Forbearance is nearing its end and over 5% of borrowers remain in the program


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Tully believes the range of people affected by such a scenario means policymakers must act. This could include extending leniency to these borrowers when vaccines are rolled out and more affected sectors of the economy are allowed to recover.

While any sudden end to forbearance could pose some serious risks to the overall shape of the housing market, Tully stressed that this is not a 2008-like situation. These borrowers did not enter home acquisitions from a fundamentally weak spot, but were placed in a difficult position by circumstances beyond their control. Additionally, the broad strength and rapid home price rises we’ve seen in so many real estate markets should mean they can take advantage Paper capital accumulated in her house to prevent a short sale situation.

One challenge Tully also foresees is the simple habit of paying mortgages. While he noted that we haven’t seen people use leniency to live “rent-free” just because their neighbors are, he is concerned about how these borrowers are getting back on their feet. According to Tully, the US has never rehabilitated so many borrowers.

He believes the immediate resolution of the problem is a continuation of leniency beyond the initial 12-month period. Additionally, it is up to the key investors and players in this space such as Fannie, Freddie, Ginnie, the FHA and the VA to work on what can be done to modify or restructure these loans. This is an area where Tully also believes individual mortgage professionals can play an absolutely crucial role.

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