Have you been hearing a lot about a wave of foreclosures, will the Biden
administration has a new program to prevent foreclosures or at least
that's the goal and the government's been doing everything they can to
prevent a wave of foreclosures from touching the house housing market.
So how will this affect you buying a home?
Not only have we seen the extension, the foreclosure
moratorium until July 31st, 2021.
And for Berenson enrollment window.
Through September 30th which about 7.2 million people have taken
advantage of, but now the Biden administration has introduced a new
directive to prevent foreclosures.
Now, if a homeowner can pay back their monthly payment and exit forbearance
then their missed payment will be moved to the end of the mortgage
and no additional cost to them.
However, this is where the directive comes into play because all this
up to this point has been expected.
We've been familiar with, but this is.
New that just came out.
So homeowners with government backed mortgages.
So that's FHA VA and USDA will now received what's
called enhanced assistance.
And so what is enhanced assistance and what roughly it's a 25%
reduction and a borrower's monthly principal and interest payment.
And the goal is to reduce the monthly obligation so that
homeowners don't go into foreclosure.
So we don't have this whole wave of foreclosures hitting the market.
So a $2,000 per month, principal and interest mortgage payment.
Now becomes $1,500 a month as a mortgage payment, which is a
savings of about $6,000 per year.
So basically the two options offered by a HUD, which oversees FHA.
So there's the COVID-19 recovery standalone partial claim and the
COVID-19 recovery modification.
So the COVID 19 recovery standalone partial claim is for homeowners who can
resume their current mortgage payment.
So HUD will provide borrowers with an option
to continue those payments with zero interest subordinate lien that's
repaid when the mortgage ends so upon sale or a refinance, which is
very similar to how Fannie Mae and Freddie Mac had been treating some
of their loan modifications as well.
The COVID-19 recovery modification is for homeowners who cannot resume
making their current monthly payments.
And this is where the biggest reduction comes into play.
So it extends the term of the mortgage to 360 months.
30 years.
So taking whatever they, maybe their term was 30 years 10 years
ago, and it's a re edition.
So extending that to 360 at a market rate and targets reducing
the monthly payment by 25%.
So these options from HUD are actually in line with the 20% reduction goal.
That USDA has VA has an Fannie Mae and Freddie Mac, which are
the conventional loan options.
So really what does all this mean for you as you're looking for homes?
The idealized view of foreclosures, creating new waves of inventory.
Isn't likely, and I've been seeing this a lot where people are saying like
a forbearance is going to end them.
A bunch of people are going to get foreclosure, and then there's going
to be all this inventory, the housing market's going to be back to normal.
And then finally I can buy and the prices are going to be lower and
it just doesn't look like that's the case for us to actually.
A market returning back to the quote, unquote normal is actually seeing the
demand slowed down or a huge flood in inventory that we just likely won't see.
Even if we did see a white wave of foreclosures, it would take
a long time for us to be able to see that actually create waves.
In the market.
So will there be a rise of foreclosures?
Sure.
Yeah.
There's going to be more foreclosures than there normally is, but a flood
that's actually going to impact the market in a meaningful way.
It's just not likely, especially with all of the plans that the government
has to reduce the amount of foreclosures because ultimately they wither away.
Overall health of the economy.
And I get it when it seems like the housing market is stacked against you,
any glimmer of hope for things to return to normal, it sounds like a dream.
It sounds like a good thing.
And it's extremely frustrating to be buying in this market, especially when
you keep seeing new changes that make it seem more and more out of reach like these
programs, especially if you were sitting there saying I'm so frustrated with the market
And then there's this, people are talking about maybe there's these foreclosures
that are going to correct everything.
And then you see actually there's action to reduce the foreclosures.
And it's oh, it seems like everything is stacked against me, but really the
best thing for you to do right now is to make sure that you yourself are
ready to buy when the time is right.
For you, not on all these external things that happen.
The lack of financial preparedness or financial misfortune of others
is not a good replacement for your own financial health and wellbeing
and a plan that you have in place for your money and your family.
So now is the perfect time to really understand if buying home
is right for you at the moment.
And that decision should always be based on your own financial situation
rather than what's happening around you.
Are you on track for your retirement goals?
Have you paid down expensive high interest debt?
Do you have emergency savings?
Are you living a lifestyle and a budget with what brings you joy
and fulfillment or are you just playing the game more and more?
I need to try to get everything.
And maybe you're not, maybe you're stuck in saying, I'm actually frustrated running
up against all of these walls here.
But those are better questions to ask for.
If you should buy a home right now than just what's happening and
letting everything external around you dictate if you should buy now or not.
And so to get started on creating your plan, exploring what does this look like?
Go ahead and click on this video.
over here
I walked through step by step.
How to get started with a home buying plan.
That way you can decide if you want to buy now or wait, depending on
what works for you and not just what's going on in the market around you.