Mortgage servicers are preparing for a wave of delinquent mortgages and possible foreclosures to hit the market but say they have already taken steps to mitigate their impact.
Realty Biz News said, “The U.S. government made mortgage forbearance available to any home loan borrowers in the early days of the COVID-19 pandemic. Those who took up the option then are now entering their last possible quarter of relief. That period will end in September, after which borrowers will need to
Of the 7.25 million who took forbearance, 72% have since exited, leaving just 2 million still active in the programs.”
CNBC reported that 575,000 borrowers’ forbearance plans would expire at the end of September and early October. For mortgage servicers, it means they face dealing with a deluge of troubled loans all at once.
The government-sponsored entities Fannie Mae and Freddie Mac, along with the Federal Housing Administration, helped the mortgage servicers with new guidelines for borrowers who’re exiting forbearance programs. The guidelines mean to assist borrowers struggling to pay their loans. The assistance includes more interest rate reductions that will be made available through loan modifications.
Borrowers who cannot afford to pay have the option of letting their home fall into foreclosure or selling the property, which may even net some a decent profit in the current red-hot housing market.
For all of the efforts made by mortgage servicers on behalf of borrowers, there will almost certainly be a jump in foreclosures in the fall and winter. That’s because some borrowers will have no other recourse.
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