Posted on 09/21/2020 10:17:30 AM PDT by Zhang Fei
Recently the Federal Housing Finance Administration (FHFA) — conservator of Fannie Mae and Freddie Mac — extended the moratorium for both evictions and foreclosures until the end of the year. Many homeowners breathed a sigh of relief.
Indeed, over the past few months the number of borrowers with active forbearances has declined. But that’s no reason for optimism. The more serious matter is how many homeowners are now delinquent. By the end of 2020, several million borrowers who have received mortgage forbearance will have gone nine months without making a mortgage payment.
What impact will this have on U.S. housing and mortgage markets? Let’s start with FHA-insured loans. According to HUD’s July 2020 “Neighborhood Watch” report, 17% of 8 million insured mortgages are now delinquent. This percentage includes mortgages in forbearance as well as those not in forbearance. Hard-hit metropolitan areas include New York City with 27.2%, Miami with 24.4% and Atlanta with 21%.
Another reason for alarm is the private, non-guaranteed (non-agency) securitized mortgages that go back to the crazy bubble years and which are still active. These were the millions of sub-prime and other non-prime loans that were egregiously underwritten, many fraudulently.
At the peak of this activity in late 2007, more than 10 million of these mortgages were outstanding with a total debt of more than $2.4 trillion. As recently as early 2018, 25% of all delinquent borrowers nationwide had not made a mortgage payment in at least five years. In New York State, New Jersey and Washington, D.C., that percentage was more than 40%.
Keep in mind that these extremely high delinquency rates existed well-before the COVID-19 pandemic erupted. Since March of this year, delinquency rates for subprime mortgages reversed a 10-year decline and climbed to 23.7% in July, according to TCW’s most recent Mortgage Market
(Excerpt) Read more at marketwatch.com ...
“25% of all delinquent borrowers nationwide had not made a mortgage payment in at least five years.”
How is this even possible? Why were they not evicted the previous 4 years?
The nation’s unemployment rate is down to 8.4%. Its the locked down liberal states where unemployment and exodus are creating the problem.
Friday, the 13th of March is when the Covid fecal matter started to hit Americans.
First the hospitals were shutting down all but emergency care.
My wife had a long time scheduled same day procedure done on the 13th of March at about 1:30 pm/
Afterwards, as they were pushing her in a wheelchair, out into the vehicle half circle to load patients into their designated drive vehicles, it was obvious that something big was happening.
I asked the RN if they were shutting down the hospital, she said yes and gave me a hug. Then, she loaded my wife into our car and gave me another hug. She said if we were really
short on grocery items, I might want to stop at the Costco on the way home. She said this could be a long time/term event.
The traffic at about 3 pm on the freeway was like rush hour.
So, we didn’t stop at Costco.
Enroute home, my wife got a few cell phone calls from local family and friends re how was she and heads up about the upcoming panic on Covid 19. We had no idea what they were talking about. Covid 19 meant nothing to us.
An RN in law, called from the Midwest, to check on my wife and me. She said that there was panic buying in the stores in their area. She suggested that we order online at some stores to pickup. I did that at Raleys/Target as they were mobbed and an order at Walmart to pickup. We had been ordering from Walmart pickup for months. The first order was 2 days later. Our RN relative blamed the Covid 19 for the panic buying.
The next morning I went into Raley’s early and basically no one knew where to pick up the order. A manager, a former neighborhood kid, I knew took me back to the order processing and they had 3 items out of 25 and said I would have to wait for a few hours. He took my 3 items and put them in a cart and told me to buy stuff in the store now before they had nothing on the shelves. I loaded up the cart with canned goods and some fresh stuff.
After I got checked out and loaded the goodies into my truck.
I walked to Target and another neighborhood kid, now an asst manager asked me how my wife was and what did we need. She took me to the middle of the store where they were rationing tp and paper towels. I got one package of each. Then, I asked if she could help re fresh stuff, she said no as they were sold out.
Then, she took me to the canned goods. I had a list of Progresso soups and canned veggies to add, 1 can of veggies and one can of soup fed us a good meal. She knew that my wife was a great cook and asked what/why. I told her the soups were great and had no shelf life expiration for awhile as well as the canned veggies. I noticed as when she picked an order for me she was buying the same. I filled up two carts and she escorted me to checkout stand and then helped me to load my Ridgeline. Being an 80 year old/friendly/cute grampa has its advantages.
Since then, 15/16 March, we have not been to a restaurant or inside Walmart, Costco, Safeway or any other grocery store, we pick up restaurant orders and try to have deliveries which are totally unreliable. We order our groceries online.
We know a great family which has a few farms and has an incredible produce stand. We started buying from them about 10 years ago. We buy 98% of our veggies/fruits from their stand.
Agreed. We were considering retiring in Texas too where my son may end up settling down. We live in Colorado and want to flee the invaders for California.
Our plans may change. :)
“Right now there is no inventory, anywhere. That’s keeping prices artificially inflated and making it nearly impossible for somebody to buy a house.”
Housing is a commodity. Its value is determined by supply and demand. When housing is tight (low inventory) then prices will rise. This will bring additional homes into the market place thereby increasing supply and lessening demand on available inventory and lowering prices.
I have still seen no satisfactory explanation of exactly what caused the evaporation of liquidity in 2008.
Wife and I have toyed with the idea of a home in Arizona, but the housing market there is insane. Houses in the range of interest to us get snapped up within a day or so at double the price they went for a few years ago.. Wife says the low interest rates and people getting out of Calif are to blame.
In some places, yes. But rural areas are booming. A very small town near me (that probably hasn’t seen 100 homes built in the pat 10 year) is booming with new home starts. People are moving away from the city to safer rural areas.
That makes a lot of sense. Exodus from the cities before they burn to the ground.
Insurance-Banking Syndicate with this type of dire-alarm of the end is just a continuous Bailout signal to the bought for Congress. Motorized vehicles have also bundled so called “securities”
Housing prices being ridiculously inflated the past couple decades cripples families.
Some think they are so lucky to have something so valuable. But it is a farce.
Overly burdensome home prices tortures communities and individuals alike.
People are moving out of the Seattle area and coming over to the Olympic peninsula. The market is red hot in the Bremerton and Port Townsend areas. There are not enough ready to move into houses. Land is skyrocketing. How long can this keep up before the only people left to purchase homes are underqualified, unemployed persons who have nothing left to choose from and who couldn’t afford them or qualify anyway? If the economy goes tits up, I think the available number of houses will increase when massive foreclosures happen due to inflation and the coming economic collapse. After a while, it seems that housing prices will come down? It’s hard to see the future in real estate.
.
No... Up! Up! Up! Real estate only goes up! /s
Really?
Where did that opinion come from?
As usual, you are spot on.
My son and his wife were trying to purchase a home since April - suburb of small/medium size city. Desirable place - solid Republican area, not infested with riots, BLM, and mayhem.
Their journey was akin to being in the hottest markets in the early 2000s. They made offers on 20 or so homes. They had escalation clauses that would make your head spin.
Houses would go on the market, some with a Facebook video. Within minutes, there would 10 offers, half of them cash, ALL above asking price.
They finally got a house, but it was a nightmare.
We have friends who lived in NYC. They want out, and can't sell their place without taking a massive loss.
But all this debt has fueled the inflated market, as you say. Some can't afford buy, some can't afford to sell.
It's like watching a bomb clock tick down.
The only people getting hurt by inflation are those with adjustable rate mortgages.
“How long can this keep up before the only people left to purchase homes are under qualified, unemployed persons who have nothing left to choose from and who couldn’t afford them or qualify anyway?”
People such as you describe will not be buying homes as long as banks maintain their lending standards and verify income, credit history and require a reasonable down payment.
“Housing is a commodity”.
And the market for that commodity in no way reflects reality.
9 months of foreclosure prevention has seen to that.
Those foreclosures must proceed to bring even a sliver of sanity back.
I closed on a modest retirement house in May.
After 14 offers.
14.
And all were full price.
“Those foreclosures must proceed to bring even a sliver of sanity back.”
I agree.
Yup - I can believe it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.