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Willy @ The Real Estate Project

Making Real Estate Happen

Is There A Real Estate Crash Coming?

     We've been going through a long lock down with the current pandemic. For awhile the lock down raised and then we were back to a sort of lock down again. Either way, there have been people out of work and/or on a layoff. People haven't been able to make their mortgage payments. The government stepped in requiring mortgage servicers/lenders to offer a "loan forbearance". If you are not sure how Forbearance works, it allows you to ask your loan servicer or lender to miss some payments in return you will get caught up at a later agreed time down the road. Well, at the time I think the agreed time frame was 4 months. That time has come and gone. Now the lenders and loan servicers are expecting to be paid. Unfortunately, many homeowners don't have the money to pay to get caught up. Some lenders and loan servicers did accept the terms of rolling the delinquent amount on to the back end of the loan, but for the most part, lenders or loan services wanted the homeowners to get caught up when the 4 months were up. 
     Now we have a situation where homeowners have not been able to get caught up on their house payments. Lenders and or loan servicers are now filing documents of "Notice of Default". An NOD is the legal action to let homeowners know that they are behind on their house payments. How long they will let that go varies from one lender to another. I've seen some lenders only wait 30 days while others wait years before filing a Notice of Trustee Sale. The NTS is the legal notification to the homeowner that the lender has started a legal action to foreclose on the property. The time frame on that is what I like to call the 3 and 3. "3 months and 3 weeks". 
     With all these homeowners not having the ability to get caught up on their house payments, we are looking at a huge foreclosure crisis on the horizon. This will have a huge impact on real estate. I'm not sure how the economy will be impacted, but I'm sure there will be some sort of impact. The only way to avoid a real estate market crash is if  the government steps in and forces lenders and loan servicers to rewrite loans.     

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