About 1 million U.S. homeowners with a mortgage are still in some stage of a mortgage payment forbearance program with their lender. And many who are, need the help.
The current rate of delinquencies at all stages is 3.5%, and that is historically high.
“The last time we saw this high of a level was back in 2008 and 2009 during the financial crisis. But what is different this time is that the foreclosure rate is at a historic low because of the forbearance program,” said Lawrence Yun, chief economist at the National Association of Realtors.
Those forbearance programs are winding down now. For many, forbearance has been a lifeline while they worked to repair their household income, and will resume normal mortgage payments.
In most cases, those missed payments will be deferred until the end of their mortgage payoff date.
But for some, without the protection, they will have to sell or lose their home to foreclosure.
That will mean more existing homes for sale, and that may help the tight housing market.
“The foreclosures, we never want to see families undergo that process, but in the current state where we are at a historic low in terms of choices, there are ready buyers who are ready to snatch up those homes,” Yun said.
It is also good for homeowners who must sell immediately or banks that want to sell, with homes selling at a record fast pace — in many cases in a matter of days.
The NAR said the number of active listings currently on the market remains lower than a year ago, and near a record low. Yun says the end of forbearance, coupled with any increase in new home construction in 2022, will lift inventory levels.