I know this doesn't take a rocket scientist to figure out... However, I have been saying for months that the declining prices in home values will continue until the FEDS, the BANKS, GOD.. .someone stops the wave of foreclosures.. For why should any of us in good faith hold onto our homes during this crisis? I have been saying for months that the FEDS, the BANKS, SOMEONE will need to re-tool all mortgages out there. Adjust all of our mortgages - anyone who has bought a home in 2001 or beyond.. And low and behold, I just read an article from Realtor. com and am sharing it with you.
Principal Cuts May Prevent Foreclosures
At least 7 million borrowers will lose their homes this year and next unless there is a broad increase in property values or lenders become much more willing to cut the principal on mortgage loans, an analyst with Amherst Securities Group told the U.S. House Financial Services Committee last month.
That testimony has motivated Federal Deposit Insurance Corp. Chair Sheila Blair to consider incentives for lenders to cut principal on $45 billion in mortgages her agency has acquired from seized banks.
"We're looking now at whether we should provide some further loss-sharing for principal write downs," says Bair. "Now you're in a situation where even the good mortgages are going bad because people are losing their jobs."
While principal reductions are rare, some banks are doing them. In the third quarter of 2009, about 21,000 home loans were modified by reducing the principal, according to Mortgage Metrics, a government publication.
Mark Zandi, the chief economist for Moody's Economy.com, suggests that banks receive a federal match of $1 for every $2 in principal reductions they offer to home owners.
"You're not going to wipe out all the borrowers' negative equity," he says. "This just gives them enough hope to get them committed again."
Source: Bloomberg, John Gittelsohn and Prashant Gopal (01/07/2010)
I truely beleive this is the only way the Big F will stop beating down our prices. For all your real estate needs in Sedona and the Verde Valley... I can be reached at barbara@barbarabaker.com, website at www.barbarabaker.com, on Facebook at Barbara Hooyman Baker, on LinkedIN, or the old fashioned way - 928-301-0669.
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