Colorado Foreclosures – Government Settlement on Mortgage Reductions?

Those of us in the real estate industry have been watching this story develop. It will definitely impact Colorado Foreclosures, but will also have a major impact on the nationwide housing market.

The core of these negotiations is whether the government can force banks to reduce the principal on mortgage balances for home owners who owe more on the home than the home is worth.

There have been well documented abuses by lenders on home owners struggling with mortgage payments, and many accusations of frauds against banks for seizing these foreclosures fraudulently.

However, as you read the article, keep this in mind: If banks are forced to reduce the principal on loans they have already made, thus decreasing their revenue, where will they recoup those losses? It doesn’t take a doctorate in economics to realize that costs will be passed on to new home buyers in the form of higher interest rates and fees. Those higher costs mean that the home buying power these new buyers have will be reduced. Ask yourself what that does to the real estate market.

You can read the entire article at the Washington Post:

 Government settlement with financial industry over foreclosure practices draws near

State and federal officials, who have been negotiating with financial firms over how to address widespread abuses in foreclosure practices, are moving closer to a settlement that could force banks to reduce the principal on mortgages for some borrowers who owe more than their homes are worth.

An official familiar with discussions between the government and the financial industry said the settlement also could require that banks increase their efforts to modify mortgages for distressed borrowers and pay penalties that could be used as restitution for homeowners who have wrongfully faced foreclosure.

Read the entire article.

It remains to be seen what impact this will have on Colorado foreclosures and homes in the metro area. Our team already has several Short Sale negotiators on staff to help you with Denver Short Sales. If you’r in a position where you owe more than your home is worth, give us a call at 303-817-0209, and we can talk to you about Short Sale options and help you understand the process. We do it everyday.

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