The delay in foreclosures is not a good thing. Yes, foreclosures are a bad thing, but delaying it is even worse. This weekend, when you’re at the Halloween craft fair (or “faire” if you live in a high income area), and someone asks you, “What’s the big deal?” you can explain it like this. Those servicing companies who have put a moratorium on foreclosing on the property often times still owe the ultimate investor the scheduled monthly interest, based on their contract. And if the loan is possibly subject to a buyback situation, the originator of the loan (whoever sold it to Chase, for example) is certainly going to argue that it is not “on the hook” for interest charges that Chase voluntarily stopped making and thus owed.

The current foreclosure issues certainly increase uncertainty – and markets don’t like uncertainty. Bank stocks are down, and they continue to hold on to trillions of “lendable” money because of nervousness about the future. Chaseannounced that it would now be reviewing 115,000 foreclosure cases in 41 states. PHH’s president and CEO stated, “PHH Mortgage is actively cooperating with its regulators, is responding to such inquiries and has completed a comprehensive review of its foreclosure procedures. Based on this review, PHH Mortgage has not halted foreclosures in any states and has no plans to initiate a foreclosure moratorium.”  This is just going to pro-long the recovery period, and we’re going to see a massive slowdown to our already Slow real estate market.  Hang in there folks, for there is always light in any Dark period, you just have to be persistent, patient and look for the shifts and act accordingly.

Kevin J. Lawson