Distressed Homeowners Post Covid

[Brett Goldsmith]

My thoughts are that there will be a new wave of foreclosures and an increase in short sales after the dust settles. (Not as large as the financial crash ). Right now people will be given forbearance plans from their mortgage servicers and foreclosures are halted temporarily through April by the Federal Government while everyone is social distancing and hiding in their homes. We may even see some sort of new programs come out ( Maybe a return of a HAMP type program or the hardest hit fund? ). While these are helpful to some people to others they are not.

Forbearance plans are band aids that delay the inevitable for many. Most borrowers who miss one payment never catch up. If someone remains unemployed or takes a pay cut post forbearance plan they will not be able to afford a repayment plan or qualify for a loan modification.

[Andy Mirza]

@Brett Goldsmith Yes, a lot depends on how quickly help arrives and how quickly the economy recovers.

I think forebearance plans will become common and I think it's the most appropriate tool for most people in the near future. I'm talking about borrowers that were current for years on their loans who suddenly ran into problems with the virus induced shutdown. Unemployment benefits may help some avoid a default. However, these are borrowers that I don't mind helping, whether it's a forbearance plan with the lender or direct governmental aid.