Question Details

Kim Vitale, Real Estate Pro in Blue Point, NY

How do you think the bank foreclusure freezes will impact the market?

Asked by Kim Vitale, Blue Point, NY Wed Oct 20, 2010

I know First American is moving forward now on 100,000 foreclosures , and it is expected that the other banks will follow suit, but I think that the media exposure may shy away investors. Just my thought...

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HI Kim, The freeze will not effect anything. The banks are not cooperating on the short sales now. They have good offers and they won't sell the house. Offers that require little concession as small as 1% of the total sale price and they refuse to approve the sale. Two thirds of the current sales are short sales or foreclosures. A freeze would only prompt the banks to look at the current short sales in process and perhaps close on the deals they already have. Flooding the market with troubled mortgaged homes will only force the market further down.
Basic economics too much supply drives down the prices. Banks need to look at taking a small loss with the current owner of the mortgage instead of a large loss by foreclosing on the property. It has been our experience that the people who want to stay could afford the home if the interest rate was lowered. This would slow the rate of foreclosed homes hitting the market and perhaps keep the current home owner in the house perhaps the would banks lose less money in the long run.
Seems to us the ones really being hurt is the Home Owner and the Investor. The Banks the Server are the ones making a profit still today. They are charging the Investors, They are hanging onto the loans instead of the short sale options available, as long as the servers hang onto to them the more profit they make.

All the Best
Dave & Lisa
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0 votes Thank Flag Link Wed Oct 20, 2010
Yes M Peters, I was aware of that, and I am sure the other banks will soon follow suit. Just curious if the media attention would possibly shy buyers even more away from the foreclosures. Which would be good for non- distressed sellers.
0 votes Thank Flag Link Wed Oct 20, 2010
This is going to be a very short hiatus - see currently Bank of America who has reinstated their actions.
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0 votes Thank Flag Link Wed Oct 20, 2010
I think that in the short term it will help real estate sales. However, in the long run I think that it will hurt the economy even more.
0 votes Thank Flag Link Wed Oct 20, 2010
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