California - No wonder we're bankrupt ...

In Orange County this morning, there are 410 bank owned properties on the market, 998 in escrow and 675 closed in the last 30 days.  

Our buyer clients are making offers at or above list price and competing against an overwhelming wave of demand for foreclosure properties.

In other words, demand is off the charts and we are running out of inventory. So what does California do?

California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday. The law is another attempt to force lenders to try and modify loans and keep people in their homes. When will government learn that more time creates greater inefficiencies? Now lenders have another 90 days to allow files to gather dust on someone's overworked, underpaid desk.   

Seriously, how long should it really take to review someone's income, assets and liabilities to determine if they can afford a modified payment? Minutes, not months.

And if that doesn't work out, how long should it really take to determine an approved short sale price after appraising the property? Minutes, not months.

If we really want to stop foreclosures, give lenders less time, have them order real appraisals (not broker price opinions) and require faster decisions. If a loan modification is not feasible, provide an approved short sale price, and reduce it every 14 days until it sells.

And if we really want to keep people in their homes, lenders should be required to allow investor short sale - lease backs. In this simple strategy, an investor buys the property at current market value and leases it back to the homeowner. This strategy would stop embarrassing evictions, traumatic relocations and family uprooting.

The net result is the same - homeowner loses their home and must rent instead. The process is far more efficient, keeps people in their homes, creates a more attractive scenario for investors likely willing to pay a premium for the property with no vacancy or tenant placement expenses.

For too long we have been approaching the problem with band aids, instead of looking at the big pictures and implementing a clear, efficient process that looks at the end of the problem, instead of the middle.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

www.TheOCExperts.com

www.ZeroShort.com

www.OCBankDeals.com

Direct: 714 276-7006