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This has certainly made the news in recent times. Is there any evidence that this activity has begun to taper off or is it still a significant factor in the housing market?
This has certainly made the news in recent times. Is there any evidence that this activity has begun to taper off or is it still a significant factor in the housing market?
This issue is the "mob mentality". Essentially if everyone is doing it (walking away), there's no shame in doing it yourself.
Before the banks would foreclose on your home in less than 6 months. No people are going up to 12 months before even receiving an official foreclosure notice and up to 18-24 months before finally being evicted.
People read the news. They aren't dumb. Outside of moral judgments. If you have a $3K note a month to make on a mortgage than's 100-200K underwater. What would you rather do. Assuming you didn't haven't anything to lose (you didn't put any money down, you really don't own any assets).
That's why it's a no brainer to "save $3K a month" you would have spent on mortgage payments and pay your other "essential living" requirements. Yes this means people are choosing to pay their credit card bills and car payments before their homes.
Of course, this is morally wrong. But again, the mob mentality effect comes in. There's no shame in walking away from your debt obligations. People don't care anymore.
I suspect it won't be until early next year when all the 2005/6 homes with very little down on people who shouldn't have purchased in the first place all get foreclosed/short sold. Remember a very important (2007 mortgage and debt relief ACT, forgiving homeowners on debt owed) expires on Dec 31st 2011. That's why all these distress homes will be resold by the end of 2011.
I thought the Mortgage and Debt Relief Act was extended to apply to the 2012 tax year so it wouldn't expire until 12/31/2012?
Regardless, I don't think that act will result in all the distressed homes being resold by the time it expires. If it's really taking the banks two years to complete a foreclosure then anyone wanting to take advantage would need to stop making payments now to make sure they're through the process in time to take advantage of the forgiveness. Not to mention that just because a bank forecloses doesn't mean that home will be listed and available for purchase right away. Banks are still sitting on a huge number of properties right now to keep their books looking pretty.
Short sales may increase about 6 months prior to expiration, but those are still subject to bank approval which is determined by qualifying hardship so it's unlikely that many strategic defaulters will be able to get theirs through before or after the Act's expiration.
I thought the Mortgage and Debt Relief Act was extended to apply to the 2012 tax year so it wouldn't expire until 12/31/2012?
Regardless, I don't think that act will result in all the distressed homes being resold by the time it expires. If it's really taking the banks two years to complete a foreclosure then anyone wanting to take advantage would need to stop making payments now to make sure they're through the process in time to take advantage of the forgiveness. Not to mention that just because a bank forecloses doesn't mean that home will be listed and available for purchase right away. Banks are still sitting on a huge number of properties right now to keep their books looking pretty.
Short sales may increase about 6 months prior to expiration, but those are still subject to bank approval which is determined by qualifying hardship so it's unlikely that many strategic defaulters will be able to get theirs through before or after the Act's expiration.
You are correct. I was wrong. I think Congress amended the original law and moved the expiration date through Dec 31th 2012.
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