Realtors Complaining About Lack of Financing on REO Resales

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Truth triumphs in the Marketplace:                                         Buyers and bankers have no confidence that prices are not going lower, and Title Corruption Taints the Deals

Editor’s Comment:

Realtors are on the wrong side of this issue. THEY should have led the way to correcting the problems and defects in the foundation of the housing market — pricing and title. Instead they put blinders on and pushed through whatever sales they could — REO sales, short sales, anything to make a buck. Now it is coming back and hitting them on the back of the head.

Sales are slowing because financing is getting harder and the message is out. The values of the homes are lower than the prices and the title chain is often corrupted leaving a prospective buyer or lender in a position of accepting a risk that didn’t exist before securitization. This isn’t the fault of realtors so don’t go blaming them for creating the securitization PONZI scheme. But they are at fault for not looking for a way to fix it. After all, it is THEIR industry.

Financing Needed to Boost REO Sales

by Carla Hill

Buyer, sellers, and real estate professionals alike are finding that today’s market is still experiencing a glut of distressed properties.

These properties hit the market each day in the form of REOs. This steady influx of properties is in addtion to the high number of short sales seen across the nation.

According to the National Association of Realtors (NAR) there are certain steps that lenders and the government need to take in order for this oversupply to reduce and for the market to return to a more normal balance.

The current market sees around one third of all sales coming from distressed properties. These housing units carry a smaller price tag than the competition, but a steeper price in terms of the value of the overall market. Distressed properties sell at steep discounts, sometimes at almost half of what a non-distressed property is listed. This causes the overall market value of a neighborhood or community to drop, ending up with more and more sellers finding themselves upside down in their loans.

NAR President Ron Phipps has said that a lack of mortgage financing is hurting REO sales and the entire housing market. They report that “the lack of private capital in the mortgage market, unduly tight underwriting standards, and increasing fees have discouraged many potential home buyers from applying for mortgages. NAR believes ensuring mortgage availability for qualified home buyers and investors will help absorb the excess REO inventory.”

“We believe the government has an opportunity to minimize the impact of distressed properties on local markets by expanding financing opportunities, bolstering loan modifications and short sales efforts, and enhancing the efficient disposition of REO properties. This will help stabilize home prices and neighborhoods and help support the broader economic recovery.”

NAR has also said in a letter to the U.S. Department of Housing and Urban Development, the Federal Housing Finance Agency, and the U.S. Department of the Treasury that steps must be taken in order to stop the steady stream of new REO properties that is currently hitting the market. Homeowners need help to either stay in their homes or to make short sales before their home is put into foreclosure, something that helps their credit scores and the market.

“Loan modifications keep families in their home and reduce defaults, while short sales keep homes occupied, helping stabilize neighborhoods and home values,” Phipps said. “Expanding resources and ensuring the use of already allocated funds for pre-foreclosure efforts is the best opportunity to reduce taxpayer costs and creates more positive outcomes for homeowners and their communities.”

As the election year heats up we expect to hear more about what candidates propose to do about the continued struggle the housing market faces as well as how to keep American homeowners in their homes

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