Given the daily headlines on the foreclosure freeze it’s easy to lose sight of that fact that most lenders are not putting a halt to their foreclosure processing. Earlier this week I sat down with my colleagues Jeff LIscher, NAR’s managing director of regulatory policy, and Paul Bishop, NAR’s vice president of research, to get their take on what’s happening with the foreclosure freeze. (See the video.)
Jeff’s first point was that there are thousands of lenders and only a handful are freezing their foreclosures while they review whether their past foreclosures were handled correctly.
So far, only a few major banks are implementing a moratorium while they conduct their reviews. Bank of America is the biggest. It’s halting foreclosures in all 50 states. J.P. Morgan Chase is halting foreclosures in about half the states. Same thing with GMAC Mortgage. But Wells Fargo, another big lender, isn’t implementing a freeze.
This isn’t to say the problem isn’t big. It appears to be very big. But it’s not all-encompassing, and I think that was Jeff’s point.
Paul reinforced this point by making clear the bulk of foreclosures are concentrated in just a handful of states, with just two, California and Florida, accounting for a third of all foreclosures. And California isn’t a pure judicial foreclosure state. It’s a hybrid in its legal processes for foreclosures.
The fact that California isn’t a pure judicial foreclosure state doesn’t mean we can expect there to be fewer reviews there. Far from it. But it remimds us that this latest crimp in the housing market is as location-specific as the housing market itself. (In a judicial foreclosure state, foreclosures are processed through the courts. Here’s a chart for you to see what the procedures are in your state.)
One thing the conversation with Jeff and Paul made clear is that, if you’re working with a client that’s trying to buy a foreclosed property, your client would do well to talk to an attorney. You just want to make sure your client’s interests are protected if suddenly the bank says it’s taking the home off the market while it reviews the paperwork that was generated when the home was foreclosed upon.
Dorothy Buse, a sales associate in the Orlando area I spoke with two days ago, says she’s had about a quarter of her listings pulled off the market because of these reviews. When this happens, she says, she immediately removes the listing from the MLS. That way there’s no confusion over whether the property is available for sale or not. In about a quarter of these cases, she already has an offer on the property. In these cases, she gives buyers a choice: they can withdraw and get their earnest money deposit back, no questions asked, or they can hold on and wait for the property to come back on the market with the understanding that the timeframe is indefinite. She has no way of knowing how long the property will be off the market.
NAR has written the heads of the U.S. Treasury Department, HUD, and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, saying the foreclosure problems give extra impetus to banks to redouble their efforts on loan modifications and short sales. Focusing on these options, NAR says, “will not only minimize losses to the owners of the mortgages, but also minimize harm to homeowners facing unprecedented financial challenges and avoid reversing gains being made towards the recovery of housing markets, especially in high foreclosure areas.”
With foreclosure problems mounting, emphasizing alternatives to foreclosure certainly seems like a win-win for banks and everyone else.
Access the article at: http://tinyurl.com/29du45q
Indianapolis Real Estate
No comments:
Post a Comment