On Thursday, November 20th, Fannie Mae (FNM) and Freddie Mac (FRE) made a landmark announcement in regards to a temporary hiatus on foreclosure sales and evictions for a six week period beginning the day before Thanksgiving until January 9, 2009. At first read, politicians and consumer advocacy groups heralded the announcement as a win for troubled homeowners.
James Lockhart who is the director of the Federal Housing Finance Agency (FHFA) was quoted that the suspension would allow "delinquent borrowers...an opportunity to avoid foreclosure and work out terms." It should be noted that this temporary suspension is an addition to the normal time-line required during the foreclosure process which is estimated by U.S. Department of Housing and Urban Development to be 3 - 6 months (subject to state foreclosure laws and processes).
For the homeowners on the brink of losing their home to the foreclosure process, the holidays will be a festive occasion removed from the reality of the housing crisis. This should bring a smile to their faces. FHFA, FNM & FRE look as if they are the champions to the financially strapped homeowners when they have been greatly criticized for the lack of proactive response to the housing debacle. The attorneys, law enforcement agencies and the judicial system who facilitate the foreclosure process also receive a reprieve from the gluttony of evicted homeowners during the holiday season.
To all of those mentioned, Happy Thanksgiving & Holiday Season!
For those on the other side of the foreclosure process, it is going to be an extended holiday stretch of dwindling business not of our own will. The professionals that will be negatively impacted from this action will be Realtors, appraisers, home inspectors, title companies, escrow companies, mortgage companies, insurance agents & real estate attorneys. This will be extremely hard on states in which stability of the housing market has been on the back side of foreclosure sales such as California, Florida, Nevada & Arizona.
No matter where you look, foreclosures have become a norm of the real estate landscape. The unilateral moratorium will only delay the inevitable flood of foreclosed homes to hit the market. It has taken the real estate industry more than 18 months to adapt to the new reality of the housing market.
Life is not like a video game. We can not press pause and wait for a better opportunity. In the eyes of this Certified Mortgage Planner, we must continuously move forward...good or bad. That's Life! Happy Thanksgiving.