Banks, Servicers & the Government continue to try to stave off the growing tide of foreclosures. They are devastating our citizens, neighborhoods and economy. News is buzzing about Fannie Mae’s new policy, announced this past Thursday, to rent homes instead of foreclosing. Loan Audit Blog reports that Fannie Mae, through its new “Deed for Lease” program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that… The next major wave of defaults is predicted to come from the Option Arm loans. Wall Street Journal reports that Wells Fargo has chose to attempt to modify Option ARMs to interest-only in a recovery bet. I can’t fathom how an interest-only modification could possibly prevent a default without principal and interest rate reductions…
The urgency to halt the advancing tide of foreclosures boils down to pure dollars and cents. Foreclosure Fish recently posted a report that$60,000 is the average cost of a single foreclosure. “Mortgage giant Freddie Mac has estimated that the average cost to a lender of foreclosing on a property is close to $60,000, with other estimates placing the total cost to the homeowner, lender, surrounding community, and local government close to $80,000.”
There are incentives to homeowners to avoid foreclosure as well. As every person who has tried to open a credit card account, lease a car or buy a house is painfully aware, credit scores are more vital now more than ever. Housing Wire reports that mortgage modifications are ‘Insignificant’ to credit scores as per Vantagescore. Davies, a representative of Vantagescore, stated, “Delinquency on a mortgage account has a far greater negative impact to credit scores than loan modifications.” Seems obvious but worth restating. Also, avoids the spectre of a possible deficiency judgment in those jurisdictions where it is permissible for the foreclosing lender to seek such a judgment.
Delight in your Monday!
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Some very interesting and insightful thoughts. I like this.^_^ because I have a blog about foreclosure and bankruptcy too.
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