Today, I’m going to tackle foreclosures, forbearance, and what’s ahead for anyone whose clients – or they themselves- have gotten into a little hot water with their mortgage because of what’s happening with Covid.

First and foremost, I want to go back ten to thirteen years. The last time that we were in this kind of financial difficulty is when we had the mortgage corruption correction of the mid and late 2000’s. We saw a steep increase of foreclosures at that time. Back then, lenders made the decision that it was in their best interests to foreclose rather than work with individuals that got behind on their mortgages. As a result, the banks learned that it cost a lot of money to foreclose and left a lot of people with a bad impression of that bank. That policy hurt the banks’ reputations in their communities and gave many a bad name that has been very difficult to shake.

Fast forward to now. People that normally pay their bills and have reasonable mortgages have found themselves on hard times because of the Covid shutdown. Many of them have opted to work out a forbearance with their lender to help them recover and get their mortgage back to current. The challenge is for these individuals is that they may have reduced their hours, lost their job or are unable to return to the job site making paying back that owed amount a challenge. A lot of people are worried about possible foreclosures.

What is different about now is that this is a government-mandated shutdown that is causing the job difficulties. It is not a mortgage corruption correction like we had thirteen years ago. We are in a completely different market.

I’m very optimistic that banks and lenders have learned their lesson regarding foreclosures. I’m hopeful that they will work with mortgage holders to put together a recovery plan so that homeowners can right their ship and get their payments current.

I am not expecting a surge in foreclosures. I am actually seeing a lot of lenders using this time and situation to build some good PR as they work with their mortgage holders. I hope they continue to do this.

Let’s say a lender decides to go through with a foreclosure anyway. The time a foreclosure takes depends on what state the lender is in. That why it is really important that you know the laws for your state so that. If you do work with clients facing foreclosure, you need to be aware of the timeline.

As always, I encourage you to do your own research into your state’s foreclosure timeline and the real number of foreclosures in your market. Your clients might be in a situation where they need your expertise and advice, whether they are facing a forbearance or foreclosure or just worried about the future of their home. Be ready with the information and back it up with facts.

That’s all for this week. Until next time, take care!