From Forbearance to Foreclosure In Portland, Oregon.

As the year 2020 draws to a close, we still have many situations unfolding. The COVID-19 epidemic, the protest movements, the economy, unemployment, and the political crisis are topics that we will be addressing throughout 2021.

One of the most sensitive topics is the lack of income many people are experiencing. It is not needed to explain that hundreds of thousands have lost jobs, businesses, and the potential for earning money.

At this point, many homeowners had signed for a forbearance plan, hoping to catch up in the near future. According to the Mortgage Banker Association, there are close to 3 million homeowners in forbearance plans. This number represents a decrease of about 19% since the coronavirus crisis broke out in March.

What is not clear in the MBA report of November 9, 2020, is the real status of that 19% reduced forbearance plans. Are they currently on their mortgage, or are they on the foreclosure banker’s list?.

According to the CARES Act, homeowners affected by the crisis can request a 180 days forbearance, being extendable to another 180 days. However, many homeowners and independent landlords have contacted us to report that their lenders have rejected their applications for a 180 days forbearance extension. These rejected applicants state the lenders changed rules without notice.

We have contacted banks in the Portland metro area, as well as the Lake Oswego area, to get deep on this information, but the lenders answered that every case is unique. So, they can apply their criteria to each defaulted loan.

The real estate market in Portland sped up during the coronavirus epidemic. Interest rates are historically low. So, currently, the market has a few houses available for sale, this has increased prices as much as15%, also increasing the house’s equity as well.

Here’s what can go wrong.

At the end of the forbearance period, all late payments are due at once. Now, this is not realistic for most families, especially if you haven’t made a payment in 6, 9, or 12 months. Most servicers have other options to reinstate loans, but we don’t know what the terms are for reinstatement.

Common Options to Reinstate  Forbearance.

  • Add the missed payments to the current payment and cancel them over time.
  • Deferral missed payments to the end of the home loan or sale.
  • Loan modification.
  • Forclosure.

We have heard stories about people whose mortgages were suspended and did not know they had applied for. If you can make your mortgage payments during the COVID-19 do it, you will avoid a lot of unnecessary headaches.

Banks have their regulations. They are free to apply their so-called criteria to every forbearance case. We had received information from our clients where banks have denied their request for a forbearance extension just because their mortgages were not current.

We couldn’t certify this information because the loan servicers reported by our clients did not answer questions about rejections.

We have found out that a big percentage of these rejected loan extensions were mortgage loans non-federally backed, some of them were 3 to 6 months forbearance plan, but at the end of this period, their servers denied the plan extension without further explanation. Because of that, many of them are at risk of foreclosure, and others are in the process already.

Contacting Your Mortgage Loan Servicer.

The CARES Act indicates that in order for homeowners to obtain a forbearance plan for their federally backed home loans, they do not need to present any proof of struggling due to the coronavirus hardships to their lenders. The same applies to getting an extension of the plan as well. However, it is highly recommended to document any conversation and any sort of communication you may have with your loan servicer.

In Portland and across the nation, there are hundreds of reports of misinformation given to homeowners. The lack of information or erroneous ones has caused damage to homeowners and independent landlords affected by the crisis.

It is important to remark that any contact you have with your servicer must be documented and filed for your own protection. We wrote In a previous publication about a client who had requested a forbearance plan in early May. In this situation, our client contacts his loan servicer over the phone. He explained his current income situation and all the trouble he was going through because of the pandemic. 

The bank official on the other end of the phone line assured the homeowner that everything was settled. So, there was nothing to worry about. After 90 days passed, the homeowner in this story received a Notice of Default. Immediately, he contacted his servicer because as far as his knowledge, he was protected by a forbearance plan.

This owner spent days trying to prove that his allegations from previous contacts with his lender were true and that he was approved for a forbearance relief plan. Unfortunately, he was unsuccessful because he had nothing in writing as proof. The lender suggested he pay the missing payments in full, or a foreclosure process would be his fate.

Better Off Home Buyers purchased his house in a transaction we closed at the end of August. Our client had substantial equity on his property. He was able to relocate and start all over again with the money he received for selling his house to us in Portland.

If you are currently in default or think you will because you are concerned about making your mortgage payments, contact your lender to discuss your options and steps to resolve the problem. Remember to file and document all communications you have with them. We can help you. Having a trusted and knowledgeable professional like us on your side is essential and could be the determining factor in helping you with your home needs.

Your home equity is much appreciated.

Home equity is the difference between what you owe on your mortgage and what your home is currently worth. If you owe $200,000 on your mortgage loan and your home is worth $300,000, you have $100,000 of equity in your home. High demand for housing causes prices to skyrocket.

Your equity can increase in two ways. As you pay down your mortgage, the amount of equity in your home will rise. Your equity will also increase if the value of your home jumps. Your equity can fall too if your home’s value drops at a rate faster than the speed at which you are paying down your mortgage’s principal balance. An economic crisis can produce a fall in the real estate market, dropping home prices dramatically.

The Federal Reserve cut interest rates to avoid major economic damage caused by COVID-19. During this pandemic time, we are having a strange combination that has sent home prices skyrocketing. On the one hand, low-interest rates encourage people to borrow a home. On the other hand, homes available for sale had reached their lowest numbers in years. People do not list houses for sale for fear of physically contacting potential buyers.

These factors combination has made increased properties’ value by more than 20%. Unexpectedly, the coronavirus pandemic brought substantial capital gains to homeowners. The pandemic has brought lost jobs, lack of income, and economic problems to the same homeowners at the same time.

Homeowners may lose the benefit of their home equity by losing their homes in a foreclosure process, and the lenders know that.

Many homeowners, including those with no backed home loans, have reported a sort of misinformation that had to lead them to a delicate situation. Some people found themselves in mortgage loan default and potentially homeless if they don’t act right away.

Selling a House In Mortgage Forbearance.

Selling a house in a forbearance mortgage plan shouldn’t be different than selling a house without it. The home selling traditional process allows anybody to sell his property following a well-established system and regulations. 

The real estate market in Oregon is volatile, especially in Portland. We had seen the bubble inflating since the coronavirus broke out and the low-interest-rate was implemented early this year. Also, home sales time has decreased from the traditional 90 to 120 days to 45 days in many cases.

Selling a house in the real estate market takes time and money. Sellers would hire a real estate agent, prepare the house for sale, which means, do repairs, do cleaning, schedule buyer’s visits, and wait for the right buyer to show up.

But if your house doesn’t need repairs, and the only problem is that you can not make the mortgage payments on time. You have many chances to sell your property in the traditional market. 

If a home seller is going through a difficult situation like the one many are experiencing due to the coronavirus hardship, he may not have the money to cover all the expenses related to selling his property. Either, he may not be able to find a real estate agent willing to sell his home. Most real estate agents do not deal with unsightly (ugly) properties. They prefer to list houses in perfect condition.

Unemployment and COVID-19 are the generators of the main regulations taken by authorities here in Portland and across the country. Forbearance mortgage plans are measures to keep people in their homes. The problem is that once the plans come to an end, chances are high that people still don’t have the wherewithal to get back to normal and be unable to pay past due debts ending up losing their properties by foreclosure.

Selling Your Mortgage Forbearance House Fast.

The MBA statistics show that nearly three million homeowners have defaulted on their home loans since the coronavirus epidemic broke out. Many of them are unemployed or have had a significant reduction in income, which will make it virtually impossible for them to catch up on late payments.

Despite the coronavirus, home prices in Oregon have increased by about 20%. If the factors involved in selling a home are in the proper place, a home for sale will hang a “Sold” sign in its window in very Little time. But if it is the opposite, homeowners could not sell their homes for a long time.

The bottom line is if you are going through a difficult time, and the only way out is to sell your house, you better do it right away. 

You must take advantage of your home equity. By selling your house you can pay your current loan debt, save your credit, and use the remaining money to buy another place.

A traditional home sale time takes between 90 to 120 days in normal conditions. A Better Off Home Sale transaction takes 7 to 30 days maximum.

Conclusion.

The forbearance plans come out to help homeowners in crisis because of the COVID-19 hardship. For many, the forbearance plan can be a straight line to foreclosure. Loan services should offer relief mortgage plans, but they have individual guidelines and are free to apply their criteria to every case. As a result of this confusion, homeowners found themselves behind in payments with no chance to catch up soon.

At Better Off Home Buyers’ offices, many homeowners have reported receiving incorrect information from their loan services. Some of them, we have been told, their lenders did not disclose the guidelines and conditions for the forbearance plans, such as potential credit consequences or future credit transactions.

The real estate market in Portland is “hot,” properties are selling faster than normal and at higher prices than the listing. Home equity had reached 20% and above in many cases.

The negative aspect of the economy today is that many people could no recover soon. Many homeowners would not get their mortgage loan current after the forbearance plans end. Foreclosures would be file for hundreds in Oregon and across the USA.

Banks don’t like to deal with foreclosures, but at the same time, Foreclosures for them are a big way to capitalize by taking advantage of the equity.

You can sell your property and take advantage of your home equity. The fastest and the easiest way to sell your property when it is in a forbearance plan. Is by selling it to Better Off Home Buyers. Typically, we close in 7 days. 

You can contact us by filling the form on this page or dial directly (503) 212-9641.

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