Foreclosure Freeze “Icing” Loudoun Real Estate Market

President-Elect Obama said he wants to put a 90-day moratorium on foreclosures once he takes office, but Countrywide/BoA, Chase and Citi aren't waiting until January 20 to start "freezing" foreclosures. The effect of this is already being felt in Loudoun County as less new foreclosure/bank-owned properties are coming on the market.

For example…I just did a search for active bank-owned and short-sale town home listings in Ashburn Village and found that over 90 percent of them were short-sales. The ratio has recently been about 60/40 (foreclosures to short-sales)

One effect of this is that buyers will be further frustrated with the purchase of a home. Short-sales take 3, 4 sometimes 6 months for a response and only about 20 percent get approved so they work for only a select few buyers that have that kind of flexibility and patience. With the rising number of short-sales and diminishing number of foreclosure listings and traditional resales on the market, buyers are left with less "real" inventory to choose from than they have in years.

(Short-sales are not "real" listings in my book because the seller doesn't even know if the short-sale will be approved by the bank while listing the property)

What will happen when the "freeze" ends? We'll see more foreclosure properties hitting the market once again. As much as this may sound like a bad thing, it's actually a good thing. We have to get through the bank-owned property inventory one way or another before we can see the market rebound. Plus, it will give buyers more "real" inventory to choose from.

 

Countrywide Cancelling Short-Sales and Freezing Foreclosures

 

Countrywide announced that they are cancelling many short-sales already in process and freezing foreclosure sales until further notice. This will affect a number of folks including…

1. Home-owners about to try to negotiate a short-sale with Countrywide
2. Home-owners in the middle of negotiating a short-sale with Countrywide
3. Buyers waiting for approval from Countrywide on their offer on a short-sale listing
4. Buyers will have less inventory to choose from due to the freeze on foreclosures (post about this topic coming shortly)
5. Real estate agents/brokers who get some or most of their business from Countrywide in the form of foreclosure listings

In my humble opinion, this will only delay the inevitable and prolong the recovery process. Getting through this inventory is necessary in order to move on and get to better times that lie ahead. But I don't have a great tan so who am I to speak…