“A foreclosure is a legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments, but it can also happen when the borrower fails to meet other terms in the mortgage document.” Investopedia
Internet and social media platforms are full of information about the assistance Congress is offering through the CARES act to homeowners that have been affected by the COVID-19 outbreak. Homeowners with mortgages backed by any federal agency can request forbearance relief, which may include a deferred payment plan and/or a home loan modification.
A conventional loan is a home loan that is not offered or guaranteed by a government entity. It is available through or guaranteed by a private lender. Conventional mortgages often meet income and down payment requirements set by Fannie Mae and Freddie Mac and often meet loan limits set by the Federal Housing Finance Administration (FHFA).
Non-Backed Mortgage Loans.
Conventional loans aren’t backed by a government agency, but they do follow some government guidelines. conventional lenders are free to enforce requirements that are stricter than the guidelines set by the FHFA, Fannie, and Freddie. If you’re applying for a conventional mortgage after foreclosure or bankruptcy, it might be tougher to qualify.
If you have a forbearance plan on a conventional mortgage, your mortgage’s repayment will look different than the federally backed loan repayment plans. Without a federal mandate in the CARES Act, conventional mortgages are different in their repayment, and each lender’s plans look different.
Of all outstanding single-family mortgages, roughly 70% are owned or backed by a federal agency, and about 30% roughly 14.5 million U.S. home loans are privately owned and not backed by any federal agency. Just under 11% of these privately-held mortgages remain in some type of forbearance or deferment program, a higher level than that of Americans with government-backed loans.
Our Better off home buyers research shows, that close to 2 million conventional loans are in any kind of forbearance plan. Private banks and lenders are not obligated to follow the CARES act homeowners’ help guidelines.
Federally financed homeowners can obtain forbearance under standard terms dictated by the guarantor. However, conventional loan borrowers receive it with varying durations, qualification requirements, and repayment options. This means that two borrowers with similar circumstances may get different treatment because different entities own their loans.
More Homes Into Foreclosure In Third-Quarter 2020.
The third-quarter 2020 analysis shows that around 216,000 homes are in a foreclosure process, with near 7,900 houses, or 3.7 percent, inhabited as so-called ‘zombie foreclosures.’
Foreclosed properties reached (215,886) in the third quarter of 2020 and are down 16% (258,024) since the second quarter of 2020 But the percentage of those properties that have been abandoned as zombies foreclosures rose from 3 percent in the second quarter of 2020.
Despite the increase, the 7,900 zombies foreclosure properties continue to represent just a tiny portion – one of every 12,500 homes – of the nation’s stock of 99.4 million residential properties.
The third-quarter 2020 data shows a drop in the number of homes at some point in the foreclosure process, but an increase in the vacant properties at a time when the federal government is trying to shield the housing market from an economic downturn stemming from the COVID-19.
Among the government’s key measures is a temporary prohibition against lenders foreclosing on government-backed mortgages. The ban, which is set to expire on August 31, 2020, and affects about 70 percent of home loans in the United States, was enacted under the CARES Act passed by Congress in March of this year and then extended to help borrowers who have lost jobs or other sources of income during the pandemic.
Conventional loans owned by private banks and lenders were no include in the CARES act, leaving borrowers at their lender’s mercy.
“Abandoned homes in foreclosure remain little more than a spot on the radar screen in most parts of the United States, posing few if any, problems from neighborhood to neighborhood. But the latest numbers do throw a small potential red flag into the air, given the increase in the percentage of zombie foreclosures,” said Todd Teta, chief product officer with ATTOM Data Solutions.
Without the government’s regulation to supervise private lenders or to establish a standard procedure to approach the defaulting mortgage problem. Third-Quarter 2020 and the coming 2021 will be the scenery of uncounted foreclosures, abandoned homes, (Zombie foreclosure), and an apartment-rental boom.
Oregon House Bill 4204 Holds on Lender Remedies
Oregon Governor Kate Brown signed House Bill 4204 into state law on June 30, 2020. Bill 4204 requires lenders to offer forbearances to Oregon homeowners affected by the coronavirus pandemic. The law also prohibits foreclosures during the emergency period, which goes from March 8, 2020, to Sept 30, 2020.
“Directs lenders of loans securing real property, land sale contracts, retail installment contracts, and personal property used as residence, to refrain from treating missing installment payments by borrowers as a default during the emergency period of March 8, 2020 to September 30, 2020, established by the Governor’s declaration of a state of emergency, plus any extensions, and 60 days following. Directs lender to defer or forbear payments during the emergency period, so that a borrower can make payments of the owed balances in periodic payments following the maturity date, of the same amount, at the same interest rate, as was due during the emergency period. Establishes that a borrower does not need to provide notification to a lender more than once on an inability to make payments during the emergency period. Establishes that borrowers may provide lender with documentation and other evidence to demonstrate that their failure to pay is a direct or indirect result of conditions that prompted the Governor’s declaration of emergency.”
The above text is a fragment of the staff measure summary, dated on 6/25/2020
On August 13, 2020, Oregon banks filed a lawsuit in U.S. District Court against the state government claiming the new law is an unconstitutional violation of contract law. The suit also argues that this new law unconstitutionally anticipates federal law and unfairly seeks to establish retroactive protections beginning March 8, which is more than three months before the bill was passed.
Third Quarter of 2020.
Private banks and lenders have developed individual programs to help homeowners affected for the coronavirus hardship. Every one of them has its procedure to qualify and approve a forbearance, deferral payment plan, or a loan modification. But as more people lose their jobs and those federal and private protections eventually expire, foreclosure numbers may tick up in the third-quarter 2020 and during 2021.
The state’s COVID-19 watch list — a warning sign that infections there are spreading more rapidly than public health officials can track them. The spread of the deadly disease has decreased since July, but authorities say the number of cases is still too high.
With more businesses opening and an Oregonian economy showing a slow but steady ascendant curve, we will have a better third quarter in Oregon, that the second we already passed. But probably the slow pace in recovery is coming late for many people that are behind mortgage payments or are facing a pre-or-suspended foreclosure.
Even if many can recover their jobs, or get a new job, it could be not enough to cover their self economic ditch carved by the coronavirus pandemic. We must have into account that many people in Portland were affected to some degree for the protester’s actions and some non-pacific demonstrations.
If you are a homeowner with a federal non-backed loan that at the beginning of the 2020 third quarter, have a forbearance plan. Picture yourself one year from now. Sincerely we hope you can comply with your mortgage payments, and by the third quarter of 2021, you have enjoyed a free hassle year.
Under a federal mortgage law that took effect in 2014, a servicer usually can’t initiate the foreclosure process until the borrower’s mortgage obligation is more than 120 days’ delinquent.
We are seeing how the federal government, the state, and many private banks are implementing measures to prevent the real estate market from collapsing.
Many lenders have created programs to mitigate the economic damage that could happen from a massive foreclosure outbreak.
but as long as all things do not return to normal, we run the risk of facing a crisis worse than the one we are experiencing so far.
A foreclosure process can last from three to six months, in the current conditions with the coronavirus crisis, we have seen that the courts in Oregon have not been working to their capacity, which would make the process a little more delayed, but once the process has started, it can only be stopped by remedying the amount owed, fines, and interest in a single payment.
if you are behind in your mortgage payments if the coronavirus has reduced your income and you will potentially be in foreclosure, the solution is to sell the property, this is an appropriate time to sell because if you have a short time being behind in mortgage payments and you think you will not be able to recover, selling the house can prevent you from losing more money. Also, it avoids a blemish on your credit report.
Better Off Home Buyers buys your house in a short time as 7 days. After you contact us, we will return your phone call the same day. Then we set an appointment to see your house, in 24 hours we will present you with a writing offer. When you give us the green light, we start working on the purchasing paperwork, so you can have in your hands the cash for your house immediately.
Currently, we are working with some homeowners with private loans. We Better Off Home Buyers have plenty of experience dealing with properties in a foreclosure process.
Many times we have purchased a foreclosure property, and the previous owners don’t have a place to go. In those cases, we had signed a rental agreement for 2 or 3 months always depending on the time they need to relocate.
During August this year, we closed 2 deals where we have purchased 2 rental properties with tenants. The renters of both properties have been severely affected by the economical coronavirus struggles. We had a conversation we the tenants to let them know we respect and follow the Oregon and Portland landlord-tenant regulations.
So, we signed an affordable 6 months rental agreement for each property. The tenants are nice working people going through a difficult time, like dozen of thousands in our Country.
Avoid a foreclosure process, contact us by filling out the form in this page or dial directly (503) 212-9641, ask for Scott Dalinger.