Boston Real Estate for Sale
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More than 2.5 million American homeowners have stopped paying their mortgages, taking advantage of penalty-free forbearance periods offered by lenders.
What happens when the free pass fades away next year?
Not much, and certainly nothing approaching the flood of foreclosures that defined the Great Recession, according to the emerging consensus among economists. While some homeowners are sure to feel the pain of forced sales, housing experts increasingly expect the end of forbearance to be a non-event for the gravity-defying housing market.
That’s because home prices have risen sharply during the coronavirus pandemic. As a result, homeowners who find themselves unable to pay their mortgages when their forbearance periods end likely will be able to sell for a profit, rather than going into foreclosure.
“If they have equity, they can always sell off the house and pay the mortgage,” says Ralph DeFranco, global chief economist at mortgage insurance company Arch Capital Services. “It’s not a great outcome, but it’s less terrible than letting the bank take it and sell it.”
How many Boston condo mortgage payments can I miss before foreclosure? is a crucial concern these days, as the coronavirus continues to drastically impact Boston property owners’ incomes. As of May 2020, more than 4 million mortgages were past-due in the country, according to Black Knight — and the delinquency norm, generally two or three missed payments and you’re out, has been replaced with new rules in the pandemic.
First, however, let’s look at missed payment practices under normal circumstances.
What happens if I miss a Boston condo mortgage payment?
A mortgage is a contract between a borrower and a lender in which the lender agrees to provide money upfront while the borrower agrees to repay the debt over time and with interest. As such, a borrower with late or missed payments can face penalties ranging from late fees to the loss of the home, which is collateral for the loan.
If you miss one mortgage payment, you’ll likely be contacted by your lender, but it’s unlikely your home will be foreclosed right away. You may receive a formal letter alerting you to the possible actions the lender may take. Do not disregard this notice — it’s a serious matter.
Your lender will also report the missed payment to the credit reporting agencies, which can hurt your credit score.
How many mortgage payments can I miss before foreclosure?
If you fail to get in touch with your lender after you miss a payment, you may receive a notice of default, which is the earliest stage of the foreclosure process.
However, getting this notice doesn’t mean foreclosure is done deal. Delinquencies, even when three or more payments have been missed, can often be rectified. Avoiding foreclosure benefits both the borrower and the lender, so there’s a good reason for both parties to try and work out a resolution.
Keep in mind that with the ongoing pandemic, the protocols for late and missed mortgage payments have changed, and lenders and servicers are prohibited from initiating or finalizing a foreclosure until at least Aug. 31, 2020. If you’ve been granted forbearance, your lender is required to report your payments as current to the credit bureaus, as well. While these protections apply to most mortgage borrowers, they don’t apply to all. Jumbo loan or portfolio loan borrowers, for example, may be excluded.
Boston Real Estate and the Bottom line
The ideal strategy is to make full and timely mortgage payments in order to avoid late fees or worse, but because of the coronavirus, many people in good faith simply can’t make their payments. If you find that late or missed payments are likely, call your loan servicer as soon as possible to explain your situation.
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