The massive and unsustainable “credit bubble” of years past created much of the negative equity that homeowners across the country are still dealing with.
Sean O’Toole , founder and CEO of ForeclosureRadar argues that foreclosure is the best way to deal with the underlying problem of negative equity.1 Loan modifications and principle reduction programs sanctioned by government programs have allowed many homeowners to remain in their home by lowering their payments to a more reasonable level. In most cases these programs still leave the homeowner with negative equity, which is the real problem according to O’Toole.1
ForeclosureRadar’s report comes alongside the announcement that it has counted the millionth foreclosure in California since January 2007 when the firm began recording its data.
O’Toole states that after foreclosure homes return to the market at levels where “negative equity” is no longer an issue. As for the displaced homeowners there are loan programs for those who lost their home as little as three years back.
Although, foreclosure filings are dropping in many of the hardest hit areas, and prices continue to rise from their all time low since the bust, O’Toole states that government programs designed to help keep homeowners in their homes are doing nothing to address the underlying problem.
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This information is intended to be used as a general guide. It is not intended to constitute legal advice and is not a substitute for the advice of an attorney. While every effort has been taken to present the information accurately, this document may not be infallible. No warranty is made that these materials are current, complete, accurate, or suitable for any particular purpose. You should seek advice from your attorney before proceeding with any real estate transaction.
Source(s):
1. Can Foreclosures Be Good For The Market, Krista Franks Brook, 01/15/2013, DSNews.com, http://www.dsnews.com/articles/can-foreclosures-be-good-for-market-2013-01-15, Retrieved 01/17/2013.
