Home lenders look for alternatives to repossessing homes
We should be looking at all creative areas to help homeowners go through this restructuring process with the goal of making it as least painful as reasonable possible. At the same time we want to assist the banks in reducing their debt load. Setting more realistic real estate prices are another effect of clearing all the delinquent inventory.
Even allowing homeowners to temporary rent and repurchase the home at a normalized fair market plan would be an equitable option for people who still want to retain their home. Outside of prosecuting crimes that caused this overhang, getting prices and inventory down is a priority at this point. This is a principle that can be applied globally. This is what I would consider real financial innovation, you need a real problem before you can truly innovate in most cases.
USA Today - The number of homes that received an initial notice of default — first step in the foreclosure process — was 6% higher in July than last year, foreclosure listing firm RealtyTrac said Thursday. Filings of initial default notices have increased on an annual basis three months in a row.
The trend comes as banks work to make up for time lost last year as the mortgage-lending industry grappled with allegations that it had processed foreclosures without verifying documents.
The increase in homes entering the process raises the possibility that more properties could end up being foreclosed in coming months.
But of late, banks have been dialing back home repossessions and increasingly letting borrowers sell homes in a short sale. That’s when the bank agrees to accept less than the seller owes on the mortgage.
Banks took back 21% fewer homes last month than in July last year, RealtyTrac said. Repossessions were down 1% from June. They’ve been down on an annual basis every month going back nearly two years.
“Lenders are much less likely now than they were even a year ago or two years ago to repossess a property after they’ve started the foreclosure process,” says Daren Blomquist, a vice president at RealtyTrac.
Completing the foreclosure process can potentially open banks to liability if they’re accused of improper procedures. And short sales, on average, sell for $25,000 more than a bank-owned property, Blomquist said.