REOs to increase again in 2010

[Kenneth Garnett]

Found an interesting article the other day that predicts that the decline in REO sales evidenced over the past year or so has bottomed out, and the trend should reverse to reach levels not seen in over a year, by the end of 2010. The article also predicts that the new federal Home Affordable Foreclosures Alternatives (HAFA) program, to come on-line on April 5, will have minimal effectiveness. Further, the article suggests that short sales will not be a panacea for keeping foreclosures at bay.

Some of the interesting statistics from this article:

* In the U.S., 7.4 million home loans are now non-current (behind on payments), almost double that of two years ago.
* For all loans more than 90 days in arrears, the average days delinquent is now at 272 days—up from 204 days in early 2008
* For loans in foreclosure, loans average 410 days delinquent, up from 260 days delinquent in early 2008
* Up to 60% of first mortgages have a second lien associated with them

The new HAFA program is a child of the current HAMP program intended to help homeowners with loan modifications. Only about 25% of troubled mortgages are eligible for the HAMP program, and the same is true for the HAFA program. Further, only 168,000 homeowners so far have been placed into the HAMP system. This poor performance for HAMP suggests that HAFA will likely also be of minimal value. Consequently, short sales will not substantially mitigate the impending resurgence of foreclosures and REOs.

To see the entire article, go here:

http://www.housingwire.com/2010/03/15/housing-recovery-is-spelled-r-e-o/

- Ken G.