Special offer

Will There Be Another Glut of Foreclosures on the Horizon?

By
Real Estate Agent with Long and Foster Real Estate VA License # 0225089470

Will there be another glut of foreclosures on the horizon?  If you watch news programs that predict market activity, they certainly are predicting more foreclosures hitting the market.  A wave of Option ARMS are going to reset soon, and that means plenty of home owners who were making interest only payments, or partial interest only payments, will be facing increased payments as their mortgage adjusts to principal AND interest, amortized over whatever period of time is left on their 30 year loans.  Scary thought.

The properties that are secured by these Option Arms may never make it to market as foreclosures.  Why?  Because many markets, like my own have been educating the public in Short Sales.  Knowing that they could avoid foreclosure, save a huge credit hit, and work with the bank to sell their home before it is repossessed, why on earth would a homeowner let a property go to foreclosure?

Even home owners that declare bankruptcy can sell their homes in short sales.  The two are not mutually exclusive. 

Short sales hold benefits for both the sellers and the mortgage holder(s).  The benefit to a seller, particularly those that hold security clearances with government agencies, is avoiding foreclosure and a large hit to the credit that comes with foreclosure.  The benefit for the bank is that they save thousands of dollars in legal fees, and lost time on the market, by not having to repossess the property. 

So if you are waiting for another round of foreclosures to hit the market, don't be too surprised when you see the market hit with a glut of short sales instead. 

Comments (6)

Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News

Chris Ann-You are correct short sales are on the horizon for many years to come. 

Sep 22, 2009 03:36 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Cindy:  I think the education on short sales has just begun. 

Sep 22, 2009 06:10 AM
Liz Loadholt
Liz Loadholt- AgentOwned Realty- Covering SC - Mount Pleasant, SC
Realtor--Broker-in-charge - Trainer--Relocation Director Covering SC

Chris Ann -- if all the Realtors would do as good a job as you in educating the public on short sales, I think you would be correct. Hopefully, your posts will help in that process.


         Mama Liz

Sep 22, 2009 09:13 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Liz:  I hope so.  There are so many people who really need this information.

Sep 22, 2009 09:55 AM
Pat Fenn
Marketing Specialist for CJ Realty Group/Cindy Jones Broker - Springfield, VA

It's a year later and we haven't seen them yet.  Where are they hiding?

Sep 23, 2010 07:48 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Pat:  I don't know.  We'll have to see.

Sep 23, 2010 12:16 PM