Mtn_Guide said:
Carlo4 said:
My financial advisor sent me a summary of the CARES act through their company. One thing that shocked me was the ability of a homeowner to stop mortgage payments for up to 6 months if the loan is federally backed/owned. Also can't foreclose until late May at earliest (believe May 22)
No doubt efforts to prevent any collapse if we have a fast enough recovery by fall.
The government can't prop up the economy indefinitely, it can only soften the blow by prolonging the pain.
Exactly. The temporary cushion might be enough. But if this continues long enough, it will hit all of these lenders and home owners who have lost their jobs and who are delaying payments all at once. There's only so much leeway that banks are able to give, even if they want to give property owners assistance. If we can't get this turned around within the next few months, eventually it will catch up to everyone. Banks don't want these properties, but you can't expect them to take on this burden indefinitely.
I remember in 2008, looking at dozens of the hundreds of possible foreclosure sales around where I lived, and the story was consistent...they'd try to work with the banks and restructure loans for a few months, then stop paying altogether for an additional 6 months until they were evicted. And to top it off, a majority absolutely trashed the houses on their way out the door. A bit petty, considering they'd been living there for free (or close to free) for close to a year. Really sad to see, considering it was a relatively nice middle class area. Different scenario than this, I know, but the effects may be similar. It's hard to say for sure right now, as we're only in the 2nd or 3rd inning of this mess.
As an aside, banks will take a beating in this scenario. Also, people are living on credit cards now more than ever, and if this continues long enough, those potential defaults will also hit banks all at once. Will be watching those bank stocks very very closely in 6-12 months...