Tuesday, March 30, 2010

Bank of America will cut mortgage loan amount for underwater homes - USATODAY.com

It's about time one of these banks got smart and started doing something to protect their investments. B of A is taking action to "stop the bleeding" of declining home values amid this waive of foreclosures. They will offer principle reductions to home loans starting in about a month. Although this is a small step, I hope it will lead to larger measures taken by itself. They are starting small, limiting this option to only a few borrowers that meet their specific criteria. Although I think they need to expand this program, maybe if they can manage it effectively then they can expand it to a larger set of borrowers.

This gives me hope that maybe I should hold onto my condo for a bit longer instead of starting the short sale process. We'll see.

Bank of America will cut mortgage loan amount for underwater homes - USATODAY.com

Wednesday, March 17, 2010

The Problem with the Housing Market

Here's a great article that my friend Larry sent to me from Phoenix on the state of today's housing market. It addresses the one place that the government and lenders haven't gone, but really need to go. This is in principle reduction. This is the one true way to stop the bleeding. If they can correct all the underwater loans, then people wouldn't have incentive to walk away, would be able to sell instead of foreclose, and the valuation of properties would stabilize. The stabilization of the housing market would be stimulus for buyers to get back in. Unfortunately, our government is so focused on supply-side economics that they haven't addressed the heart of the problem, which is the decline in property values. Finally, we're starting to get more press on these aspects of the housing market. Maybe that will translate into more action?

Take a look:

More owners opt to walk and leave mortgages behind
There was an error in this gadget