Mathews Associates

"Building Lifestyles for Life"


Posted by Dwight Mathews on December 29, 2009

The Treasury Department is currently close to finalizing a more enticing incentive program for lenders and servicer’s to rely more on Short Sales opposed to Foreclosures.   The result of course is less loss to the lender.

That program was unveiled in May as part of the Obama administration’s Home Modification Program, which, up to this point has failed miserably.  According to the Treasury, only 12 percent have received refinances.  The sad part is the fact that most of those folks who did get help are now re-defaulting on their loans.  Throw in an avalanche of repossessed-Bank owned homes (shadow inventory) which some analysts estimate could rise as high as 7 million units and you have a compelling case for a new housing crash that could drive home prices down further.

What they are trying to do is move some of these foreclosures in the pipeline, and bring them to a resolution before foreclosure happens.   Twelve percent of these loans being modified isn’t enough to clean up the problem.

NO KIDDING!!  As long as the Banks and lenders are in control of the process and can choose which is best for their bottom line-NO $ incentive is going to solve the problem.

Under the upcoming Treasury plan, as much as $10 billion of government funds dedicated for loan modifications will be used to give lender catch-up payments, to ease their fears that property values could continue to fall.  One proposal being considered is to offer lenders $1000. for going along with a short sale, and the same amount for deed-in-lieu transactions with similar results.  Borrowers also would be in line for incentives-possibly $1500. in closing fees for agreeing to a short sale or deed-in-lieu.  Second lien holders could receive nearly as much – $1000. – for signing away any claims in those sales, the Treasury said.


This plan, like many other desperation band aid fixes will have absolutely no effect in stabilizing the Real Estate market unless they force the Banks and lenders to accept this program.  If they did, you would see inventory levels drop dramatically because of all the New Buyers and Investors who would enter the market.    Quite frankly, I find it hard to  keep up with all the new laws, rules and regulations that have been put into place over the past several years.   In the best interest of my clients however, I must.  The Real Estate market will eventually work itself out in time and we will once again begin to see a normal market.   In the meantime, keep making offers.  The Greatest Buying opportunity in history won’t be around forever you know.

Hire One For Your Side! Email me at READVISOR @ and request a private one on one Free consultation.

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