Why the Forbearance Program Changed the Housing Market | Physician Mortgage Loan
At Physician Loans USA , we don’t want you to feel overwhelmed; we don’t want you to feel like you are lost or alone in whatever you are confronting.
Today I would like to talk to you about Why the Forbearance Program Changed the Housing Market
When the pandemic hit in 2020, many experts thought the housing market would crash. They feared job loss and economic uncertainty would lead to a wave of foreclosures similar to when the housing bubble burst over a decade ago. Thankfully, the forbearance program changed that. It provided much-needed relief for homeowners so a foreclosure crisis wouldn’t happen again. Here’s why forbearance worked.
Forbearance enabled nearly five million homeowners to get back on their feet in a time when having the security and protection of a home was more important than ever. Those in need were able to work with their banks and lenders to stay in their homes rather than go into foreclosure. Marina Walsh, Vice President of Industry Analysis at the Mortgage Bankers Association (MBA), notes:
“Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options.”
As the graph below shows, with modification, deferral, and workout options in place, four out of every five homeowners in forbearance are either paid in full or are exiting with a plan. They’re able to stay in their homes.
What does this mean for the housing market?
Since so many people can stay in their homes and work out alternative options, there won’t be a wave of foreclosures coming to the market. And while rising slightly since the foreclosure moratorium was lifted this year, foreclosures today are still nowhere near the levels seen in the housing crisis.
Forbearance wasn’t the only game changer, either. Lending standards have improved significantly since the housing bubble burst, and that’s one more thing keeping foreclosure filings low. Today’s borrowers are much more qualified to pay their home loans.
And while the majority of homeowners are exiting the forbearance program with a plan, for those who still need to make a change due to financial hardship or other challenges, today’s record-level of equity is giving them the opportunity to sell their houses and avoid foreclosure altogether. Homeowners have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Thanks to their equity and the current undersupply of homes on the market, homeowners can sell their houses, make a move, and not have to go through the foreclosure process that led to the housing market crash in 2008.
Thomas LaSalvia, Chief Economist with Moody’s Analytics, states:
“There’s some excess savings out there, over 2 trillion worth. . . . There are people that have ownership of those homes right now, that even in a downturn, they’d still likely be able to pay that mortgage and won’t have to hand over keys. And there won’t be a lot of those distressed sales that happened in the 2008 crisis.”
Bottom Line
The forbearance program was a game changer for homeowners in need. It’s one of the big reasons why we won’t see a wave of foreclosures coming to the market.
PLEASE CHOOSE A STATE BELOW AND WE WILL CONTACT YOU DIRECTLY TO GET STARTED.
Physician Loans USA, Real Estate Solutions for Doctors, matches borrowers with potential lenders and agents in the field of mortgage lending, home buying and relocation services
PLEASE USE THE FORM BELOW AND WE’LL LET A PHYSICIAN LOANS USA SPECIALIST KNOW THAT YOU ARE LOOKING FOR MORE INFORMATION
At Physician Loans USA, we have a staff that you can connect with via phone or e-mail. Our corporate promise to you is that we will be same business day of your initial inquiry. We take pride in helping relocating physicians throughout the country, and understand the hectic schedule your profession demands.
To connect with us directly,
Or via email: INFO@PHYSICIANLOANSUSA.COM
Visit us at www.physicianloansusa.com
Just call 216-616-4332 for more information
