In an article from the Wall Street Journal, banks and loan investors are starting to bit the bullet and lower the principal due on home mortgages for some borrowers.
Loan modifications typically involved only a temporary reduction in the interest rate of the loan or an modification of the time period the loan is due.
Part of this due to the Obama administration encouraging banks to help keep homeowners in their homes. Part of this economic plan has provided incentives to banking institutions to find solutions to help homeowners.
At the same time, banks now have more flexibility to modify loans because of their success in stabilizing their balance sheets and, in some cases, raising fresh capital. Banks can afford “to take the pain up front,” said Kevin Fitzsimmons an analyst at Sandler O’Neill & Partners LP in New York. “If they want a legitimate chance of salvaging something out of the loans, they are better off taking the loss now.”
It will be interesting to see if the banks are more agressive about principal reductions, along with loan modifications. In the Bay Area many homeowners are in homes that have, in some cases, lost 50%-60% of their value from the frenzy back in the early to mid 2000′s.
It could also have a stabilizing effect on the real estate market. If homeowners are able to neogotiate affordable payments, this could potentially help to reduce the number of foreclosures and short sales in the marketplace.
About Lisa Cartolano
About Lisa Cartolano
I am a Real Estate Consultant working and living in
the San Francisco Bay Area with my husband and two young boys and I sell homes
throughout the Oakland-Piedmont-Montclair areas. I am excited to be able to
write for HousingStorm.com's Crocker Highlands site to share news and information about all of these great places
to live.
As the real estate market changes, I know I need to
change with it. Utilizing technology tools and an in-depth understanding of the
area, I am able to help my clients navigate Bay Area Real Estate.With the bulk
of real estate searches now happening online, I have focused my education on
using this technology to help focus marketing to buyers using the internet to
find homes and to help buyers find the best real estate for their needs. I am
ePro-certified by the National Association of REALTORS®(NAR), of which only one
percent of all REALTORS in the country are graduates.
If you are looking for a patient and committed
professional to help you make a successful real estate choice, please contact
me.
Lisa Cartolano
Direct:
510.213.1139
Fax:
510.339.3747
DRE#:
01715440
www.LisaCartolano.com
lisa@lisacartolano.com
