Is the purpose of a headline to (1) provide you with a quick summary of the following story, (2) offer a teaser only to find that the story may present a much different account than what the headline led you to believe or (3) be an attempt to explain something that the author hasn’t fully investigated themselves?
Are foreclosure's being accurately reported?
A headline appeared in the LA Times the other day which stated “California home default cases plunge” What conclusions do you draw from that? If I am an average reader who doesn’t do real estate everyday it would probably lead me to believe several things. I might conclude that the real estate market is over the hump and foreclosure filings are on the decline. I might believe the California economy is picking up and employment is increasing. It could possibly mean government programs designed to keep people in their homes are now finally producing the intended outcome. Or even on a wilder note, maybe many homeowners in distress have new found wealth and are now able to cure their deficit, removing the default filing.
Anyone Ever Hear of Cause and Effect?
How about we take this headline and look at it from a contrarian viewpoint. In late 2009, the Treasury Department announced a new program for homeowners in distress. They finally realized that no matter how many people or businesses we modify, vilify or rectify, Moses can’t get everybody on board the Ark. It was then they finally started looking at ways to avert the inevitable.
A new program was developed and in keeping with acronym tradition it was appropriately called HAFA, albeit sans Jimmy. HAFA in the literal sense stands for Home Affordable Foreclosure Alternatives. This new program had an inception date of April 5, 2010, and is the latest program designed to assist homeowners in distress. In simple terms it is an offshoot of the makinghomeaffordable.gov, created in 2008 when housing progressed from shelter to investment to crisis. HAFA now provides the homeowner options to either “short sale” their home or complete a “deed in lieu” (returning the property to the lender). I’ll discuss more about the HAFA program in a couple of days, because I do think that it is an excellent program and warrants further examination.
Now here is where I think making the statement housing defaults have plunged can border on misleading. One of the components of this new program requires lenders to disclose the new options to homeowners. The effect of this postpones any action taken by the lender to foreclose on the home. There we have cause and effect. Lenders have anticipated this was coming, therefore they have been adjusting to meet these new requirements and guess what? A reduction in foreclosure filings.
Doug Willis is a licensed California Real Estate Broker with RE/MAX Property Concierge and has obtained the Certified Distressed Property Expert designation. Visit his website, www.qualifyforashortsale.com for information on short sales, qualification guidelines and free reports.
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