Short Sale Pros - Negotiating Short Sales at No Cost to Homeowner, Realtor or Investor » bankruptcy

1.7 Trillion in foreclosures still ahead?

admin — Sun, 23 May 2010 22:12:34 +0000

RealtyTrac and Trulia announced last week that 41% of people would consider a “Strategic Default”, or choose to stop paying their mortgage even if they are capable because of negative equity (owing more than your home is worth).

First American Core Logic says there are 130 million homes in the United States. If 20% of them are upside down, or 26 million homes, and 41% walk, then 10.4 million homes would go into default.

The National Association of Realtors says the median home price is $166,100, so if you take 10.4 million homes by $166,100, you have over $1,727,400,000,000 in foreclosures ahead.

Let’s hope strategic defaults reach no where near the 41% level. It is a big problem and Short Sale Pros always advises against it.

Cram Down legislation defeated

admin — Fri, 01 May 2009 01:55:33 +0000

Today, the Senate defeated the proposal to let bankruptcy judges unilaterally change the terms of mortgages to keep people in their houses. It’s also a defeat for some people trying to keep a roof over their head through a bankruptcy.

This is a huge victory for banks. Now they don’t have to worry that judges will take away their right to seize homes when in default.

The idea of the cram-down legislation was that judges would be able to change loan terms and cut the principal on a mortgage to a property’s current market value. The entire industry, other than Citigroup, cried murder over this proposal.

Don’t be surprised if the deal the banks get from “the market” is even worse than what they would have gotten from the judges.