A reader wanted an opinion on this quote from the latest CNN survey:
“Foreclosure sales will pick up this spring as mortgage servicers figure out who can qualify for a modification and who can’t,” said Zandi.
The bank reps on Monday’s conference call both talked about the “retention waterfall”, where they are going to try each and every step available to rescue borrowers. First they’ll try a regular refinance, then a loan modification, then offer a short sale, then consider foreclosure.
Foreclosure sales WON’T pick up this spring, like Zandi says. Why? Because the HAFA program will allow defaulters to consider short-selling their house for a few months – with only a trickle actually coming out of the retention waterfall. Then there will probably be another government program devised to try to save the day.
How about this article? (hat tip to Rick for sending it in)
Feb. 25 (Bloomberg) — The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.
The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.
As long as the government thinks foreclosure is a dreaded last-resort, the can will be kicked further down the road.
If this happens, you can start calling us Communist China. We have a thing in the US called private property rights. The government has no ability to dictate whether a lender can foreclose. I don’t think that will stop this administration from trying though. Just look at how they usurped bankruptcy laws with GM and Chrysler.
I fought the law and the law won.
Question I have is: is the can-kicking delaying the eventually recovery, or is it just lifting the bottom of the home-price trough? If the latter, sure buyers now won’t get as good deals, but it’s not going to have any difference when things turn around.
AMANSHOMEISHISATM,
This is of course, assuming that we’ve reached rational pricing.
I personally doubt this in Southern California, so it’s attempting to fight the forces of nature by holding back the dike, stick a finger in and hope it doesn’t all come crashing over. They’re hoping this “flood” subsides and it’s back to “up and to the right”.
My opinion is that there are structural issues with the economy that are actually ERODING home values as we speak. Stubbornly strong dollar come to mind as we bleed jobs to everywhere else. Can’t buy $1M homes with no job, or at best a fleeting commission-based one selling real estate to others and profiting. Longer-term maybe, but we’re talking 10-15 years from now, not 2-3.
We’ve got serious problems that require serious solutions, not hand-wringing and foreclosure moratoria. We need to speed up foreclosures, not slow them down.
Chuck Ponzi
Jim has it right, this is more can kicking which just drags out the recovery period over additional years.
Isn’t kicking the problem down the road Washington standard operating procedure?
Chuck’s right about structural problems being too big to bail.
I spoke to a friend today and his wife is about to lose her job processing accounting data at a large firm. She was able to train her Indian replacement in just 1 day.
Our economy is structurally flawed and these jobs won’t come back if we ever have a real recovery.
My sources tell me the plan is to use whatever means possible to create the appearance of a market bounce, to sucker in investors into the RE and stock market. Then the USD will be collapsed overnight and we’ll have a new world reserve currency in the morning.
World Banksters won’t be affected because they own the system and their wealth (aka, power) is based on other people’s poverty.
Don’t fall for the trap.
Twoofer,
If the dollar will collapse, don’t you want to own real estate?
If the dollar collapse you had better hope you have a fixed rate. If the dollar collapse interest rates will soar to over 20%.
Of course inflation will go crazy. Then we will see the average value of a house double. That will help people who took out loans between 2002-2007.
Wow this is crazy! There are people openly just not paying and have been for months. They could easily make the payments but bought at peak and just made a financial decision that is now socially acceptable to just sit and wait until they have to move. This will just delay the process with more red-tape and more steps in the process.