the AZ market

Tag: #lydiawietsma

  • AZ Forbearance Update 4/28/2021

    In this 10 minute video, Lydia Wietsma and I discuss the latest in forbearance, delinquencies, and loan servicing.

    Consumer Finance Protection Bureau (CFPB)

    The CFPB has put loan servicing companies under a microscope. It is watching the servicers to ensure that borrowers in forbearance have been handled properly.

    “I think the math speaks for itself how well the forbearance program has worked, and it’s one of the few times in my career that I have seen a government-initiated program adopted as well and executed as well by the industry as this one,” said Rick Sharga, executive vice president of RealtyTrac.

    Forbearance Numbers:

    After 2 weeks of large drops, we had a small drop in total loans in forbearance. As of April 18, about 4.49% of loans were in forbearance, a slight decline from 4.50%. This is a decline of nearly 5,000 borrowers to about 2.25 million.

    Forbearance by Stage:

    • 12.9% of loans in forbearance are in the initial stage, down from the previous week’s 13.1%
    • 82.4% are on extension, up from last week’s 82.1%. More than 40% of borrowers on extension have now been in a forbearance plan for over 12 months.
    • The remaining 4.7% are re-entries, down from last week’s 4.8%.

    Forbearance exits from June 1, 2020 through April 18, 2021

    47.3% of borrowers continued making their payments throughout the forbearance plan, got caught up upon exit, or paid off the loan with a refinance or sale.

    14.6% of borrowers exited their plan, still behind on their payments and without a loss mitigation plan in place. This number remained flat from last week.

    Delinquencies:

    • Over the past 20 years, delinquencies have fallen by nearly 10% on average in March due to tax return and other seasonal funds being used by homeowners to pay down past-due mortgage debt
    • Despite March’s strong performance, some 1.9 million mortgage-holders – including those in active forbearance that are behind on their payments – are at least 90 days past due on payments
    • There are 1.5 million more such serious delinquencies than at the onset of the pandemic, nearly five times pre-pandemic levels
    BLACK KNIGHT’S FIRST LOOK AT MARCH 2021 MORTGAGE DATA

    New Low-Income Refinance Option:

    This morning FHFA announced a new refinance option for low income borrowers.

    To qualify for this option, beyond owning a GSE-backed mortgage, a borrower must have an income at or below 80% of the area’s median income and have been current of their payments for the last six-months, with no more than one payment missed in the last 12. Borrowers must also not have a mortgage with an LTV ratio greater than 97% and a DTI no higher than 65%. Lastly, borrowers must have a FICO score no lower than 620.

    Now, the FHFA said the new refi option could save borrowers an average of between $100 and $250 a month. 

    Under the new refi option, lenders must ensure that the borrower saves at least $50 a month in their mortgage payments while simultaneously dropping their interest rate by at least ½ of a percent or 50 basis points. This could potentially knock an already historically great rate such as 3.5% down to 3% with the new product.

    Loan Servicing:

    Lydia’s servicing company has added another local iBuyer to its list of clients they are doing inspections for. Opendoor has been hiring this company since July for its inspections.

    Inspections have been consistent.

    While foreclosures remain at a standstill, servicing companies are doing more inspections on properties that were inspected 12 months ago.

  • AZ Forbearance Update 4/7/2021

    In this 15 minute video, Lydia Wietsma and I discuss forbearance, evictions, delinquencies, extensions, and appreciation.

    Forbearance Numbers:

    The number of loans in a forbearance plan dropped for the fifth straight week. This week we decreased to 4.90% from 4.96% of all loans are in forbearance. The number of borrowers remains right around 2.5 million.

    Forbearance by Stage:

    • 13.7% are in the initial stage, down from last week’s 13.8%.
    • 84.1% are on extension, up from last week’s 83.4%. Over 21% of these borrowers have been on a forbearance plan for over 12 months.
    • 2.2% are re-entries, down from last week’s 2.8%.

    Forbearance exits from June 1, 2020 through March 28, 2021:

    • 41.2% of borrowers either continued making their payments throughout their forbearance plan or got caught up upon exit. This is down from last week’s 41.7%.
    • 13.9% of borrowers exited their plan, still behind on their payments and without a loss mitigation plan in place. This is a decrease from last week’s 14.1%.

    Of the total exits in March 2021, 21% received a loan modification due to income declines.

    Logan Mohtashami, the lead housing economist for HousingWire believes that the increased employment numbers may end forbearance sooner than expected.

    Evictions:

    For the third time, the CDC extended its eviction moratorium. This time through June 30th otherwise it would have expired at the end of March.

    Based on US Census surveys (not the big one) renters owe an estimated $60 billion in back rent payments and other housing costs.

    Landlords who either cannot continue with the financial obligations of the investment or who are tired of owning it are starting to list and sell the properties with the non-paying renter included. There are investors who want properties and are willing to take on non-paying renters in order to acquire the property. The amount owed to the current landlord is often made up in the sales price.

    This is a good option for struggling landlords.

    Delinquencies:

    In February delinquencies ticked up slightly from January. Experts believe this is mostly due to the short month. We will know when we see March’s numbers.

    Despite the increase, 30-day lates are 19% below pre-pandemic numbers. There are still 5 times more 90+ day lates before the pandemic. That is about 1.7 million more than there were a year ago. This number includes those in a forbearance plan.

    Foreclosures:

    On Monday, the CFPB proposed furthering the ban on foreclosures through the end of 2021. Under current CFPB foreclosure rules, a borrower must be 120 days delinquent before the foreclosure process can start. I am not sure what the timelines are for those who were in the foreclosure process last year when the moratoriums were put in place. The services want to start where they left off, but will they be able to? It sounds like the CFPB does not agree though. The 120 days is to protect those who exiting their forbearance plan more than 90 days late from immediate foreclosure.

    Servicers:

    Servicers are hiring and preparing for more REOs and foreclosures. They are at the mercy of federal policy but they are preparing nonetheless.

    Appreciation:

    It is very difficult to make predictions in this current environment. Policy is changing regularly. We do know one thing that is helping all homeowners, struggling or not, it is the sky-high appreciation. Nationwide it is nearly 16% and here locally it is 19%. This gives homeowners options, whether or not they are struggling to make payments.

  • AZ Forbearance Update 3/31/2021

    In this 11 minute video, Lydia Wietsma and I discuss the latest in forbearance, inflation, and foreclosures.

    Predictions & Inflation:

    There is a lot of talk about what will happen next. While we do not have a crystal ball and the real estate market is unpredictable, there are a few assumptions we can make based on the numbers. There are tons of headlines and YouTube videos all about how the market will crash in 2021. The problem with many of these predictions is that they exclude very important data. Today I saw a YouTube video with many thousands of views and used lots of numbers to illustrate his point. Throughout the entire video, he never made mention of buyer demand or homeowner equity. Remember, the foundation for all economics is the relationship between supply AND demand.

    While, yes the supply could and will likely rise as the foreclosure moratorium is lifted. But these will be for properties with equity and the homeowners can do a normal sale and walk away with money in their pocket. 40% of residential housing is owned free and clear and And nearly 57% of mortgaged homes have at least 50% equity. In 2020 alone, homeowners gained $1.5 trillion in equity.

    With all the of stimulus being pumped into the market, concerns over inflation are rising. The feared inflation is already here but rather than oil companies or grocery stores increasing their prices, it is homeowners increasing sale prices of their property.

    Logan Mohtashami of HousingWire described inflation as, “As a general economic rule, widespread inflation is caused by a shortage in goods and services – or in common vernacular, too many dollars chasing too few goods.” This is what we are going through in housing; a severe supply and demand imbalance. Consumers call it appreciation and economists call it inflation.

    Forbearance Numbers:

    Now, let’s talk about the forbearance numbers. We saw improvement again last week and dropped down to a new low in a year. We decreased from 5.05% of mortgages in a forbearance plan to 4.96% or about 2.5 million borrowers.

    Forbearance by Stage:

    • 13.8% are in the initial stage, down from 13.9% last week and reached their lowest level in a year.
    • 83.4% are on extension, down from 83.5% last week. About 17% of borrowers in this category have passed the 12 month mark in a forbearance plan.
    • 2.8% are re-entries, up from last week’s 2.6%.

    Forbearance exits from June 1, 2020, through March 21, 2021:

    • 41.7% of borrowers either continued making their payments throughout their forbearance plan or got caught up upon exit.
    • 14.1% of borrowers exited their plan, still behind on their payments and without a loss mitigation plan in place. This is the group that needs the most attention. They need to know they have options.

    CFPB website with solutions for struggling renters and owners: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/

    Foreclosures:

    There were 250,000 foreclosures in process before the pandemic. They will likely be restarted at the same stage where they were in foreclosure before. Based on those numbers and the potential borrowers who may be still struggling after their forbearance plan, we might see around 500,000-750,000 foreclosures in 2021. After the market crashed in 2008 there were nearly 10 million foreclosures.  

  • AZ Forbearance Update 3/17/2021

    In this 15 minute video, Lydia Wietsma and I discuss the latest in mortgage forbearance, delinquencies, and declining demand (not prices).

    Forbearances:

    We have some good news and progress in regards to forbearance and delinquencies. The rates of mortgages in forbearance declined again week over week. We are now down to 5.14% from 5.20% keeping the number about 2.6 million.

    Forbearance by Stage:

    • 14.1% are in the initial stage, down from last week’s 14.6%.
    • 83.3% are on an extension, an increase from just below 83% last week.
    • 2.6% are re-entries, the same as last week

    Forbearance exits from June 1, 2020 through March 7, 2021:

    • 42.3% of forbearance exits are current upon exiting their plan.
    • 14.1% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.

    Delinquencies:

    Remember unpaid loans in forbearance are also counted in the mortgage delinquency numbers. The following information comes from the Black Knight Mortgage Monitor report. For the full report, click here.

    From December to January total delinquent loans decreased by 3.82% to 5.9% of loans are delinquent. This is the first time it has been below 6% since March 2020.

    Early-stage delinquencies continue to stay below pre-pandemic levels, with the number of borrowers with a single missed payment down 24% and 60-day delinquencies down 6%.

    However, despite some slight improvement in January, the 2.1 million serious delinquencies (90+ days) remain 5X or 1.7 million more than their pre-pandemic levels.

    Here in AZ, we have had an increase of 2.8% in seriously delinquent loans, year over year. That is lower than most states. Hawaii has the highest rate at 5.2% and Idaho has the lowest 1.6%.

    Black Knight Mortgage Monitor – January 2021

    370,000 borrowers who were current on their mortgage became 30 days delinquent in January, marking the lowest inflow in the past 12 months.

    However, the number of borrowers rolling from 30-to-60 and 60-to-90 days delinquent were up 31% and 75% year-over-year respectively as borrowers may be rolling to later stages at higher rates because of participation in forbearance plans.

    While the rate of improvement could accelerate/decelerate based on broader economic factors, borrowers have limited incentive to leave forbearance plans early and we could see just a 20% decline in serious delinquencies between now and the end of Q3 2021 if current trends hold true.

    Not only does this place continued pressure on servicing entities, but forborne interest as well as tax and insurance payments have a negative impact on borrowers’ equity positions.

    The industry must now walk the fine line of providing ample borrower protections while at the same time trying to limit equity erosion and servicer advance risk. Which is why it is important for struggling borrowers to get into a forbearance plan within their specific loan’s guidelines. The timelines are a little confusing too.

    Timelines:

    Anyone can get started in a forbearance now, borrowers have until June 30, 2021 to get started. Then each loan type has different timelines for extensions. We will post the dates for each loan type.

    VA, FHA & USDA borrowers:

    • On February 16, 2021, the U.S. Department of Housing and Urban Development (HUD), the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Agriculture (USDA) extended moratoriums on single-family evictions and foreclosures to June 30, 2021.
    • They also announced that borrowers who have been on a COVID-19 forbearance plan on or before June 30, 2020 may request up to six months of additional mortgage payment forbearance, in three-month increments, which provides up to 18 months of deferment.
    • HUD extended the deadline for the first legal action against FHA borrowers and the reasonable diligence time frame to 180 days from the date of expiration of the foreclosure and eviction moratorium.

    Fannie Mae & Freddie Mac borrowers:

    • On February 25, 2021, the Federal Housing Finance Agency (FHFA) extended moratoriums on single-family evictions and foreclosures to June 30, 2021.
    • It also announced that borrowers who are on a COVID-19 forbearance plan on or before February 28, 2021 may request up to three months of additional mortgage payment forbearance, which provides up to 15 months of deferment.

    Demand:

    We will likely have fewer transactions in the 2nd half of the year due to low inventory but also dropping demand partially due to rising prices and rising interest rates and the market is trying to stabilize. Demand is currently dropping faster than supply. Nationwide supply did not drop last week, for the first time in a year. Dropping demand is hard to notice when you go from 50 offers to 15 offers, or even 15 offers to 3 offers. This does not mean that prices are dropping or will drop. It just means sales will not be as far above asking and it is not the time for sellers to overprice their listings. Expect increased competition in the coming months.

  • AZ Forbearance Update 3/10/2021

    In this 12 minute video, Lydia Wietsma and I discuss forbearance, demand, specific industries, and our one-year anniversary.

    Last week was our final week of having normal year over year comparisons. As of this week, the one year anniversary of our economy beginning to shut down, the year over year comparisons will get weird.

    What we do know is that last week purchase mortgage applications were up 7% week over week and 2% year over year. Demand remains higher than supply, both nationally and locally. I am impressed to see the application increase when rates have increased as quickly as they have. The reason for the continued demand, according to several leading economists, is based on today’s demographics. The largest group of the largest generation is about 26-34; prime home-buying age. These ‘Replacement buyers’ as some call them, will keep demand high through the end of 2024.

    We need to keep the expected, elevated demand in mind when we look at the forbearance numbers and speculate about foreclosures.

    Forbearance:

    Currently, there are about 2.6 million borrowers in forbearance or about 5.2% of loans. While this number has stayed flat over the past few months, it did decrease to a new low since the forbearance plans were introduced last March in the CARES act.

    Forbearance by Stage:

    • 14.6% of forbearance plans are in their initial stage, which is either 3 or 6 months depending on loan specifics.
    • Nearly 83% of all plans are on extension.
    • 2.6% are re-entries.

    Forbearance exits from June 1, 2020 through February 28, 2021

    • Nearly 43% of all forbearance plan exits are current on their mortgage upon plan exit.
    • 13.8% of forbearance exits, exit without a loss mitigation plan in place.

    Foreclosures:

    There is increasing talk of foreclosure challenges coming. While, yes I do expect there to be an increase in foreclosure filings, because there are virtually none now, I do not expect a huge amount of foreclosures going to auction. 90% of borrowers have equity and these homeowners will have the ability to do a normal sale and walk away with money in their pocket. We are not in the overleveraged situation we were in 12 years ago. And with the replacement buyers, there will be buyers to purchase the properties as they come on the market.

    Remember over the past 22 years, on average there are about 67,000 foreclosures a month nationwide. They are to be expected but we will not see a wave for foreclosures.

    Stimulus:

    The latest stimulus package, which is being debated in the House today, has several provisions for housing and how those provisions are implemented could impact struggling borrowers, landlords, renters, and future buyers. We will know more about the specifics very, very soon.

    Lydia did a deep dive into the travel industry and what is happening, particularly with airline employment. The newest stimulus does have more provisions that are industry-specific. The stimulus is back in the House now and once it is approved it goes to the White House for President Biden’s approval to be signed into law. It will happen soon.

    For more details on the TSA travel numbers, check out this website.

    Also, Lydia’s inspection requests have decreased. After reaching nearly 10 a day recently, they have dropped down to 1 or 2 a day. We are looking into the reasons for such a dramatic decrease and will have more info for you next week.

  • 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 2/4/2021

    AZ Forbearance Update 2/4/2021

    In this 17 minute video, Lydia Wietsma and I discuss the latest in forbearance and updates on the new CFPB leadership.

    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:

    This week the percentage of borrowers in forbearance remained flat at 5.38% or roughly 2.7 million borrowers. This number has remained unchanged for nearly 3 months.

    Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “While new forbearance requests dropped slightly, the rate of exits from forbearance was at the slowest pace since MBA began tracking exit data last summer.”  

    “Overall, the forbearance numbers have been little changed over the past few months. Homeowners still in forbearance are likely facing ongoing challenges with lost jobs, lost income, and other impacts from the pandemic.”

    With improvement rates and exits slowing, data analytics company Black Knight estimates there are only 860,000 forbearance plan expirations scheduled for January and February. That’s less than the industry saw in December alone, which Black Knight said could limit potential removal activity over the next 60 days.

    Forbearance by Stage:

    • The initial stage decreased slightly to 18.07% (versus 18.17% the previous week)
    • Extensions remained about the same at 79.30% (versus 79.31% the previous week)
    • Reentries increased slightly from 2.52% to 2.64%.

    Forbearance Exits from June 1, 2020 – January 24, 2021:

    44.2% of borrowers are current upon exiting their plan. Down from 44.4% the previous week.

    13.4% of borrowers exited forbearance with no loss mitigation plan in place. These are the borrowers who need 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.

    New CFPB Leadership:

    The Biden administration appointed Dave Uejio as the new acting director of the Consumer Financial Protection Bureau (CFPB). Expect strict enforcement coming down from the CFPB under this administration, much like how it was under the Obama administration. The power of the CFPB was diminished under the Trump administration.

    Uejio said that the bureau will direct its attention to mortgage servicers, promising “aggressive action” to ensure companies follow the law. He went on to explain that in the coming months, his top two priorities are relief for consumers facing hardship due to COVID-19 and the related economic crisis and racial equity.

    “One thing we can do immediately is focus our supervision and enforcement tools on overseeing the companies responsible for COVID relief,” Uejio said in the email. “I am concerned about the findings described in last week’s Supervisory Highlights edition that companies are failing to properly administer relief through the crisis.” Here are some of the issues the acting director highlighted on servicers:

    • Mortgage servicers gave consumers incomplete and inaccurate information about CARES Act forbearances, failed to process forbearance requests and collected and assessed late fees despite having approved forbearances.
    • Servicers withdrew money even though consumers were in deferment.
    • Companies across markets misreported accounts to credit bureaus and violated CARES Act amendments that added protections to the Fair Credit Reporting Act.

    Uejio also stated that they will be expediting enforcement investigations relating to COVID-19 in order to send a message to the industry at large.

    “On COVID-19, we need to take swift action now, in order to make sure our actions help people in the middle of the crisis, rather than just cleaning up after the fact,” he said. “As you know, protecting economically vulnerable consumers is core to the mission of the CFPB and a key reason why the agency was created. It is going to take urgent action for the CFPB to step up to this challenge.”

    Home Valuation:

    For anyone who wants to know what their home is worth, check out Homebot, it is very accurate and available nationwide. Click here to enter your property info.

    If you are a Realtor and interested in offering Homebot to your clients, please let me know as I have a discount code available.

  • 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 1/13/2021

    In this 10 minute video Lydia Wietsma and I discuss the latest developments in forbearance trends and numbers.

    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.

    The Numbers:

    Last week the total number of loans now in forbearance decreased from 5.53% to 5.46% or about 2.7 million homeowners are in forbearance plans.

    By stage: 18.49% of loans in forbearance are in their initial stage. Up slightly from 18.27%. 79.85% are in extension, up from 79.61%. The remaining 1.66% are forbearance plan re-entries, down from 2.11% last week.

    Of the cumulative forbearance exits for the period from June 1 through December 27, 2020 about 45% are current and 13.2% left with no loss mitigation plan in place. The others either sold, deed in lieu, loan modification, etc. It is the 13.2% of borrowers that are the ones who need extra guidance.

    “Surging COVID-19 cases caused economic activity to stall in December, with a monthly job loss for the first time since April, and with those jobs mostly concentrated in the leisure and hospitality sector. We expect that this slowdown will prevent any rapid improvement in the forbearance numbers over the next few months.”

    Mike Fratantoni, MBA’s Senior Vice President and Chief Economist

    One thing to note is that most forbearance exits happen at the beginning of the month and entries at the end of the month. As the size of the overall change diminishes, we will see the numbers decrease at the beginning of the month and either stay flat or increase at the end of the month.

    Equity & Inventory:

    Year over year inventory has dropped by nearly 51% while contracts are up nearly 26%. Monthly median appreciation is 16%. And closings are up 26% year over year. We have 0.7 months of inventory. The supply imbalance is pushing prices up quickly.

    With equity increasing , struggling homeowners have more and more options.