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78 ere's no real way to gauge how many people entering the mortgage forbearance programs will fail to resume payments. So there is no way to determine what foreclosures will look like once these programs end. Will we see a tsunami like we saw during the Great Recession? Or will it be something more manageable that won't disrupt the market? About 2.7 million U.S. mortgage borrowers, or 5.5% of the total, are currently in forbearance programs, according to the Mortgage Bankers Association (MBA). MBA statistics show that the total peaked at about 4.75 million in May 2020. Right now, forbearance for federally-backed mortgages has been extended until March 2021, and I believe that under President Joe Biden's administration, that date is likely to be pushed back to September 2021. It's a good move, because there are plenty of factors at play that could positively impact the economy by then to give borrowers ample opportunity to get back on track and resume payments. Specifically, the current COVID-19 vaccination program will go a long way toward reopening the economy. If you look hard at the hospitalization mortality rates around this pandemic, about 81% of mortality is age 65 or higher. If we vaccinate everybody over 65 years old by May or June 2021, we're going to reduce mortality significantly, and that will allow us to dramatically reduce stay-at-home requirements. ere is a tremendous amount of capital on the sidelines waiting for the economy to reopen. Businesses have the capital to spend, and consumers have increased disposable income through savings (about 9% above pre- COVID-19 levels). So, as mortality decreases, optimism will return, and we're going to see a tremendous amount of dollars re-engage in the economy. THE FORECLOSURE MARKET You will see some foreclosures once the forbearance ends. It won't happen all at once, but I expect it to build gradually over an extended period. Looking at the number of mortgages that are delinquent and in forbearance, we can expect to see a range of about 500,000 to 700,000 foreclosures occurring from Q4 2020 to Q4 2021. I would be surprised if we foreclose on more than 700,000 homes. at range is de minimis compared to the numbers foreclosed during the Great Recession. is time it's not going to be anything like that. To provide some perspective, during the Great Recession, many Americans lost their homes due to foreclosure. According to real estate data, there were over 3.7 million completed foreclosures as a direct result of the Great Recession. is time around, the market has improved and borrowers are better positioned with more equity in their homes. Today, what we are seeing is that economies that depend largely on tourism, recreation, and leisure activities have been hardest hit by the pandemic stay-at-home regulations. at is where we are likely to see the most significant number of foreclosures. Data from two months ago shows New Jersey had the highest FHA delinquency rate at about 20%, followed by Nevada, New York, Florida, and Hawaii. Another factor that helps this time around is that we are not overbuilt. In fact, we are IS A FORECLOSURE CRISIS IN THE CARDS? Will we see a tsunami like during the Great Recession, or will it be something more manageable? Quick Take By: Patrick F. Stone

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