Realty Check

Beware Holiday Foreclosure Moratoria

Foreclosed Home

In the last few days I've been bombarded with press releases from the likes of Citigroup , Fannie Mae and others, touting their holiday foreclosure moratoria.

From Fannie:

“We’re taking this step in support of struggling families who have unfortunately found themselves facing foreclosure,” said Michael J. Williams, President and Chief Executive Officer. “No family should have to face the prospect of being evicted during the holiday season.”

Citi's was sort of the same, adding that the bank would be working on "foreclosure alternatives", as if we didn't know that already. I actually reported the Citi release in my Realty Check updates yesterday, and then received a note from Bank of America , saying that this was standard practice historically and B of A would be doing the same.

Yes, in years past, even in good years past, banks always held off kicking folks out of their homes around the holidays. I always ask myself, do the banks truly have big, ungrinchy hearts? Do they just want the good holiday pr? Or do they just know that in a very practical sense, very few sheriff's deputies are going to forcibly remove families from homes where presents sit wrapped under the living room tree?

I'm not trying to bah-humbug the practice, I just want to put out a warning: All this Christmas cheer is going to skew the numbers come January. Yes, we'll see big dips in foreclosures and specifically bank reposessions (REO inventory as well), and I want to be sure we don't all go decreeing that the foreclosure crisis is over.

We've seen the numbers dip throughout the fall, largely due to the modification programs that are working diligently to jam a lot of borrowers into new monthly payment programs. But a good number of these modifications will not end up as permanent solutions, and come February the sheriffs will come knocking again, and more often.

So let the banks all look like George Baileys these next few weeks, but let us not fool ourselves into believing that the ghosts of housing past won't continue to haunt us when the January cold truly sets in.

Questions?  Comments?