More Foreclosures Coming? Loan Modification Program a Flop?

With all the talk of bailouts and loan modifications, one would seem to think that there will be less foreclosures out there…or at least you’d hope more people would be able to save their homes.

Here’s an interesting article regarding a lot of loan modifications that are not going through, so there will  be more foreclosures on the horizon, instead of less. 

I’ve heard a lot of buzz around that a ton of people that are applying for loan modifications (mods) don’t qualify for a variety of reasons and that many who would be perfect candidates for the loan mods are just  not applying for them, and are still walking away from their houses. 

I have a friend that bought her house in 2006 and she is underwater.  She pays her bills on time, but just owes more than what the house is worth.  She tried to get a loan mod but was denied.   So, she’s stuck and feels that even if she rents out her house, she won’t get enough to cover the mortgage.   She wasn’t a “sub prime” borrower, she just bought at the height of the market and is stuck.  I think her plan is to stay in the house, but she’s got 2 more years until her ARM adjusts, and if she cannot refinance or get a loan mod by then, she’ll be screwed.  It’s a sorry state of affairs, that’s for sure.

I know that being a Real Estate Investor, it’s tough because I have mixed emtiotions…it’s great to have more deals to choose from…and having lots of foreclosures to choose from just makes choosing deals easier.  In fact, our first home purchase was a HUD foreclosure, so I know first hand that these deals can be great.  But, when foreclosures are so rampant, it starts to hurt everyone in the neighborhood, bringing everyone’s home values down…so there needs to be a happy medium out there. 

That’s all for now.  Happy Investing!

Tags: bailout, bank owned houses, foreclosures, invest in real estate, loan modifications, loan mods, REO, wholesale real estate