Let’s take a side step away from the “10 Things About Realtors” column to talk a little bit about an emerging trend in the housing industry.
FSBO’s and realtors alike are becoming more and more aware of the vast effect trends can have upon their endeavors in the real estate market. Staying savvy to the latest trends has been shown, especially of lately, to make the difference between success and failure in today’s highly variable market.
One recent trend that has caught many eyes is a growing shift towards banks utilizing the current abundance of foreclosed homes in today’s market, choosing to invest in their remodeling and the possibility that the general consumer will find one of these homes irresistible.
Acquired by banks after a borrower defaults on their mortgage, foreclosed homes are often in disarray and will merely continue to depreciate from neglect. Though, in this growing trend these homes are receiving high-value improvements targeted directly to the everyday buyer. A practice which is projected to be advantageous to the banks undertaking these “makeover” investments, as well as the general home buyer.
In fact, increases in general demand and the sales prices for these revamped homes are expected to have an overall positive effect on the real estate market as a whole. Yet, this new trend may only be treating a symptom of the overall predicament, as it does not prevent lenders from dealing with foreclosed upon homes in the first place. Thankfully, an outfit known as Bank of America has chosen treat this issue at heart, attempting to prevent borrowers from ever struggling with foreclosure at all.
Once the second greatest supplier of reverse mortgages, Bank of America has chosen to no longer offer these unique mortgages. Banks generally operate these mortgages by providing the home buyer must be 62 or older with monthly payments based upon the equity they hold in the home (fair market value of home minus all liens on the property). The bank would then take ownership of the home upon the buyer’s death or decision to move out.
By no longer offering reverse mortgages Bank of America is able to focus more determinately upon traditional mortgages, preventing the black scourge that foreclosed homes represent for the market from the start. So for what it’s worth there’s a much needed glimpse of hope in today’s tumultuous market.
Posts Tagged ‘Mortgages’
Foreclosures: Redux
Monday, March 28th, 2011Credit Cards Over Mortgages
Wednesday, February 3rd, 2010Remember that Brent White essay about under water mortgages? Some of you may have read it and some may have not. Basically, it was an essay on how under water mortgage owners are financially better off by walking away than by attempting to pay off a mortgage for a house that no longer retains equal value. He also got into some very interesting insights about the psyche of the American consumer and the pressure felt to fulfill their obligation of paying their mortgage. Engaging stuff.
Building upon that, a new study has shown another trend moving away from people’s tendency to pay off their mortgages. Now, it seems, that people are more bent on paying their credit cards off as opposed to keeping their mortgages current. No more than three years ago, the exact opposite was the norm.
In a study conducted by Trans Union, a global credit solutions company, and published on CNNmoney.com, it is reported that now about 6.6% of consumer are delinquent on their mortgages while being current on their credit card payment, while in 2007, 4.6% were delinquent on their credit card payments and only 3.95% were delinquent on their mortgage. The statistics increase for states that were hit hardest by the mortgage crisis—namely California and Flordia.
It doesn’t seem like a whole lot, but it cites an increasing trend in the way Americans are looking at their financial portfolios. Something has caused them to push their mortgages to the back burner. Most likely, it’s the fact that people’s homes are no longer making them money, so they’re more inclined to let their mortgages slip.
Now it seems that Mr. White’s little diatribe on the idea of consumer guilt and fear of shame over their mortgage has flopped to the side of credit.
