{"id":1906,"date":"2021-07-28T12:52:38","date_gmt":"2021-07-28T12:52:38","guid":{"rendered":"https:\/\/phphouses.com\/blog\/?p=1906"},"modified":"2021-07-28T12:52:38","modified_gmt":"2021-07-28T12:52:38","slug":"4-reasons-end-forbearance-will-not-lead-wave-foreclosures","status":"publish","type":"post","link":"https:\/\/phphouses.com\/blog\/4-reasons-end-forbearance-will-not-lead-wave-foreclosures\/","title":{"rendered":"4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures"},"content":{"rendered":"
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4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures<\/p><\/div>\n

With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago. Here are four reasons why that won\u2019t happen.<\/p>\n

1. There are fewer homeowners in trouble this time<\/strong><\/h4>\n

After the last housing crash, about\u00a09.3 million<\/a>\u00a0households lost their home to a foreclosure, short sale, or because they simply gave it back to the bank.<\/p>\n

As stay-at-home orders were issued early last year, the overwhelming fear was the pandemic would decimate the housing industry in a similar way. Many experts projected\u00a030% of all mortgage holders<\/a>\u00a0would enter the forbearance program. Only 8.5% actually did, and that number is now\u00a0down to 3.5%<\/a>.<\/p>\n

As of last Friday, the total number of mortgages still in forbearance stood at \u00a01,863,000<\/a>. That\u2019s definitely a large number, but nowhere near 9.3 million.<\/p>\n

2. Most of the 1.86M in forbearance have enough equity to sell their home<\/strong><\/h4>\n

Of the 1.86 million homeowners currently in forbearance, 87% have at least\u00a010% equity<\/a>\u00a0in their homes. The 10% equity number is important because it enables homeowners to sell their houses and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.<\/p>\n

The remaining 13% might not all have the option to sell, so if the entire 13% of the 1.86M homes went into foreclosure, that would total 241,800 mortgages. To give that number context, here are the\u00a0annual foreclosure numbers<\/a>\u00a0of the three years leading up to the pandemic:<\/p>\n