Foreclosures Suspended: Take this Opportunity to Spread the Word of Optimism!
This last week, Bank of America has decided to suspend foreclosures for an indefinite amount of time while they clean up their books and make sure they are doing the process right and get caught up on this overwhelming task. This should open up a big door for some people in a lot of different situations and in my opinion could help the overall Real Estate market and maybe economy as a whole.
Bank of America was the first to announce the foreclosure suspensions for all 50 states, but many other banks are talking about it and some have done it in a majority of states. Foreclosure suspension in it's simplest form postpones the process of a home going to auction. There are 3 specific homeowner situations that popped into my head when I heard this, it represents a big chunk of people these days and it should help all of them a lot.
The first is the Homeowner who is close to foreclosure and has given up hope for a short sale because the foreclosure was imminent. This situation is more predominant than you think. A homeowner falls behind and by the time they figure out the steps to help themselves out of it, there is a sale date and they feel like it's too late. So why even try right? With this Foreclosure suspension, this group is given a window of opportunity to ask the bank for a short sale plan. Banks have become much more accommodating on this and I assume will even get more so as this suspension plan goes into effect. If this is you please contact a Realtor as soon as possible and learn your options. Short sales are much better for neighborhoods than foreclosures and for the individual doing the short sale can feel much better than losing your house and certainly is better for your credit.
The next group even more encouraged by the suspension of foreclosures. It is a group of people that have been either fighting through the modification process or like the group above thought the foreclosure was too close for them to begin this process. A modification of the loan can restructure the loan with either longer terms, lower interest rates and puts existing balances at the end of the loan. This usually provides the homeowners with a lower payment and kind of a start over refresh with their loan. This is perfect for a homeowner who had financial troubles like a job loss but has since gotten themselves in good shape but just can't catch up. The government has set up for this and there are a lot of incentives for banks to make these work, so check with your bank on this option or check with a great Realtor to help you understand it.
The third group, and this certainly is my most optimistic side speaking, but I do think it's true. For every report I hear that the world is ending and a statistic that shows that things are not getting better, I am seeing articles that show statistics, surveys and reports that show that things are getting better. I feel that a lot of the negative reports are politically driven and maybe the positive ones are as well, but even if some of the positive news is true, then at least some people's situation may change. Some of the reports I have seen have said that small business owners in Colorado feel like the worst is behind them and this may be a year for growth. So maybe it's a slight bump in hiring, maybe it's a tick up in buyer confidence that makes inventory go down quite a bit while these foreclosures are suspended. Maybe it's a continuation of government infrastructure spending that bring some communities back from the dead. Let's do remember that we have an incredible buyers market and interest rates literally at their lowest ever. It won't take much to start some dominoes falling that may get things rolling, and maybe this foreclosure suspension can give this small bit of breath the economy needs to get it's wind towards recovery. And it can all startwith Real Estate, the culprit that most blame for the recession. If any of this is true then maybe someone that was going to get foreclosed on can keep their job, or get their Christmas bonus or get their short sale sold and we could all really benefit.
A lot of people(Realtors especially) that I talk to, look at the foreclosure suspensions as a negative that will just add a big bubble out there still yet to pop. I suppose it's possible, especially if all Real Estate agents feel that way. But for those of us who look at things with rose tinted glasses, I think this bank strategy that was kind of created out of a negative could be turned around to a positive. At the very least I think it will help a lot of homeowners out that are informed and have the opportunity to use this time for what it can be. At the most though, this could turn into the straw that broke the recession's back. Stay tuned.
Damon Knop 303-332-8754 Distinctive Properties, LTD