Experts predict foreclosures to rise by end of year, here’s how you can avoid one
The foreclosure moratorium is about to come to an end, and foreclosures could rise. (iStock)
Prior to the expiration of the federal foreclosure moratorium in July, data shows that foreclosure activity decreased slightly last month. However, experts predict it could begin to increase throughout the second half of 2021.
There were more than 12,000 properties with foreclosure filings, or default notices, scheduled auctions or bank repossessions, in July, according to ATTOM Data Solution’s July 2021 U.S. Foreclosure Market Report, which was released on Aug. 17. This is down 4% from the previous month but up 40% from 2020.
"The end of the government’s moratorium won’t result in millions of foreclosures, but we’re likely to see a steady increase in default activity for the balance of the year," Rick Sharga, the executive vice president of RealtyTrac, a subsidiary of ATTOM, said. "Much of the foreclosure volume will come from the reinstatement of foreclosure proceedings on properties that had already been in default prior to the pandemic, and new foreclosure activity on vacant and abandoned properties."
If you are struggling to make your mortgage payment on your current homes and are at risk of falling into foreclosure, consider refinancing to save money on your monthly payments. Visit Credible to see how much you could save by lowering your interest rate.
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How to avoid foreclosure
Following the end of the foreclosure moratorium, more homeowners became at risk of falling into foreclosure if they were unable to make their monthly payments. However, in today’s strong housing market there are several options available to homeowners.
Many homeowners with mortgages backed by the federal government were previously protected under a foreclosure moratorium until it expired in July. However, the government’s eviction moratorium expires at the end of September. Homeowners that went into COVID-19-related forbearance periods at the beginning of the pandemic will start to see those periods expire in the coming months. However, there are still options for them even as their forbearance period ends, such as a loan modification or a mortgage refinance. Refinancing can help homeowners lower their monthly mortgage payments, and they can compare multiple lenders at once through an online marketplace like Credible.
Here are a few options homeowners have to help them avoid foreclosure and reduce their monthly payments:
- Refinance
- Forbearance
- Sell the home
Refinance: Mortgage interest rates are at historic lows and remain below 3%. As of Aug. 19, the average 30-year fixed-rate mortgage is 2.86%, according to a weekly report from Freddie Mac. With these low rates, borrowers can lower their mortgage payments and potentially save hundreds of dollars per month. Even some homeowners who bought at the beginning of the pandemic could still benefit from a mortgage refinance. Visit Credible to compare rates from multiple lenders at once and see which one is the best fit for you.
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Forbearance: Those that experienced financial hardship have the option to request pandemic-related forbearance. Some federal programs allow up to 18 months of forbearance for homeowners. Loans backed by federal agencies such as the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Veterans Affairs (VA) and the Department of Agriculture (USDA) have a deadline of Sept. 30, 2021, to apply for forbearance. There is currently not a deadline set for loans backed by Fannie Mae and Freddie Mac, which back the majority of home loans in the U.S. You can check the Consumer Financial Protection Bureau’s (CFPB) information site or talk to your mortgage servicer to learn how to apply for forbearance.
Sell the home: Home prices are on the rise, increasing nearly 17% annually in May. Those having trouble making their mortgage payments also have the option to sell their home at a time when homeowners are seeing record-high equity levels. If you’re considering selling your home and are interested in buying a new one that is more affordable, visit Credible to compare mortgage lenders and get prequalifed in minutes without affecting your credit score. With Credible, you can also speak to a home loan expert and have all your questions answered.
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