Some Banks are Purposely NOT Foreclosing on Homeowners in Default: Here’s Why
While the economy is sputtering its way to recovery if recent statistics on unemployment are anything to go by, home foreclosures remain a problem.
Housing and financial experts predict that 4-5 million foreclosed properties have yet to come onto the open market. Why? One reason is, banks are purposely NOT foreclosing on homeowners who are currently in default. Following is why.
Why Banks are NOT Foreclosing on Homeowners in Default & What This Means for You
By holding off on foreclosure, lenders allow home prices to recover to some degree. But it’s a “faux housing recovery” — at best. Lenders do this because so many homeowners are underwater. They lose when this happens because it’s more likely that a struggling homeowner will walk away from the property (ie, do the jingle mail walk). Or, they may do a short sale or file for bankruptcy. All of this hurts a lender’s bottom line.
BUT, home prices can’t recover if there’s a glut of inventory (ie, lots of foreclosed homes) on the market. It’s a classic case of supply and demand. After all, everybody wants a deal — and the more inventory there is, the less demand (or incentive) there is to pay a premium price. Once supplies dry up, then the pendulum swings back in the lender’s favor. Consider this.
Currently, there are an estimated 7.7 million homes whose mortgages are in delinquency, but are not being reported as REO (Bank Owned) properties on the market yet. Depending on who you ask, an estimated 4-5 million of these will be bank owned properties for sale within the next year.The reason for the current new wave of foreclosures is largely attributed to the failure of the Government’s “Making Home Affordable” program, launched a year ago this week. [Source: LoanSafe.org]
The bottom line is, a lot of homeowners may be coasting along thinking that they’re ok and that their lender will work with them to refinance or modify their home loan. The cynical part of me says, “Not so.” They’re just waiting for the market to recover and then more homeowners will be foreclosed on.
Get your financial act together as soon as possible and try to refinance or get a home loan modification beause once the market starts to recover, lenders will be much less likely to work with struggling homeowners.
Make Money in the Home Foreclosure Market
Learn how to register with your local housing authority to get foreclosure cleaning jobs (and other RE services related work, eg, painting work, plumbing jobs, general contracting work, lawn maintenance contracts, etc.).
Read the story of how one janitorial cleaning service grew it’s business from $225,000 to over $10 million — all because of government contracts. So, sign up and get on the road to landing lucrative government contracts from local and federal agencies today.
P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.
Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.