In the ongoing saga of Short Sales and Foreclosures, the Obama Administration plans to announce this week a carrot and stick approach to deal with the issue.
650,000 borrowers have signed up for temporary loan modifications under the federal Making Home Affordable program enacted earlier this year. However, it is estimated that only a fraction of the borrowers who are eligible for the program have a "permanent" loan modification, and that many individuals are being told that their bank "doesn't participate" in the program.
In addition, short seller's, who have a legitimate hardship such as a job loss or medical issue, are being told "that's not my department", and "I will get to it later", when dealing with big banks.
With an estimated 20% of all home owner's currently owing more on their homes than the market value, "short sales" aren't going away anytime soon.
So far the big banks have implemented a sort of "hide and seek" approach to short sale transactions, in the hope that some home buyer's and seller's would give up, and find another way.
One of the lesser known, but equally as important reasons the First Time Home Buyer's Tax Credit was expanded and extended, was that the Halls of Congress were swamped with angry phone calls from constituents who waited month's for a bank's response on a short sale, only to be given misinformation, wrong information,or in the case of some institutions, outright lies.
After it came to light, that many of these "bailed-out" financial institutions were awarding big bonus's to corporate executives, while at the same time, dragging their feet on loan mods, and short sales, public outrage has pressured both congress and the administration to be held accountable to these now partially "publically owned" institutions.
Johnny "Culdesac" Yankoviak