The rate of missed mortgage payments rose to a high during the coronavirus pandemic that has not been seen since the 2008 housing crisis. With so many people struggling to stay ahead on their mortgages, many mortgage lenders are afraid of what the future may hold. But why are so many mortgagees falling behind on their mortgages, and what can people do about it?
The Forbearance Crisis
According to the Mortgage Bankers Association, about 5.5% of all homeowners are currently in forbearance on their mortgages. This means they have reached an agreement with their mortgage holders to avoid foreclosure. This is down from the highest rate of forbearance, which was in June 2020, when it reached 8.55% during the worst parts of the coronavirus quarantine. While this helped avoid foreclosures, it was of little comfort to either homeowners or mortgage holders, who have felt a great deal of economic pressure over the course of the past year.
Why is This Happening?
Like with many other economic problems, the high rate of forbearance can be laid at the feet of COVID-19. The combination of fears of COVID infection and quarantine measures implemented to prevent its spread have had a devastating effect on many people, who have lost their jobs and their businesses. As a result, previously affordable mortgages suddenly became massive economic burdens, and many homeowners fell behind as a result.
For now, there is a federal moratorium on foreclosures that will last until May 1, but when that ends, mortgage lenders expect a wave of foreclosures to hit. When that happens, many current homeowners who are behind on their mortgage payments may face homelessness. Fortunately, there are some legal steps that can be taken to help mitigate the effects of this ongoing economic crisis. To take full advantage of those benefits, you should speak to an attorney knowledgeable in issues related to financial distress.
As experienced real estate attorneys and litigators, we have been on all sides of many foreclosure actions. We have represented lenders, borrowers, and tenants. As part of our efforts to assist homeowners who are in foreclosure and deal with the foreclosure crisis that has inundated our market, we offer several low-cost options and counseling to help give homeowners the space they need to make intelligent decisions so they can get back on their feet, permanently. For more information about these options, please call (516) 280-7105 or fill out our contact form for a free consultation.