Will Mortgage Forbearance Lead to Mass Foreclosures in Johnson County

Real Estate Agent with Mike Russell Real Estate Group SP00225692 Kansas

In early January we received the December Market Report for Home Sales from The Kansas City Regional Association of Realtors (KCRAR), most of the information showed a somewhat flat market compared to the year prior except for 1 number. 

Well, that 1 number was how many available home there were for sale compared to last year. In turns out that we actually had 54% less homes available to sell. As new homebuyers started to come into the market it quickly became apparent that finding them a home that meets their criteria was going to be a challenge. Forward 3 months and the the inventory situation has gotten worse while bidding wars and price escalation rules the market. Right now buyers are begging for new homes to hit the market but no relief seems to be in sight?

One hope of many buyers is that a slew of foreclosures will hit the market after the mortgage forbearances expire, thinking that the homeowners wont be able to get caught back up and lose their home to foreclosure. Here are 3 reasons why this will not happen and why you should not hold off buying in hopes of a foreclosure crisis.

1. Mortgage Forbearances were extended till the end of June 2021 and I truly believe they will get extended at least 1 more time. When it come to mortgage foreclosure Kansas is a judicial state. Meaning that foreclosure are handled in a court preceding, the lender has to file the forclosure with the courts and go through many steps before being able to foreclose a home, this process can take anywhere from 3 months to 8 months with 6 months being the average. But Kansas also gives the homeowner an additional 3 months after the home is foreclosed to redeem their home and pay the amount owed. This means the earliest you would see foreclosed homes hitting the market is February of next year but most likely later.

2. The forbearance program is working, 92% of homeowners who took forbearance have already caught up, only 2.5% of Fannie Mae Loans and 6.3% of FHA/VA Loans are currently behind and many of these people have the ability to catch up but are choosing to stay in forbearance out of caution.

3. Homeowners have equity, during the last mortgage crisis the owners had little to no equity. That is not the case right now, most homeowners have solid equity in their home. With a HOT market they will just sell the home if they cannot get caught up on the mortgage. 

While I believe that there will be some foreclosures due to the forbearance program, I expect the number to be small and it will not make a dent in the inventory shortage we are currently seeing. So if you are waiting in hopes of a massive number of foreclosed homes hitting the market? 

You are probably kidding yourself?

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 Mike Russell is a REALTOR with Keller Williams Realty. Mike specializes in Johnson County Kansas Homes and Real Estate for sale. Mike is a tech savvy realtor with over 20years experience. Did you enjoy Mike's Blog? Feel free to subscribe or join Mike on his Social Network to stay up to date on Overland Park, Olathe, Leawood, Lenexa, Shawnee and all of Johnson Counties real estate news and more...

Mike Russell Real Estate Group can be reached at 913-266-5828 or MRussell@KW.com  or www.SearchjocoHomes.com

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Comments (1)

Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy


What a great artticle you shared with us, it is well written and logical.  Wishing you continued success.  A

Apr 13, 2021 12:34 PM