According to Wolf Richter for WOLF STREET, “Everything is on ice. But when forbearance ends, forced sellers or lenders will put millions of these homes on the market. Since last spring, historic delinquency problems have been fermenting largely on ice and on hold by forbearance programs. “The Federal Housing Administration (FHA), which insures nearly 8 million high-risk mortgages, reported that the delinquency rate of its mortgages rose to 17.5% in February, up from 17.0% in January, matching the all-time records of September and November last year,” according to the AEI’s Housing Center.
“Low down payments, low closing costs, and easy credit qualifying,” the FHA promises. So FHA mortgages always have high delinquency rates, even during the good times, when they were already rising. But during the Pandemic, delinquencies ballooned, and they’re not improving in any way despite the improving economy.
Despite the increasing delinquency rate, there is another phenomenon taking place that is worrying. The prices of houses are increasing rapidly. There is something called FOMO, fear of missing out. FOMO: a fear of regret, which may lead to concerns that you might miss an opportunity for a profitable investment. There are many stories of buyers making offers on many houses and getting outbid. It is not uncommon to give in and buy more than you can reasonably afford.
Paying top dollar to commit yourself to a house that is not the one you want to live in to access a cheap mortgage is probably not a good idea.”
FOMO has led to many areas of the country over-leveraged, meaning debt is unsustainable. Over-leverage often leads to a downward financial spiral. Resulting in the household having to borrow more to stay solvent, and the problem gets worse. This spiral usually ends in default and foreclosure. Bankruptcy protection is often the result.”
We may look back on these times as not the best of times. The national debt is $28 trillion, soon to be $35 trillion. I remember Sen. Everett Dirksen, long ago, saying, “A billion here and a billion there. Soon you are talking real money.” A bill passed in Congress totaled $1.9 trillion, and a $3 trillion bill is on deck. Every time we print more money for the debt and new programs, we cheapen the dollar. That is inflationary. It seems like prices are going up, but the dollar buys less and less.
If you are out on the end of the branch where even birdies won’t go, you are overleveraged. The slightest change in employment or cost of food and essentials can ruin the budget you used to buy the house leading to buyer’s remorse.
If you find yourself in financial trouble, don’t wait until you default to see help.
As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. We offer the simple truth about your home and how we can help you sell it fast.
Give us a ring. We would love to help you understand the process and to answer all of your questions. You can reach us at 402 999.0577.