Extreme Home Tear DownA news broadcast in southwestern Ohio reported recently about a man who bulldozed his home rather than allow the bank to take his home after the bank failed to accept a Short Sale offer of $170,000 for the $350,000 home.
The homeowner, Terry Hoskins, hoped that his actions would help make banks “think twice” about taking away a person’s home.
The incident seems to have hit a nerve with many agreeing that Lenders must try harder to work with beleaguered homeowners, while others wondered what could possibly be accomplished by such an extreme act.
The incident underscores figures from First American CoreLogic that show between 12 and 13% of home sales are now bank owned homes that have undergone damage. For many people the strain of losing a home is too much and leads to behaviors that would not normally happen.
Investors and Lenders need to redouble efforts to come to a meeting of the minds on Short Sale prices and terms. The waste that otherwise occurs in damaged and destroyed property is at least a 50-50 proposition for homes that are taken back as bank-owned property.
Administration Considers Halt to Foreclosures
The Obama Administration is considering further sanctions against Lenders who foreclosure before all Home Affordable Modification Program options have been explored. The HAMP guidelines strongly
urge Lenders to look at all options before foreclosing, but falls short of requiring Lenders to examine every severely delinquent account one by one before sending out a Notice of Default. If the more stringent requirement is enacted Lenders would need to contact all borrowers who are 60 days or more late in order to determine eligibility for a HAMP modification or HAFA short sale.
urge Lenders to look at all options before foreclosing, but falls short of requiring Lenders to examine every severely delinquent account one by one before sending out a Notice of Default. If the more stringent requirement is enacted Lenders would need to contact all borrowers who are 60 days or more late in order to determine eligibility for a HAMP modification or HAFA short sale.
The change would also require Lenders to stop all foreclosure activity against those who have been accepted into the modification program. There have been many complaints from families who have begun making approved modified payments and have still been subjected to foreclosure filings.
The Administration says an outright ban on foreclosures before all other measures are exhausted is just one of the options under consideration in order to salvage what has widely been seen as a failed foreclosure rescue program.
Another proposal under consideration is a mortgage write down, which will require rewriting the net present value formula used by lenders to determine whether they will make more money by foreclosing or by modifying the loan.
New Investor-Led Strategy for Keeping Homeowners in Home
A company in Florida has opened up a new strategy for keeping homeowners who can afford to pay reduced mortgages in their homes. All Statewide Property Corporation has formed an investment partnership which buys up bulk non-performing mortgages from lenders and then goes to homeowners with an offer to write down the mortgage to current market value at prime plus 4% (currently around 7%). In locations where market value has dropped dramatically the homeowner can typically save 25% or more. The company does not consider credit rating, late payments, or any existing bankruptcies or foreclosures on the homeowner’s record.
Because the company looks for residents with strong motivation to remain in their homes they target a group that is less likely to redefault at the new mortgage rate. The company indicates that investors in this partnership can make 17 to 24% returns on investment.
Disappointing Home Sales Figures for January
The National Association of Realtors report of January home sales is in and it shows a decline of 7.2% to 5.05 million units sold of single family, townhomes, condos and coops. This figure is down from 5.44 million units sold in December 2009. The only good news is sales were 11.5% ahead of the totals recorded in January 2009.
The NAR explained that these sales were based on contracts written in November and December when there was uncertainty about the extension of the homebuyer tax credit. With that extension, NAR expects sales to pick up in the spring, but Lawrence Yun, NAR chief economist, admits that the declines over the winter are a sign of continuing instability in the housing market.
Have a great afternoon!
Bob Massey
www.REWealthCoach.com
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