I don’t know about you, but I’m getting angry hearing all the horror stories from people about their ordeal with one bank or another. It seems like every week I talk to someone else who was trying to negotiate a modification on their home loan and after months of effort the bank denies the modification and by then it is too late to do anything about the situation.
Every story has a little different twist. Sometimes it’s a short sale with an accepted offer ready to close escrow. The current lender refuses to approve it and instead forecloses only to sell it later for less money. These situations involve real people who are put through the ringer by these banks and others.
These past years we have seen the real estate market continue to plummet to the point of having nowhere else to go but back up. We have seen our government bailout one industry after another while continuing to go further in debt. Why couldn’t some of that money been put to use in a common sense effort to help save homeowners. Most people I have talked to only wanted a new interest rate with a more affordable monthly payment. Some would have liked to have their principal reduced. Many were unable to refinance because their home no longer had enough equity. I guess it made more sense to the banks to take the property back and sell it to someone else for half the value.
In a story titled ‘Dual Tracking’ in California by Ken Calegari, Ken states As if consumers are not suffering sufficiently in the ongoing economic crisis, even while pursuing solutions to their housing difficulties, and sometimes continuing to make mortgage payments, they find their homes have been sold from under them in a foreclosure sale. As identified in an April 14, 2011 Los Angeles Times article by Alejandro Lazo, this is the result of a common bank tactic referred to as dual tracking, where, while a borrower in default is seeking a loan modification, the lending institution often continues to simultaneously pursue foreclosure.
The article goes on to state that while lenders contend that dual tracking simply protects their investment if the homeowner is unable to qualify for new loan terms, regulators and consumer advocates say the practice lulls some homeowners into thinking they are no longer at risk of having their homes taken away. Paul Alvarez, in a special to The Press-Enterprise, notes that consumer advocates say hundreds, if not thousands of borrowers, are losing their homes in foreclosure while negotiating to lower their mortgage payments.
In the mean time we need the overall economy to turn around. One way for the real estate portion of that to get back in balance is to work through the current inventory of distressed properties. It seems however that the government or the lenders or someone has a better idea. According to the Daily Real Estate News dated July 14, 2011, 1 Million Foreclosures Delayed Until 2012, and based on an Associated Press story by Alex Veiga, an estimated 1 million foreclosure-related notices for defaults, auctions, and home repossessions that should be filed by lenders this year will be pushed back until next year, according to the latest report by RealtyTrac.
While the delays could give home owners more time to catch up on their payments and try to avoid foreclosure, housing experts warn this means the looming shadow inventory of distressed properties likely will continue to plague the real estate market even longer. “The best-case scenario is we don’t get back to normal levels of foreclosure activity until 2015, which means the housing market recovery gets delayed by at least a year,” says Rick Sharga, a senior vice president at RealtyTrac.
And given delays in the time it’s taking lenders to move a home from default to foreclosure and then sell the property, the housing turnaround could conceivably be pushed out to as late as 2016, Sharga said.”It could be the new reality is we’re going to have to accept the fact that home prices in most markets aren’t going to budge much for the next several years while this overhang gradually, painfully makes its way into the market and gets purchased,” he said. Foreclosures typically sell at a discount to other types of homes, weighing down home values. As a result, housing experts say U.S. home prices are unlikely to recover until the glut of foreclosed homes on the market is cleared out.
What an ongoing mess. I’ll try and sum this all up. If you own property, keep it unless you’re planning to move up or move away. If you are in a position to buy your first home or investment property now is a fantastic time. While prices may not change much it’s hard to say what is going to happen with interest rates, which affects affordability. Hang on, we may be in for a long haul. The good news is that it could be worse and remember you aren’t the only one who is going through this. Regardless of your situation.
Questions or comments can be made to Kerry Suess at firstname.lastname@example.org.