DEAN GRAZIOSI: DEAN GRAZIOSI REAL ESTATE – REAL ESTATE FEED BY DEAN GRAZIOSI

4,000 American homeowners will enjoy a less stressful holiday season thanks to a new stance taken by Citigroup.  The bank has announced that it will suspend all foreclosure activity for the next 30 days beginning December 17, 2009.  That means that 4000 homeowners have some extra time to try to work out their financial re-arrangements.

Loans owned by CitiMortgage and City Financial North America whose owners meet certain criteria will not be subjected to foreclosure sales or notifications until January 17^TH.  CEO Sanjiv Das said, “We hope that with this suspension we can make the holidays a little less stressful for our customers who are going through a very difficult time.” 

The Citigroup announcement came less than one week after the bank met with President Obama.  Financial institutions and various Wall Street banks have come under fire by the administration. As they have announced $30 billion of intended bonuses and had a record year for profitability. Wall Street followed this announcement with reports that record profits were reaped as a result of the taxpayer bailout.

The Citi foreclosure suspension gives temporary relief to 2000 homeowners already in foreclosure and anther 2000 scheduled for foreclosure in the next 30 days.  The hope is that these owners will pursue alternative measures to remedy their delinquencies.  Citigroup services $20 billion o mortgages.  These 4000 loans represent about 20% of the portfolio.

In related news, Fannie Mae released a similar announcement.  The agency revealed that it will suspend foreclosure activity from December 19 2009, through January 3^rd 2010.  Owners and tenants living in foreclosed properties will not be evicted during this time frame.

In addition to creating a sense of goodwill, these actions may be representative of a social consciousness not previously exhibited by the American banking industry.  Of course, the banks may want to hold off on absorbing so many homes in the dead of winter, but at least homeowners will have the holiday season to weight their options. 

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There is a massive ‘shadow inventory’ of around 7 million units, which is primarily made up of distressed and foreclosed properties, in the pipelines that the banks haven’t put up in the market yet. Once this shipload of inventory hits the shelves of sellers, it is going to further pull the rates down. This is one of the reasons why top researchers like Senior Managing Director of Research for Wall Street, Amherst Securities, Dr Laurie Goodman, believe that the market is going to go down further in the coming months, due to impact of the low cost inventory building up.

Dr Laurie Goodman also indicated that the prices could see a fall of around 8-10 percent in the forth-coming months. This may not completely push down the prices since the consumer demands are also increasing, which might just counter balance the price depression. Adding to the inventory of homes are the delinquent accounts, which have not been able to sustain the repayments due to a job market that has not really improved. Thus, with income in trickles, many have not been able to meet their commitments. These homeowners have been forced by circumstance to approach banks with foreclosure requests to qualify for government programs. The foreclosure rates in the country have increased over the second quarter by 5 percent.

There are multi fold factors, which have increased the foreclosure rates and will most likely keep them high for some time to come. Most lenders have not yet pressed foreclosures due to the loan modification programs extended to the homeowners. When this period ends, and the modifications don’t bring in the necessary economic relief, many more will be forced to close.

Adding to the difficulty is the yearly rate adjustments in flexible home loan rates, which will kick in now and may produce increased commitments resulting in greater financial difficulties for owners. Compounding to the fiscal problems is the mounting unemployment of 9.8 percent, which is slated to increase further. Therefore, most believe there will another tide of foreclosures soon.

The picture looks bleak and gloomy for many, but for others who have saved enough and are in financially secure positions, the situation is ripe for a home. The interest rates are the lowest and going down week by week, the prices are low and the choices are many, including resale homes. If you are financially stable, you should drive a hard bargain not only on the price of the house, but also on the interest rate of your home loan. This might be your best opportunity, but do your financials right and get them double-checked before you take the plunge.

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