At a conference last month of mortgage service companies that work with real estate agents on bank-owned properties, they announced that over 80% of homeowners that went into forbearance after the pandemic started are now current on their mortgage.
What is a forbearance? It is when a mortgage service company, lender or bank allows homeowners to pause making payments and move those missed payments at the back of their mortgage. It will add the missed payments to the back of the loan. You’ll have to repay any missed or reduced payments in the future.
When the pandemic started, 1.6 million homeowners went into forbearance. Now, 80% of those homeowners, are now current on their mortgage. Of the remaining 20%, approximately 15% will not be able to afford and pay their monthly mortgage. A majority will be able to sell their home with equity and walk away with a profit as prices in the San Fernando Valley have increased 30-35% since the pandemic began last year.
“The forbearances are not going to cause a huge shift in the marketplace.”
Now the remaining 5%, or only 80,000 nationwide, will be in foreclosure and will be gobbled up quickly. This small number will not affect the inventory in the market, hence we expect the market to remain strong. In Los Angeles, we still have under 2 months of inventory and under a month for Porter Ranch.
