We are kicking the can down the road–again. Millions of homeowners with federally guaranteed mortgages have the option to extend their forbearance an additional six months, and the new federal foreclosure moratorium deadline has been pushed back to June 30, 2021.
According to a statement released by the White House, there are now 70% of existing single-family mortgages, including the 2.7 million homeowners currently in forbearance.
The New Federal Foreclosure Moratorium Deadline
The new forbearance and foreclosure moratorium deadline applies only to loans backed by a federal agency, Fannie Mae, or Freddie Mac. If you have a private mortgage, then these moratoriums won’t apply to you. But many private lenders are offering forbearance, so call your loan servicer and ask even if you don’t have a government-backed loan
Forbearance gives homeowners who are struggling financially the option to pause their monthly mortgage payments without hurting their credit score or paying penalties. If you’re eligible for forbearance, your options vary slightly depending on what type of loan you have. “The dates [for forbearance] vary based on who owns your loan, and based on when you got your original forbearance,” says Urban Institute senior research associate Karan Kaul.
Paul Tracy explains how this works at Investing Answers. “Let’s assume Bank XYZ has made $10,000,000 of loans to various companies and individuals. Though Bank XYZ works very hard to ensure that it lends only to people who can repay their loans (and repay them on time), inevitably, some will fall behind, some will be renegotiated, and even some will default, sold off as non-performing loans.”
“Bank XYZ knows this and estimates that 1% of its loans, or $100,000, will probably never come back to it. This $100,000 estimate is Bank XYZ’s loan loss reserve, and it records this reserve as a negative number on the asset portion of its balance sheet.”
Looking forward, an estimated 2 million mortgage loans could become seriously delinquent in 2021. For some borrowers, the reason they are delinquent is job loss.
States are beginning to loosen COVID rules, allowing Americans to take their kids back to school, allowing businesses to reopen and people to go back to work. Many of the hardships that caused such financial difficulties as forbearance and threat of evictions will moderate. For some it may be too late. We have an opportunity to help the consumers stay in their homes. We can buy the non-performing loans at a deep discount from lenders, restructure the loans on better terms, and keep the borrowers in their homes. It is very satisfying work.
Paige Panzarello, the “Cashflow Chick,” Founder of The Tryllion Group, Investor/Entrepreneur having done $150 Million+ in real estate transactions; Specializing in Non-Performing Notes. She has been a regularly featured guest on “The Cashflow Guys” podcast, and you can also find her on many other Real Estate and Entrepreneurial podcasts and in the Wall Street Journal as well. She also speaks at various Real Estate Investing clubs and conferences across the country. Paige teaches the “Building Wealth with Notes” Workshop that drills down into the details of how to successfully buy Non-Performing Notes, create passive income, and mitigate risk. www.CashflowChick.com/training
Surviving the crash of 2007, Paige knows how “life happens” every day. Her passion is to help people build wealth, secure their financial future, enjoy life, and be ready-not broken! Whether it is improving communities one house at a time, assisting borrowers in staying in their homes, or working with other investors to learn a new way to earn higher investment dollars for their retirement years, Paige potentially dedicates herself and her business to helping people improve their lives in every way.