In a struggling economy and a suffering housing market, it is still a buyer's market. Most Americans still believe that now is a good time to buy a home. Which means that despite difficulties getting financing, and a risk of a double-dip housing market, low prices home are managing to keep up interest in home ownership. Banks that are auctioning foreclosures off dirt cheap and owners short selling homes to escape mortgages they cannot afford has kept house prices low. Interest rates might rise, but the bargain prices are likely to continue as home foreclosures are reaching record highs each month.
Short-sale rates tell the story. Fannie Mae approved short sales on 36,534 home loans it owned in the first half of 2010, nearly triple the number in 2007 and 2008 combined. Freddie Mac, its sister company, approved 22,117 in the first half of 2010, up from only 94 in the first half of 2007. In 2011, those numbers are expected to continue to rise. And foreclosures continue to rise as well. Even with efforts to slow or stow foreclosures all over the country, Florida still ranks second in the nation in foreclosure rates.
And the worst may be yet to come. News reports are citing studies that show real estate short sales are set to increase in 2011 as banks attempt to get rid of defaulting mortgages without foreclosing. Short sales are a way to do that by allowing the owner to sell the home at a loss. Even though the bank takes a loss, it is normally much less than the loss taken in a foreclosure. It also keeps the banks from being left trying to get rid of foreclosed properties that can be difficult to sell even at the low prices. Evicted owner no longer put money into the home during the several months before foreclosure and often strip the home of all appliances.
Short sales are a much quicker and less risky than foreclosures. Keep in mind that if it is a buyer's market, that also means it's a seller's market. And with all the foreclosures hitting the market, it's a good time for a buyer to seek a short sale purchase. Banks are overwhelmed with foreclosures they are trying to get rid of, and are quicker to agree to a short sale than they were years ago. Wondering what this means for Florida homeowners? Will 2011 be the year of the short sale, or will home owners still look to strategic default on their mortgages?
If you are having trouble paying your mortgage, it is important that you contact a Miami bankruptcy attorney who can help you decide what your options are. While the decision is ultimately a personal decision you need to make with your family, a Miami foreclosure attorney has the experience and knowledge to help you decide what your best option is.
Walking away with less, By Dina ElBoghdady and Dan Keating
Sunday, September 26, 2010