Down Payment requirements are the problem.Yes, we need to stop foreclosure. However, no mater how low prices get, most people cannot buy due to the lack of cash on hand and/or willingness to part with it.
This news paints a picture why banks will simply not lend money to (virtually) anyone without 20% down payments (there are exceptions.)
The reason being that if home prices continue to drop, homeowners are less willing to pay their mortgage if financial problems arise as the home is worth less then they paid. They can simply , and often do, just walk away from the home. Thus, the banks foreclose on the homes and lose money.
In order to combat the liquidity problem, the Federal Government has made a bold move today and announced, “The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary calls vital to supporting the economy.”
The FED says all “the government programs have been aimed at supporting the lending that is vital to the economy.” I applauder the move by the FED and am optimistic that the new Presidency will continue to do everything in their power to protect banks by insuring loans, thus make mortgage loans available to qualified buyer, supporting purchase and sales of low priced foreclosures, clearing supply of homes and stabilizing Phoenix AZ real estate prices.
Once, the bleeding stops, we can build a foundation towards a Phoenix AZ real estate recovery and a national economic recovery.
Copyright © James Wexler
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale bank owned homes