HOW ARE MORTGAGE LENDERS PREPARING FOR THE BIGGEST WAVE OF DELINQUENCY IN HISTORY? With the corona pandemic, lenders are preparing themselves for the biggest wave of delinquencies in the history of America. If the plan to buy time works for them, they may avert an even worse crisis: mass foreclosures and mortgage market mayhem. The impact of the Coronavirus on the housing market continues to deepen and while it is not widespread just year, stakeholders in the real estate market are all preparing for the worst. Currently, there are about 10 million new jobless claims and the biggest number of these are the borrowers who lost their income due to the virus. Good news is that they can skip payments for as many as 180 days at a time on federally backed mortgages. Ultimately, this will help them avoid penalties and a blow to their credit scores. However, it should be noted that this extension is not a payment holiday, eventually, they will have to cover it all up. About 15 million households all across the country could stop paying their mortgage payments if the United States economy remains closed all through the summer and maybe beyond, according to Mark Zandi, the Chief Economist for Moody’s Analytics. “This is an unprecedented event,” said Susan Wachter, professor of real estate and finance at the Wharton School of the University of Pennsylvania. “The great financial crisis happened over a number of years. This is happening in a matter of months -- a matter of weeks.” Right now, most lenders feel like they are operating in the dark and it is difficult to predict what direction the Coronavirus will take, but whichever way it goes, there will be significant damage to the economy regardless. Supposing that the cure to the virus is found and the effects of the virus recede soon and the economy roars back to life, then the plan will be to help borrowers get right back on track. But, the greater the fallout, the more expensive it will be to prevent repossessions.
HOUSING MARKETS BOILING HOT ALREADY 94 l
