More Good News / Bad News
The Good News on this rainy day 3 of a moderate Noreaster in Tidewater, Virginia, is that foreclosures and “shadow inventory” continue to decline. The meteorologists tell us we have a couple more days of winds and much needed rain off the Atlantic Ocean. Likewise, the economists predict that our financial storm is not over yet: “We’re only in the fifth inning,” said Sam Khater, deputy chief economist at CoreLogic.
Foreclosures are down 22% from a year ago but are still running over two times the “normal rate of foreclosure”.
The bad news is that, just like there are still pockets of disaster in even moderate or waning storms, there are still far too many individual households suffering prolonged financial hardship in this recession. The outrageous hardship of the day is that many homeowners currently have their short sales on hold due to the government shut down! These sellers have worked long and hard to resolve an impossible burden, they have “run the race”, only to have the track meet cancelled on the last lap! A substantial percentage of short sales in Virginia require some involvement by the Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA). The approvals that come from the FHA are on furlough with the workers until a funding bill is passed by Congress. Currently, Veterans Administration (VA) as well as Fannie Mae (FNMA) and other quasi-governmental approvals are still progressing normally. But on FHA loans, to make matters worse, several of the law firms that serve as trustees on the deeds of trust apparently feel it is their duty to complete foreclosures in Virginia during the governmental shut down even with short sales pending.
I haven’t noticed the foreclosure trustees laying off 22% of their staff members yet.
Just when many key players in the real estate industry thought they could safely manage Short Selling without a lawyer, it turns out that sellers may need legal protection more than ever to survive the “shutdown.”