Countrywide announced last week they'll start a program to help customers modify their loans, and stay in their homes. Countrywide is the first major lender to announce projected refinancing or modifications of their loans, approximately $16 billion in sub-prime ARMs, due to reset through 2008.
This program is dependant on Countrywide choosing which client to help, and the borrower must be in good standing. So it allows several million homeowners, whose loans have already adjusted, to continue down the foreclosure path.
They've also partnered with a nationwide non-profit, Neighborhood Assistance Corp. of America (NACA), one of Countrywide's harshest critics, to help even more already in dire situations. The agreement requires Countrywide to cut many more borrowers' payments to levels they can afford, based on an analysis of individual household budgets prepared by the NACA.
I hope this is just the first of many lenders who will initiate some osrt of program, dedicated to helping the millions of homeowners who are facing foreclosure. They were so imaginative in creating wildly popular, yet, fiscally irresponsible financing programs to get folks into homes that they never should have qualified for. So how hard should it be for them to design creative financing programs designed to keep people in these homes?
I hate to continue to be the naysayer, but I get so frustrated with people continuously cherry picking which news they want to embrace, regarding the housing market. It's not getting better, by any stretch of the imagination. And ti sin't going to get better for seller's any time soon.
Remember, those "creative" financing schemes continued well in January of this year. So the ARM's will continue to adjust for at least the next 24 to 48 months or so. And for my market, home values are not going to start appreciating again until 2010 or so. The appreciation will not be anywhere near what we experienced over the past 5 years, it will definitely be a more moderate, realistic trend.
I see my field inspections (delinquents, pre-foreclosures, foreclosures, BK's) doubling every month, to the point that I can't keep up with them! Last year I might have had 20 per month, for my city, and two other surrounding cities. Lately, I've had 300 or more every 3 - 4 weeks, just for Vacaville! That is huge, scary and sobering. Many homes are abandoned, and the REO market is growing exponentially.
When consumers purchase a new phat house with no money down, 100% financing, with a 2 year ARM attached to a 3 year prepayment penalty, and home values dropping faster than the dollar...they weigh their options, and realize they can walk away, and come out ahead. They'll have severely damaged credit, but with no vested interest in the home they can easily rationalize walking away. It's like they over paid rent for the last two years, and with no equity, no chance of refinancing, and no other options, they pack up and leave.
For buyers, this is the best of times It is really quite an opportunity for you to build wealth through Real Estate. Keep in mind, it may take a while longer for your investment to grow, but it will grow. This isn't the time to buy to flip; it's the time to buy and invest longterm.
Jackie Crockett
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