Many people have been fearful of the next wave of foreclosures to hit the market. It is estimated that it will about two or three years before all of the adjusting loans (toxic loans) are out of the system.
We are all aware of the out of control flood of foreclosed properties hitting the market about a year ago. Prices plummeted, properties languished and communities suffered.
Over the past several months there has been a freeze on foreclosures. During the freeze the inventories have dropped. Prices have increased.
At last the solution is in place. The banks are encouraged to modify loans whenever possible. If the owner can not qualify for a modified loan there is now a new option.
In the event the owner can pay market price rent and the rent does not exceed 31% of their income, the owner is offered the option of signing the deed back to the bank and becoming a tenant in their own home.
The length of the lease is not specified. The tenant is responsible to keep the property maintained to community standards. It can n ot become blighted.
These provisions allow the banks to systemmatically put the properties on the sale market without flooding the market. They can help to stabilize the market.