Will We Ever Be the Same Again?

Will We Ever Be the Same Again?

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Will we ever be the same again? The Housing Wire reports,  “The U.S. forbearance rate, measuring the share of mortgages with suspended payments, increased for the second consecutive week from 5.48% to 5.54%, according to the Mortgage Bankers Association. The MBA estimates the number of homeowners in some form of mortgage forbearance increased from 2.7 million to 2.8 million this past week.

Before the recent increases, the U.S forbearance rate had either fallen or remained flat since forbearances decreased. The MBA said more people entered forbearance than excited this week.

While the rate of forbearance increased across all loans and servicer types, for the first time in 25 weeks, The share of Fannie Mae and Freddie Mac loans in forbearance increased to 3.36% — a 1-basis-point gain.  Ginnie Mae loans’ forbearance rate, which includes loans backed by the Federal Housing Administration, also gained ten basis points to 7.83%.

Will We Ever Be the Same Again?

We have shared here that this could be a big problem after December 31, when moratoria on foreclosure and evictions end. Now we have an added problem; the filing rate for divorce is sharply rising.

According to the NY Post, “Divorce rates have spiked in the US  during the coronavirus pandemic as couples stuck at home for months “have had it.”

“The number of people looking for divorces was 34 percent higher from March through June” than 2019, based on new data collected by Legal Templates, a company that provides legal documents.”

The combination of stress, unemployment, financial strain, death of loved ones, illness, homeschooling children, mental illnesses, and more has put a significant strain on relationships.

The data showed that 31 percent of the couples admitted lockdown had caused irreparable damage to their relationships.

Now Is the Time to Get Ready

The combination of potential foreclosures and rising divorces will cause houses to be sold and banks selling non-performing notes. We know that divorce and foreclosure are two big reasons to sell for stressed homeowners.  What is about to happen will be an opportunity for rel estate investors to help homeowners avoid foreclosure and keep them in their homes. As we wrote in Due Diligence Steps in Notes Investing, if you are a note investor, do your initial due diligence. You want to perform a high-level review of the notes that will soon become available. You want to focus on only the best notes and underlying collateral.

Necessary Steps of Initial Due Diligence Include:

  • First, strip out any of the states you want to exclude.
  • Second, filter out any of the cities that don’t pass your criteria (e.g., low population, high vacancy rate, negative growth rate).
  • Third, strip out any of the properties that do not meet your minimum criteria (e.g., built before 1950, less than three beds).
  • Fourth, strip out any notes that don’t meet your overall strategy (e.g., payment history, UPB).
  • Fifth, perform any additional due diligence steps based on your comfort level.

Paige Panzarello, the “Cashflow Chick,” Founder of The Tryllion Group, Investor/Entrepreneur having done $150 Million+ in real estate transactions; Specializing in Non-Performing Notes. She has been a regularly featured guest on “The Cashflow Guys” podcast, and you can also find her on many other Real Estate and Entrepreneurial podcasts and in the Wall Street Journal as well.  She also speaks at various Real Estate Investing clubs and conferences across the country. Paige teaches the “Building Wealth with Notes” Workshop that drills down into the details of how to successfully buy Non-Performing Notes, create passive income, and mitigate risk. www.CashflowChick.com/training

Surviving the crash of 2007, Paige knows how “life happens” every day. Her passion is to help people build wealth, secure their financial future, enjoy life, and be ready-not broken! Whether it is improving communities one house at a time, assisting borrowers in staying in their homes, or working with other investors to learn a new way to earn higher investment dollars for their retirement years, Paige potentially dedicates herself and her business helping people improve their lives in every way.  For more information got to www.CashflowChick.com

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