Many have speculated as to when the housing market will bottom. The short answer is, nobody knows, but there are some guideposts to watch out for. First, in order for house prices to bottom, they must be affordable. Sub-4% interest rates combined with falling prices have made houses affordable on a monthly payment basis. Second, supply and demand must rebalance and demand must outstrip supply for prices to go up. That criteria is more elusive. When the housing bubble popped [Read More...]
Principal forgiveness is the worst policy option. Despite this fact, it’s so appealing to loan owners and politicians, reporters are keen to write about the prospect. However, the world is not comprised only of loan owners. Nearly 40% of households are renters, and of the remaining 60% who own homes, 90% of them are still paying their mortgages. Ninety-four percent of the population is asked to fix the problems of the 6% who are loan owners and the banksters who [Read More...]
A new study from Office of the Comptroller of the Currency showed mortgage delinquencies at major banks at 12% when it is normally less than 1%. Many of these mortgages are shadow inventory where banks have been allowing delinquent mortgage squatters to stay rent-free for years. Also, foreclosures are increasing rapidly as the banks are finally accepting rising prices will not bail them out, so they are going to have to clear out the delinquent borrowers on their own. Amend, [Read More...]
Mortgage delinquency rates will likely decline in 2012 as lenders foreclose and remove the loan from the delinquency pool. Unfortunately for lenders, the delinquency rate is expected to rise for the first quarter of 2012 as declining prices and a weak economy prompts more borrowers to strategically default. 2012 mortgage delinquencies seen dropping sharply By Eileen Aj Connelly NEW YORK – If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should [Read More...]
Some lenders may be increasing the rate of foreclosures, but overall, the time it’s taking banks to foreclose is increasing. The foreclosure time now stands at a record 631 days. Foreclosures don’t take forever, but they certainly do take a very long time. Foreclosure used to be a deterrent to prevent borrowers from becoming delinquent on their loans. Now that the process takes so long, the prospect of two years of free housing is actually becoming an inducement for strategic [Read More...]
In early 2010, i predicted the moral trepidation about strategic default would largely be gone from the American psyche. People are beginning to look at their homes as their other investments, and when the numbers favor waling away, they do so. People are opting to get out of the rat trap of working to service a bottomless pit of debt. As underwater borrowers strategically default, lenders are trying different methods for holding back the rising tide. Loan modifications have postponed [Read More...]
At a basic level, each of us wants the safety and security of an ordinary world of predictable surroundings and routines. The real estate and mortgage world we live in today is a surreal landscape of failed loan programs, ever-tightening credit standards, and uncertainty about the future of real estate prices. The success or failure of many loan programs will determine the likelihood of their reappearance in an altered form. Subprime first-mortgage lending will return. The 20% down piggy-back loans [Read More...]
Everyone who participated in the Great Housing Bubble wants to go back to the way things were before. That is the problem with Ponzi schemes; once they collapse, you can’t rebuild them. Borrowers were only making their debt-service payments by borrowing more money. When faced with the prospect of paying their debts without continued borrowing, Ponzis can’t do it. Loan modifications seem like a great idea: borrowers resume making payments and get to keep their houses, and lenders don’t have to foreclose and recognize any losses. In other circumstances, this [Read More...]
The banks blew it. We all know that, and now we are all being asked to pay the bills for their catastrophic mistakes. I didn’t cast the first stone, but I hope my writing about this issue has left a lasting impression. I also hope we can all learn something from this are avoid the mistakes again in the future. I have my doubts. We can all see the problem and the solution, but we all know the government is [Read More...]
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