It probably doesn’t signal the end of the mortgage meltdown, but there’s even more positive news in the real estate world:
The “Hope Now Alliance”, an organization focused on assisting home owners avoid foreclosure and stay in their homes, announced that the number of mortgage modifications declined from April to May. There were 182,901 modifications in April and approximately 170,000 in May.
The significance of this difference is that fewer mortgage modifications suggest fewer homeowners who are facing unbearable financial stress. A good thing, indeed.
This drop is a relatively small 7% and it could be a one-time event. However, it is plausible to think that this evidence, combined with the significant buying activity in previously declining markets (like Las Vegas, Nevada and Riverside, California) suggests that the real estate markets are firming, even in the most seriously hard hit real estate markets.
This is a time for prudent opportunism.
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3 Comments So Far»
could this be a “dead cat bounce” in the market?
Of course that’s possible, but I don’t think so. There’s no historical evidence that developed real estate markets like the United States just “die”. What I believe we’re seeing is the “bottoming” of the market as new “support” levels are being found in the various markets across this great country of ours. — Bryan Ellis
It may also mean that the lenders simply cannot afford to keep the loans on their books, and they must get cashed out (short sale). If a lender is a target for a take-over, the buyer will want that lender to get rid of their “questionable” loans (even at a discount) before taking-over that lender. Lenders are not yet required by law to always accept a loan modification request, even when that request is strongly encouraged by HUD.
Even that is, I believe, a good sign. The more that the free market fleshes out these issues, the stronger the market will be long term. All good. — Bryan Ellis
It could be that their is a decrease in modifications because the (1) banks are discouraging the mortgagor to take a modification because they are only offering plans that don’t work for the mortgagor - i.e. they offer higher payments instead of short-term lower ones, or no delayed promissory notes for the past due balances, etc. or (2) a greater percentage of mortgagors are in a long-term sitatuion such as job loss with unemployment expiring, layoffs, decrease in income for any number of reasons, higher expenses due to the increased costs overall so their essentials / budget is higher, or similar.
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