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Loan Mods Fail – More Portland Foreclosures

by admin on December 14, 2009

When the government’s Home Affordable Modification Program was announced back in March, the goal was to save four million homeowners from foreclosure by getting their mortgage payments permanently reduced. The Treasury Department recently reported that 728,000 trial modifications are underway, but only 31,382 homeowners have received permanent loan modifications.

The trial modification period lasts for three months, during which homeowners are required to make all payments on time and provide documents regarding proof of income and owner occupancy. Lenders report that almost half of the homeowners fail to provide required documents during the trial period, and about a quarter of them default again before the trial period is over. After reviewing the income documents, many homeowners are found to be ineligible for permanent modification due to insufficient income.

What does this mean for real estate investors? It means that the majority of foreclosures are only being postponed by the loan modification program (less than 1% of the four million foreclosures have been converted to permanent loan modifications), so there will be millions of additional foreclosed properties for sale in the next year or two. This should make it easier to find (and negotiate) huge discounts through short sales and REOs. Be sure to add some of these wholesale deals to your Portland investment property!

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