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Recent Reports Show U.S. Foreclosures Trending Downward from 2019

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Despite the fact that many Americans have struggled financially as a result of the pandemic and subsequent shut downs that led to layoffs and business closures, foreclosures in the first quarter of 2020 declined almost 10% from the previous year.  Specifically, home mortgages backed by Fannie Mae and Freddie Mac, who entered into a conservatorship and have been working to implement foreclosure prevention.

While third-party foreclosures as well as foreclosure starts both saw drops in numbers in comparison to the first quarter of 2019, the number of forbearance plans rose from less than 7,000 in the first quarter of 2019 to over 170,000 in the first quarter of 2020.  Additional efforts to keep Americans in their homes and avoid foreclosure include loan modifications where homeowners have received lower monthly payments, principal forgiveness or extended term modifications.

According to an article published by DSNews.com, reported by Krista F. Brock, Freddie Mac and Fannie Mae, “Since entering conservatorship, Fannie Mae and Freddie Mac have completed 4.4 million foreclosure prevention efforts, with 3.7 million homeowners able to retain their homes as a result.”   The efforts are resulting in positive numbers with regards to loan performance as well.  The number of loans, according to the FHFA’s Report, between 60 and 90 days delinquent are showing slight declines from the end of 2019.

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How Will Homeowners Be Expected Pay Back Paused Mortgage Payments?

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As American homeowners suffer economic losses due to the global pandemic, mortgage companies allowed their borrowers to pause their mortgage payments, also known as forbearance.  This offers some relief and peace of mind to homeowners struggling to pay their monthly bills due to job loss or a reduction of pay.

However, in recent weeks, incorrect or misinterpreted information has caused some homeowners to panic, believing that once the forbearance period comes to an end, they will be expected to pay their missed mortgage payments back in a lump sum.  An article published by HousingWire.com sets the record straight.

The article, written by Ben Lane, indicates “Fannie Mae and Freddie Mac each issued a statement Monday, reiterating that borrowers are not required to repay their missed payments all at once when their forbearance period ends.” Additionally, Lane quotes the Federal Housing Agency Director, ‘“During this national health emergency, no one should be worried about losing their home,” FHFA Director Mark Calabria said in a statement. “No lump sum is required at the end of a borrower’s forbearance plan for Enterprise-backed mortgages.”’

Its important for borrowers and lenders to understand and communicate the next steps and what will be expected of the borrower once the forbearance period comes to an end.  Many lenders will offer a repayment plan, a payment deferral or a modification of the loan.  The borrower should reach out directly to their lender and discuss the details of these next steps.

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Surprising New Trends Revealed in Recent Home Mortgage Data

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Freddie Mac recently released data on mortgage trends for the first quarter of 2018.  One figure that may surprise many:  almost half of new mortgages in the first quarter of 2018 were secured by first time home buyers.

According to the National Association of Realtors, the age of these first time home buyers is around 32 years old.  It would, therefore, seem that these first time home buyers are, in fact, millennials.  A generation entering the economy with student debt, rising home prices, rising interest rates and a shortage of homes for sale, many would not have expected them to account for 46 percent of the new mortgages.

According to an article written by Phashant Gopal published by Bloomberg, with the improving job market and access to easier credit regulations, this group has been moving out of the rental market and becoming home owners.  These young adults are aware that mortgage rates and home prices are increasing and have decided to enter the home ownership ranks before they are priced out.

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Photo Credit: Investment Zen

 

 

 

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