Not going to turn around anytime soon…

Posted on 21 Oct, 2010 by

Who needs a bailout now?  Fannie Mae and Freddie Mac are next in line, the taxpayers should probably be first in line.  According to CNN Money: “The Fannie-Freddie bailout could end up costing taxpayers up to 363 BILLION through 2013.”  According to Yahoo Finance:  “The worst-case scenario assumes the economy would fall back into a recession and home prices would sink an additional 24 percent, until early 2012.”

http://money.cnn.com/2010/10/21/news/economy/FHFA_Fannie_Freddie/index.htm

http://finance.yahoo.com/news/Tab-for-Fannie-Freddie-could-apf-1303139837.html?x=0

What great news for a market that has already dipped quite a bit.  Now an estimated 24% on top of what has already sunk is an astronomical hit.  Let’s be as real as possible here.  The Debt Relief Act ends after December 31, 2012.  This means you don’t have that much time to make an economical decision on what to do with your underwater mortgage.  If you don’t make a move on your home now, it makes no economical sense to start near the end of 2012, because your Debt Relief will be void.

It’s nearing the end of 2010, the average short sale takes 3-6 months for approval.  In order for your decision to be economically sound, you will need to initiate the process no later than January 2012.

The biggest downfall to waiting will be if the market continues on it’s downward spiral and the market dips another 24%.  The average home in Arizona was $268,000 in Quarter 4 of 2005.  In the first quarter of 2010, it’s $140,000.  The market has drastically decreased 48% since 2005, with another estimated 24% go.  That could lead the Phoenix Metro average housing price to $106,000.  When was the last time it was EVER that low?

Sellers – CARPE DIEM – take advantage of the Debt Relief act now.  The time is right to take action.  Unless you’re planning on staying in that specific property for the next 25 years, it makes more sense to get into something comparable right now, for less money, less payment, less hassle, less headaches.

Buyers – CARPE DIEM – there are deals on the market.  Find a company that can assist with your searches to scoop up as many properties as possible.  Might want to steer away from Fannie and Freddie for a little while, though.

Seize the day, gather ye rosebuds while ye may.

3 Responses to “Not going to turn around anytime soon…”

  1. Brian North says:
    October 22, 2010 at 12:24 am

    As we get closer to years end, I have talked to many industry professionals who believe that the banks will try to stall foreclosures to force homeowners to pay taxes on their loss accrued by the banks. If there’s anybody that is hanging on to a home in hopes that the market will come back anytime soon, they could find themselves in a world of financial trouble long term. The GOOD NEWS is that Arizona is only one of seven states that has some form of legal protection for sellers with a deficient balance accrued from a short sale. Couple this with the existing Federal protection and there could be no better time to hurry up and take action. Time to take advantage of a HUGE opportunity to limit the damage and move along with piece of mind.

  2. Lenders are not willing to postpone Foreclosure Sale dates these days as the inventory of foreclosed homes, request for loan modifications and short sales continue to flood in daily. They have to do something to clear out their system so they are more willing to help the home owners who are Pro-Active and not ostrich people. The longer you wait and avoid open communication, the greater the chance you will find a deaf ear at the lender. Take advantage of the current “Mortgage Debt Relief Act” ending Dec 31, 2012 before you find out it is too late for you to get on board. Short sales are typically taking 6 months to complete and some lenders, un-named, will actually take up to 18 months to complete a short sale. We’ve still been getting “Full & Final Release” verbiage for our ProActive sellers. Let us take on this burden so you can focus on your family and your Piece of Mind.

  3. When I see the absurd amount of taxpayer dollars being spent on various bailouts and so called homeowner solutions without the serious consideration of principle reductions it makes me question whose interests is truly being severed… the homeowners or the lenders? For homeowners while a loan modification enables them to remain in the property with reduced monthly payments, they are still responsible for the full loan balance. For the lenders the loan modification enables them to continue receiving payments on a loan secured by a home worth significantly less than that loan amount.

    So let’s say homeowners finds themselves in a situation after 2012 where they need to sell the property. Will the homeowner have to pay taxes on the deficient amount? Will the lenders be able to pursue the homeowner for the deficient amount? Will the lenders be as willing to work with homeowner and accept a short sale offer?

    The answer is we don’t know.

    What we do know is that right now in this current market and economy, homeowners have tax and deficiency protection as well as lender willingness to accept a short sale offer.

    Unless principle reductions are seriously considered as a viable solution for the loan modification, a short sale is the only long term solution for a homeowner and their financial well being. The current loan modifications only delaying the inevitable and leaves the homeowners at the mercy of the lenders.

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