14 million Americans are currently “underwater”, according to an executive at Deutsh Bank last week. The same executive went on to forecast that home prices will likely fall another 14% before bottoming out. So, as prices continue to fall, the number of over-leveraged mortgagors could reach 25 million. That would mean that over 48% of ALL mortgagors have negative equity. (Full interview @ CNNMoney.com)
The foreclosure filings for July were 7% higher than June and 31% higher than July of 2008 according to RealtyTrac. That is the third time in 5 months that there has been a record set.
But isn’t the Obama Plan Working?
Simple answer is NO. Banks are not moving fast enough to make the modification programs effective for the millions promised relief. Bank of America for instance has modified the loans of ONLY 4% of their eligible borrowers since the program was unleashed months ago. What is worse after struggling through red-tape, run-arounds, and delays, the majority of home-owners that successfully modify end up becoming a short sale candidate in months. What are the banks that received bail-out money using the money for?
The rest of the programs are not set to bring long-term economic repair either. Cash for Clunkers will only bring car part and car price inflation while encouraging more Americans to open lines of credit they cannot afford. The Cap–n–Trade Bill will only cause housing inflation, more over-leveraged property, and unnecessary tear down of properties that meet the price criteria for first-timers and rehabbers. The bill will also bring even more unemployment. Taxpayers who have managed to maintain employment now have to work harder to earn less and pay more taxes. ...and Never before has a government mandated program stood to unravel the very basis of American Capitalism and our historical economic strength like the health bill. We are not facing an end of the recession that should be left to occur organically by free trade and an investor driven market, but are instead facing mandated government pocket picking that is building a hollow future.
One solution we can bring to this situation is short sales. Short sales solve a problem and fill a need.
Seller ends up with a better situation: out from under debt and credit salvaged
Lenders NET MORE versus REO sale
Neighborhood values are not as impacted
Less vacancies and vandalism
Municipalities get their tax money
For those of us in the Real Estate Industry finding a team to work to bring more Short Sales to close is vital. One solution is Loss Mitigation. There all types of loss mitigators to review so choose carefully. You may wish to check out http://www.RRES.ManageMyShortSale.com.
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