There is little chance of a foreclosure crisis occurring again.Let’s examine the reasons why another surge is highly improbable.
There is a scarcity of homeowners who are significantly delinquent on their mortgage payments.Right now, the prices of many things are going up, like food and gas. This is making people think that more people might not have enough money to pay for their homes.
People are worried that many homes might be taken away by banks. Even though a bit more homes are being taken now compared to last year, experts say there won’t be a big problem like in 2008 where many homes were taken away.
Bill McBride from Calculated Risk is a smart person who knows a lot about homes. He watched the data and market before the big problem in 2008, so he knew it was going to happen. Now he’s looking at things closely again, and he thinks something different will happen this time.
“There will not be a foreclosure crisis this time.”Let’s look at why another flood is so unlikely.
There Aren’t Many Homeowners Who Are Seriously Behind on Their Mortgage Payments
During the last housing crash, a big reason many homes were taken away is because banks gave out mortgages very easily. Even if people couldn’t prove they could pay the money back, they still got loans. Back then, banks didn’t look at things like how good people’s credit scores were, how much money they made, if they had a job, and how much debt they had.
But things have changed now. Banks are more careful and strict about who they give loans to. This means that more people who are good at handling money are getting loans.
The information from Freddie Mac and Fannie Mae, which are big companies that deal with mortgages, shows that fewer homeowners are falling really behind on their mortgage payments. You can see this in the graph below:
Molly Boese, who is an important economist at CoreLogic, is explaining that there are very few homeowners having a hard time paying their mortgage payments.
“May’s overall mortgage delinquency rate matched the all-time low, and serious delinquencies followed suit. Furthermore, the rate of mortgages that were six months or more past due, a measure that ballooned in 2021, has receded to a level last observed in March 2020.”
Before there can be a big increase in homes being taken away, more people would need to have trouble paying their mortgage bills. Right now, a lot of people are able to pay their bills on time, so it’s not very likely that there will be a sudden increase in homes being taken away.
Bottom Line
If you’re concerned about a lot of homes being taken away, there’s no evidence in the current information to show that this will happen. In reality, people who are good at handling money are paying their mortgage bills very well.
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Wed, 16 Aug 2023 22:54:51 +0000
