Mortgage delinquencies will exceed Great Recession levels
marketwatch.com
marketwatch.com
Best job currently seems to be delivery driver at $16/hr. There is absolutely no way I will avoid homelessness unless things change significantly, and soon.
I have an engineering degree from a good school, I played by the rules, I worked hard. Doesn't seem to matter much. The joke around here is that the $1200 check is enough money to buy a really nice shotgun to kill yourself with.
2. If your loan is owned by the Feds (as about 90% of private residential mortgages are) then I believe the deferred loan amount is added to the end of your loan via an extension of the amortization schedule. You can also defer payments for up to 12 months. You would not owe a lump sum in August.[2]
3. Even if you quit paying your mortgage and intentionally chose foreclosure as your best option (as many did in 2009-2010), it's unlikely the foreclosure would occur within the next 12 months.
[1] https://fileunemployment.org/unemployment-benefits/unemploym...
[2] https://www.consumerfinance.gov/about-us/blog/guide-coronavi...
tl;dr it's largely dependent on how each lender wants to implement. There are lenders that will go the deferred payments then balloon or seek a loan modification. I'm not 100% sure what a loan modification.
Other lenders will simply extend the term of your mortgage by how many payments were missed.
I have a 30 year fixed rate conforming conventional mortgage. This is ver-batim from their COVID-19 assistance page.
>Important: The terms of this Forbearance Plan, and any additional Forbearance Plan(s), do not include forgiveness of any amounts. The total amount of payments suspended during a Forbearance Period will become due and payable at the end of the Forbearance Period, and you will be required to either repay the suspended payments in full or make other arrangements for how you will repay the suspended payments, such as qualifying for a loan modification or another assistance option.
If your loan is owned by Fannie Mae or Freddie Mac, or if you have an FHA, VA, or USDA loan, your loan is likely subject to the CARES Act. The CARES Act allows for a forbearance of up to 180 days upon request, with an extension of up to an additional 180 days if your hardship is ongoing. The initial Forbearance Plan suspends payments for three months. If your financial hardship remains at the end of this Forbearance Plan and you are unable to resume your normal monthly payments, contact XXX for assistance. You may request additional Forbearance Plan(s) in three-month increments, up to a total of twelve months from the starting date of this Forbearance Plan, or seek another assistance option.
Even if your loan is not covered by the CARES Act, if you have a hardship you may contact us to request assistance. Please call xxx for further assistance.
Despite the wording, approval is not at the discretion of the financial institution. If the loan is federally backed, the financial institution must approve mortgage relief.
Moreover, currently they are not even allowed to seek proof of financial distress.
For practical money advice during a crisis seek out Dave Ramsey. He's gotten a lot of people through this type of thing and went through it himself. Good luck. Don't buy a shotgun.
Don't get me wrong, it was not something I felt good about but sometimes you absolutely need a reset and it does not make sense to suffer financially for decades when a viable solution presents itself. From a purely logical perspective it can often make sense.
Right here is the problem with the US. Why should all your creditors need to pound sand for your financial mismanagement? I'm okay with deferred payments, restructuring, and other types of payment plans but why do we allow people to wipe their slates clean?
It's legalized theft.
Another way to look at it is sometimes either through bad choice or unfortunate circumstance people get into financial trouble. Not everyone has wealthy parents or a network they can fall back on. By not allowing people to reset you are creating an indentured class. What of those unable to pay? Should we send them to prison? Perhaps garnish their wages in perpetuity? What if they become pregnant or sick after falling into debt? By not allowing a way out you are creating a slippery slope towards forced labor.
Not allowing bankruptcy also closes the door on entrepreneurship for anyone in a low income bracket or without rich parents. They cannot take a business loan as the risk of failure means they are forever indebted.
All roads lead to the rich getting richer and the poor getting poorer.
Note: If its legal it cannot be theft by definition.
"Oh legalized theft". So, cash advance abusive loans aren't? Overdraft fees (and the ways bank forces an overdraft)? Wage theft? Patent trolling? ATM fees?
Even more naive than that is thinking the bank is losing money at the end. Sure, they might lose money on one lending operation. But they know how many people are going to pay back or not. If they don't they have multiple ways of losing much less than the nominal value.
All businesses have a risk and I guarantee the bank knows that better than people who defend them.
It comes down to how much you are hurt. You can cripple me financially for life with a $150k loan I can’t pay back because I can’t get the kind of job that pays enough.
Option a: I pay most of my income for life and end up only paying interest, never make headway. My life is ruined, the bank doesn’t care.
Option b: the bank has to eat its small investment. Nobody is fucked, maybe one guy is fired if he does this repeatedly.
Massive difference in outcomes for society.
I figure that reality versus the "theory" is that everyone is calling for this option right now, and if the mortgage companies could work on delaying payments for everyone they would be out of business eventually. Some people probably can't be helped, some can. I feel like it's more akin to a lottery.
Edit: I’m decently knowledgeable with MEAN/MERN, Django, and Swift. I’m less practiced but still (mostly) capable with Rails and Go. SQL and I are frenemies but I’m working on it.
Related terms: - Mortgage forbearance - Credit report - mortgage relief options - proof of hardship - borrower assistance
I'm a damn hard worker, and I've saved a shit ton of money, but don't think I fool myself into knowing that's enough. If I got cancer tomorrow, it'd all be a big fucking waste.
If I got cancer tomorrow (and the odds of cancer eventually are damn high), I could almost guarantee you that I'd be declaring bankruptcy in the long term. I would lose everything.
To be honest, it upsets me that you're falling into the trap of thinking fiscal responsibility is the end all be all, even after witnessing this pandemic destroy hard working folks like yourself. Yes, people need to save for things. But folks shouldn't be bankrupted or ruined by uncontrollable forces, that's what societal safety nets are for.
It's not one or the other (fiscal responsibility or societal safety nets), we can do both!
So after diligently saving / working hard / "doing things right" I'd end up in the same situation as someone who lives paycheck to paycheck. My family and I would very likely lose all our assets / financial security in the long run. That to me would be one hell of a waste.
It's why I'm a huge believer in social safety nets / programs. They help everyone. You may be lucky today, but believe me, most people hit snake eyes eventually. If not you, a loved one will.
[1] - https://www.consumerfinance.gov/about-us/blog/guide-coronavi...
Edit - thanks for the comments, updated the about field in my profile with my email.
Take the delivery job and rent an apartment when the bank forecloses. You won't be homeless. $16/hr is good money.
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Judging by the tenor of the responses you've received already this comment will not get a lot of positive attention. But here goes...
You should have six months expenses saved. Period. You own a home and "have an engineering degree from a good school".
Saving is both an intentional act and a privilege. It sounds to me you had the privilege (you have a house and a good degree) but lacked the intention.
I say this as a person who has not always had the privilege of saving money. And who knows how fragile life feels when you are on the edge.
Foreclosure of non-recourse loans does not trigger cancellation of indebtedness income. Instead, it could trigger capital gains.
Beyond that, if that shotgun ever starts looking too good, drinking worked for me. Yeah, not great long-term, but definitely helped me "flatten the curve".
Godspeed.
We're rapidly entering an era where possession is 9/10ths of the law. Hold onto physical possession, because you can't count on the law still being there.
(On second thought, as someone looking to buy a house in the near future - please do vacate the property, and leave it in good condition, so it can be sold for cheap in a foreclosure auction and I can buy it. </haha-only-serious>)
I know, most young people have decades to go on their house. But even some equity can help if times are tough.
Out of curiosity, I got a pre qualification for a mortgage. They wanted to give me about 4x what I was comfortable spending. I'd rather put 40% down and have a low payment than over leverage--even though my wife and I have had high incomes for the last five years. I always thought of it as years runway if things went really bad (FAANG and other tech salaries dry up, housing equity collapses). It's better to be sitting on cash than worrying about paper gains and if you're going to have a home year end.
It could have a big impact on how things develop from this point on.
There is no consistency in how loan forbearance will be addressed with customers.
Allowing someone to not pay their mortgage for three months and then requiring a balloon payment isn't really a solution for the crisis, and will just kick the can down the road.
If you lose your job for 5 months, but get your loan deferred, won't you just need to 6x the the normal payment once you get your job back? Granted most loan terms won't end right when you get your job back, but I feel like many individuals will not be able to keep up with their debt if they lose several months of income. Is this fixing a problem or just delaying the realization of losses so people don't go bankrupt right now?
> Fannie & Freddie are fine with tacking all deferred payments to the end of the loans
F&F require no balloon payment. Deferred payments must be tacked on to the end, not as a balloon payment, extending the term.
“Fannie & Freddie are fine with tacking all deferred payments to the end of the loans instead of requiring a lump sump payment.”
Meaning the payments missed would not be due when payments restart, but added to the end of the current monthly payments.