Foreclosure Moratorium Facts (real time)

No doubt you’ve heard the news recently that a number of major banks have volunteered to temporarily suspend foreclosures in 23 states and Bank of America is temporarily suspending foreclosures nationwide. What does this mean for the short sale market? Will this delay help short sales or contribute to the already increasing mentality of distressed borrowers to simply wait it out before reaching out to their servicer or a real estate agent for help? While this situation is changing daily, I want to tell you what we currently know to answer any questions you may have. (sourced from N.A.R. - Realtor.org) * In late September and early October some lenders and servicers began voluntarily halting foreclosures in select states while they reviewed their foreclosure processes. * The lenders and servicers that have placed their foreclosure moratorium on properties in the 23 states where courts are involved in the foreclosure process include: Goldman Sachs Group Inc’s Litton Loan Servicing, Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase, and PNC Financial. * These lenders/servicers have only temporarily halted their foreclosures while they review their foreclosure process. This is in response to findings that questioned whether some lenders/servicers were following the correct procedures to foreclose on a property. * This halting of foreclosures is a voluntary action taken on the part of these lenders/servicers and has not been mandated by either the states or the federal government (yet). * Some members have begun to report the immediate impact of this moratorium on transactions that involve foreclosed properties. Delays in escrow and the removal of listed foreclosures are temporary results of this moratorium. * The immediate impact on the market will be the slowing of home sales, which could put upward pressure on home prices in the short term. The long-term effect on the market is uncertain at this point as it depends how long the moratorium remains in place. * Assuming the moratorium is lifted in the next month, the flow of REOs to the market should resume, but the uncertainty created by the moratorium may cause hesitation on the part of buyers. * Federal agencies, including the Office of the Comptroller of the Currency, the Federal Housing Administration, and the conservator of Fannie Mae and Freddie Mac, have asked lenders and servicers to review their foreclosure processes. * The participating lenders and servicers believe their internal review processes should take anywhere from a few weeks to 30 days to complete. Some industry insiders believe this was a calculated effort to forestall foreclosures through the holidays and the end of the year. Then it will be business as usual after. If that is true, this would be the third year in a row that some type of moratorium has delayed foreclosures at the end of the year. The problem is, the water cooler conversations going on nationally are bound to cause more homeowners to sit on the fence as the government, servicers, investors, and attorneys duke it out. As far as PartnerFirst is concerned, it is yet more confirmation that short sales will move to the forefront of foreclosure relief options - especially with loan modification re-default rates rising. What say you???????????????