On July 13th 8 institutions, including Bank of America, J.P. Morgan Chase & Co., Wells Fargo and Citigroup, met a deadline for submitting detailed action plans on how they will be handling distressed mortgage loans (short sales and foreclosures). The details of these plans, submitted by major banks and other home-loan servicers, were handed in to the Office of the Comptroller of the Currency, which regulates national banks. At this point, all details of any such plans to handle massive numbers of short sales and foreclosures are being held confidential.
July of 2011 was also significant as a very large number of loans issued in June of 2006, called 5 year ARM's, finally "turned over" and reset as of July of 2011. These loans featured low teaser rates and the option of interest-only payments for the first 5 years. Many of these borrowers who made interest only payments for the past 5 years are simply under water as their current home values are less than what is owed on their mortgages. If these homeowners can't afford their house payments, and if they can't come to terms with their mortgage lenders in some way then they will be faced with the pursuit of a short sale or they will eventually be faced with the reality of a foreclosure.
With mortgage interest rates climbing higher, the pool of buyers will shrink. Likewise, any existing pool of buyers will see their purchasing power shrink, as mortgage interest rates climb higher.
As we consider all these realities in the marketplace converging, it appears obvious that we will all experience downward pressures on home values, a phenominal "buyer's market" and more "growing pains" for the real estate market to endure throughout this fall and well into 2012.
While this is a phenominal time for investors to engage their long term plans for building wealth with today's real estate market, it is also a very sobering time for many homeowners who are simply terrified and confused about what the future holds for them.
I foresee a "tsunami wave" of short sale and foreclosure inventory hitting the market in the Greater Greenville, SC and "Upstate" region throughout the second half of 2011 and throughout 2012.
Along with this reality comes an ever increasingly strong renter's market. Thus, the investor activity in buying up distressed properties, rehabbing them and renting them out! When people are displaced from their homes as a result of short sales or foreclosures, they've got to live somewhere! For most people, their only choice is to rent. I was shocked to have heard of what sounded like a record high rent one of my friends and neighbors told me about the other day. They were having a difficult time selling their home for what they wanted, so they rented it out on a two year lease, for an impressive monthly rent amount.
The bottom line is that if you are a homeowner trying to sell your home in today's market with the luxury of choice, then you are very blessed! If you'd like to sell, but don't have to sell....you are very blessed!
However, if you are a homeowner facing foreclosure, if you've missed payments and cannot see yourself catching up on those missed payments and you don't have any such "luxury of choice", then your best option may just be a short sale. An approved short sale by your mortgage lender will have much less severe implications on your life, your finances and your credit than a foreclosure!
The most crucial step for any homeowner who is struggling with their payments or has missed payments recently, is to understand what their options are, including fully understanding what a short sale is, and is not.
Once a homeowner fully understands their options, suddenly things tend to become less scary and less stressful. Many of my short sale clients actually feel relieved once they understand their options and choose to engage the short sale process with me. Many of my short sale clients have told me that after they left the closing table they were overjoyed and filled with relief and they could simply get on with their lives and never stress out again over "that house, that mortgage, that bank, the phone calls from the bank, the letters from the bank and the bank's law firm", etc, etc. When foreclosure is no longer hanging over your head like a dark cloud, life tends to be more enjoyable!
If you are a homeowner who has fallen behind on your mortgage payments, and if you happen to live in the Upstate South Carolina region, including Greenville, Simpsonville, Fountain Inn, Mauldin and Greer, then please take the time to call me so you can understand your options as a homeowner in today's challenging real estate market.
I am confident that as an expert short sale listing agent I can help you!
Kirk Westervelt, CDPE, SFR, REOS
Keller Williams Realty
Van West Enterprises, LLC
(864) 451-2402
kirk@kwrealtyagent.com
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