Coronavirus economic impact could lead to another mortgage crisis
DALLAS - The economic impact of the coronavirus could lead to another mortgage crisis.
Foreclosures are expected to skyrocket as people struggle to pay their home loans.
It's on the horizon and different from 2008 when there was a lot of creative financing and many had little or no equity built up. These are people who have been in their homes but have been financially affected by the pandemic.
The coming months could bring a coming coronavirus mortgage crisis.
“We're not seeing a ton of foreclosures, which is surprising. But we are forecasting the industry is forecasting an increase in foreclosures,” explained real estate attorney Rachel Kirallah. “These are homeowners that have been in their homes that have been impacted by the pandemic.”
Many people have been laid off. Others are taking pay cuts. Some businesses closed during the rage of COVID-19.
Under the CARES Act and forbearance programs, many people had mortgage payments suspended for a specific period of time.
“A lot of those are coming up on the expiration of those three or four months. And so it’s going to be a really tough time for homeowners who are already delinquent or behind or heading into that direction,” Kirallah said.
Terry Tremaine is president of the Metro Tex Association of Realtors.
“It is totally unbelievable. As properties come on the market, they are sold within days,” he said.
Eight percent of homeowners across North Texas are at least one payment behind on their mortgage. Ten percent are in the Houston area.
“That is the rumor that’s going around. We haven't seen any foreclosures coming on the market as of yet,” Tremaine said. “But people are being laid off. Mortgage payments are hard to make, so that is a possibility that we will see that in the spring.”
It is, it seems, two extremes.
For some homeowners, it will be a tough year for those who are struggling to make payments.
But for others, it’s a great market with great interest rates.
Both professionals advise you to call your mortgage company if you are falling behind on payments, and make sure you open any mail you receive from your lender.