Mortgage forebearance EXTENDED, no crash in sight

[Nate Sanow]

I just read the Housing Wire article stating they are going to extend FHA Forbearance into December 2021 for "certain borrowers."

Stuff like this is why in my humble opinion everyone holding their breath for 2021 to look like 2009 is going to be dissatisfied.

If the pent up foreclosure situation is a backed up damn, it will likely slowly trickle, not come flooding in. Aka a deal here, a deal there, 1 reasonable seller knowing they need to exit their ownership but that dynamic juxtaposed with a continued sellers market everywhere requires perhaps some extra tact & servitude to get the deal.

For me, recognizing that in the wholesaling space is why I’ve made a pivot to get my license, and work on getting some things together for flips and long term / short term holds.

Call me crazy, but I feel like the wave is going up, not crashing down, and there might still be time ride it.

Not to mention sub-markets like Tulsa, Oklahoma City, Little Rock, Indianapolis, Dee Moines, etc — anything slow, strong and steady — might not see a crazy crash at all.

If anything the greater concerns are increasing wage & class gaps, the artificial creation of dollars by the US, shifting policies that artificially create favorable market conditions, and things that if I think about it too long make my IQ of at least 1 start to hurt my head.

All I’m saying is if you’re newer and waiting on the “perfect” time - especially if someone is telling you to - you might be waiting long past this next year.

Thoughts?

[Joe Splitrock]

Mortgage forbearance is like pushing a snowball up hill. You can only push it so far before it gets too big and rolls back down. 

Even if the payments are added to the end of the loan, just the act of skipping payments has consequences. Mortgage servicers and mortgage backed securities are affected. Loans are most profitable in the early years, before inflation erodes the value of the pay back dollars. 

Keep in mind the housing crash was the result of high default, which is just lack of payments. So although these loans are not in default, they are also not paying. It is like if a tenant stops paying rent and tells you they will pay it back in a few years. For the months they are not paying, the damage is done to the landlord.