Foreclosure Crisis: Finding A Path To The Future

Foreclosure Listings

Caliber Sharp

The question that looms in the minds of the public policy makers, the financial gatekeepers, and the general public in considering the current real estate/financial market quagmire, is where do you go from here? Metaphorically, one might ask, is the ‘glass half empty or half full’? Kenneth Rogoff, chief economist for IMF, suggests in a recent CNBC video clip, ‘the worst is yet to come’. The nation’s financial woes are, well, now borne in some way by everyone. Is there a way forward? Read on…

We have a mortgage default crisis, which has spawned a heavy inventory of unsold existing homes: the highest number in California and the next highest in Florida. Americans have lost their homes to foreclosure and banks have lost the revenue from the defaulted loans. Homeowners and banks find themselves in crisis and need a resolution.

The first order of business is to help homeowners in trouble to keep their homes. To this regard, the federal government has stepped in with a bill to give troubled homeowners a chance to refinance their homes with guaranteed funds at a lower interest rate. This plan is primarily offered however, to homeowners who continue to make their mortgage payments in good faith.

Another group of homeowners who find themselves getting behind on their mortgage payments are at risk of foreclosure. At this juncture, the entrepreneur or just the individual who is looking for a good deal is key to helping the homeowner in pre-foreclosure status. The foreclosed homebuyer has to have the knowledge that a homeowner is in trouble and the courage to approach the same individual about a possible deal. This pre-foreclosure deal is often acceptable to the bank and the pre-foreclosed homebuyer.
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On the other end of a home mortgage crisis, the actual foreclosure is the loss of a residence as well as the credit rating of the homeowner. As mentioned earlier, the bank has a non-producing loan and may have to sell the property at a great loss. The foreclosed home investor or individual buyer has the ability to purchase the property at an auction or sheriff’s sale. The bank is then able to get a bad debt off its books and eventually the property can be re-mortgaged to become a producing loan.

Across the US the volume of defaulted mortgages has brought about a deeper financial crisis. Securities investors have lost considerable money in mortgage-focused funds. In the final analysis, the recovery of the US economy from the effects of bad mortgage debt will take the efforts on a local level by pre or post foreclosure investors or individual buyers and on a national level with recapitalization of large failing mortgage banks or companies.


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