Mortgage Industry Warns Foreclosures Will Skyrocket In August If COVID-19 Relief Is Stopped
The mortgage industry has been sounding the alarm bells in Washington for several months about extending COVID-19 relief. Now, the Federal Reserve Bank of Atlanta has also joined the orchestra of alarm bells.
The industry is warning that this time the flood of foreclosures will be of biblical proportions. Economists warn foreclosures could surpass the financial crisis of 2008. Economists say there is only one way to stop it. Socialism. That’s right. They want to extend COVID-19 relief efforts.
The danger of mortgage forbearances turning into foreclosures is becoming very real. The COVID-19 infections surge in the United States.
COVID-19 cases in the sunbelt states have set record highs in the past week. The nation had a record of 54,500 new virus infections before the long holiday weekend. Businesses are beginning to shut down again. Thus, laying off thousands of people.
In addition, July 30 is the end date for the $600-a-week federal enhancement to state unemployment benefits. The House of Representatives passed a bill to extend the beefed-up payments through January. However, the Senate left town for a two-week vacation without voting on the bill.
The beefed-up unemployment benefits have kept forbearance and foreclosure filings lower than some of the most pessimistic forecasts of 20% to 30%.
Economists are warning of a new round of layoffs with the latest COVID-19 resurgence. A new surge will force states to reverse their reopenings. Federal Reserve Chairman Jerome Powell has warned that additional relief measures are needed from Congress to avoid “long-term damage” to the economy.
After that, if the economy is still struggling, foreclosures could rise, the Fed report said. In the wake of the financial crisis, about 10 million American families have already lost their homes.
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