Government Looking for Foreclosure Agreement with Banks

Treasury Secretary Timothy Geithner is in active negotiations with the biggest banks in the country to settle the foreclosure mess that has dragged down the entire country for the past 3 years. Other parts of the world were also impacted in the increasingly global economy, where foreign investors who bet on housing lost out big. Geithner and the banks know that there are a huge number of lawsuits in the pipeline awaiting the financial lenders, and a broad settlement is likely the best way to avoid them. Such a coordinated effort will require much time and skill, but a sweeping settlement and reform is the best way to quickly heal the housing market.

Attorney Generals Investigate Foreclosure Practices

50 state attorneys general and a large number of federal agencies are continuing to investigate the large amount of fraud that fueled the housing boom before the big crash. Mortgage lenders were forging documents, creating loans for those who couldn’t afford them and robo-signing during foreclosures. A global settlement is the best solution for all involved. The result of a settlement across the industry would also do much to speed up the foreclosure process. Right now, many people are waiting in the sidelines instead of buying because they know there is a large number of homes on bank balance sheets that are not being put in the market, otherwise known as shadow inventory. The release of those homes on the open market would either trigger a price war for low priced property or drive housing down further, due to an increase in supply. Either way, it’s a good thing as a lack transparency is the biggest thing keeping potential homebuyers from jumping into the market.

Is Now a Good Time to Buy?

If people know how many homes are really out there, the real bidding can begin. If your home is underwater, look for the best mortgage refinance rates. It could help save your home from foreclosure. There is currently a $20 billion number being thrown around as the amount the largest banks would have to pay collectively, a chunk of which would go towards helping struggling homeowners. If you are a potential buyer, there are many reasons to wait. Start researching the best U.S. home loan rates and be ready for when the market drops.