So far, we are experiencing an uneven economic recovery with a hidden impact of lost jobs and lower-income for some homeowners. There is a complicated web of rules and regulations to help renters and homeowners stay in their homes.
The programs set up to prevent people from losing their homes won’t end any time soon. Homeowners with federally backed loans should be protected from foreclosure through the end of June. The federal eviction moratorium is set to expire at the end of this month. When the deadlines do hit, housing counselors still don’t know what to expect.
Regulations to Help Renters and Homeowners
“We just don’t know what the financial conditions of homeowners are at this point,” Ms. Loftus said. “It’s not just the mortgage that they may be dealing with. They may have delinquent utilities, insurance, car repairs. … A lot of that comes into play that makes it doubly hard to deal with their mortgage.”
Missed Mortgage Payments
For homeowners, missed mortgage payments could lead to foreclosure, the process in which the mortgage lender moves to take ownership or sell the home to recover the lost money. For renters, missed rent checks could lead to eviction when a landlord removes them from the property.
In the state of Pennsylvania, more than 9,800 homeowners said it was very likely they would have to leave their homes due to foreclosure in the next two months, according to the survey data. Another 47,700 reported they could lose the roof over their head to eviction.
The first ban on foreclosures and evictions went into effect last March and came with legislation to provide rental and mortgage assistance for tenants, landlords, and homeowners.
The federal government COVID 19 relief program has another round of economic relief, which includes $25 billion for rental assistance.
A False Sense of Safety
When the foreclosures and evictions ban lifts, the impact will hit homeowners differently, depending on their economic situation, their loan, and their lender.
“For some, it will be immediate, said Jeffrey Fondelier, vice president of operations with Blueprints. For others, we’ll be able to intervene effectively and buy time,” he said
Buying time could include applying for other funding sources or modifying parts of the loan, but it’s hard to predict how mortgage lenders will react once the moratorium lifts, he said.
Forbearance and Repayment
Some people have been making partial payments toward their overall bill, but all homeowners will be on the hook to make up the missed checks once the period of forbearance ends.
“When forbearance ends, for some people when they see the amount they owe, we may see some homeowners panicking,” said John Arentzen, a housing counselor with Advantage Credit Counseling Service.
“It’s likely homeowners won’t have to pay all the missed months back at once — something that would be overwhelming, Mr. Arentzen said — but the specifics of what happens once the forbearance period ends depends on the type of loan and the lender.”
A Shot of Novocain to the Housing Market
Michael Suley, a former real estate broker, thinks of the moratoriums on foreclosures and evictions as a shot of Novocain. It dulls the pain at the moment but won’t help homeowners, tenants, and landlords once the ban lifts and payments are still due.
the “Cashflow Chick,” Founder of The Tryllion Group, Investor/Entrepreneur having done $150 Million+ in real estate transactions; Specializing in Non-Performing Notes. She has been a regularly featured guest on “The Cashflow Guys” podcast, and you can also find her on many other Real Estate and Entrepreneurial podcasts and in the Wall Street Journal as well. She also speaks at various Real Estate Investing clubs and conferences across the country. Paige teaches the “Building Wealth with Notes” Workshop that drills down into the details of how to successfully buy Non-Performing Notes, create passive income, and mitigate risk. www.CashflowChick.com/training
Surviving the crash of 2007, Paige knows how “life happens” every day. Her passion is to help people build wealth, secure their financial future, enjoy life, and be ready-not broken! Whether it is improving communities one house at a time, assisting borrowers in staying in their homes, or working with other investors to learn a new way to earn higher investment dollars for their retirement years potentially, Paige dedicates herself and her business to helping people improve their lives in every way. For more information got to www.CashflowChick.com