Exactly how many properties will be freed up now that the federal eviction and foreclosure moratoriums have expired? Lillian Dickerson with Inman News begins to answer that question in the article she wrote and was published on Aug. 02, 2021. Below are excerpts of that article.
“…After a series of yo-yoing between expirations and extensions, the federal eviction moratorium and the foreclosure moratorium on all federally-backed mortgages established by the CARES Act and the Centers for Disease Control and Prevention (CDC) ended July 31. With this most recent one-month extension, the CDC explicitly said “this is intended to be the final extension of the moratorium.”
At that point in time, it’s unclear exactly what will happen with homeowners and properties across the country, but things will likely be dependent on geographical location and loan provider.
How many new properties may come to market is unclear
Wells Fargo, for instance, has said that it will not begin foreclosures again until 2022, and has also put a pause on evictions through the end of the year.
Bank of America and Chase, however, will only continue their foreclosure suspension through the end of June, in line with federal government guidance. During a Senate hearing on the Annual Oversight of Wall Street Firms at the end of May, Chase CEO Jamie Dimon added that about 90 percent of the bank’s customers had already exited forbearance programs.
On the evictions side, several state governments have continued to keep eviction moratoriums that extend beyond the federal deadlines over the last nearly year and a half of the pandemic. But at this point, most are either in line with the CDC’s expiration date or through the end of that specific state’s state of emergency, which is variable and may change frequently.
States with stronger protections currently in place include Washington, D.C., which has suspended all evictions filings and hearings through the end of federal orders, and Minnesota, which has also suspended hearings and sealed eviction records while the state remains in a public health emergency. Other states like Georgia and Ohio have no statewide orders in place at all, and have allowed filings and hearings to continue.
What is known, however, is that over 2 million homeowners are currently behind on their mortgages, and a higher proportion of those homeowners are households of color, according to a housing report released by Harvard University. Because many of those homeowners are still struggling with the fallout of job and income losses, they may not be able to resume payments come August.
“Because these borrowers are especially likely to have suffered sustained income losses, it may be difficult for them to make up for their missed mortgage payments as well as property taxes and homeowner insurance premiums,” Harvard’s report reads. “Lenders often resolve delinquencies by adding the accumulated debt to the mortgage and extending the loan term to cover the costs, but this solution presumes that borrowers can again make full monthly payments.”
Likewise, at least 6 million renter households are behind on rent and at risk of eviction, according to the U.S. Census Bureau, which the National Low Income Housing Coalition warned has the potential to bring a historic wave of evictions this summer and fall.
“These tenants or occupants have been running behind on their payment obligations, which may be deferred for a time being, but it’s still going to accrue,” Saurabh Shah, co-founder of residential real estate crowdfunding platform InstaLend, told Inman.
“There is going to be a time when the maturity clock sets in on the accrued obligation that they have to pay, and it’s highly likely that they won’t be able to catch up with that. So any restructuring of the loan is still not going to be helpful when you consider all the payments that are still outstanding.”
All that is to say, it’s hard to predict just how many homes may be vacated as a result of the moratoriums expiring. Some experts predict there likely won’t be a huge flood of properties that come onto the market, but the market will get a modest boost of inventory — and real estate agents who have been desperate for inventory will want to be ready when that time comes…”
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