Short sales are coming back big time, as the Administration tries yet again to prop up the housing market.
Having failed to bribe mortgage brokers to alter loans, the next bright idea is to bribe underwater homeowners.
And it won’t work, because nobody really knows how low prices will go, second/third mortgage lenders will want to be paid, and there’s no evidence of any pent-up demand in an economy with 10% unemployment and 23% of homeowners under water.
So, expect at least another 10-15% decline in house prices and more short sales in the next 12 months, as bankers do their very best to avoid the reality of their balance sheets.
The most sensible approach, namely having bankruptcy judges reduce mortgage principal and force the bankers to make a deal, has already been voted down twice in Congress.
Gorilla says: “Extend and pretend will morph into short to abort!”
Tags: housing