Last week, both Freddie Mac and Fannie Mae announced they were joining the list of mortgage lenders who were temporarily freezing foreclosures and would not be starting new proceedings into the start of 2009. Chase and Bank of America previously had made similar announcements.
On the surface, this can be good news for homeowners in trouble assuming they have an interest in keeping their homes and assuming the lenders are willing to modify some of the outstanding loans. That’s on the surface.
If it turns out the lender isn’t inclined to modify the loan, the situation can become a bit more complicated. Insurance companies, for instance, are hesitant to insure vacant homes for an extended period of time – usually 90 days is the limit. So for homeowners who have moved on in expectation of the foreclosure, they find themselves on the books as owners of an uninsured property long after they’ve said goodbye in their own minds.
On the surface, the news also would appear to be good for the Phoenix real estate market in general – there will be less new inventory, giving the market the opportunity to absorb some of the current glut of homes on the market. Except … this isn’t the time of year when a large number of sales take place. Any relief in inventory can only be a positive, but it may be less positive than it appears at first glance.
What I’m waiting to see is the impact this has on short sales. Anecdotal evidence is some lenders are becoming more amenable to short sales – book the loss now rather than wait and have to add the home into their own inventory somewhere down the line – but I’ve yet to see anything concrete along those lines.
Time will tell.
Bottom line for all of this is if you’re in a situation where you’re unable to continue paying your mortgage, you need to get in touch with your lender. Maneuvering through these companies’ phone labyrinth is less than enjoyable, but communication is key. Find out if your lender might be inclined to modify. If not, find out if they’re amenable to a short sale. (They may not say so in so many words, but it’s not hard to get the gist.)
Cynicism aside, there is the possibility the delay can provide a lifeline to those who would rather not uproot their families and move on. And that possibility is worth the call.
[tags]Phoenix real estate[/tags]