As home values continue to plummet and the number of foreclosures continue at an alarming rate, the questions people have been asking are: "Is the housing market ever going to recover? If so, when?". Property values everywhere are down at least 25-30 percent, sometimes more, in certain areas and a lot of people’s homes are "upside down" (amount owed exceeds what the property is worth). People want to know whether they should hold on to their properties or if they are better off just walking away.
These are difficult questions, no doubt, and people are confused about their options. As I see it, the US economy is a big mess and without the stabilization of the housing market, the chances of a sustained economic recovery anytime soon is almost zero. The reason is because the government itself is just beginning to understand how we got to this point in the first place and it seems like a lot of our elected leaders didn’t even see this problem coming although it had been brewing for years. We are facing a deep recession and it will take time for the economy to fully recover.
People have purchased homes that they couldn’t afford to begin with. There is a lot of blame going around- lender fraud, greedy buyers, lack of government oversight. It doesn’t matter anymore at this point. What we need are solutions instead of pointing fingers at one another. Over the last 2-3 years, many ARM’s (adjustable rate mortgages) have reset, driving millions of people in foreclosure who couldn’t afford the higher payments. But these are only about half of the ARM’s that were written in the last few years. When the remaining 50 percent of these bad loans adjust in the next 3-5 years, we can expect even more foreclosures coming.
The staggering number of foreclosures have forced a lot of banks to go bankrupt themselves. These banks no longer have sufficient capital to continue their operations and service their debts. I read in a recent newspaper article that in 2008, at least 25 banks failed and had to be taken over by the FDIC. Banks cannot just continue to write off bad debts so unless the housing market recovers, there may be more bank failures in the near future.
Experts say that for the housing market to recover, median prices have to fall to pre-2000 levels. Even with the recent 20-40 percent drop in home prices, these experts are saying that we are not there yet. They say that home prices will need to fall even more, at least for another year or two, before they start to go back up. Once we hit rock bottom, it may take at least 10 years for the housing market to fully recover. If true, this is bad news for a lot of homeowners. This means that if you are already struggling as it is just to stay in your home and make your payments every month, you need to have a long-term focus and a long-lasting ability to sustain losses. Otherwise, it may not make sense for you to keep your home if you are upside-down and have to wait at least a decade to recover the value of your property that has been lost.
If you are one of the millions of homeowners currently facing the possibility of foreclosure, perhaps you need to find out what your legal options are. Of course, no one really understands your situation more than you do and ultimately, the decision as to whether you should keep your property or not is one that you need to make yourself. However, you may have legal options that you didn’t even know existed and you will never know what they are until you consult with a professional who can evaluate your situation and make possible recommendations.
If you need to discuss your situation with an attorney, please call Toll-Free 1-866-477-7772 to schedule a free office consultation. We have offices in Glendale, Cerritos and West Covina.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped more than 4,000 clients in finding solutions to their debt problems. To schedule a free attorney consultation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published on February 4, 2009 in Asian Journal Los Angeles p. B2 )
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