There’s no magic bullet to safeguard your home – many firms claiming to offer loan modifications and foreclosure prevention have proven to be scams. Numerous distressed homeowners have been hoodwinked, losing thousands of dollars that could have been used to secure their homes. The Federal Trade Commission (FTC.gov) is doing its best to combat these fraudulent entities, but often they only become aware of them after homeowners have incurred losses and lost their homes.
The anticipated 3.7 million impending foreclosures stir curiosity about their potential impact on real estate, stock and bond markets, and the economic recovery.
Don’t be misled by the recent decline in foreclosure reports. In April 2011, foreclosures were down 34% from the previous year, with 219,258 foreclosed US properties compared to 332,209 in April 2010. This drop does not indicate fewer homeowners facing difficulties, but rather that banks are overwhelmed with backlog. This slowdown, as RealtyTrac CEO, James J. Saccacio clarifies, is more due to delays in foreclosures than an uplift from a housing recovery.
Foreclosures have been increasing annually; from 1.3 million in 2007, 2.3 million in 2008, 2.8 million in 2009, to 2.9 million in 2010. So, the big question is, how many more homes will we lose this year? According to Saccacio, data from the Mortgage Bankers Association indicates around 3.7 million properties are significantly delinquent. This suggests a sluggish growth in real estate values until 2013 and that over 13 million homes might face foreclosure before the market corrects itself.
CEO and Co-founder of Trulia, Pete Flint, shares this sentiment, predicting at least 18 more months for prices to stabilize. He also remarked that many Americans have unrealistic expectations about the housing market rebound speed. However, in a twist of irony, Flint suggests that now may be an opportune time to venture into the housing market notwithstanding potential short-term price drops.
In conclusion, real estate is currently in a precarious situation. With at least four million homes yet to face recovery, prices will invariably fall. However, considering the current 40-year low in interest rates, financing your purchase could be more reasonable now than in the forecasted future. For those eyeing properties promising cash-positive returns and are willing to hold onto them for more than seven years, now might indeed be the best time to invest.
For those struggling with an underwater mortgage, don’t despair just yet. The organization, HopeNow.com, reports that there were 1.76 million permanent loan modifications in 2010. Reach out for assistance to HUD-approved counselors via 1-888-995-HOPE. The HOPE NOW Alliance is a network of counseling organizations that provide extensive debt management, credit counseling and foreclosure assistance.
