Many industry professionals predicted that the property market would implode when the epidemic struck in 2020. They worried that the loss of jobs and the current state of the economy would cause a wave of foreclosures like the one that occurred after the housing bubble burst over ten years ago. Thank goodness the forbearance program made that different. To prevent another foreclosure catastrophe, it gave homeowners much-needed assistance. Here is how forbearance succeeded.
When having a home’s security and safety was more crucial than ever, forbearance helped approximately five million homeowners get back on their feet. Those in need could negotiate with their banks and lenders to avoid foreclosure and stay in their houses.
What does this signify for the real estate industry?
There won’t be a flood of foreclosed properties hitting the market since so many individuals can stay in their homes and find other housing choices. Furthermore, although somewhat increasing after they removed the foreclosure moratorium this year, current foreclosure rates are still much below those observed before the housing crisis.
The game didn’t only alter with forbearance, though. Another factor preventing additional foreclosure filings is that lending standards have greatly improved since the collapse of the housing boom. The borrowers of today are far better able to repay their mortgages.
And while most homeowners are exiting the forbearance program with a plan, those who still need to make a change due to financial hardship or other difficulties have the opportunity to sell their homes today due to the record-high level of equity, allowing them to avoid foreclosure altogether.
The housing crisis, when so many individuals owed more on their mortgages than their homes were worth, gave rise to a lack of choices for homeowners. Homeowners may sell their properties, move, and avoid going through the foreclosure process that caused the 2008 housing market crisis, thanks to their equity and the present lack of available property on the market.