How do Short Sales Affect the Economy?
By John Occhi, Hemet CA REALTOR
Hemet CA Real Estate

Does anyone really know what the future holds as far as real estate values - in Hemet or any other market in Riverside County or the rest of the Inland Empire?  I think not!

Yes, there are many wise men and women who study all of the different economic and social factors and come up with their opinions.  Recently, the National Association of Realtors reported that we may have seen the worse of the downturn and others, like the Federal Reserve are predicting even deeper cuts.

Interest Rates have a lot to do with our current situation.  A recent Market Rate Commentary published by Inman News discusses the history or interest rates and the effects they have had on the economy of this country.

Myself, I happen to believe that the two largest contributors to the Short Sale and foreclosure market today, in Hemet CA and elsewhere has to do with the loans that were made and the rapid appreciation we saw in values in the early part of this decade.

Mortgage guidelines were so lax it seems like all anyone had to be able to do was verify they had a pulse.  Many borrowers squeezed into their mortgage, buying as much home as the guidelines allowed based on very low mortgages.

Unfortunately these low monthly payments were only teaser payments and were typically only clocked in for 6 months to a couple of years.  Once the introduction period expired, the monthly payments went through the roof - like a skyrocket on the 4^th of July!

Unfortunately for the borrowers, many of them go through months of struggle before they ultimately lose their home - either voluntarily or involuntarily, but either way they lose.

There are several different options available to homeowners, but each is unique and dependent on a number of different factors.  The best case scenario is a homeowner recognizes they are in over their head and get out before they start missing payments and damaging their credit.  Unfortunately, human nature and the pressures of our society tell us to hang -on, that it will get better.

I have recently aligned my self with Freedom Foreclosure Prevention Services.  They offer a number of different resources and services to help a homeowner keep their home - or at least get out with some dignity.  The good news about this national company is they never charge a potential client a dime until they know what they will be able to do and the homeowner agrees to the suggested course of action.

If they cannot help with their loss mitigation program, then the last solution is to sell the home for less than what is owed, which creates a short sale.

This phenomena is not new to the United States.  For those who can remember back in the 1980's this country went through a huge controversy with the collapse and bail-out of the Savings & Loan industry.  The government had to step in and create the Resolution Trust Corp or RTC.  Many investors were then able to purchase properties directly from the RTC at a deep discount.  This was the forefather of the Short Sale in today's market.

Investors today have an enormous opportunity today, to invest in the short sale and pre-foreclosure market. As a Hemet CA Realtor, I have the opportunity to stay on top of the local market and bring opportunities to the attention of savvy investors while at the same time offering loss mitigation services to distressed homeowners.

If you learned anything here, please feel free to add a comment below.

Now Have a Blessed Day,

John Occhi, Hemet CA REALTOR
Mission Grove Realty
Loss Mitigation Consultant