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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (166941)	11/24/2008 10:46:40 PM
From: energyplay	Read Replies (1) \| Respond to of 306849

>>>"the best approach is to just let the house go into foreclosure, it will get bot by investors and if purchased at a deep discount, those houses can be turned into affordable rental units." That's probably the best outcome for situations where the mortgage is far higher than what the "owners" can pay. That requires having enough investors, however. For people who are only a little bit over their heads, some of these loan modifications maybe a better approach. With some of these loan work outs, that is essentially what will happen, if the pricipal and interest rates are cut enough. Transaction and moving costs are avoided. That's probably the best outcome for situations where the mortgage is far higher than what the "owners" can pay. That requires having enough investors, however. For people who are only a little bit over their heads, some of these loan modifications maybe a better approach. With some of these loan work outs, that is essentially what will happen, if the pricipal and interest rates are cut enough. Transaction and moving costs are avoided. What society gets is a renter with a small equity kicker, and continuity for the family - kids stay in the same school. What society gets is a renter with a small equity kicker, and continuity for the family - kids stay in the same school. Hopefully, the house will be kept in better repair than it would as a rental unit. From a neighborhood stantpoint, many renters - except for corporate nomads - can be much worse than a marginal owner who should have bought a less expensive house. With rentals, you could end up with college students on your street. ;-)

To: MulhollandDrive who wrote (166941)	11/25/2008 6:05:03 PM
From: Smiling Bob	Respond to of 306849

The problem with that is it further fuels the spiral downward in home prices. Additionally, it leads to too many people- not all deserving- becoming homeless. A foreclosed home becoming a rental unit has a more negative effect on the surrounding neighborhood than a pseudo owner- occupied property where the inhabitants have at least established roots. Many of those facing foreclosure are refi's that have been in the property for years. Others have been in there long enough to have kids in school and jobs. It's not a one size fits all solution. If someone can't find a way to pay even a reduced rent or hasn't the desire to stay, then they obviously are not candidates.