the "Real Realtor" - Foreclosure Settlement, Far Enough?

Think this will affect homes and real estate in Plymouth and Cape Cod? I suspect behind closed doors following the Foreclosure Settlement Thursday; the five major banks involved are quietly celebrating the fact that they dodged the bullet on this one. To me it appears as a slap on the wrist and does little to help anyone who actually lost his or her home to foreclosure. $2,000 payable to these folks is not even enough for a down payment on another home or even enough for a deposit on most rentals. And they still have lost their credit rating!

$25 billion ends the 16 months of investigation and what was accomplished? Were the banks truly held accountable? Are the victims now able to recoup their losses? And does it prevent this behavior in future?

We Realtors are hoping this will help bring back the housing market and get it moving in the right direction. We have been living under the veil of the so-called “shadow inventory” which is all the bad debt in the form of foreclosed houses banks are holding and have yet to release on the market. This settlement may in fact help in the long run by clearing out this inventory and letting the natural market forces start rebuilding peoples equity again. Though like most settlements and large programs – this will likely take time and have some changes to work through.

Roughly it breaks down that $25 billion is designated at $5 billion payable to the states, $17 billion to those already foreclosed who will get the $2,000 each. And $3 billion to help restructure existing loans where the borrowers are underwater. That is they owe more on the mortgage than their house can be sold for in their current market. Interestingly these restructured loans will supposedly write off some of the outstanding loan amount, $20,000 or more, and both those who have not been making payments as well as those who have – will be eligible for the restructured loans. So maybe there is a bit of hope here after all?

The banks will be monitored and will face penalties if they don’t honor or execute on their commitments. And according to several articles, the fact that the banks can now put a number on their legal exposure or liabilities may help to clear the clogged pipeline of foreclosures. Not sure where the state money will end up but you can bet some of it will help suffering state budgets.

Now let’s see how this unfolds for Plymouth and Cape Cod real estate. Let me know your thoughts. And here is a peak at some local area forclosures from my website:

http://riverfarmproperties.com/?page_id=520