by Bill McBride on 2/15/2010 10:25:00 PM
Monday, February 15, 2010
James Hagerty at the WSJ reports on two studies, one from John Burns Real Estate Consulting Inc., and another from Standard & Poor's Financial Services LLC that both forecast most modification efforts will eventually fail - and that mods have just delayed foreclosures. The Burns forecast is for another 5 million distressed sales over the next few years. See the WSJ: Foreclosures Seen Still Hitting Prices
Hagerty reports that Burns study suggests prices will be mostly flat unless the economy turns down, and the S&P study forecasts further price declines.
S&P says current trends suggest that 70% of [modified loans] eventually will redefault.This will be the year of the short sale.
Loan servicers ... seem to have "nearly exhausted the supply of plausible candidates for loan modifications" and will find that many loans are "unredeemable," the S&P study says.
As a result, servicers increasingly are looking to arrange "short sales," in which homes are sold for less than their loan balances.