The recent report that the Obama plan to re-negotiate mortgages in trouble shows exactly what I have been saying for months. This plan simply isn't working! Out of almost 651,000 applications barely 2000 have been re-negotiated through October 31, 2009. Now to be fair, some of the blame is due to incomplete paperwork by applicants, but there simply is no rational reason why a lender would want to follow through with this process. And for the government to now publish "lists" of those loan servicers who are not meeting some standard level of mortgages re-negotiated is not going to help. Look what happened to the TARP money. When the banks realized how much the government was going to meddle in their affairs if they kept the TARP funds, many opted to give it back rather than be "under the thumb" of the government.
If Mr. Obama wants to really help the housing market, he should drive a process that completes short-sales in reasonable timeframes. What we are seeing today is that these sales are taking longer and longer to close. Some are taking six months or more to close IF the buyers are still interested at that point in closing on the home. No one profits by the delays we are seeing. Sellers are disappointed, their hopes get raised and then dashed. Buyers get excited and then are slowly disillusioned. Agents are frustrated. And the banks get to keep the assets on their books at full value until THEY decide what to do with the property- sell it short or foreclose.
Short-sales are, and will continue to be for some time, a significanty portion of the market. Unfortunately we have no real process that expedites them. If we want to get people out from under an unaffordable mortgage, and get capable owners in a home, then we should begin to solve the short-sale problem. Over 60% of all sales today in our local market segments are short-sales. The time is now. The urgency is great.
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