Foreclosure Flood Isn't on the Horizon
The rising cost of goods, from groceries to gas, has sparked speculation about the affordability of mortgage payments. Concerns have arisen that a wave of foreclosures may be imminent. While foreclosure filings have seen a slight increase compared to the previous year, experts believe that a massive wave of foreclosures is unlikely.
Bill McBride of Calculated Risk, a housing market expert who correctly predicted the 2008 foreclosure crisis, has a different perspective on the current market. He states, "There will not be a foreclosure crisis this time."
Reasons for a Limited Foreclosure Risk: Several factors contribute to the low likelihood of a foreclosure crisis similar to 2008:
Improved Lending Standards: Unlike the previous housing crash, lending standards have become stricter. Lenders now require evidence of applicants' creditworthiness, income stability, employment status, and manageable debt-to-income ratios.
Decline in Mortgage Delinquency: Data from Freddie Mac and Fannie Mae reveal a decrease in homeowners significantly behind on mortgage payments. Molly Boese, Principal Economist at CoreLogic, notes, "May’s overall mortgage delinquency rate matched the all-time low."
Few Homeowners Struggling: The number of homeowners facing severe difficulties in making mortgage payments has dwindled. Even the rate of mortgages that were six months or more past due has decreased.
Contrary to concerns, there is currently no substantial data suggesting an impending flood of foreclosures. Qualified buyers are consistently making their mortgage payments, reducing the likelihood of a foreclosure wave.If you're apprehensive about potential foreclosures, rest assured that the market data supports a more stable outlook.
