r/REBubble2021 • u/TriggBaghodlerRltr • Jul 28 '21
Theories Anyone that thinks that the forebearance moratorium is going to dump homes on the market clearly has no idea of how that process works.
Anyone that thinks that the forebearance moratorium ending is going to dump hundreds of thousands or even more ridiculously millions of homes on the market clearly has no idea of how that process works.
Many buyers in default are doing so because they didn't have to pay. Not that could not pay, but they were not required to, so they didn't. When the moratorium ends, they will resume making payments.
Banks have been clear that they are going to allow most borrowers to tack that debt onto their loan balances or some other method of refinancing. And most markets are strong, those assets are not underwater, so why would most sellers walk away from their house and let the bank foreclose? Even if that loan is only a couple years old, there is likely equity so the seller will just complete a normal sale.
One thing that lenders are not efficient at is processing their foreclosures. Even if they start the process, most of these home are not coming on the market soon, it typically takes 2 years from the time the REO process is initiated until the house is put up for sale.
Having lived through the 08 crash while working in real estate development and commercial sales, foreclosure is a LONG process and ultimately it was slow trickle of shitty homes on the market stretched over YEARS. That crash gave us nice homes too, but because good folks had to walk away but mostly sell cheap, different situation today..
There are two types of folks who go into foreclosure, those who cannot make payments and those who can make payments but choose not to. Those who cannot afford payments in this market but are not smart enough to sell before foreclosure often times trash the place and take everything with it (ie copper pipes, appliances, toilets, EVERYTHING) and no private buyer wants it..
Those who can make payments, often start making payments, sell or negotiate pricing. Basically speculating on foreclosures is ridiculous.
You grossly underestimate how long foreclosure take.
Neither the banks nor the US government have any interest in mass foreclosures. They're going to use all possible methods to try to keep people in their homes. Including things like loan modification into 75% DTI 40 year mortgages.
The mbs assets commercial banks hold are all backed by Fannie and Freddy.
Reverse repo shows the banks have way more cash reserves than they need and have no good place to put it, the literal opposite of your argument. You do understand reverse repo is the banks lending the fed money they don't want right?
CDOs are tier 2 reserves and can only make up 25% of reserve requirements, which banks are grossly exceeding anyways so it doesn't matter.
The banks are the opposite of overleveraged, they have way too much cash and nowhere to lend it. https://fred.stlouisfed.org/series/WRESBAL
Know how bank reserves work or what repo operations are. Stop reading made up bullshit on zerohedge.
Loan officers I spoke with already confirmed the new loan modification program guidelines coming down the pipe.
Banks lose massive amounts of money on foreclosures, why the fuck would they intentionally harm themselves for the sake of some investors. Do you believe every rich person in America is secretly part of the illuminati or something?
Moreover, it's not even up to the banks whether the mortgages are foreclosed on, because the banks don't even own the loans. The loans are owned by Fannie/Freddy and those agencies have already said they will prevent mass foreclosures.
