Two Positives On The Foreclosure Front
We all know that the biggest barrier to meaningful recovery in the housing market is the glut of foreclosed inventory on the markets. So finally some good news. A new survey from online real estate sale sites Trulia.comand RealtyTrac.comshows increased buyer interest in foreclosed properties.
55 percent of adults surveyed indicate they are at least somewhat likely to consider buying a foreclosed property in the near future. That’s up from just 47 percent last fall.
40 percent of those surveyed say they expect to get at least a 50 percent discount on a foreclosure. That’s also a big jump from last fall. So who’s testing the waters most? First timers.
“First time home buyers have been priced out of the market for the last few years, and they're now jumping in in significant numbers since prices have come down,” says Trulia.com CEO Pete Flint. “So first time home buyers who are trying to step on the first rung of the housing ladder are buying foreclosures in significant numbers.”
However, the Trulia/Realty Trac surveyalso found that negative sentiment surrounding foreclosures is up. 85 percent of those surveyed cited concerns, up from 80 percent last fall. Chief troubles are hidden costs, the risky process and still falling home prices.
“I would really recommend do your research,” warns Flint. “A foreclosure may not actually be the right thing for you because there are many resale properties out there. Also, work with an experienced foreclosure expert.”
Banks have been ramping up the foreclosure process now that all the moratoria have expired, and that will mean more foreclosed properties hitting the market over the next six or so months. But another roadblock to foreclosure will lift today, as the President signs the “Helping Families Save their Homes Act of 2009.” The headline in this legislation is safe harbor for servicers from investor lawsuits in HUD’s Hope for Homeowners program.
The bill provides a safe harbor from liability to mortgage servicers issuers, trustees, loan sellers, depositors, and any other person” to the extent the person’s cooperation is required to allow the servicer to engage in loan modifications, as long as the servicer provides a modification consistent with the Administration’s program or it utilizes Hope for Homeowners.
Up until now, servicers have been very wary about modifying troubled loans, fearing mega lawsuits from the investors who own the loans. Investors fought this safe harbor provision, claiming it would be the end to contract law as we know it, but they lost. The safe harbor was the alternative to bankruptcy cramdown, at least in the political process.
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