BEWARE: Hidden Mortgage Crisis EXPOSED!

There's a hidden mortgage crisis brewing right now in the United States and the mortgage industry is showing clear signs of stress. Despite the signs, we are seeing record low number of foreclosures. Why is that? Well, today on the housing nerd, I'm going to attempt to answer that question. I'm also going to show you at the end of this video, what this means if you're a buyer seller or investor in real estate, you don't want to miss today's housing nerd video, but before I get started, do me a favor like this video. If you get any value out of it, subscribe to the channel. I post updates all the time about the real estate market and whatever you do, comment below, I want to know what you think about the mortgage market right now, delinquencies and foreclosures. All right, let's get started. So the report that I'm going to use in this video is from ice data or black night, it's the mortgage monitor report for 2024, the link to the reports in the description below, and I encourage you to check it out yourself. So what we're going to do is look at the, uh, mortgage delinquency rates. Then we're going to look at, uh, foreclosures and we're going to look at why there are low foreclosures versus delinquency. And the results are really surprising. So I have, I'm not going to read all this report, just some of the highlights that I think are the most important. All right. So the report starts and they say the national delinquency rate fell three basis points to 3.45% in October down 0.8% for the month, but up 6% year over year, the fifth consecutive month of year over year increases. So they point out that really mortgage delinquencies are at a super low level. And you'll see that in a minute in the chart, uh, serious delinquencies, though, those that are 90 days or more past due, but not inactive foreclosures rose 3.6 thousand units or 0.8% continuing their slow rise. And we're up 7.3% year over year. So serious delinquencies, uh, and delinquencies overall on mortgage payments are certainly increasing. They go on to say though, and this, my friends is the part you really need to pay attention to. Foreclosure activity remains muted due in part to 70% of serious delinquencies. Those that are 90 days or more past due still being protected from foreclosure by loss mitigation, only 145,000 loans are near term risk of foreclosure on par with the four-year average. Only 145,000 loans, but look back in that statement, 70% of the folks that are behind 90 days or more in their mortgage are in some type of loss mitigation or forbearance where they don't have to pay their mortgage. And they're not going to get foreclosed on right now. Comment below. I want to know, what do you think of that? Do you think people should be just in forbearance? And are you shocked that 70% of people past due seriously past due are actually in forbearance of some kind or loss mitigation, and we'll dive into that chart in a second on forbearance. Cause that's really shocking too. So this part here is the national delinquency rate of first lien mortgages. You can see the blue line is the delinquency rate. The black line is the overall 90 day delinquency rate. And you can see back in the GFC. Obviously we had a spike in delinquencies and 90 day delinquencies. And then as we moved on through the decade, obviously the delinquency rates dropped, then they spiked again during COVID then they dropped significantly. When they came out with a COVID CARES Act and you didn't, you, if you couldn't pay your mortgage, you could go on a modification and you weren't treated as delinquent, which is pretty shocking, right? That's why you see that, that drop in delinquencies. It wasn't that people, uh, you know, we're making all their mortgage payments. It was, if you were late and you had a program set up with your lender during COVID you weren't reported as actually late, but then you can see. That it's going sideways now with a slight uptick at the end. So delinquencies are certainly on the rise, but this part here may be the most important part of the video that you should pay attention to. So this shows you foreclosure protections on 90 day delinquent mortgages, meaning you have to be delinquent, seriously delinquent to then go into foreclosure unless you're in a foreclosure protection. So they specify the black here in the bottom are folks with no protection, 90 days late, but they have no protection. So they're just waiting for the foreclosure process to start. You can see though, that's only like 25%, right? Then look at the blue, the light blue. You can see that those folks are in forbearance. That is what 30 to 60. That's about 30% of all 90 day late borrowers are in forbearance, meaning they're not making a payment at all. That's what forbearance means. Then you've got the gray area that's loss mitigation. That's another 20%, 30%. Um, so, and then you've got a bankruptcy in the darker blue and that's another 10%. So altogether, you know, that's 70% of all 90 day mortgages. If you go from this black area all the way up to the top, that equals about 70% of all 90 day delinquent mortgages are in some type of protection, meaning. They can't get foreclosed on, they can't move to that next stage. Is that shocking? It's shocking to me. Is it shocking to you? Comment below. I definitely want to know. Now, the next thing that we're going to look at, if we scroll down here are some of the other mortgage performance, uh, top line, uh, indicators that they talk about the number of loans in active foreclosure rose by 1000 units in October, but remains 34% below pre pandemic levels due to ongoing VA foreclosure moratoriums, a number of mortgages that would have otherwise been referred to foreclosure are remaining seriously past due elevating serious delinquency rates while muting foreclosure activity combined. The total of loans, 90 days or more past due or in foreclosure is effectively flat from the same time last year. And then they say with that, with that share down six basis points among GSC loans and 12 basis points among portfolio held mortgages, meaning with GSC loans, that's basically all the government back loans together. So they're saying, Hey, the share of delinquencies and foreclosures is down for all the GSC loans. But, but, but check this part out. Alternatively, that share is up 23 basis points among FHA loans and 35 basis points among VA loans overall showing slightly higher levels of stress. Among those loan products from the same time last year. So look at this, you can see, and I made some notes here on this graph. These are all the 90 day plus, uh, delinquencies right now. And the, uh, black line is FHA. You can see back in the GFC FHA loans were around 8% delinquent, uh, 90 days or more delinquent, not just delinquent, but 90 days or more delinquent. So we're talking at least three payments behind, then they dropped, then went up in COVID like we talked about, then down because there were no delinquencies when they had that, that, uh, COVID CARES Act going on. Then they continued to drop. Um, but now they're starting to increase and I circled it. You can see the increase in mortgage delinquency with FHA. 90 days or more past due. Remember this isn't just delinquent, this is three months or more past due. Now that's around 4%. So 4% of all FHA loans are actually 90 days or more past due, but they're not being foreclosed on because of the forbearance and loss mitigation. We're still seeing the VA loans, same situation, except VA loans is actually in a moratorium, meaning you can't even foreclose on VA loans. Even if you're not in loss mitigation, can't foreclose on them right now. So that's why you're not seeing those trickle through to foreclosure, but that delinquency rate is clearly increasing too, as you can see. Comment below. I want to know, what do you think? Like, does this surprise you that, you know, FHA loans are seeing larger amounts of 90 day delinquency. Same with VA. If you look down at the GSC, GSC, which is all, I'm sorry, GSE, which is all the, um, mortgages together that are backed by the government. You can see there's really not an uptick there. Cause you've got a bunch of loans in the mix, like conventional loans and such that don't have as much stress. It looks like as FHA or VA loans. That surprised me. I'm curious what you think. Okay. Then we look at foreclosure starts and foreclosure sales. Remember you're delinquent 90 days delinquent, then you go to foreclosure. You can see back in the GS GFC, back in the great financial crisis, there were 300,000 new foreclosure started. Uh, then, uh, and also if you look at the blue, that's about 125,000, uh, foreclosure sales. But then that dropped off a cliff down, down, down, down. Then they canceled foreclosures during COVID canceled delinquency, canceled foreclosure that dropped to the basement where it was basically none. Then started to trickle up as far as starts go, but the sales are still really low. And I circled this at the end because quite frankly, we haven't seen any foreclosures hardly. I mean, really none. I don't know about you comment below. Let me know if you see foreclosures in your market, but people tell me on my channel all the time, Jason, I'm not seeing foreclosures and I'm not either. So this, um, has to come to a head at some point, right? You would think maybe, maybe not. So now that we know that, uh, foreclosures are, uh, not happening because mortgage delinquency, uh, is kind of being kicked down the road or wherever you want to call it because of forbearance and loss mitigation. Let's talk about where this may head next and what this means as a buyer, uh, or seller or investor in real estate. Well, you got to remember that the government has intervened, interfered, whatever you want to call it in the mortgage market already. I mean, we're not even seeing high levels of foreclosures yet. And the government has already stepped in and said, Hey, don't worry guys, we've got you, we're going to let you kick the can down the road. Extend and pretend, modify your mortgage, you know, extend the term, lower the rate, lower the principle. Yes, they do that. And the banks are doing everything they can do right now to keep people in their houses because quite frankly, they don't want foreclosures. Now, do you think the government wants foreclosures? Do you think the president either current or future want foreclosures? Do you think they want foreclosures? No, they don't. They want people in their houses. Obviously foreclosures is that's bad for ratings, right? Bad for approval ratings. So the politicians definitely don't want foreclosures and banks don't want foreclosures either. So they're keeping people in their homes. The question is how long can that game continue? Well, I would expect that it continues for a long time. I mean, again, let's be honest. No politician is going to stand up in front of everyone and say, Hey, during my term, you're going to experience a lot of pain in the housing market. It's going to crash. There's going to be tons of foreclosures. Then they leave office. A new person comes in and that person who let the, the everything crash, which probably is the right solution. Honestly, they're known as the person who had a bunch of foreclosures on during their watch. No one wants that. So it doesn't matter what side of the aisle you're on. It doesn't matter if you like Trump, don't like Trump. It doesn't really matter. I think we can all agree. No politician is going to want foreclosures on their record, basically. That's my opinion, but I'm curious what you think. So if you're a buyer and you're waiting on foreclosures, I wouldn't hold your breath. I think we'll continue to see muted foreclosures for the conceivable future. And it takes a long time to go through the foreclosure process. However, there's one area that you can, uh, you will start seeing foreclosures and that's taxes. Remember, even if you don't have a mortgage, you still have to pay property taxes. Every property owner in the United States has to pay property taxes, some more than others. Those property taxes can't go to loss mitigation. If you don't pay your property taxes, the County that you live in can and will foreclose on your house. In fact, in my little County that I live in, in central Ohio, one third of all the foreclosures are from taxes. They're not for mortgages. So you will see tax foreclosures. Now may not be as many as mortgage foreclosures that we experienced during the GFC. You'll certainly see that. And so if I were you and I wanted to go and market or look for foreclosures, I would get with your County, uh, go on your County website, the County auditor site, and look for share of sales. There are a lot of counties in the United States that do that, not all counties, but a lot of them. So you can find the foreclosures, the tax foreclosures on most County websites, and that can be a good way to find some opportunities. But as far as a big wave of foreclosures, I don't see that happening. We're going to certainly watch it here on the housing nerd. You can watch it with me, but right now not seeing that they're just muted because a lot of people are in a protection. And again, I want to know what you think about this. Is this protection good? Is it not good? You tell me. So if you want to see more detail about foreclosures, you should check out this video right here. This video, uh, I just did. And it, I take you into some of the behind the scenes information on foreclosures and also show you my local County and how I look for foreclosure properties at auction.