Re: "Procrastination on Foreclosures, Now 'Blatant,' May Backfire" [Aug. 27]
Anyone who takes the position that we have to move this inventory faster to the marketplace is not in real estate, or looking out for all the homeowners who are paying their mortgages. To add the numbers we would be talking about to the marketplace is completely against the principles of supply and demand. There is no demand, which is evident from the recent number of sales of existing homes.
If it was not for the government-sponsored enterprises, there would be no lending. Now Fannie Mae and Freddie Mac are tightening requirements, making lending even harder. We have no move-up market, which has always been the backbone of real estate. What would happen if we immediately added another million below-market listings to the mix? What is the cost to maintain all these vacant properties while they sit on the market for the next two years? And what will that do to the values in the rest of the neighborhood?
We have to prevent foreclosures; we cannot claim that strategy failed when it has not been implemented properly. The servicers have not trained an army of specialist — just ask anyone who is trying to get a modification. Look at the GAO's June report on the Troubled Asset Relief Program, which highlights all the deficiencies in the system over a year later, yet organizations like mine that can bring the true professional processors and underwriters cannot get a contract to help the servicers deal with their backlogs. The national foreclosure effort, the Home Affordable Modification Program, will fail if Treasury continues to give the servicers a monopoly on the Tarp funds. How much more evidence do we need that the current structure is not working?
The people quoted in the story are not looking long-term. As for losses, a $270,000 performing loan is better than a $300,000 nonperforming loan, or, worse, a 50% writedown at 50% depreciation of original value.
Steven Gillan, Executive director
American Alliance of Home Modification Professionals
Astoria, New York