Things improved in Cape Cod for the first 11 months of 2009, at least, that is, in terms of foreclosure activity – which is in itself an important barometer of local economic health. But, in December 2009 the trend went the other way – how bad was the shift, and why did this happen in the first place?

The main driver appears to have been the combined effect of the raft of HAMP inspired interventions flowing from Federal and State legislation, community counseling programs, and personal law suits. But did these interventions merely have the effect of constricting the pipeline for a while, as opposed to creating any real long term impact?

David Brennan, Senior Vice President at Cape Cod Five Cents Saving Bank has been quoted as saying that the lending industry took time to come to grips with, and learn the lessons of HAMP, and have only just recently ramped up to full capacity on the subject. Moreover, the slump in property prices was a deterrent against buying inventory items that might not sell at prices equal to their cost. As the Cape Cod property market began to rebound towards the end of 2009 banks may simply have regarded the resuscitated values as the more attractive option and pursued foreclosures with renewed enthusiasm.

An unfortunate new dynamic is the rocketing number of dodgy deals offering paid advice that’s available for free from local housing agencies. These sharks have been silent for a while following negative publicity, but seem to have re-invented themselves in new guises as potential demand for their services kicks back in again.

Another risky possibility is the sheer size of the banks’ foreclosed inventory which is not yet for sale, but could become a devastating tsunami if released in an uncontrolled manner if a shared computer program somewhere decides its time to sell. At current rates of progress it will take the banks an estimated 33 months to get through their inventories nationwide – but can they wait that long? It seems the mortgage crisis could be far from over, and that in Cape Cod too?

The local realty agents I spoke too seemed less concerned. Ross Joly of Joly, McAbee and Weinert Realty pointed out that the lower local building rate in better days gone by had left a low inventory behind which was helping stabilize prices. “I really don’t see a negative effect on the [local] market,” added rival Matthew Weider of Century 21 Shoreland. “… when these properties come on the market, they sell.”

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