The real estate market is far from reaching bottom because lenders only have realized $1.5 trillion compared with losses of up to $3.8 trillion, according to Bruce Norris, principal of The Norris Group.
The rate of delinquency in the residential market has slowed down because lenders are taking longer to begin foreclosure proceedings, rather than an improvement in the market, according to Norris. Homeowners are being allowed to stay in their homes for months and even years longer than the traditional foreclosure timeline because if lender-owned properties are listed at a slower pace, the fall of prices will slow down as well.
"People are being allowed to be delinquent because lenders aren't sure what they would do with these properties," Norris said.
The analyst said the federal government's push for loan modification programs is ineffective because statistics show that more than half of borrowers who negotiate a modification re-default within a year. Still, modifications are favored because they are delaying the growth of foreclosure inventory.
Norris expects major waves of residential mortgage defaults as many Alt-A and Option-ARM loans are yet to reset. Job losses, negative equity, declining income and a lack of available replacement loans and buyers is adding to the number of defaults.
http://jurislawgroup.com/jurislaw/real-estate.html
http://www.carealestatejournal.com/index.cfm?eid=908398&evid=1&source=email
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