BY MORGAN LEGEL
Journal Staff

Cook

The current Guam foreclosure moratorium, without further action, is set to conclude at the end of January.

While some island bankers and real estate agents expect it to likely be extended once more, what will happen once the moratorium reaches its expiration date?

Joaquin PLG Cook, president and CEO of Bank of Guam, said that the island’s moratorium on foreclosures has tentatively been extended to Jan. 31, with Freddie Mac’s extended until Feb. 28. However, he said the moratoriums will most likely be extended beyond those dates.

Guzman

Ryan J. De Guzman, CEO, partner and broker for Century 21 Commonwealth Realty, said he believes that once the moratorium is over, there could be foreclosures.

But this will not hurt the real estate market on the island; it may actually help it, he said. According to De Guzman, if this wave of foreclosures happens, the real estate agents will have no problem selling those properties, and quickly.

However, the moratorium is just one factor affecting foreclosures.

“The moratorium is definitely affecting the foreclosure numbers compared to previous years,” he said. “The payment deferrals granted by federal home programs has also been a great help. That said, we continue to see payments come in for our mortgage portfolio. In addition, there have been a lot of refinances happening as borrowers take advantage of low rates.”

Philip J. Flores, president and CEO of BankPacific, said the bank’s view on the situation is very positive.

Flores

“Our residential loan portfolio is quite strong right now,” he said. “This is partially a result of stimulus payments and people are saving more. The increase in savings comes partially from a behavioral change, the realization that there really are ‘rainy days,’ and people are not spending money for travel, restaurants, etc., so I don’t expect there will be ‘a lot’ of foreclosures.”

“It is uncharted territory…,” De Guzman said. “It puts people in limbo, like wait and see.

For the Bank of Guam, the 2019 foreclosure numbers versus the 2020 ones before the pandemic, were actually lower.

In 2019, 19 of the bank’s mortgaged properties were referred for foreclosure; only one was actually foreclosed while five are still pending — the delay in proceedings due to COVID. In 2020, there was one referral prior to the start of the pandemic back in March, which is also pending due to COVID; there were no foreclosures after that.

“Currently,” Cook said, “We have a handful of mortgage loans whose referral process has been placed on hold since the moratorium came into effect.  Of those, about half are due to COVID-related hardships.”

Flores said the industry is cautious when it comes to foreclosures.

“Banks do have a heart and the last thing we want to do is foreclose on someone’s home. Further, there is a pent-up demand for housing, so if one could no longer afford the mortgage, selling-out from underneath would not be difficult.”

In the current climate, properties usually sell quickly.

Freddie Mac, a federal home loan mortgage corporation, has extended its foreclosure moratorium to Feb. 28., while Guam’s hits its expiration date on Jan. 31.

“As far as what I’ve seen,” De Guzman said, “Because our current location market has such a limited amount of inventory, if a home or an owner are in trouble, the owner is not going to be able to hold onto the property and it will sell.”

He also said, whatever the case, the people of Guam know to expect the unexpected, and everyone should try to have a three month to six-month reserve, whether they are an owner or a renter, to help save them if an unexpected situation occurs in the future. mbj