The foreclosure crisis continues on from its dark beginnings in 2007, yet as we near the end of the fourth year of the real estate market meltdown, there are plenty of positive signs ? green shoots poking up from burnt soil ? for investors, homeowners, and lenders alike heading into 2012.
You just have to know where to look.
Numbers released today, for example, show how the loan guaranty program run by the Department of Veterans Affairs is outperforming virtually every other loan or loan guaranty program in the country ? even big-name, prime loan programs with strict credit requirements.
A VA loan is available to any veteran or eligible family member and offers the chance to purchase a home with no money down. This is contrast to the FHA loan program, which has a down payment of 3.5%, and conventional programs, which now almost-universally require 20% down.
One would think that a program that doesn?t require a down payment and is less strict than most programs out there today would be awash in foreclosures, but the 90-day delinquency rate is just 2.2% ? compared to 4.5% for FHA. Part of the success stems from the close involvement in each loan from the agency itself, which considers itself as the ultimate advocate for its constituency: veterans.
That kind of notion ? advocacy and representation in housing ? is being attempted in at least two major cities. This week, the mayors of Chicago and Los Angeles ? Rahm Emanuel and Anthony Villaraigosa ? have announced developments in their cities? efforts to purchase foreclosures in hard-hit neighborhoods, rehabilitate them, and sell them on the market.
Villaraigosa?s program in particular has already been underway and is steadily working to restore a few foreclosure-heavy neighborhoods in South Los Angeles. Emanuel?s program has not yet begun, but will aim to do virtually the same thing in Chicago.
Stabilization is the name of the game, both at the federal level and at the city level. More active intervention in the foreclosure market is required, as well as more of a relationship between the homeowner and the government ? especially if the government is taking an active role in either guaranteeing the loan or developing the property.
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