FHFA Extends Forbearance Plans
The Federal Housing Finance Agency lengthened forbearance extensions for Fannie Mae and Freddie Mac borrowers, allowing coverage for up to 18 months. Eligibility is limited to borrowers who are on a Covid-19 forbearance plan as of February 28, 2021. Some borrowers may now be in forbearance through August 2022. This may impact the timing of the impact of foreclosures discussed in last week’s Weekly Brief.
Weekly Brief – February 22, 2021
As I discussed last week, the impact of mortgage forbearance and foreclosures on the residential market remains unknown. There are multiple variables that could impact the ultimate effect: government intervention, the outcome of the COVID-19 pandemic, and the state of the economy and job growth when foreclosures are once again allowed.
The Biden administration bought more time for job growth and to bring an end to the economic impact of the COVID-19 pandemic this week by extending the foreclosure moratorium, which was set to expire on March 31. The moratorium now lasts until (at least) June 30. This gives the economy another three (3) months to recover. From an optimistic viewpoint, this could blunt the impact of foreclosures, as more borrowers could get back on firm financial footing during this three-month period. A pessimist might argue that this only kicks the can down the road another three months.
Regardless of your viewpoint, this extension does delay the potential impact of foreclosures on the residential market. As has been noted in several articles, residential prices are growing at a brisk pace. A glut of foreclosures could slow down that price growth. However, given the timing to process a foreclosure, the redemption period, and the post-possession sale process, it does not appear that foreclosed properties will hit the market until late in Q3 2022, or early Q4 2022, given this new extension of the foreclosure moratorium.
The residential market in Michigan remains strongly favorable to sellers. Inventory is limited, and demand remains strong. Perhaps in 2022 the entry of foreclosed properties to the marketplace will shift the pendulum back in the buyer’s direction.
Biden Extends Foreclosure Moratorium & Expands Relief Program
Using a three-pronged approach, President Biden rolled out mortgage protections. He extended the expiration date for the foreclosure moratorium from March 31 to June 30 and extended the enrollment window to request a mortgage payment forbearance. The third protection allows borrowers to defer mortgage payments for an additional six months. Eligible homeowners must have enrolled in a forbearance plan by June 30, 2020.
Thousands of St. Louis Evictions Promise a Wave of Homelessness
/in National /by Tracy WillisThousands face eviction in St. Louis, Missouri. The backlog of eviction suits threatens to leave many homeless, especially low-income tenants. An eviction defense program and hotline that was set up in August 2020 has received 60% more calls than normal, and many of those calls concern illegal lockouts. The backlog of eviction suits is concerning, with the fear being that all of these tenants may be put out all at once when the eviction moratorium ends.
Weekly Brief – January 11, 2021
/in Weekly Brief /by Dave NykanenI want to highlight a few topics that I believe will dominate the Michigan real estate landscape at a macro level in 2021.
First, mortgage foreclosures will begin to impact the residential market later this year. Although there is the potential for further federal or state moratoria, eventually we will be unable to kick the can further down the road. These foreclosures will begin to place downward pressure on sales prices at the end of 2021 or early 2022, as the foreclosed properties will begin to be marketed for resale.
Second, the impact of COVID-19 on commercial properties will begin to be felt in 2021 as well.
Although it appears the industrial class is weathering the storm quite well, the same cannot be said for retail and office properties.
For retail properties, in addition to the impact of “stay home” orders, you have the continuing trend of online shopping, which only accelerated due to COVID-19. Paradoxically, the decline of the retail sector has contributed to the stability of the industrial sector, as logistics and warehouse uses that support online retailers have thrived during the pandemic.
Major retailers often file for bankruptcy protection in January, after the cold realities of a failed holiday season hit home. This year, I would expect that major retailers, as well as “mom and pop” stores will have to fact reality in early 2021. The “sit-down” restaurant sector will likely also be impacted.
For the office sector, it remains to be seen is whether the impact will be long-lasting. If companies permanently shift work to a remote, or work-from-home, setting, the impact on the office sector could be significant. However, if employers move back to a traditional work setting, 2020 may be a blip on the office sector radar.
Finally, the lifting of eviction moratoria will impact the residential market. Evictions could have a net positive impact on the investor-owned market, as non-paying tenants are shown the literal, and proverbial, door. Or it could merely signal that rental rates will be forced down, impacting investors and overall residential market pricing.
If you would like to track articles on foreclosure and evictions, those articles are specifically tracked on this page of the Michigan Real Estate News website.
Evictions are a Looming Reality
/in Grand Rapids, National, SE Michigan /by Tracy WillisThe New York Legislature has passed a comprehensive and controversial anti-eviction law. The new law bans tenant evictions for a least another 60 days and offers some foreclosure protection to small business owners, as well as renews tax exemptions for elderly or disabled homeowners. Critics feel the law goes to far and doesn’t require proof that financial hardships are due to the pandemic or define income limitations to qualify for eviction protection.
Community Builders, a Grand Rapids-based nonprofit, is partnering with the city’s Homeless Outreach Team to coordinate short-term accomodations and support service for the area’s homeless population. The Geographically Targeted Housing Outreach intiative (GTHO) is funded in part by the city of Grand Rapids Emergency Solutions Grants under the federal CARES Act.
A Detroit Free Press investigation discovered gaps in the state’s safety net designed to prevent renters from losing their homes. Although the number of evictions has decreased when compared to 2019 data, 4 factors are crippling the state’s evction protection measures: A lack of comprehensive statewide data, missing key information to track communities that have not received aid, local judges who fail to follow the state Supreme Court order, and landlords who are finding leasing loopholes.