The Banking industry, through HAFA, might have pulled out a genius
move: To disipate the "Shadow Inventory" cloud, without writting
off their debt, without changing non performing loans to the
liability column, without affecting the balance of their
reserves..... They did this, plus: They removed the stigma of a
"Tsunami" of foreclosures that would bring prices down.
Plus: They are keeping America in their houses.
All these was accomplished in a swift move, in which Banks
decided to contact millions of borrowers in default, some already
involved in short sale of their homes; offering a 3 month trial
period at a very reduced monthly payment, with the promise of
modifying their loan if they pay ontime.
The smart thing about this is, that banks will not reduce the
principal owed by the borrower, they simply will drop rate, will
extend the term, will do whatever it takes to reduce the monthly
payment, to a level that the homeowner will qualify to pay, and
schedule an escalation of this payment during the next 5 years,
ending with a payment similar to where it was at the beginning,
after 5 or 7 years. After all, the Fed. rate for banks is something
like 1%, so whatever the banks do, they will still be making a
profit.
By the time the borrower realices that his payment is too
high (after 5 or 7 years), properties will most likely will be back
to the value they had before the big drop, so if the borrower
decides to sell, it would not be a short sale anymore.
Genius..... the only victims, unfortunatelly are the
Realtors, but this is just the first 3 to 5 months, in the end, the
whole economy benefits from this great idea, and that itself means
a great Real Estate market with regular sales, no more REO Gurus or
Gods, in the near future.
God Bless America!!!
I think this example was written on a Real Estate blog on what
is going on in the real world. The banks are doing
what some traders do with a broken stock. For
example... you buy a stock at 100 a share and now it is worth 40.00
bucks.. Do you sell now or wait to it recovers?
The banks are sort of taking what they can get in a sense by
"selling covered calls" until the market recovers.
As long as they have an income stream..they don't seem to
care because it is still better then writing these deals off
completely... I guess
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Short Sales
Posted by zach06 on 16th of Jan 2012 at 11:20 am
Are the REOs and Short sales coming to an end?
The Banking industry, through HAFA, might have pulled out a genius move: To disipate the "Shadow Inventory" cloud, without writting off their debt, without changing non performing loans to the liability column, without affecting the balance of their reserves..... They did this, plus: They removed the stigma of a "Tsunami" of foreclosures that would bring prices down.
Plus: They are keeping America in their houses.
All these was accomplished in a swift move, in which Banks decided to contact millions of borrowers in default, some already involved in short sale of their homes; offering a 3 month trial period at a very reduced monthly payment, with the promise of modifying their loan if they pay ontime.
The smart thing about this is, that banks will not reduce the principal owed by the borrower, they simply will drop rate, will extend the term, will do whatever it takes to reduce the monthly payment, to a level that the homeowner will qualify to pay, and schedule an escalation of this payment during the next 5 years, ending with a payment similar to where it was at the beginning, after 5 or 7 years. After all, the Fed. rate for banks is something like 1%, so whatever the banks do, they will still be making a profit.
By the time the borrower realices that his payment is too high (after 5 or 7 years), properties will most likely will be back to the value they had before the big drop, so if the borrower decides to sell, it would not be a short sale anymore.
Genius..... the only victims, unfortunatelly are the Realtors, but this is just the first 3 to 5 months, in the end, the whole economy benefits from this great idea, and that itself means a great Real Estate market with regular sales, no more REO Gurus or Gods, in the near future.
God Bless America!!!
Posted by biscuit on 16th of Jan 2012 at 08:09 pm
TRUE BUT
Posted by zach06 on 16th of Jan 2012 at 08:38 pm
I think this example was written on a Real Estate blog on what is going on in the real world. The banks are doing what some traders do with a broken stock. For example... you buy a stock at 100 a share and now it is worth 40.00 bucks.. Do you sell now or wait to it recovers? The banks are sort of taking what they can get in a sense by "selling covered calls" until the market recovers. As long as they have an income stream..they don't seem to care because it is still better then writing these deals off completely... I guess