Good News For Unemployed Home Buyers
One of the major factors affecting the real estate market at present is the number of foreclosed, short sale, and real estate owned (REO) stock available. These properties produce two downward affects on prices – they increase the number of properties available for buyers to choose from and they are generally priced below current market values. Steps taken by the Obama administration may help to reduce some of these stock numbers.
On Friday, the Obama administration announced that the forbearance period for home foreclosures was to be extended from four months to twelve months for all unemployed borrowers. This affects all FHA-backed loans and those servicing loans made through the Making Home Affordable Program (MHA) – special conditions apply to MHA loans.
Eligible unemployed home owners can now miss payments for up to twelve months without risking the loss of their home. Furthermore, the press release has reemphasized its requirement that lenders undertake a review at the end of the forbearance period to determine whether or not the lender is eligible for any additional foreclosure assistance programs.
This change in the forbearance period is intended to be taken as a standard for a whole mortgage market. Whether or not it flows through to other lenders is an aspect that only time will show. If it does, then you can expect to see a slow down in the rate of homes foreclosed upon, at least for the next six to twelve months. As the economy improves, and more people return to the workforce, the foreclosure market will start to fall away, hopefully leaving home owners free to sell their homes without the abundance of stock currently available. Perhaps then we’ll see home prices starting to climb again.
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