Mortgage write-downs could help USA property owners
Securing a good USA property deal is likely to get harder if foreclosure levels slow down, as is expected and aided by proposed mortgage write-downs.
Many existing homeowners struggling to keep up with mortgage payments could be about to receive a major boost, after it was unveiled that as many as one million homeowners would get write-downs in the size of their mortgages under a proposed deal with banks over underhanded foreclosure practices.
Speaking at a Conference of Mayors meeting in Washington, Shaun Donovan of Housing and Urban Development, said: “We’re very close to a settlement that would both fix the servicing problems, but also help over a million families around the country stay in their homes and get help.”
Using Donovan’s estimate, the settlement could provide a reduction of about $20,000 (€15,500/£12,400) for each of the one million borrowers.
“Principal reduction can have a substantial impact on the housing market nationally,” Donovan said.
With over 30% decline in home prices since 2007 and a large volume of vacant, foreclosed homes flooding the market, the USA property sector has struggled to recover from the crash. It is estimated that about 22% of U.S. homes are in negative equity, according to Core Logic.
But with more national and international purchasers entering the market, including astute property investors, residential inventory levels across parts of the country are falling.
The Orlando property market, for example, has seen a significant fall in the glut of homes on the market in the past year, with inventory levels reportedly down by in excess of 50% year-on-year.
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