For the foreclosure tsunami crowd….

[SD Realtor]

Recently I posted my thoughts about how we would see the govt pull out all the stops this year, I thought this link would be good reading… I am sure most of you have already read the article but in case you didnt….If you have been a good homeowner and stayed within your budget and saved money instead of overspending… well this will make your day…. I especially like all the incentives the govt will pay investors and servicers to forgive mortgage debt. It just makes me feel good all over!

http://news.yahoo.com/obama-administration-bolsters-homeowner-lifeline-000743732.html

So when is that tsunami coming again?

[paramount]

I like this plan a lot.

I played by the rules, unlike many others.

And now I’m stuck holding the bag? I don’t think so.

I want relief in the form of principal reduction, and I want it now!!

Otherwise, here’s your house back!

[SD Realtor]

Paramount I think it would be an interesting experiment. If you think about it, homeowners who did play by the rules are actually more deserving then those who did not. They are the ones who would probably be more productive with the savings from a writedown then those who did not. Then again it could be my cynical nature coming to the surface with that statement.

Either way let it rain baby!!

[EconProf]

We now know why the big banks have been so slow to do short sales, so uncooperative with borrowers wanting loan modifications, and so willing to see the shadow inventory grow. They were waiting for the taxpayer to subsidize the principal reduction. Their time has now arrived, and the current administration is accomodating them.

[SD Realtor]

Yep I remember all the posts in 06 and 07 about how finally Wall Street, corrupt lenders and instutions, and foolish buyers would all get thiers… heheheheh…

What a sad joke…

[HenryPP]

I too played by the rules. Other than my mortgage, I have almost no debt (except credit card that always gets paid off before month-end). According to my last credit report, my debt to income ratio is about 10% and that includes the mortgage. I’ve never been late and I am not underwater. Will I get a principal reduction? I don’t feel I really need it, but if I don’t, what does it mean when the people who were careful and played by the rules are forced to subsidize those who went ponzi?

As for the tsunami, here’s one for you: As I wrote elsewhere, I’m looking for a 2,500 to 3,000 sqft house in 4S. Well, according to RealtyTrac, there are a whole bunch of such houses with auction dates from Dec 2011 to Feb 2012. Presumably these will hit the MLS in the next few months, right? Would that not qualify as at least a small and local tsunami? 🙂

[SD Realtor]

Because there have been those same defaults in 4S with auction dates in 2007, 2008, 2009, 2010, 2011 and here we are in 2012.

If the tsunami did not hit then, why would it hit now in the face of a stronger effort to halt them? This is not to say there have not been foreclosures and short sales in 4S, however if you think there will be enough inventory to produce a substantial price movement… well I would disagree for that 2500 to 3000 sf home demo.

[Coronita]

[quote=paramount]I like this plan a lot.

I played by the rules, unlike many others.

And now I’m stuck holding the bag? I don’t think so.

I want relief in the form of principal reduction, and I want it now!!

Otherwise, here’s your house back![/quote]

Unfortunately, That won’t work for me. Because I have an LTV of 47% or so… I think if I tried to threaten the lender, I think they would say “go for it. We’ll actually make money by forclosing on you :(”

And about refinancing. I guess you can’t refinance more than 60% of the value I think.

So the only thing I can do, is try to take advantage of the cheap credit and leverage the hell out of things (if I can).

[HenryPP]

I’m the first to admit that I am no expert when it comes to the housing market. But I thought it was the period BEFORE the auction date that had become very long, and that once a house actually went to auction it was only a matter of a few weeks or months before it hit the MLS. Either the bank took back the home at the auction and put it up for sale as an REO, or an investor bought it at the auction and sold or rented it out. (And for the larger and more expensive properties, investors usually go for a profitable flip).

If I understand you correctly, you’re saying there’s a third option – the house goes to auction and … then what? The bank takes it back and just keeps it in shadow inventory? But then why would the bank go through the hassle of foreclosing and having to deal with owning a now empty home where who knows what might happen?

Now I’m confused.

[HenryPP]

Sorry, not sure what happened. I was replying to SD REALTOR.

[sdrealtor]

Auctions get postponed far more often than not. Probably less than 10% of inital auction filings go thru. I have a short sale in process that had an auction scheduled for the first time over a year ago. It can go on for a long time for any number of reasons like a short sale in process, a bankruptcy filing, a loan mod in process, seller makes some partial payments, lender decides they just want to….etc. Hope that makes you a little less confused

BTW, I know, I was answering your question to clear things up.

[SD Realtor]

Henry

If you look on the other thread you mentioned I had commented then as well. Just because a property has an auction date, that means exactly that… it has an auction date. Please reread that other thread about how many times we went to a trustee sale only to see that the auction was postponed… this would happen again, and again, and again. As I posted before, back when we went to trustee sales approximately 90 (nine zero) percent of the sales that all had a date for that particular day are postponed for various reasons.

Again, there is no compelling reason to buy or not buy, however if you feel there will be a jump in inventory due to foreclosures, I strongly disagree unless those foreclosures are priced poorly. If they are priced competitively then they will come and get consumed rapidly. That is if they even get to be reos.

[SD Realtor]

Now you are talking FLU. I am implementing that strategy as well.

[HenryPP]

Got it. Thanks SDR and sdr. Very helpful information (if not quite the news I was hoping for).

[markmax33]

All of these programs have been major failures. Don’t get tricked into thinking this one is any different. They are just re-inflating the bubble.

[Author]

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