A lot of people tell me that the days of loan modifications are over, that banks think the foreclosures numbers are reasonable and won’t be so quick to help out unfortunate homeowners. I’d think they’re actually making sense if it weren’t for the hard data which says otherwise.
In the second quarter of this year non-foreclosure solutions outpaced foreclosures 4 to 1. 421,000 compared to 115,000. That’s a staggeringly large gap considering how far into the “recovery” we are and how good we have been at reintegrating homes back into the housing market.
But there you have it. Banks appear to still be flexible. The most popular option was loan modification which had almost 116,000 uses. Short sales, my personal favorite, made a strong showing at 33,000.
I think the one thing that’s keeping the banks on edge about strong-arming their way into foreclosures is the shadow inventory. We’re still expecting a flood of foreclosed properties to hit the market in one fell swoop. And as much as people would like to ignore that sobering fact, when it comes to dollars and cents the banks just need to face reality.
So if you’re working with clients who might give up and accept a foreclosure, remind them of the real situation. They might just qualify.