There is a side benefit to our economy with millions of foreclosures across our country the past four years, and probably four more years to come before the banks work through their ?shadow inventory?.? It is estimated that so far $50 Billion have NOT been paid to mortgage payments and billions more that will not be paid to mortgages in the next four years.? Where that money has been allocated is the ?story?;? savings; ?retirement contributions; credit card payoffs; ?college education funds;? and, other investments back into families and communities.
The reason families and people are making the decision to NOT pay their mortgage is obvious.? Their home?s value is underwater with no near future hope for its value to reach what is owned on it for years to come.? So, people stop making their mortgage payments knowing that they will be able to live in their home up to two years or more because lenders have so much inventory already that they are not going to foreclose until some of it is sold.
This very long delay allows people to use their mortgage payment for items that allows them to get back into a healthy financial position with you and I paying for the Feds guarantee of any loses to banks.? It certainly does not seem fair to me, but it is the reality of what is going on.? How about this statistic from RealtyTrac?? Nationwide, foreclosures completed (REOs) in the first quarter of 2011 took an average of 400 days from the initial default notice to the REO, up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.? In New York and New Jersey it takes over 900 days!
It certainly does not seem fair to any of us that people are using their mortgage payment to better their financial position, actually using our money to do so. Remember the Feds (us) are guaranteeing every dollar lost by the banks from loans that are settled for less than the original loan amount.? What is happening with the practice of not making mortgage payments for up to two years and still living in your home as if nothing is happening seems completely wrong to me.? And, no matter if it is wrong, $50 Billion is being funded by us (Feds).
Here is today?s foreclosure reality as described by the CEO of RealtyTrac, ?James Saccacio reported, ?The first delay occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent into foreclosure but are waiting longer to allow for loan modifications, short sales and possibly other disposition alternatives,? Saccacio continued. ?Data from the Mortgage Bankers Association shows that about 3.7 million properties are in this seriously delinquent stage. The second delay occurs after foreclosure has started, when lenders are taking much longer than they were just a few years ago to complete the foreclosure process.?
Now, my doom and gloom report needs to be put into perspective.? Remember, ALL real estate is local, not National.? In the East Bay?s San Ramon Valley, foreclosures make up less than 20% of home sales today, and it is one of the best times to buy homes in our region. However, we are seeing a new trend in the higher end price points ? strategic foreclosures after the homeowner has purchased another property.? What this means is after they have their new home they just walk away from their original one. And, in one case, the homeowner sued the bank for loan fraud and created the agreed upon foreclosure as a ?legal settlement of a law suit? so it did not affect his credit.? Strategic foreclosures are important to watch to see if it becomes a trend of luxury real estate owners whose homes are under water.? More to come on this topic.
CONTACT US TODAY if you want to become a Buyer or Seller.? Rates have never been lower, and home prices are holding steady.? If you are going to buy a home this year, please contact us today to begin the process.? Interest rates will rise before the end of the year.? Until next time?
Related posts:
- 2010 East Bay Real Estate Update: Mortgage Interest Rates Rising In Q2, Q3, Q4!
- East Bay Real Estate: Jim Walberg?s 2011 Real Estate Predictions!
- High-End East Bay Real Estate May Be Next Focus Of Foreclosures?!?!
Filed Under: Blog, Buyers, Featured Posts, Luxury Real estate, News, Real Estate, Sellers
Tagged: east bay real estate, Federal Loan Guarantee, Foreclosures, Luxury Real estate, RealtyTrac, REOs, San Ramon Valley
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