Yes, there has been a shift in the market over the past several months, which has raised concerns that we are destined for a repeat of the crash we saw in 2008. But the reality is there are a few major differences between what is happening today and the bubble of the early 2000s.
The major key here is the simple fact that banks do not want to take your home back from you – they don’t want it, it does them more good to keep you in your home than it does to take it from you. If you think about it, it really is a lose/lose situation for the bank to take your home back. They have already lost money on you not paying the mortgage, now they have to hold it, insure it, maintain it, pay the broker’s fees, fix repairs, etc. all before being able to resell it. And who do you know who is being foreclosed on and willingly leaves the home and doesn’t practically destroy it on the way out? Chances are there will be squatters and serious property damage before the home is even in the possession of the bank again.
Banking systems today have learned a lot from the mistakes they encountered from the bubble burst. Loans are much more solid now and people have so much more equity in their homes now that even if they find themselves out of a job or otherwise unable to pay their mortgage, they can still cash out their equity and sell their home before getting upside down and the bank taking it back.
Banks are full of bankers, not landlords. They do not want the headache of foreclosing on you. It is a very timely and expensive process and they try to avoid it at all costs. So if you are seeing clickbait headlines about a wave of foreclosures coming, remember that context is important. It may be true that the number of foreclosures is higher now that it was a year ago, the fact is that foreclosures are still well below the pre-pandemic years. Nothing is imminent, don’t buy into the hype. You can always #asksethanything
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