Are Foreclosures coming?

Question

I would love to pick up a foreclosed property; do you guys feel with everything currently going on that we will see a wave of foreclosures in the next 3-6 months?

Jay Hinrichs · Answer

From my cheap seats.

small commerical is going to be stressed however those usually work out in some manner and dont end up on the court house steps.

unlike 2008 to 2012 it took lenders about 2 years to really understand and then implement forbearance programs.. in this EVENT they did it in 2 weeks..  there is always bad debt and foreclosures  that never changes.. so many folks have great loans with payments less than rent why would they default ?  landlords that are under capitalized and if they get a lot of bad tenants are at risk..

will there be deals you bet but there are always deals

Joseph Cacciapaglia · Answer

I don't expect to see widespread foreclosures like the last downturn. There are just a lot of reasons that this crisis is different. If the shutdowns go on for a very long time, then of course I'd have to change that prediction.

Also, I want to point out that there is nothing special about foreclosures. They aren't automatically good deals. I find this is a common misconception that new investors have. There are foreclosures in just about every market at any give time. In the last downturn, there were a lot of foreclosures that were great deals, but there were plenty that weren't. There were also a lot of non-foreclosures that were great deals.

Instead of waiting and hoping that there will be a wave of foreclosures in the future, I think we would all be better off focusing on the opportunities that exist today. There are plenty of nervous sellers that would happily accept an offer today, just to be rid of the uncertainty. The only way to find those sellers, is to be out making offers.

Ron S. · Answer

My modelling shows that there will be a wave of defaults, that will turn into foreclosures, but not for 18 months down the road. For 60-70% of the loans out there, they are GSE loans, and will not be allowed to start a foreclosure until they default on a modification. They won't default on a modification until 120 days after they enter into a modification, which they won't enter into until 12 months after their deferral from the COVID program ends, which the deferrals only started now.

So, yeah, there will be a wave. A small wave in my opinion but a wave none the less compared to the last 5-7 years. And that wave might not mean the foreclosure happens, just that the default into foreclosure will happen.

I'm hoping as a society we learned a bit from the last one but from the calls i'm getting, we haven't. People think its free money to defer their mortgage payments. They don't understand they have to pay it back and very very few lenders are putting it on the back of any loan. Most can't. Most won't.

Jim K. · Answer

I think the money's going to be in estate sales. A large number of elderly people is about to die in a very ugly way. Many of their next-of-kin are going to want to "put this behind them," sell properties quickly and with certainty to cash buyers, use the money to make their own urgent payments, just forget about the ugliness of the moment. Nobody's going to be able to get Mom's old place cleaned out quick-quick, freshened up with some new paint and carpet, get eager buyers in through nice pics and descriptions from five states away.

So I'm pretty sure there are going to be some prime cash deals out here in my area as the death toll mounts.

Ruben Joseph · Answer

Yes

Diane G. · Answer

You are asking for guesses...Lol

And my guess is no, no flood of foreclosures like 2009... But price will be lower for the next 3-12 months becuase most people are just poorer.....

Lien Vuong · Answer

Any market shifts and economical changes would warrant some financially inept people to lose their homes. I think there will be a group for foreclosures that are coming but not in the wave of 2008's when real estate was the catalyst for the recession.

For those who bought callously and did not have any reserves in place, they will for sure lose their homes because of lack of rental income and that will increase the foreclosure and short sale inventory. The fact that there are forbearance programs in place I think will bandaid some of the loss but I think it will be inevitable for those things to happen.

Ruben Joseph · Answer

Click this link and you guys tell me if mass of foreclosures aren’t coming

Jack Parking · Answer

Valid point @Joseph Cacciapaglia, I think I'm one of those investors who think that foreclosures are automatically a good deal. I'm not wishing foreclosures on anyone, that would be such a difficult thing to go through. I'm just wondering if these foreclosures will flood the market a little bit and turn west MI into a buyers vs a sellers market.

Are Foreclosures coming?

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