Posts

Mortgage Servicers Warned to Prepare for Disaster

/1 Comment/in /by

The Consumer Financial Protection Bureau warns that mortgage servicers should begin reaching out to affected home owners now in order to best advise them on ways they can modify their mortgage loans. The CFPB is concerned about mortgage firms that may cause harm to struggling families and homeowners. A separate compliance bulletin said that companies that are unable to successfully manage loss mitigation can expect the bureau to take enforcement or supervisory action. According to the bureau, as of January, over 2 million borrowers have postponed their payments or failed to make them for at least three months.

Michigan real estate news weekly brief

Weekly Brief – March 15

/in /by
A few random topics for your consideration this week:
  1. The topic of reuse of no longer desirable real estate is starting to appear more frequently in the media. As I have discussed in several updates, the use of real estate will continue to change as the market desires change. This week, Crain’s discusses the reuse of several sites, including the Holiday Inn in Farmington Hills (discussed here previously), as well as Fairlane Mall (discussed here previously) and Briarwood Mall (also discussed here previously). Watch for reuse of real estate to become a continuing topic as retail and office uses fade.
  2. I am hearing from some individuals who would be in a position to know that the foreclosure “boom” that has been predicted may be a much smaller boom than thought. A combination of governmental assistance, mortgage servicer leniency, and post-COVID economic recovery may make the expected boom more of a small bubble.
  3. The changing desirability of malls is a nationwide issue, and is impacting even one of the most storied and successful urban malls in the country, Water Tower Place in Chicago, which is losing one anchor (Macy’s), and watching a second anchor drastically reduce its footprint (American Girl Place). If Water Tower Place is being this dramatically impacted, perhaps pessimism about even the most successful malls in Michigan is warranted (perhaps even Somerset Collection, the fate of which I discussed previously).

16% Jump in Foreclosures for February 2021

/in /by

Despite foreclosure and Covid-19 relief measures for homeowners, foreclosures are actually on the rise. A report from ATTOM Data Solutions shows a 16% jump in foreclosures from January to February and notes an upward trend in 29 states. The government’s moratorium bans foreclosures on federally backed loans for homeowners and protects borrowers in the forbearance program. Loans on commercial and investment properties, and properties that are vacant and abandoned don’t garner the same protections, accounting for the slight increase. The yearly data still shows a significant decrease in foreclosures over the same period in 2020.

Housing Counselors Prepare for Surge

/in /by

Calls from homeowners concerned about foreclosure have fallen while interest from homebuyers has surged. The trend points to an uneven economic recovery and the hidden impact of lost jobs and lower income. When federal foreclosure and eviction protection ends, housing counselors aren’t sure what to expect, as they are currently just guessing at the financial state of homeowners who may also be grappling with delinquent utilities, insurance, and car bills.

Lawyer – No Light at the End of the Pandemic Tunnel for Property Owners

/in , , , /by

The future of real estate continues to be in a flux. At a federal level, GSEs have continued to extend foreclosure and eviction moratoriums through June 30, 2021. The Center for Disease Control issued its own eviction moratorium in September 2020, and the Biden administration has extended it through March 31, 2021. In Michigan, the pandemic’s eviction moratoriums have expired, although the Michigan Supreme Court has recognized the CDC Order. No formal foreclosure moratoriums were ever instituted in Michigan, but social distancing requirements have halted the proceedings that are held in courthouses which have been closed to the public during the pandemic.

FHFA Extends Forbearance Plans

/in /by

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

/1 Comment/in /by

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

/1 Comment/in /by

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.

Weekly Brief – February 15, 2021

/1 Comment/in /by

One of the biggest unknowns of the real estate market in 2021 is the impact of the lifting of COVD-19 forbearances, and the expiration of foreclosure moratoria.

The number of mortgage loans in forbearance is still quite high, at 5.38%. And the pace of borrowers exiting forbearance plans is the lowest since tracking began in the summer of 2020. This could mean that borrowers are unable to resume regular mortgage payments due to continuing weakness in the economy.

However, some commentators argue that an accelerating economic recovery due to the reduced impact of the COVID-19 pandemic will lead to borrowers being in a position to resume mortgage payments. If this is the case, the rate of foreclosures once moratoria are lifted could be lower than expected.

The other unknown variable is whether we will see further governmental relief targeted to the housing and mortgage industries. This could be an x-factor that upends the normal market forces.

Obviously, the rate of foreclosures will have a significant impact on home prices. Right now, home sales are increasing at a healthy rate. Perhaps even too quickly. Too many foreclosures, however, could shift that pendulum back to stagnant, or even decreasing home prices.

The ultimate outcome of the COVID-19 economic crisis and its impact on housing prices will be a trend to watch this summer and in 2022.

Mortgage Forebearance Crashes to a Halt

/in /by

With 2.7 million Americans still taking advantage of mortgage forebearance programs as late as mid-January 2021, the reality of a housing crisis looms. The CARES Act programs will end at the end of March unless changes are made to the rules. Most of the programs have a 12-month cap. If no intervention occurs, 600,000 Americans will have to begin paying their mortgages again.