How will the fact that the foreclosure process is about to speed up affect housing sales?
Thanks to settlements by the nation’s five largest banks, the foreclosure process is about to get much quicker due to the fact that the robo signing scandal is now settled to the tune of $26 billion. Now, lenders will take their fingers off the pause button again and foreclosures will proceed at a much quicker pace.
This foreclosure holding pattern has lead to a real estate market where people were staying in homes for months or years without making a payment. This is helped by the fact that from the time of the first missed payment to the time the bank officially repossess the house it can be up to 370 days. In Florida, for example, the average time was 861 days and in New York it was up to 1056 days. In fact, it’s estimated that millions of foreclosures just last year could have been pursued but were not.
However that’s all about to change with the foreclosure process about to speed up.
In the real estate market foreclosures are already picking up. In states where the robo scandal hit hard, many banks paused on foreclosures unless they knew it would pass more rigorous standards. Today, lenders can move forward in the foreclosure process with less concern. For example, Indiana has seen an increase in foreclosure filings from last year to the tune of 45%. In Florida, filings were up by almost 26% over last year.
The expected flood of foreclosures may not be imminent in the short term, however, eventually this flood of foreclosures will begin to move. It’s important that people are prepared not just for new increases in foreclosures, but for the opportunities for increased short sale activity in the real estate market.
Foreclosure Process Is About to Speed Up | What Does this Mean for Real Estate Professionals?
What this increase in foreclosures may inevitably do is drive down home prices lower than what they are today and make it increasingly more difficult to get a bank to provide you with a mortgage. While lower prices is good news for buyers, more stringent lending requirements is bad news for all parties involved.
Housing prices are expected to fall by almost 4% at the end of 2012 and no one knows when the market will finally hit bottom.
If you are a real estate professional, what strategy should you use if housing prices are falling and banks aren’t lending?
Foreclosure Process Is About to Speed Up | Wholesaling Mortgages
Real estate profits are made by providing solutions, and selling a house with little, no, or even negative equity to buyers who cannot qualify for conventional bank mortgages may be the largest problem facing millions of Americans this year. So what is the solution?
The real estate market saw a time similar to this in the late 70′s when mortgage rates were incredibly high and people were seeking to buy and sell houses without the aid of banks. What distressed sellers would do is assign the mortgage of their house to the end buyer. Essentially, the seller would sell the deed to the property to the buyer while keeping the existing financing in place until the market corrects and the buyer can refinance.
The same strategy that worked 40 years ago is applicable today. Many distressed sellers are unable to come out of pocket to pay any equity deficiencies or closing costs. Real estate professionals who understand the market can create real estate transactions at market price by combining distressed sellers with motivated buyers. The assignment of mortgage payments may be the key to returning the market to it’s natural position once again.
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