Except for landlords, everyone seems to love the concept of home ownership. Privacy, economic freedom and independence make it the greatest social policy in history. The dark side of home ownership is foreclosure. The loss of a home reaches deep into our souls.
In this happy, happy housing market, foreclosures are uncommon. But housing markets do turn ugly, something many of us worry about after 10 straight years of real estate mania. Let’s just hope that we do not begin hearing terms that have been absent from our real estate vernacular for many years–like deed-in-lieu of foreclosures, quick sales and bank REOs. No one likes the sound of that. It means homeowners are losing their houses.
The ingredients for a dark-side scenario are higher mortgage rates, a slow economic recovery and massive personal mortgage indebtedness. Add a slip in home prices and climbing teaser adjustable-rate mortgages, and some homeowners could be pinched, forcing them to walk from their homes.
This week, Inman News ran a series of stories on managing to a changing housing market, should interest rates rise and the market change. If there is a down cycle, the industry is better prepared to prevent foreclosures, manage inventory and price foreclosed homes properly.
That is a good thing, if the number of foreclosures rises. In the meantime, how do we prevent serious damage? Underwrite loans more thoughtfully, mitigate problems before foreclosure become the only option and show compassion when things get rough for down-on-their-luck families.
Sound Pollyannaish or altruistic? Yes, indeed. But we are talking about people’s homes.
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