Short sale, loan modification or foreclosure …? It looks to me like most banks are trying to figure this out themselves. The government intended for banks to modify their loans by either reducing the interest rate, especially on ARM’s, and possibly extend the term, again this would concern ARM loans and/or defer the principal. They were supposed to do one or all in order to modify these loans so that the borrowers could stay in their homes but, I, as a Realtor, a mortgage broker and a homeowner (and an interested citizen and spectator, as most homeowners are) am not seeing that.

The banks are only trying to modify a loan if it appears to them that it beats a short sale and are only trying short sales if they appear to beat foreclosures. The problems are arising, for me anyway, because foreclosures are always overloaded with delays to begin with and if a short sale or loan mod doesn’t work that just delays it further. 

 What Geitner is doing is simply hoping that the market will turn sometime in the next 3 to 9 months, he doesn’t really know anymore than you or I do.  Everyone is hoping for a bottom and many are even hollering that there is a bottom that has started occurring and we are now turning the corner.

I am not sure what planet these people are on but the one I’m on still sees toxic waste everywhere I look and not just greenhouse gases either; I’m speaking of trillions of dollars in toxic MBS and derivatives that are so worthless even the investors don’t know what they own or even who EXACTLY sold it to them and these securities were being created by investment banks and bought up by these same investment banks, including Asian and European banks and governments that bought them because they were “safe.” Safe because they were “insured” by the same banks that sold them when they created a new security and called it a credit-default swap, which was partly insurance and mostly a wager; although it was sold as 100% insurance. The bottom line here is that these MBS and credit-default swaps and trillions of dollars worth of derivative products, these same geniuses bundled up every kind of debt imaginable, car loans, student loans, credit cards, etc. and sold them, are still out there and are proving to be worthless and the end result is showing up today: 1,000 GM stores closing, 60,000 lost jobs, the auto parts companies, etc, will soon start closing, more lost jobs in almost every state and there are still more signs popping up on lawns in neighborhoods all over the country that are becoming rental areas instead of owner-occupied properties.

So, we need to get these short sales done as quickly as we can; I believe everyone would agree to that statement. So, why then are there so many real estate agents that are representing banks delaying these sales. I see it happening everyday and wonder: are these agents incompetent or are they just not motivated enough? The majority of these agents refuse to even disclose how much an offer is when they have one on an REO house they are representing and this just causes further delays because what do you as an agent then tell your buyer: “ah, they have an offer but I can’t tell you how much, so just make your highest and best offer and we’ll play this game until the bank decides what they’re going to do?” And, then, you either lose your buyer or the deal.

Agents representing a short sale need to get the bank to COMMIT to a set price or forget listing it, as far as I’m concerned, because another wave of people in this upcoming tsunami are just coming in: the wave of people who have been in their houses since 2004 and before that and refied or took cash out, or both, and are NOW having a hard time making their house payment. These people will stay in their houses, they WANT to, but only IF the loan modifications are such that their payments are inline with what houses in their neighborhoods are NOW renting for … PERIOD.