SHORT SALES AREN'T GOING ANYWHERE

I get asked all the time w/ various loan modification programs available- are short sales going away? NO WAY JOSE!. Here's David Letterman's Top 3 Reasons Why Short Sales are going to be with us for some time.
Number 3 Answer. Option Arms- Many people have option arm loans where they were only paying 1% interest rate. These loans have negative am and the loan balance has risen since the borrowers close date, putting the balance quite a bit higher than it was originally. The Gov. is talking lowering rates to 3% or higher and trust me many of these option arm holders wont be able to qualify at even 3%. Ratios need to be around 38% and many folks wont be able to manage that. Short sales are the best alternative.
Number 2 Answer. Second Homes- Many people played investor during the boom and are stuck with homes that are not owner occupied. These homes will either foreclose or be sold short. The gov. will not force or even suggest lenders to work on these homes. Most investors used stated income to qualify back then and don't have the full doc ratios required to keep these homes. Even with renters in the homes.
And the Number 1 Answer is. Job loss- Unfortunately this meltdown is tricking down to main street big time and I speak with clients whose spouses were either laid-off or their hours were cut back. In this case, there is a good chance these people won't be at the needed ratio for debt to income and will be forced to sell their home.
Government intervention will help but I assure you this shake out will take time and if we see auto makers and other large industries with horizontal industries dependent on them we'll see many more defaults. I think we have another few years before we exhaust this market. Out, Presson.