A three prong approach to helping the housing market recover
In a recent article, the Associated Press reported that RealtyTrac Inc.’s latest data show bank actions against defaulting mortgage holders rose 33 percent in August from the previous month. As the existing and future inventory of foreclosed upon, or real estate owned (REO), properties continues to loom over the housing market, the National Association of Realtors (NAR) issued a letter to federal agencies urging more backing for loan modification programs, as well as lending initiatives and short sale support.
Responding to a request for input from the U.S. Department of Housing and Urban Development, the Federal Housing Finance Agency and the U.S. Department of the Treasury, NAR sent a letter strongly advocating that the government work to expand financing opportunities. NAR outlined three major areas it feels would have the most and best impact on the housing market:
- Providing financing opportunities to qualified borrowers — to both relieve the current REO inventory and help forestall adding to the inventory.
- Strengthening pre-foreclosure programs such as loan modification and short sales).
- Overseeing and encouraging the disposition of REO inventory — utiliizing local expertise (e.g., contractors, real estate brokerages, professional property managers) as needed.
While stressing that financing should be provided to qualified homebuyers according to strong underwriting guidelines, the letter pointed out that private capital supporting the mortgage market has all but disappeared in the last three years — and that the lack of financing opportunities powers lowering home values, which increases the volume of upside-down mortgages and thus the number of homeowners facing default and foreclosure.