The 2020 and 2021 years have been two of the most unusual time periods in world history , especially for the real estate sector . For example , millions or tens of millions of homeowners and tenants have been severely delinquent with their mortgage and rent payments while unemployment numbers rose incredibly high . However , home values have absolutely skyrocketed to alltime record high annual percentages and prices .
How is it possible for us to see record delinquencies with or without approved forbearance (“ no mortgage payments paid and the lender agrees not to foreclose ”) or loan modification agreements in place and record price growth at the exact same time ? Don ’ t these two opposing situations contradict one another in a cognitive dissonance sort of way ? In past years , record mortgage delinquency numbers would typically cause declining property values nearby because these home delinquencies or foreclosures would become the latest lower sales comparable for the neighboring homes .
The true irony of record delinquency numbers is that most homeowners created much more equity in their properties by just sitting there and not making any mortgage payments . As reported by CoreLogic ’ s Homeowner Equity Report , the total US homeowners ’ annual equity grew $ 2.9 trillion between the second quarters of 2020 and 2021 with an average individual mortgage borrower ’ s gain of $ 51,500 in just one year . A deferral of 12 months ’ worth of $ 2,000 per month payments that totaled $ 24,000 would still be less than half of the new equity gains .
In this article , you will learn about how you can refinance out of a forbearance or loan modification plan instead of losing all of your equity in a future foreclosure sale . For most American families , the bulk of their net worth originates from the equity in their owneroccupied residential property ( singlefamily home , condominium , townhouse , duplex , triplex , or fourplex ), so this topic point is quite relevant to millions of people today .
Let ’ s review next some of the most mindblowing delinquency data that ’ s been published in 2021 :
$ 833 Billion in Unpaid Mortgage Balances
• An estimated 15 million people lived in households that owed more than $ 20 billion in unpaid rent as of July 2021 .
• 7.43 million rental property units were not current .
• 5.95 million owneroccupied housing units weren ’ t current .
• 8.71 million lived in owneroccupied homes where the homeowners have little or no confidence in their ability to pay their mortgage .
• 12.71 million lived in rental properties where the heads of household had little or no confidence in their ability to pay their rent .
• Serious mortgage delinquencies were up 20 % in July from June and were the highest recorded since 2010 .
• By midAugust 2021 , 3.9 million homeowners were in active forbearance , which represented 7.4 % of all mortgages nationwide and $ 833 billion in total unpaid principal .
• An estimated 11.6 % of all FHA and VA loans were in active forbearance .
* Sources : U . S . Census Bureau and Black Knight Mortgage Monitor
How Hyperinflation Creates Wealth
Most people should know by now that historically low mortgage rates for borrowers is one of the main reasons why real estate values have boomed since 2013 , depending upon the region . The vast majority of homeowners need thirdparty loans to buy their properties . Over the past decade , a very high percentage of homebuyers purchased their homes with 0 % to 3.5 % down payments with or without their own personal funds for loan programs like FHA , VA , or conforming that allowed gifted funds from family or seller credits .
Historically , 7year to 10year boom cycles for real estate have been the norm . Yet , we haven ’ t seen significant price drops in a major metropolitan region , state , or across the nation . Do we still have at least another few years of potential doubledigit home appreciation growth in our future or not ?
Photo by Monstera from Pexels
The true irony of record delinquency numbers is that most homeowners created much more equity in their properties by just sitting there and not making any mortgage payments .
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