We have many reasons to be optimistic about housing. Past-due mortgages and foreclosure filings have been trending down in recent months, not to mention inventory is decreasing, interest rates are lower than ever and home prices are stabilizing. But the progress is fragile, and ongoing recovery won’t be helped by unreasonable regulation. The only appropriate focus for legislators is helping families who are struggling right now and doing whatever it takes to keep properties out of the REO market.
Recent steps to provide distressed homeowners with more viable alternatives to foreclosure, such as easier refinancing through the Home Affordable Refinance Program (HARP), and ongoing streamlining of short sales by major lenders, are important steps in the right direction—and at the right time.
Lawmakers have the power to either continue helping or risk hurting the economy with their decisions on housing. It’s important they hear the message that housing needs focused attention to gain real traction toward sustained recovery, which really is in the best interest of the entire economy. I urge you to contact your representatives to offer your professional opinion on what it’s going to take to make the turnaround stick.
There’s no more important goal than keeping families in their homes if they have a reasonable ability to pay the mortgage. The Obama administration’s executive order to allow homeowners to refinance their government-backed loans under HARP, regardless of how much value a home has lost in the downturn, sets a great example for other major lenders. And by following suit, the big banks can avoid flooding the market with costly foreclosures and avoid jeopardizing consumer confidence.
More importantly, homeowners who’ve had to cut back in these lean times can save hundreds of dollars a month on their mortgage payments with previously denied access to historically low interest rates.
Next Best Thing
In cases where homeowners have no reasonable ability to pay their mortgage because of unemployment, illness or other personal challenges, a short sale should be the first consideration. Next to lenders needing to continue ramping up their abilities to handle short sales, one of the biggest obstacles to closing these life-changing transactions is educating homeowners about the option. More lenders are being proactive in contacting homeowners who are at risk of default and outlining alternatives to foreclosure, such as short sales. Plus, in many cases, these homeowners are being introduced to one or more trained real estate agents who can help them through the process.
With short sales becoming increasingly commonplace (Bank of America reported recently that its yearly total of short sales has more than doubled since 2009), it’s more important than ever for real estate professionals to promote their expertise in distressed properties and their willingness to help. The key for any agent who’s interested in taking part in the short sale solution is getting appropriate training, such as the Certified Distressed Property Expert (CDPE) designation or the NAR Short Sales and Foreclosure Resource (SFR) certification.
Economists and real estate leaders alike agree that foreclosure alternatives are going to make the difference between needless struggle and real recovery. And as lawmakers and lenders become wiser to this reality and the primary task, refinancing and short sales will play a major role in pulling us out of the current downturn and pronounced cycle of foreclosures.
Margaret Kelly (CRB) is chief executive officer of RE/MAX.
For more information, visit remax.com.