20% Foreclosure Rate – Reality?
A new study from a group called Amherst Securities Group LP has lots of folks shaking their heads. They’ve come up with a too-crazy-to-believe story. They claim that 20% of all borrowers are in danger of defaulting.
That’s 11.5 million homes that they think are going to be foreclosed on. This astronomical number is according to them so big that it “politically cannot happen.” Let’s hope so.
Now, how to actually keep this from happening is not exactly clear in the report. We’ve seen that the government and the banking industry haven’t really figured out the right way to accomplish this. But their point was merely to make clear to federal regulators that something does need to be done.
One of the most misleading pieces of information is the current loan modification process. Anyone that enters into a loan mod automatically has their account listed as current, even if they haven’t begun to make a single payment. So theoretically, the situation is actually a lot worse than it was, but everyone will think we’re doing better.
This kind of false security could potentially be extremely dangerous. Unless of course a large part of those loan mods work out. Between you and me, I’m not that confident.
One policy that the study encourages is cutting principal balances. This idea has become popular lately, mostly out of desperation. But even such a drastic policy won’t be enough on its own to encourage people to stick it out in the mortgages.
Some of their others recommendations include making credit more available, qualifying homeowners to purchase cheaper homes, and encouraging real estate investment.
That last one is a policy I can certainly get behind. But what do you think? Are things as bad as they seem? Worse? And what policies would you recommend?
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Knoxvilleabs
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http://www.shortsaleology.com Cory Boatright
