I am constantly being asked my opinion when the mortgage market is going to turn around. My opinion is no less than 2-3 years. We have not seen the end of the ARM resets and with never ending layoffs more people are going into default. As I drive around Hampton Roads I see more empty store fronts. What is happening with these people who have been paid off? Are they able to find jobs right away? All these factors affect the real estate industry.
The 2011 Midwinter Housing Finance Conference was recently held in Utah. The Federal Reserve Governor Sarah Bloom Raskin stated that the residential mortgage market will not rebound until loan servicing practices at large financial institutions improve. According to Raskin, deficiencies in how loans are serviced are impairing the mortgage markets and diminishing "overall accountability to homeowners.”
To help move the housing market forward, Raskin advised that servicers should consider proprietary modifications, short sales and deeds-in-lieu-of-foreclosure for loans that do not qualify for modifications under the Treasury Department’s Home Affordable Mortgage Program. "These actions will have a far-reaching positive impact: A lower inventory of distressed properties for sale results in higher house prices, which leads to a healthier pace of recovery in the housing market and the broader economy," Raskin said.
Raskin noted that a shift toward servicing-focused business models will be difficult for large financial institutions that have run their servicing divisions on lean budgets. "Until these operational problems are addressed once and for all, the foreclosure crisis will continue and the housing sector will languish," Raskin said.