The Lion, the Foreclosure, and the Sale
Default, the term that no one in the mortgage industry wants to deal with but is always lurking in the background. We see a housing crisis like the early 2000’s and want to avoid the same situation so we implement new policies to prevent default and they slowly become the standard for all loans. Borrowers trudge through mountains of paperwork to prove to a lender that they are worthy of a loan but inevitably, something will happen to a small population and the lender will have to foreclose. Foreclosure action is the last thing lenders want because they have these properties sitting on their books and need to get rid of them, but potential buyers are weary because purchasing a foreclosed home is generally excruciating and takes significantly longer than they think. This article about foreclosures offers a light at the end of the tunnel for buyers and lenders as companies try to make the transfer of foreclosed properties more transparent. Will this be enough to spur the foreclosed home market and make it easier for lenders to offload properties in default?
Knowing that they will be hard pressed to get rid of foreclosed properties, lenders take more and more precautions in the origination process since they know unloading the properties will be difficult, adding more hoops for borrowers to jump through. If a new platform specifically for foreclosures can make it easier to sell properties, perhaps we can loosen the reigns on the origination of the loan and make it easier to close. In the rising interest rate market, we see today, purchases will be the majority of new originations and buyers will always be looking for the best deal. Giving buyers the same detailed information as traditional listed properties allows them to make informed decisions and navigate the murky foreclosure auction process. Lenders will have a larger pool of buyers at auction, driving up the bid prices and recouping more of the money lost. This is a win-win for everyone! As we head into March, the purchase market will be picking up along with the rates. Will a new foreclosure platform open the housing market this summer and help lenders move these dead weights on their books?
With February coming to an end, the temperatures are also on the rise. Pittsburgh had record setting highs earlier this week that had me wanting to clean up my golf clubs and hit the links, but the rain has returned, and temperatures are keeping things dreary. It seems everything these days is all over the place between temperatures and the bond market, but they say March comes in like a lion, out like a lamb. Hopefully, March shows us the lamb side and things calm down for the busy months ahead.
Photo by Jack Cain
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.