Recently we heard some good news for homeownership. The Mortgage Bankers Association reported on Monday that nationwide mortgage forbearance rates in June were the lowest in months: 5.64% for federally-backed mortgages, and 7.8% overall. This means that a greater share of Americans are again able to afford their homes after the initial COVID outbreak.
Local foreclosure data appear to echo this point. According to RealtyTrac, the number of foreclosures in San Francisco in June (20), more than halved compared to the monthly averages between January and March:
Monthly Foreclosures in San Francisco: July ’19 – June ’20
These are encouraging signs. However, we cannot assume we are past the worst of the pandemic’s blows to housing affordability.
Typically notices of default are issued after 90 days of missed payments. That means that if someone lost a job and started missing mortgage payments in April, their foreclosure process would only begin now.
And when you consider the scale of Bay Area layoffs due to COVID, we should expect more people in our city will experience this in the coming months.
If you received a notice of default from your mortgage lender, you should know you have options.
They are as follows:
- Pay Stated Balance: The notice of default will indicate a date by which you can pay the outstanding balance and return to good standing. If you are able to do this, it is the best thing you can do to stay in your home.
- Contact HUD Counselor: Regardless of your income or assets, you have the right to speak with a housing counselor at the United States Department of Housing and Urban Development (HUD). You can reach HUD’s hotline by calling: 800-569-4287.
- Prepare For Sale: If you are no longer able to afford your home, there are two ways of selling your home: either a short sale (in which the amount owed on your mortgage is greater than the current value of your home) or a regular sale. In either case, we would be happy to offer a free consultation on your best path forward.
If you are in this situation, we would be happy to talk through these options in more detail.