The Horse Fighting The Reigns

Interesting developments in the foreclosure world as the government tries to "kick the can" of foreclosures down the calendar as far as possible.  Here is an excerpted article from Bloomberg:

The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

Meanwhile, investors who own bad mortgages are wanting to rid themselves of non-performing loans as quickly as possible.  The HAMP program is starting to create significant headwinds for investors who want to repossess collateral property and resell it to recoup their investment.  Hence an excerpted article from HousingWire:

... a session called “Loss Mitigation – When HAMP is Not an Option” proved to be extremely popular.
...
The shift away from the government plan marks a shift in the strategy of servicers as 2009 “was all about HAMP” in terms of allocating time and resources, according to Alanna Brown, director of government programs and new initiatives at Fannie Mae National Servicing Organization.
...
Rich Rollins, CEO of Infusion Technologies, said servicers are seeing increasing potential in short sales and leaseback options.

He agreed with a general mentality at the conference that 2010 — and even 2011 — looks to be the “year of the short sale,” which he said gives investors “immediate positive cash flow” as a non-retention strategy.

“HAFA gave [the short sale] credibility,” he told HousingWire.

The government zigs, the market zags.  The government's efforts are delay tactics and prolonging the inevitable.