OfflineThe $26 billion mortgage abuse settlement seems to be over and done. Since many lenders were slowing their pace of foreclosures during the negotiations, it’s now expected that there will be a resurgence in foreclosure activity.
RealtyTrac.com states that last year’s 34% decline in foreclosures wasn’t about a better housing market. Instead, it was a slowing of foreclosure filings due to the problems lingering from the robo-signing scandal and the negotiations with the government about restitution to homeowners abused in the process. RealtyTrac.com estimates that foreclosure filings will climb from 1.9 million in 2011 to somewhere near 2.5 million in 2012.
Since part of the mortgage negotiation centered on relief for homeowners in default, the pace should now pick up in dealing with problem mortgages. The solutions offered by the settlement can only work for homeowners who can afford to make new and lower mortgage payments. However those who can’t, or are considered as un-salvageable, will not be helped and foreclosure will proceed normally.
Until a settlement was reached, banks let many defaults sit in limbo, not sure what they’d be able or forced to do until finalization of terms. There were five lenders party to the deal:
• Bank of America
• JP Morgan Chase
• Citigroup
• Wells Fargo
• Ally Financial
These lenders together account for about 60% of the mortgage market. There are currently more than 3 million homeowners either seriously delinquent on mortgages or in foreclosure. Many analysts are glad to see the pace pick back up, as improvement in the housing market can’t happen until the foreclosures are worked through.
Some banks are getting serious about getting delinquent homeowners out of their homes with less damage and at a lower cost. Some banks are paying selected homeowners as much as $35,000 to sell before foreclosure. With some homeowners staying in their homes for as long as three years without making payments, banks are looking for faster and less expensive solutions than formal foreclosure. These payments and looser short sale rules are being used to move the inventory through the process faster.
So this means, that for someone just trying to start out in the real estate investing business, that we should focus our attention on these kind of properties? Since the banks are going to be willing to settle for less than the normal before going into foreclosure? I ask because I am new, and just bought my bandit signs. I am attending Dean's event tomorrow here in Dallas, TX, and am really looking forward to closing on my first deal. I have a real estate agent who is eager to work with me, and kick of the 2012 year! Any information would be great. thank you for the post!