A number of real estate analysts have stated that lenders might be forced to consider reducing balances of homeowners' mortgages to ease the burden of foreclosures and the increasing number of properties under list of cheap homes in the U.S. Although the method is an unpopular one, analysts claim that this might be the only resort as around three to five million loans are currently delinquent.
The issue has a significant bearing on Minneapolis home foreclosures as the area has recently auctioned around 300 distressed houses, giving proof to the level of foreclosure problem that the city is facing. According to local housing market observers, the huge number of foreclosures auctioned at the Minneapolis Airport Marriott Hotel represents the losses that the local housing market has incurred.
Statewide, sales of home foreclosures in Minnesota had risen by 17% during the 2010 first half, with Bank of America revealing that its other REO portfolio currently has a total of 296 properties in the state. Meanwhile, Wells Fargo has 420 Minnesota bank owned homes in its books.
As the number of foreclosures in the state and the whole country continues to increase, more properties end up in the list of cheap homes which effectively pulls the value of residential properties down. This hinders the recovery of the national housing industry, analysts have stated. They added that the more cheap houses there are, the poorer the condition of the market.
Because of the continuous growth of lists of foreclosed homes all around the country, some housing experts have put forward the option of lowering the loan balances of some troubled homeowners. However, this solution has been criticized by a big percentage of the residential property market since it is deemed unfair to those who pay their loans regularly.
Critics have also stated that people who took out mortgages that they cannot afford should not be gifted with a reduction, while those who are current in their payments will have to suffer from higher costs due to reduced balances that will be enjoyed by delinquent borrowers. Those who oppose the proposed solution also argued that reducing balances of mortgages will not prevent properties from ending in list of cheap homes nor will it solve the foreclosure problem.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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