A couple of weeks ago I posted an article that included a chart that showed that there are still a boat load (over a million) Adjustable Rate Mortgages that will reset between now and 2011. You can re-read that article here.
Many experts believe the Fed Rate will hold steady through most of 2010 and therefore, the number of mortgage resets may not see huge jumps. Many of these mortgages are tied to properties that are upside down, meaning the property value is less than the mortgage, and that will be the primary reason for increased defaults — or it will at least make these properties prime candidates for short sales.
Real estate investors can attest to how hard it has been to get lenders to let go of their inventory, and if you specialize in short sales, you know that at times, waiting for a short sale response from a lender is a lot like watching grass grow.
Relief May Be On The Way…
In the article U.S. Treasury set to finalize home “short sales” plan,Reuters suggests that there may be some help on the way. It seems that the Government sees the looming train wreck and also knows that if they don’t get these short sales moving through the pipeline by incentivizing the lenders, the number of predicted foreclosures (on top of the countless others that are currently out there) will become a reality.
So, what does this mean to investors?
I sure hate to go out on a limb, but perhaps this will be just what is needed to get lenders to open the flood gates and start to move some of their inventory.
Will it happen? We’ll see.
For all of you specializing in short sales, keep us posted.