Tom Johnson

  • Home
  • Search
    • Advanced Search
    • Map Search
    • Get Property Alerts
    • What’s My Home Worth?
  • Areas
    • Aurora
    • Denver
    • Parker
    • Centennial
  • Featured Properties
  • Blog
  • About
    • About Tom
    • Testimonials
  • Contact

Try Our Property Search

Get Property Alerts

Read Our Blog

What's Your Home Worth

Are We About to See a New Wave of Foreclosures?

March 18, 2020 By Tom Johnson

Are We About to See a New Wave of Foreclosures? | MyKCM

With all of the havoc being caused by COVID-19, many are concerned we may see a new wave of foreclosures. Restaurants, airlines, hotels, and many other industries are furloughing workers or dramatically cutting their hours. Without a job, many homeowners are wondering how they’ll be able to afford their mortgage payments.

In spite of this, there are actually many reasons we won’t see a surge in the number of foreclosures like we did during the housing crash over ten years ago. Here are just a few of those reasons:

The Government Learned its Lesson the Last Time

During the previous housing crash, the government was slow to recognize the challenges homeowners were having and waited too long to grant relief. Today, action is being taken swiftly. Just this week:

  • The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days.
  • The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”

Homeowners Learned their Lesson the Last Time

When the housing market was going strong in the early 2000s, homeowners gained a tremendous amount of equity in their homes. Many began to tap into that equity. Some started to use their homes as ATM machines to purchase luxury items like cars, jet-skis, and lavish vacations. When prices dipped, many found themselves in a negative equity situation (where the mortgage was greater than the value of their homes). Some just walked away, leaving the banks with no other option but to foreclose on their properties.

Today, the home equity situation in America is vastly different. From 2005-2007, homeowners cashed out $824 billion worth of home equity by refinancing. In the last three years, they cashed out only $232 billion, less than one-third of that amount. That has led to:

  • 37% of homes in America having no mortgage at all
  • Of the remaining 63%, more than 1 in 4 having over 50% equity

Even if prices dip (and most experts are not predicting that they will), most homeowners will still have vast amounts of value in their homes and will not walk away from that money.

There Will Be Help Available to Individuals and Small Businesses

The government is aware of the financial pain this virus has caused and will continue to cause. Yesterday, the Associated Press reported:

“In a memorandum, Treasury proposed two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size.”

The plan also recommends $300 billion for small businesses.

Bottom Line

These are not going to be easy times. However, the lessons learned from the last crisis have Americans better prepared to weather the financial storm. For those who can’t, help is on the way.

Filed Under: Market Information

Recent Posts

  • Why Your Home Inspection Matters [INFOGRAPHIC]
  • Why Buying a Home May Make More Sense Than Renting [INFOGRAPHIC]
  • Why You Should Consider Condos as Part of Your Home Search
  • What Experts Say Will Happen with Home Prices Next Year
  • What Every Seller Needs To Know About Renovating This Year
  • 4 Simple Graphs Showing Why This Is Not a Housing Bubble
  • Don’t Let Student Loans Delay Your Homeownership Dreams
  • What’s Driving Today’s High Buyer Demand? [INFOGRAPHIC]
  • The Top Indicator if You Want To Know Where Mortgage Rates Are Heading
  • How Remote Work Impacts Your Home Search [INFOGRAPHIC]

Categories

  • 1031 Exchange
  • Aurora Neighborhoods
  • Home Buying
  • Home For Sale
  • Home Improvements
  • Home Maintenance
  • Home Ownership
  • Home Selling
  • Home Value
  • Investment Property
  • Market Information
  • Money Matters
  • Mortgage
  • New Construction
  • Recommendation/Testimonial
  • Taxes
  • Uncategorized
  • VA Loans
  • Email
  • Facebook
  • LinkedIn
  • Twitter
Equal Housing
Blue Fire Group    Real Estate Websites
© 2023 Copyright
LAC
Buying Buddy    Powered By Buying Buddy ®