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Foreclosure Update | Loan Modifications and Biden's Forbearance Extension 2021 - YouTube
Channel: Short Sale Queen TV
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Loan mods, the forbearance enrollment,聽
the homeowner's assistance fund聽聽
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and everything in between Joe Biden announced聽
on Friday what the administration is planning聽聽
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on doing and putting into place to聽
help homeowners stay in their home,聽聽
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but there is always a fine聽
print so let's get to it.
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Hey guys, Nicole Espinosa with the Short聽
Sale Queen. If you are new to the channel,聽聽
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make sure you are hitting the subscribe button聽
so you get notified of the two videos that we're聽聽
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putting out a week. Comment below where you're聽
watching from in what market so that we can聽聽
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show some love as well as network with you.聽
If you are a real estate agent or investor,聽聽
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we have a thriving community and we'd聽
love to network to see where you're at.
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Today we are going to go over the new extension聽
and of course everyone's favorite, the loan聽聽
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modifications. And today we're going to breakdown聽
what the Biden administration has put into place聽聽
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to help homeowners stay in their homes.聽
So of course as I'm breaking down聽聽
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all of these new changes, of course there's things聽
that make sense that are great and that homeowners聽聽
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can take advantage of. And then of course,聽
there's things that make absolutely no sense聽聽
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for a lot of the homeowners that are going to be聽
facing foreclosure in the next couple of weeks.
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So as you know, July 30th, the moratorium,聽
foreclosure moratorium expires, which means聽聽
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that now if you have a government-backed loan聽
you can get foreclosed on. This entire time聽聽
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homeowners have been in forbearance,聽
they haven't been making payments聽聽
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and they were protected from any type of聽
foreclosure action if they had a government-backed聽聽
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loan. Government-backed loans can be FHA, VA,聽
USDA, which include Fannie Mae and Freddie Mac.
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So this entire time they've been kicking the聽
cans on the road. If you've been watching my聽聽
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other videos here, you're going to see all of聽
the updates. So this is where we stand as of now.聽聽
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They are not extending it any further past July聽
30th, but they are extending their forbearances.聽聽
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So you have until September 30th to apply for聽
an extension on your forbearance. So they are聽聽
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allowing you to stay in forbearance. But聽
as we know, forbearance is only temporary.聽聽
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Forbearances like if you don't know what a聽
forbearance is, it's like putting a pause聽聽
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on your mortgage statement, but this does not聽
mean that you don't owe the amount that you've聽聽
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missed. It just means that they can't put聽
you in foreclosure and it gives you time.
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This entire time the homeowners that chose to go聽
into forbearance for the last year and a half,聽聽
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they haven't had to pay, but it's coming聽
up. As soon as the forbearance is over,聽聽
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they're going to owe the total amount of what they聽
have not paid. And that is a huge misconception聽聽
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in this industry that the bank is helping聽
homeowners by extending the forbearance, but聽聽
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all they're doing is buying them time. Because at聽
the end of the day, if you can't afford one month,聽聽
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how are you going to afford a year and a half聽
worth of payments that's going to be called due.
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So this is where, key in, what they're doing聽
now is they're extending the forbearances until聽聽
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September and then they're offering two different聽
ways for a homeowner to catch up or be current and聽聽
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stay in their home. So let's talk about both聽
of them. As of June 2021, there are still 1.75聽聽
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million Americans in forbearance. So we still have聽
a huge problem on our hands. We're seeing more聽聽
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and more people every month exit forbearance and聽
going into either a loan modification or trying to聽聽
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figure out what to do and cue the opportunity for聽
real estate agents and real estate investors who聽聽
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now have homeowners that they're prospecting that聽
are out of forbearance and need to do something.
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It is very unrealistic to think or assume聽
that a homeowner is going to pay just get聽聽
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a forbearance and pay a year and a half worth聽
of payments. What's more realistic is that the聽聽
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homeowner is either going to sell the house,聽
they're going to either try and work something聽聽
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out with their lender or let the house go聽
into foreclosure. Guys, the banks are being聽聽
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so aggressive right now. We are starting to聽
see foreclosures come back at an all-time high.聽聽
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This month alone in July of 2021 when I'm聽
recording this, we have 15 homeowners that聽聽
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are now in foreclosure for next month that聽
were getting the foreclosure date stopped.
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When pre-pandemic we're used to聽
stopping 30-plus sales a month.聽聽
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So now we're starting to see those foreclosure聽
sale dates come back and the banks are not being聽聽
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lenient. They are being tough because they want聽
to foreclose. So keep that in mind that this is聽聽
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still a huge issue and these are things that are聽
not going to be reported yet or public because聽聽
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there's not enough data yet to collect. So聽
I'm telling you from personal experience,聽聽
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because this is what we're dealing with聽
now. Our phones are ringing off the hook.
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There are so many homeowners right now that are聽
seeking answers. So let's go ahead and breakdown,聽聽
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make sure you've watched through the whole video聽
because I'm going to breakdown all of the options.聽聽
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Okay, so let's talk about the first option that聽
they are putting into place that they're offering聽聽
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homeowners that will be available towards the end聽
of this year. The extended term option. Okay? So聽聽
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let's talk about that. What they're doing聽
is they are allowing homeowners to extend聽聽
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the life of their loan up to 40 years no matter聽
where they're at. They could have a 20-year note,聽聽
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30-year note, but they're allowing聽
them to extend it to 40 years聽聽
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to become current without聽
changing their mortgage balance.
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Now if you're a homeowner watching this and聽
I have a lot of real estate professionals,聽聽
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but if you're a homeowner that's watching this, I聽
know that this is emotional. I know that this is聽聽
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a situation where you just聽
want to stay in your home,聽聽
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but how does it make sense? Even if they are聽
forgiving that year and a half, how does it聽聽
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make sense to pay into something for 10 more聽
years? If you were to breakdown the numbers聽聽
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of how much the bank is actually winning聽
in this situation, where the government is聽聽
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actually winning in this situation, how much聽
they get to charge you. It is mind-blowing.
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Let's just say in those 10 years you had聽
a thousand, just do a regular number,聽聽
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a thousand dollar mortgage payment with聽
taxes and insurance and of course interest聽聽
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because this isn't going to be interest-free,聽
right? They're extending it 10 years聽聽
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at the current market rate. So you could聽
be locked in at a number that was really聽聽
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good. And now that your credit is not so good,聽
they're going to lock it in at the current rate聽聽
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for the extra 10 years. Do the numbers, do聽
the math on how much you're actually paying聽聽
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more than just that year and a half that you聽
fell behind. That doesn't make any sense to me.
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The entire point of homeownership is to build聽
equity. So now you are instantly in a no equity聽聽
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situation. You instantly are now upside down.聽
If you ever want to sell, you are going to be聽聽
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in a short sale situation. In this market, in聽
the market where it is still a seller's market聽聽
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where you can get top dollar for your聽
house, wouldn't it make more sense to sell,聽聽
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cash out and be able to start fresh, right? This聽
is for real estate professionals, what the banks聽聽
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and the government is not going to explain is the聽
breakdown of how much they end up actually paying.
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It's not helping them at all. It's just giving聽
the option to get further in debt. Okay? I聽聽
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understand that there's going to be a lot of聽
overwhelmed homeowners. We see this all the聽聽
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time when it comes to loan mods. The bank paints聽
this picture of, "Hey, we're going to help you.聽聽
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No problem. You don't have to pay anything."聽
But a lot of times this doesn't serve in聽聽
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the best interest of the client or of the聽
homeowner. All this does is make the bank聽聽
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or the government-backed entity more money. Okay?
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So I'll get off my soap box, but that's the first聽
option that you can extend the life of a loan. The聽聽
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second option is the COVID-19 standalone partial聽
claim. So all that means is that what they're聽聽
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going to do is in order to make you current聽
and make you whole, they will create a second聽聽
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lien on your property interest-free. So remember,聽
they're not going to forgive any debt, but they're聽聽
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not going to charge you interest that loan.聽
And whenever you go to sell the property, all聽聽
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of those back payments, everything that they've聽
put together in that loan has to be paid off.
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Now partial claims are not a new concept. This聽
is something that HUD has been doing forever聽聽
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for homeowners that have an FHA loan聽
and they can't afford to keep paying聽聽
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it. And if it makes sense they'll do that,聽
that way the payments can stay the same.聽聽
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So as of right now, this is聽
what the Biden administration聽聽
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is offering homeowners as far as a COVID relief聽
to try and keep them in their houses. Now,聽聽
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I'm always going to say the same thing and the聽
same advice that I always say when it comes to聽聽
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doing anything to restructure your loan or聽
modify it is let's think about long-term.
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Let's think about your situation now and what is聽
the best option long-term. It's so important to聽聽
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know this like this breakdown and the ins and聽
outs of these programs. Because when you guys聽聽
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are cold calling, this will be your number one聽
objection. This will be the reason why homeowners聽聽
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don't want to sell. This will be the reason聽
why homeowners don't want to move forward and聽聽
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give you, "Who cares if you have a cash offer聽
or who cares if you can get them top dollar?"
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When you see these homeowners in聽
foreclosure, you're going to see聽聽
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waves of sellers that are going to try聽
everything they can. Now with that said,聽聽
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even if there is homeowners say a majority of them聽
like 75% of these homeowners are doing the loan聽聽
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modifications. I truly believe because history聽
repeats itself. I truly believe that they're聽聽
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going to get into these agreements and they're聽
going to default again. Because we still have聽聽
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so many people that have a reduction of income聽
and they haven't been paying in over a year.
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So when the reality happens and聽
they have to start paying again,聽聽
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they're going to realize they can't afford聽
it even if the payment stays the same. So聽聽
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be on the lookout for this. This is something聽
that you're going to need to know going into聽聽
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cold calling and prospecting. Because when聽
we talk about objections this is one of the聽聽
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biggest ones that you're going to get as you start聽
calling the pre-foreclosures again. Here's the key聽聽
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in all of this. If you are a homeowner and you聽
are behind or if you have a client that is behind,聽聽
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definitely make sure that you are contacting聽
the servicer. Because no matter what even if you聽聽
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decide to sell or even if you decide that you want聽
just to buy more time to figure out how to pay,聽聽
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contact your servicer so that you can聽
request the forbearance extension.
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This will give you more time without聽
you going into foreclosure or your fees聽聽
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accumulating because it's still going to be聽
on pause. You can always contact our office聽聽
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if you need help or if you need advice. Here聽
is our information, our phone number and our聽聽
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website. We'd be happy to help and be a聽
resource and answer all your questions.
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If you are in the real estate industry, don't聽
forget our free Facebook Group, the only short聽聽
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sell group worth being a part of. And comment聽
below and tell me where you're from and what聽聽
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was your biggest takeaway. If you guys want聽
me to cover any specific topics or any videos,聽聽
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let me know in the comments. And like聽
I said, we're doing two videos a week.聽聽
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We're trying to keep you updated with聽
everything that's going on as well as聽聽
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to help you and your real estate聽
business. I'll see you guys next time.
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