Foreclosure Moratorium Lifted
While sales of single family Las Vegas homes have risen recently it appears as though the self imposed moratorium by the banks on foreclosures has been lifted.
While the Obama Administration promised distressed homeowners relief and loaned banking institutions tens of billions in TARP and bailout money the banks took a “wait and see” attitude and slowed or suspended home foreclosures here in the Valley and across the Nation.
Now that it appears the average homeowner will not be a part of Obama’s bailout, and that there will not be any realistic government effort to keep families in their homes the banks have once again started to move on legal proceedings to recover mortgaged property and get them off the books.
The timing of lifting the foreclosure moratorium is interesting if not suspect. Is it the realization by the banking institutions that the Calvary is not coming or is it public outcries of foul will make government handouts harder to come by for banks and distressed homeowners? It could also be that we are now in the selling season and the financial institutions are simply making a prudent business decision to act.
While motives are uncertain it is clear for both the banks and our government, it is time for the Administration to act and do so decisively. They need to cease spreading false hope to homeowners that over extended themselves to begin with. The market will not recover until it hits bottom and that can only happen without government interference while allowing the free market to work. The promise of government intervention has prolonged this crisis and adversely affected home values across the nation.
Secondly, if the government really wants to help, instead of handing out billions to the nations largest banks they could stimulate the economy and real estate industry by backing a program of guaranteeing 4% Fixed Rate loans for 30 years to qualified buyers. This would not take any money from the treasury and would be a major boost to home sales.
These are two simple steps that cost tax payers nothing that would have huge benefits to the real estate industry, our economy and homeowners. The only downside is the government will have to be honest with the voters and tell the Janitor making $15.00 an hour that he can not afford his $250k home.
We all need to live within our means if we are to overcome this crisis. This includes our government.
16 Comments to Foreclosure Moratorium Lifted
Comments
An increase in REOs in the Las Vegas Real Estate Market will most definitely cause prices to fall even further. I agree the Government needs to stop trying to intervene and just let things run their course. If a bank fails, it fails, stop injecting tax payers money into these banks.
Tony as long as the government gives distressed homeowners hope of intervention they will do all that is in their power to stall the inevitable and this will continue to drive all neighborhood home prices down. The government needs to come clean and admit to the American Voters there will be no rescue to any measure that is meaningful. These programs that they seem to announce weekly have so many restrictions that they affect a very small percentage of distressed homeowners.
Again, let the government offer loan guarantees on 4% Fixed Loans for 30 years to qualified buyers and watch how the landscape changes for the real estate market and the economy overnight.
Great insight. The government is NOT here to save most people who are upside down in their mortagages. We need to let the forclosure process continue so prices will stop falling & we can climb back out of this mess!
You are absolutely right about the positive affects on the real estate industry and the economy as a whole if the Government Guaranteed 4% Fixed Rate Loans on homes for 30 years. It would have to be to ONLY qualified Buyers though. We don’t need another tidal wave of “Liar Loans” again.
If the Government would initiate such a program we could start reducing the inventory of existing homes and stabilize home prices immediately.
The problem is that a program such as this makes entirely too much sense and cost the taxpayers nothing so it is extremely doubtful our elected officials would implement it.
The “Hope For Homeowners” loan remodification program was supposed to provide 30-year fixed rates as low as 2 percent. As of May 1 2009 only 51 homeowners have been refinanced through that program… nationwide! That’s not much hope. The major resistance has come from holders of primary mortgage loans and mortgage backed securities who are paranoid that the HOPE program would give unfair advantage to holders of secondary liens.
Quite a few problem loans to homeowners were originated with 1st and 2nd mortgages. The 2nd lienholder would otherwise loose out completely if the home owner defaulted, but the HOPE program would requiring reworking of both loans as a single new loan.
The largest banks (who have already received huge sums of government bailout money) also hold the largest dollar amounts of 2nd mortgages. So, in addition to the bailout money already received, by refinancing the banks would receive: 1) Value from their otherwise zero-value investments in secondary mortgage backed securities; and 2) Origination fees for the new loans. Home owners would keep their homes and the foreclosure nightmare would subside.
Here Here on the 4% rates, that would be much more effective than all of the existing policies which are currently not working! We need this kind of common sense approach to this market. We also need some good media inclusive of some good job numbers!
The Government recently announced new lender incentives designed to help up to 1.5 million borrowers with second mortgages. During the housing boom “piggyback” second loans were available from lenders to allow buyers to make small down payments or even zero down payments. Usually the borrower in these cases had poor credit scores and didn’t have to prove income. About half of all troubled loans include these types of second mortgages.
Now, to avoid foreclosure, the buyers are encouraged to refinance at a lower monthly payment. However, in order to refinance the first mortage the holder of the second has to agree to subordinate. This has been a major obstacle.
According to the Treasury Dept. the new incentives which are designed to help up to 1.5 million borrowers with second mortgages. Mortgage companies will be offered $500 upfront for each modified loan plus $250 a year for three years as long as the borrower doesn’t default. Borrowers would get up to $1,000 over five years applied to the principal balance of the primary mortgage.
Additionally, mortgage companies will be given $2,500 payments to entice them to participate in the “Hope for Homeowners” program which has so far been a failure.
Until the Government eases all of the restrictions and regulations on banks and lenders none of these programs are going to succeed and the real estate market nightmare will continue. The two things that are needed to turn it around are jobs and lower mortgage interest rates with possibly longer terms such as 35 to 40 years.
An increase in REOs in the Las Vegas Real Estate Market will most definitely cause prices to fall even further. I agree the Government needs to stop trying to intervene and just let things run their course. If a bank fails, it fails, stop injecting tax payers money into these banks.
Probably it’s difficult to say what’s right and what’s wrong in this situation. But anyway it is evident that at least some job must be done.
Curing foreclosures with the moratorium, are likely not the answer to the mortgage crisis. Although the foreclosures cases have been lowered, this reduction are not necessarily a solution for the crisis as moratoriums frequently add costs to a foreclosure process
family in Las Vegas homes! that’s sounds great. I agree with Konnel, The government program entirely too much sense and it to be to only qualified Buyers though. for me this is unfair.
In such a nationwide crisis we cannot rely on the government alone. We need to help ourselves. Each and every one who is in a foreclosure situation needs to act and not wait until maybe the government will help him. There are solutions out there.
I just can’t believe how the housing market is so unstable. It is definitely a scary time when buying a house.
I disagree. Unlike other purchases, you MUST have a place to live and prices are very attractive right now.
If you have the money, it is a great time to buy a home, or two, or three. Kind of like the stock market. If you know what your doing, recessions are the times to make huge returns. But if you don’t have a ton of money to lose, be careful. But a house isn’t that bad of an investmetn, especially right now.
I like how you added “slowed” foreclosures, because that is exactly what is going on. Eventually home values have to drop to where they ought to be in order for the market to re-stabilize itself.
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