When mortgage forbearance plans were first announced and the pandemic surged through the country in early 2020, many homeowners were allowed to pause their mortgage payments. Some analysts were concerned that once this pause ended, the housing market would experience a wave of foreclosures like what happened after the housing bubble 15 years ago.
Here’s why we are not expecting a wave of foreclosures in 2022:
1. There Are Fewer Homeowners in Trouble This Time
After the last housing crash, over nine million households lost their homes to a foreclosure, short sale, or because they gave it back to the bank. Many believed millions of homeowners would face the same fate again in 2022.
However, 2021 data shows that, this time, most homeowners exited their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again. Those that are behind with their mortgage payments and have no plans still have time to contact their lenders.
2. Most Homeowners Have More Than Enough Equity To Sell Their Homes
For those who homeowners who can’t negotiate a solution with their bank, many will have enough equity to sell their homes and leave the closing with cash instead of facing foreclosures.
As a buyer, it is unwise to sit on the sideline waiting for a wave of foreclosures for there will not be one.