Mortgage Defaults Could Pile Up at Pace That Dwarfs 2008

[sri_india]

Mortgage lenders are preparing for the biggest wave of delinquencies in history. If the plan to buy time works, they may avert an even worse crisis: Mass foreclosures and mortgage market mayhem.

 

 

Borrowers who lost income from the coronavirus -- already a skyrocketing number, with a record 10 million new jobless claims -- can ask to skip payments for as many as 180 days at a time on federally backed mortgages, and avoid penalties and a hit to their credit scores. But it’s not a payment holiday. Eventually, they’ll have to make it all up.

 

 

As many as 30% of Americans with home loans – about 15 million households –- could stop paying if the U.S. economy remains closed through the summer or beyond, according to an estimate by Mark Zandi, chief economist for Moody’s Analytics.

 

 

“This is an unprecedented event,” said Susan Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania. “The great financial crisis happened over a number of years. This is happening in a matter of months -- a matter of weeks.”

Meanwhile, lenders are operating in the dark, with no way of predicting the scope or duration of the pandemic or the damage it will wreak on the economy. If the virus recedes soon and the economy roars back to life, then the plan will help borrowers get back on track quickly. The greater the fallout, the harder and more expensive it will be to stave off repossessions.

‘Press Pause’

“Nobody has any sense of how long this might last,” said Andrew Jakabovics, a former Department of Housing and Urban Development senior policy adviser who is now at Enterprise Community Partners, a nonprofit affordable housing group. “The forbearance program allows everybody to press pause on their current circumstances and take a deep breath. Then we can look at what the world might look like in six or 12 months from now and plan for that.”

Even if the economic turmoil is long-lasting, the government will have to find a way to prevent foreclosures -- which could mean forgiving some debt, said Tendayi Kapfidze, Chief Economist at LendingTree.

The risks of allowing foreclosures are too great because it would damage financial markets and that could reinfect the economy, he said.

Up to 30% of home borrowers may seek forbearance, topping the last crisis, according to Mark Zandi of Moody’s Analytics

Bloomberg data from Mortgage Bankers Association

“I expect policy makers to do whatever they can to hold the line on a financial crisis,” Kapfidze said. “And that means preventing foreclosures by any means necessary.”

Laura Habberstad, a bar manager in Washington, D.C., got a reprieve from her lender but needs time to catch up. The coronavirus snatched away her income, as it has for millions, and replaced it with uncertainty. The restaurant and beer garden where she works was forced to temporarily shut down.

She has no idea when she’ll get her job back. And how do you search for another hospitality job during a global pandemic? Now she’s living in Oregon with her mother, whose travel agency was forced to close.

[sureshkonda]

Dallas, Seattle,Bay Area lo easy ga 50% untayi july lopu

[Simple123]

2 minutes ago, sureshkonda said:

Dallas, Seattle,Bay Area lo easy ga 50% untayi july lopu

Bay area lo hardly 1% .  I have seen SFO prices going up and i can give you the listing's. 

I didn't see any layoff in any of the big companies facebook , apple, amazon, google, nvidia, netflix. sony, playstation , broadcomm, VISA, ....  etc . 

My gut feeling , nothing can scratch bay area market , Demand may go down but not the real estate market. It is high end market.