THE END OF REO AND SHORT SALES IS NEAR?....Quite possibly yes!

The Banking industry, through HAFA, might have pulled out a genius move: To disipate the "Shadow Inventory" cloud, without writting off their debt, without changing non performing loans to the liability column, without affecting the balance of their reserves..... They did this, plus: They removed the stigma of a "Tsunami" of foreclosures that would bring prices down.


Plus: They are keeping America in their houses.



All these was accomplished in a swift move, in which Banks decided to contact millions of borrowers in default, some already involved in short sale of their homes; offering a 3 month trial period at a very reduced monthly payment, with the promise of modifying their loan if they pay ontime.



The smart thing about this is, that banks will not reduce the principal owed by the borrower, they simply will drop rate, will extend the term, will do whatever it takes to reduce the monthly payment, to a level that the homeowner will qualify to pay, and schedule an escalation of this payment during the next 5 years, ending with a payment similar to where it was at the beginning, after 5 or 7 years. After all, the Fed. rate for banks is something like 1%, so whatever the banks do, they will still be making a profit.

By the time the borrower realices that his payment is too high (after 5 or 7 years), properties will most likely will be back to the value they had before the big drop, so if the borrower decides to sell, it would not be a short sale anymore.



Genius..... the only victims, unfortunatelly are the Realtors, but this is just the first 3 to 5 months, in the end, the whole economy benefits from this great idea, and that itself means a great Real Estate market with regular sales, no more REO Gurus or Gods, in the near future.

God Bless America!!!