The recent rise in foreclosures has some people drawing comparisons to the 2008 housing crisis. However, experts say that today's foreclosure numbers are nothing like 2008.
In 2008, the foreclosure crisis was largely driven by an oversupply of homes and loose lending standards. Many people were able to qualify for mortgages they couldn't realistically afford, and when the housing market crashed, they found themselves underwater on their mortgages and unable to keep up with their payments.
Today's situation is different. The current increase in foreclosures is due in large part to the economic fallout from the COVID-19 pandemic. Many people lost their jobs or experienced reduced income during the pandemic, making it difficult to keep up with their mortgage payments. However, unlike in 2008, the housing market is not oversupplied. In fact, there is currently a shortage of homes for sale in many parts of the country.
Additionally, lending standards are much tighter than they were in 2008. Mortgage lenders are requiring higher credit scores and larger down payments, which means that people who do get approved for mortgages are more likely to be able to afford them.
Another key difference between today's foreclosure situation and the one in 2008 is the government's response. In the wake of the pandemic, the government implemented a number of programs to help struggling homeowners, such as mortgage forbearance and foreclosure moratoriums. These programs have helped many people stay in their homes and avoid foreclosure.
In conclusion, while the increase in foreclosures is a cause for concern, experts say that today's situation is not like the 2008 housing crisis. The underlying causes are different, and the government and mortgage industry are better equipped to respond to the problem.