the Mortgage Bankers Association said, “2.6 million homeowners remain in forbearance plans. MBA expects the rollout of the vaccines to boost economic growth through the course of the year, leading to a stronger job market and a greater ability for more struggling homeowners to get back on their feet. We do believe that additional support is needed until they have regained their jobs and incomes.”

    Forbearance by Stage:

    • The initial stage decreased to 16.07%
    • Extensions increased to 81.42%
    • Re-entries decreased to 2.52%

    Forbearance Exits from June 1, 2020 – February 7, 2021:

    • 43.6% of forbearance exits are paid up and current.
    • The number to watch remains at 13.8% of forbearance exits are doing so without a loss mitigation plan in place.
    • This means that if all 2.6 million borrowers exited their forbearance plan today, about 348,000 would leave with no plan in place.

    Delinquencies:

    In Q4 2020 the mortgage delinquency rate, which includes those in forbearance who are behind, was 6.73%, a 0.92% decrease from Q3 2020 but still nearly 3% above this time last year. This nearly 1% quarterly drop is the biggest decrease since the Mortgage Bankers Association started tracking this data in 1979.

    The 30 day lates reached their lowest since tracking began in 1979, while both 60 and 90 days lates also decreased. 90+ day lates remain the largest delinquent group at just above 5% of all mortgages.

    Total mortgage delinquencies across the three loan types – conventional, FHA, and VA – and across the major stages of delinquency – 30-day, 60-day, and 90-day – declined from last year’s third quarter.

    MBA Delinquencies

    Timeline Changes:

    The foreclosure, forbearance, and eviction moratorium have all been extended through June 30, 2021

    • Extend the foreclosure moratorium for homeowners through June 30, 2021
    • Extend the mortgage payment forbearance enrollment window until June 30, 2021, for borrowers who wish to request forbearance
    • Provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.

    Final Thoughts:

    The longer they push the can down the road, the less equity these homeowners will have to work with. The one saving grace for them is the huge amount of appreciation we are currently experiencing. With inventory levels where they are today, many expect prices to continue to increase at rapid levels.

  • AZ Forbearance Update 1/27/2021

    In this 15 minute video, Lydia Wietsma and I discuss the latest in forbearance, delinquencies, and sneaky foreclosures.

    We do these videos to share the information with real estate professionals and struggling borrowers. People have options. There is no need to panic sell.

    Forbearance Numbers:

    Our forbearance numbers have been consistent over the past few months. There is a lot of movement, many are coming in and many are exiting their plans. We are still at about 2.7 million active forbearance plans. Week over week, we had a slight increase from 5.37% to 5.38% of all loans are in a forbearance plan.

    Forbearance by Stage:

    • initial stage increased to 18.17%
    • extensions decreased to 79.31%
    • re-entries increased to 2.52%

    Forbearance Exits from June 1, 2020 – January 17, 2021:

    44.4% of borrowers are current upon exiting their plan.

    The important number for us to watch remains the 13.4% of borrowers leaving their forbearance plan while still behind on their payments and with no loss mitigation plan. This is the group that needs help.

    This means that if all 2.7 million borrowers exited their forbearance plan today, about 362,000 would leave with no plan in place.

    Delinquencies:

    Keep in mind not everyone who is delinquent on their payments are in forbearance. There are about 3.55 million loans in delinquency.

    When the foreclosure moratoriums actually expire we will see a bunch of new foreclosures only because of the 13-month backlog on foreclosures, which will work itself out very quickly.

    Courtesy of Black Knight’s First Look Mortgage Data for December 2020

    Broker Price Opinions:

    Currently, the moratorium expiration is March 31st which means the prep work has already started. Lydia’s servicing company is preparing for some significant movement in the coming months. One of their major clients recently ordered upwards of 30,000 broker price opinions (BPO) on properties that are all in forbearance.

    There remains a lot of confusion around forbearance. Borrowers and the loan servicers themselves do not always know the full story. Borrowers are assuming they can refinance immediately after completing their forbearance plan, this is only the case when the borrower has made 3 consecutive, timely payments. Borrowers cannot miss payments and expect to refinance right away.

    Sneaky Foreclosures:

    Due to COVID no longer posting on house, posting on auction.com. Be sure to look there.

    While we are on the foreclosure topic, we wanted to share the scary thing we learned about last week.  And they are sneaky foreclosures.

    During the crash 10 years ago when homeowners negotiated loan modifications or filed Chapter 7 bankruptcy that allowed them to stay in their house and removed the monetary value of their second lien but did not remove the lien itself.

    Those second liens that “went away” are now toxic loans. 60% of foreclosures out there right now are notes being purchased from the banks, that are selling for pennies on the dollar. Random people are buying the notes and then moving forward with foreclosure on the seconds. That borrowers thought were charged off. The lien buyers add interest on non-payments for the past 10 years.

    Bottom Line:

    Borrowers today have options. Now is not the time to panic sell.

  • AZ Forbearance Update 1/20/2021

    In this 9 minute video, Lydia Wietsma and I discuss the latest developments in forbearance trends and how the latest proposed stimulus impacts struggling borrowers.

    We do these videos to share the information with real estate professionals and struggling borrowers. People have options. There is no need to panic sell.

    Forbearance Numbers:

    Total loans in forbearance decreased from 5.46% to 5.37% which is a nice decrease after several weeks of staying relatively flat. It keeps us around 2.7 million borrowers in a forbearance plan.

    Forbearance Plans by Stage:

    • Initial entries decreased slightly to 17.27%.
    • Re-entries increased slightly to 2.28%.
    • Extensions increased to 80.45%.

    Cumulative forbearance exits from 6/1/2020-1/10/2021:

    • 45% of borrowers are current upon plan exit.
    • 13.5% of borrowers exited with no loss mitigation plan in place, which is up from 13.2% from the previous week.

    Reminder, forbearance needs to be paid back so exit strategies are a must.

    New Housing Policies:

    President Biden’s proposed $1.9 trillion stimulus plan includes extending the national eviction and foreclosure moratorium through September 30, 2021.

    Forbearance is a solution and foreclosure moratoriums are a Band-Aid and do not fix the problem and the goal is to keep homeowners in their homes.

  • AZ Forbearance Update (video) 1/6/2021

    In this 11 minute video, Lydia Wietsma and I discuss this weeks’ biggest news in forbearance. Each week, the plans, numbers, options, and timelines change.

    One – Timelines:

    There have been changes in the world of forbearance. And that is a good thing for struggling borrowers. Initially in the CARES Act, the COVID forbearance protection plans were to expire in October 2020. They were then extended to the end of 2020. Now, a recent announcement by the CFPB shows new timelines.

    • FHA – Deadline Feb. 28, 2021
    • VA – Deadline Feb. 28, 2021
    • USDA – Deadline Feb. 28, 2021
    • Fannie Mae – No deadline at this time
    • Freddie Mac – No deadline at this time

    To find out who owns a mortgage visit https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/mortgage-relief-do-i-qualify/

    Two – Forbearance Numbers:

    According to the Mortgage Bankers Association, for the third week in a row, forbearance numbers stayed relatively flat. There are about 2.7 million borrowers in a forbearance plan which is roughly 5.53% of mortgages. For all of November and December we hung out at around 5.5%.

    At the very end of the year forbearance entrances and exits slowed, likely due to the holidays. Weekly forbearance requests declined last week to the lowest levels since the week of March 15.

    Hopefully, the latest stimulus provides aid to the struggling borrowers, despite not having any specific forbearance programs.

    The forbearance numbers by stage are more telling. Borrowers entering the initial stage and borrowers re-entering forbearance both decreased. However, borrowers on extension increased to nearly 80% of all loans in forbearance.

    Three – Forbearance Exits:

    Of the cumulative forbearance exits for the period from June 1 through December 27, 2020:

    About 45% of borrowers leaving their forbearance plan are current on their payments.

    The group to pay attention to is the 13% of borrowers who left their plan without a loss mitigation plan in place. The others either refinanced, sold, deed-in-lieu (not much in AZ) or did a loan modification.

    Many experts believe that struggling borrowers are more likely to sell rather than foreclose. This will benefit those struggling as a regular sale does not negatively impact credit and buyers have very limited options. Any additional inventory is welcome. In Maricopa County, there are only 4,100 single-family homes available and all of ARMLS has fewer than 6,000 listings available. We are 70% below where we should be. Nationwide we only have about 419,000 single-family homes available; low inventory is a challenge everywhere.

    Four – Servicing:

    Inspection requests have increased over the past 3 weeks. iBuyers are now hiring the servicing companies to do inspections on properties they are buying. They are having 2-3 inspections per acquisition.

    Five – Options:

    Struggling borrowers still have options. Forbearance continues to be available and American homeowners have more equity that has been available in years. The bottom line is this: Don’t panic sell.