Strategic Foreclosures

04
May

Two new studies that are beyond obvious and probably a waste of time, just came out. They say that record numbers of home owners are walking out on their mortgages even though they can still make payments. I just have one word for this:

DUH!

Yep, seems that confidence in a rise in home values is shot. And people aren’t as scared of foreclosures as they used to be. Add it all up and you get lots of cheap (read: smart!) people are taking the easy way out.

Yep, 31% of all foreclosures in March are apparently “strategic” and could have been avoided. The study credits this to the belief by homeowners that banks won’t pursue them if they default. At least, not like they used to.

Two more factors that would increase likelihood of a foreclosure:

1) If your neighbor had negative equity and received a partial forgiveness loan

2) If the homeowner finds a way to finance a new home

Can you think of any other reasons? Leave a comment and let me know.

Of course, fear of losing a good credit score is the main reason to avoid foreclosure. 74% of homeowners feel that way.

Of course Obama is trying to combat this by proposing lots of new housing initiatives. The most obvious is the principal write-down.
Morgan Stanley believes this might stem the rise of foreclosures.

But honestly folks, that’s just a band aid on the problem. The real answer needs to see the root of the problem.

If we can collectively convince people that the negative value of their homes is only temporary, than no one would walk away. I mean, the real problem is confidence in the recovery. We need to help people believe that higher values are on the way.

And that will really solve the problem. Don’t write down the mortgages. That just hurts everyone. Instead, convince them that staying will ultimately pay off.

I can’t make this change alone. I need all of us to get out there. Talk to homeowners. Tell them how we can make the recovery a reality and restore value to their homes.

Together, we can make it happen!

Pingback: Strategic Foreclosures abound « Short Sale Solutions in Chester County
Garret Clancy

Real estate values will come back, but they will not make a full recovery. The easy-money, easy qualify 2000's swelled the number of 'qualified' homebuyers. More buyers = higher home prices. That right there, sir, is the housing crisis in a few words. Easy money lending is gone and that's good. There are fewer qualified buyers. Fewer buyers=lower home prices.

America emerged beautifully from the S&L crisis (probably before your time) because we faced facts. We took the write-downs. For the most part I agree with your assessment BUT — the reason things are so dysfunctional now it when a homeowner is 100K underwater the bank says “you eat the loss. All of it.” Well, it took two you know. One idiot to overpay and another idiot to over-lend. I predict there will eventually be some type of principal reductions. If we don't do this the crisis will last ten years longer than necessary.
How to do it? That's the riddle.
Garret Clancy

Real estate values will come back, but they will not make a full recovery. The easy-money, easy qualify 2000's swelled the number of 'qualified' homebuyers. More buyers = higher home prices. That right there, sir, is the housing crisis in a few words. Easy money lending is gone and that's good. There are fewer qualified buyers. Fewer buyers=lower home prices.

America emerged beautifully from the S&L crisis (probably before your time) because we faced facts. We took the write-downs. For the most part I agree with your assessment BUT — the reason things are so dysfunctional now it when a homeowner is 100K underwater the bank says “you eat the loss. All of it.” Well, it took two you know. One idiot to overpay and another idiot to over-lend. I predict there will eventually be some type of principal reductions. If we don't do this the crisis will last ten years longer than necessary.
How to do it? That's the riddle.
paulsaulo

This is really a very interesting articles' and in my home state one of the leaflet that I read recently is imposing on individuals who are loosing their homes, to be very careful dealing with short sales guru, and to even put the pain on this myth, both local and state authorities are encouraging folks to call them directly. So therefore these types of mis-informations is causing some caious in our area, but I have never been so optimistic that you can still get it done here in Oregon and Washington regardless of what the “after the fact experts” are saying.

And as far as this is concern yes I have run into many folks that are giving up on their dream homes, but I encourage them to give me a shot at it without promising any thing upfront.
paulsaulo

This is really a very interesting articles' and in my home state one of the leaflet that I read recently is imposing on individuals who are loosing their homes, to be very careful dealing with short sales guru, and to even put the pain on this myth, both local and state authorities are encouraging folks to call them directly. So therefore these types of mis-informations is causing some caious in our area, but I have never been so optimistic that you can still get it done here in Oregon and Washington regardless of what the “after the fact experts” are saying.

And as far as this is concern yes I have run into many folks that are giving up on their dream homes, but I encourage them to give me a shot at it without promising any thing upfront.
terrykeddy

Reports and articles about people leaving their home and renting one just like it for half of what they were paying on a loan, have been around awhile now and it is entirely up to the family involved as to why they would or wouldn't “walk away” now!
terrykeddy

Reports and articles about people leaving their home and renting one just like it for half of what they were paying on a loan, have been around awhile now and it is entirely up to the family involved as to why they would or wouldn't “walk away” now!
Reba

I do believe and have always believed that this whole financial mess is a play to help the rich get richer, and it is somehow tied to the value of housing. Yes, house prices will go up again, and it will begin to happen when the inflation that is set to hit this country, because of our government's financial decisions, over the next two years or so. Patience will be a personality trait that will eventually be well rewarded.

But, I do have one question about Obama's plans that you mentioned in the article. I have not heard anything about “a principal write-down.” What is that all about? I have a fiend who is struggling to hold onto her properties, and she has many. I would love it if I could pass on a bit of info that may help her get through this time of hardship.
Reba

I do believe and have always believed that this whole financial mess is a play to help the rich get richer, and it is somehow tied to the value of housing. Yes, house prices will go up again, and it will begin to happen when the inflation that is set to hit this country, because of our government's financial decisions, over the next two years or so. Patience will be a personality trait that will eventually be well rewarded.

But, I do have one question about Obama's plans that you mentioned in the article. I have not heard anything about “a principal write-down.” What is that all about? I have a fiend who is struggling to hold onto her properties, and she has many. I would love it if I could pass on a bit of info that may help her get through this time of hardship.
Gil

Your dreaming Cory. Here, in california many folks are hundreds of thousnds of dollars in the whole and you want to ralley them on waiting for the market to improve?
Becky

People who have a lot of their money invested into real estate for fun and profit feel this way – but people who only have one home, and are tired of being bent over backwards trying to make giant payments on something that will never see the light of day feel very differently. We are defaulting – strategically originally, but now there is a baby on the way and my husband is lucky if he gets to work two days a week. I'm glad we started this process when we did. What nightmare! I'm not sorry, and I refuse to feel guilty about it.

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