In the past couple of weeks, many national mortgage lenders have announced a temporary foreclosure “freeze” in Georgia. Coupled with that, 49 of the 50 states have announced that they will begin to look into the foreclosure paperwork that has been filed in their respective states. How is this portion of the mess going to affect you?
If you are a homeowner that is currently behind, it is important to understand that this freeze does not allow you to fall further behind on your mortgage. To the contrary, this will actually provide you more time to work with your lender toward becoming current on your mortgage.
For those in the market to purchase a home, this freeze will certainly slow the amount of supply in the marketplace, which could create a short-term increase in home prices. Many of the bargain homes in this market have been a product of bank foreclosure, so that market will likely decrease in the months ahead. However, this freeze will surely be temporary, and many of those homes will once again be on the market in the months ahead. If you are purchasing a foreclosed property, make sure that you obtain Owner’s Title Insurance on your property at closing. This will help to protect you, in case something were to occur between the lender and the previous owner.
The freeze could also provide some positive news for any sellers in this market. Generally, home prices continue to be driven lower because of the numerous amounts of foreclosure properties on the market. As that number shrinks, it could provide a short-term price increase, which could help sellers achieve their target sales price.
While this freeze may create some short-term advantages for the marketplace, it will most likely slow the overall recovery of property values, and the economy as a whole. Regardless of your current equity position, the best recommendation is to maintain making your monthly payments with your lender. If we all do our part to uphold our credit obligations, we will be able to help expedite this recovery for the entire economy.