Foreclosures are gone for good

Hardly.

Fannie Mae and Freddie Mac have both extended their eviction moratorium to April 1st.  If history is any guide, this will not be the last extension as the government works with the banks to straighten-out the housing mess.

The “freeze” on foreclosures began last fall when Bank of America, Chase, Citigroup, and Wells Fargo all put a halt to their new foreclosure filings.  The plan was two-fold:  The banks were waiting to see if they would be able to recover some of their losses with bailout funds, and they were buying some time to contact their mortgage customers who were in default to see if loan modifications would be a better solution.

From the first round of loan modifications, over half are in default six months later.  It’s safe to assume history will repeat itself here.  Many of the loan modification customers I have encountered are using the loan modification as nothing more than an excuse to stay in their house for free for a few more months.  They had no intention of paying before the modification, and they have no intention of paying now.  Let’s hope that attitude belongs to the minority of loan modification customers.

The big variable this week is the bankruptcy judges’ ability to “write down” the loan amount to make the loan affordable for a homeowner so he/she can avoid bankruptcy.  This is power the judges did not have before this week.  While it may seem like a good idea on the surface, the impact will be far-reaching.  Basically, this gives judges the power to decide the investor for the loans are having their equity in their investments reduced without any input from the investor.

Mangled Mortgage tells you everything you need to know about foreclosures, short sales, and loan modifications.  Order a copy today!

Foreclosure Moratorium

The country’s largest banks have put a moratorium on new foreclosures…for the next few weeks.

Wow.  A few weeks.  That should stop the flood for sure.

Wells Fargo, Chase, Bank of America (including Countrywide Home Loans), and Citigroup are all waiting to see what the Obama administration will do before they move forward with any more foreclosure filings.

Much like the loan modification efforts, industry professionals and economists believe this is just delaying the inevitable flood of foreclosures.  The programs unveiled so far as a result of the stimulus package are too complex, too little, and too late.