Banks are Closing in on Foreclosed Homes
The US is in the throes of a recession. Unemployment is at its peak. As people lose jobs even those with sound credit history are faltering on mortgage payments. Hence, foreclosures have become common.
The Federal government had come up with a scheme under which loans of homeowners are being modified, first on an experimental basis, and then permanently. The program took off on a slow pitch. However, now the banks have stepped up activities. Hence, many homes have been foreclosed upon. The number has jumped by 35 per cent to encompass 257,944 homes.
Does this mean that the market would be inundated with low-priced properties? Would the real estate scenario be so depressing? A realtor thinks otherwise. Tom Adams, who owns Century 21 Adams & Barnes, says, “I think lenders are smarter than that.I think they’ve been gauging the absorption rate for some time so they could determine how many to release at a time.”
“Banks know there’s a shortage and they’re taking advantage of this window to go out into the market as much as they can without hurting things,” he said.
In the first half of 2010, the number of homes facing foreclosure increased by 16 per cent.
California is one of the states with very high foreclosure rates. “We’re right now on pace to see more than 1 million bank repossessions this year,” observed Rick Sharga, a RealtyTrac official observed
Prof Ahmed Ispahani of University of La Verne, said that the banks are hesitant to inundate the market with troubled loans. Verne said, “If they release a large number of homes, prices will go down and their income will go down. They are acting very smart. They want to release as few as possible so demand exceeds supply.”
He continued, “I have some friends who are eager to buy, but they say other buyers are offering more than what the homes are priced for. It’s a very controlled market.”
Homeowners are also complaining that the banks are not fast in responding to their pleas for mortgage modification. Another trend that can be observed is a lot of first time home owners are buying homes because of credit being offered by the Federal government. Marty Rodriguez of Century 21 Marty Rodriguez said, “There are still a lot of first-time buyers trying to get that federal tax credit. But when that tax credit is gone, it will change things.”
