Yesterday afternoon, I sat in on a conference call about covering the foreclosure crisis. But it wasn’t so much a lesson in foreclosure journalism (if there’s such a thing) as it was a discussion of where we are in the now four-year housing crisis with a dash of speculation as to when we might get out of here.
The answer? Not anytime soon. Here are some of the issues we’ll be dealing with in the next year or two:
1. Falling prices. It looks like 2011 will include home price declines in several major areas of the country, including parts of California, Arizona, Nevada, Florida, and Illinois.
2. More foreclosures. While we’ve waited for the much-promised HAMP and HARP programs to live up to the government’s breathtaking promise to save 4 million homeowners from foreclosure, the government announced that just 750,000 families were saved from “homelessness” through these programs. The real number, I think, is lower. Meanwhile two million families a year over the past few years have lost their homes to foreclosure.
3. It pays to put you into foreclosure. The shadow inventory of future foreclosures is growing and BIG SURPRISE!!!, it turns out that it’s really in loan servicers’ best financial interest to put you into foreclosure so it can tack on huge fees and charge you for its own homeowners insurance policy that costs several times what yours costs.
4. The future of Fannie Mae and Freddie Mac. In January, 2011, the government is supposed to put forth a new plan that outlines what we’re going to do with Fannie and Freddie, the secondary mortgage market behemoths, and a framework that explains how we’re going to securitize loans and reassure the world about the strength of the U.S. homeowner so that they’ll buy our mortgage-backed securities (MBS). But guess what? No one knows what to do about Fannie and Freddie, and no one wants to do anything while the housing industry is so fragile. My guess is that the government will have to push this back, perhaps into 2012.
Life is full of surprises, so we’ll see if the housing industry can muster up something more than a lump of coal for itself this Christmas.
Please leave your comments on the blog.
I have a daughter who is military. They bought a home a one assignment, at the peak, which they lived in for a couple years. Then transferred, bought another home at their new sight. Both are draining them. Any plans to help military personnel?
The reason the HAMP and HARP programs have not saved more from forclosure it that the major lenders are unwilling to work on a mortgage mod…..they just keep stretching out the process until someone is forced into forclosure……seems purposfully….makes no sense! I know this from personal experience.
My daughter was awarded the house in divorce–mortgage lenders have changed twice and both are very reluctant about re-financing as a matter of fact she never gets to correspond with a live person. No one seems to be on the same page–she is working with NACA & ESOP. I can not beleive how hard it is for people to attempt to work out terms to stay in their homes. It is awlful and a disgrace on the system and the government for allowing these vultures to prey on American citizens. What happended to the “American Dream” of owning a home–GREED! GREED!
Run Trump Run… Donald Trump is considering running for President in 2012, he seems to be the only one talking about the real problems. Because of his real estate background I hope he does so that we can star prospering in this sector again. In the meanwhlle hold on it is going to be a tough ride.
How much more can housing values drop. I have personally seen 100sof homes within I285 in Atlanta ‘for sale’ below $17K which previously sold for more than $100K back in 1997. How much further than 80% depreciaition will we see. The answer is not much because they can not fall below $0.00. Many markets have reached the bottom. Time is now to buy and hold for the future.
How many of the homes lost to forcloser are second or investment homes? Many of them in Florida seem to be owned by people that use them in the winter and they return to their regular homes up north in the summer.
I grew up in Florida. My hometown over built one area in the 1920`s…..streets…sidewalks,etc….it took till the 1990`s for that to be solved.
This “housing problem”…is a people/job/economy problem….it will probably take 20-40 years to solve…we`ll all be long gone….just ask any Cuban….sometimes a country can make a mistake that lasts a life time
I found out several weeks ago that it is actually more beneficial for mortgage companies to foreclose. I applied for a loan modification. I wasn’t behind but am very upside-down so wanted to apply. I was given a trial modification with much lower payments. After several months of making my trial payments (100% on time), I called the mortgage company to make a payment and was told that my home was being considered for foreclosure. Apparently, even though I had signed the paperwork they sent, the mortgage company had decided to decline my trial modification but failed to notify me. Therefore, they looked at it as me only making partial payments so not only were they considering foreclosure, they added on late fees making me over $10,000 in arrears! So, now I’m paying extra every month to catch up. Meanwhile, I was talking to a bankruptcy attorney at a meeting I was attending and I told her my story. She told me that she meets with about 6 potential clients per day and on average, 5 have stories similar to mine! She told me of two teachers who were facing bankruptcy to save their home because after six months of “trial modification” payments, their modification was declined and the mortgage company told them they had to pay over $12,000 to bring their mortgage current or they’d be foreclosed upon. With that many people having these problems, I think it’s obvious that the programs aren’t working as intended and instead are taking people who were paying on time and making them delinquent.
Yes, it seems some banking/loan servicing entities have entered the title insurance business, where, as you noted, they could make more money on a property by letting it go into foreclosure. After it returns to the market, one of their “addendums” (really, another contract) to the buyer’s purchase contract is to use their title company of choice (it could be one of their own subsidiaries, not a separate independant title company) or if you choose not to (in California you can’t be forced to use an REO company’s title insurer), the buyer must choose their own insurer at their own expense.
Yes, I doubt their agenda is how to help a borrower avoid foreclosure.