Foreclosures in South Lake Tahoe May Be Effected by Policy Changes
Fannie Mae has launched pilot projects in Phoenix and Orlando intended to reduce foreclosures by pre-approving short sales, agreeing on a price and the loss it will take prior to a deal even being made. It is hoped the program will improve the popularity of short sales among real estate agents.
Property professionals initially had welcomed short sales but soon found the process to be a frustrating one-due to squabbling about the sale price and slow approval times by the mortgage companies-that often ended with no sale at all.
“Short sales have received such a bad reputation among real-estate agents that, as a portion of the overall mortgage market, they have gone down,” says Tom Popik of the research firm Campbell Communications, whose November survey of realty practitioners found that agents had to wait as long as 8.1 weeks to receive a response from the lender on a short sale. That was nearly double the 4.5 weeks the process took earlier in the year.
Fannie Mae’s pilot will focus on homes that are listed at less than the mortgage balance and carry a Fannie Mae-backed loan serviced by Countrywide Financial Corp.
If it proves successful, the concept could be expanded to other geographical areas and additional lenders. There are concerns, in the meantime, about the program’s success, with real estate agents noting that property prices could decline before the pre-approval is issued.
I think that Fannie Mae is making the right decistion to negotiate short sales over foreclosures. The foreclosure process takes time, and time is money. Foreclosure is also expensive for the lenders, the more money that the lenders loose, the worse the effect will be on the lending market.
Short sales are also a better option for the homeowner. Although a short sale does adversely affect credit, it is not as bad as loosing your home to foreclosure.
I think that Fannie Mae will find this trial policy to be effective and will soon spread it across the country. Other lenders will follow Fannies lead. They would be crazy not to. This will in effect reduce the amount of foreclosures in South Lake Tahoe. With more homes in South Lake Tahoe being sold as short sales, agents will also need to adapt and gain confidence in short sale transactions
Source: The Wall Street Journal, Nick Timiraos (01/09/09)
For more information about South Lake Tahoe Real Estate, Short Sales and Foreclosures in South Lake Tahoe, or houses on the South Lake Tahoe MLS, contact Brent or Jill Johnson.
