Well, I’ll tell you one thing.  There just seems to be more and more legislation coming out of Washington these days.  We can all debate whether the new laws are good or bad.  One thing is for sure, the laws will have consequences – intended or unintended.  Take for example a proposal that I read the other day about a new “Measure Limiting Foreclosures”  (http://www.bloomberg.com/apps/news?pid=20601103&sid=aaM7DybrRqY4).  The new legislation would force lenders to adhere to certain rules and regulations in an attempt to force lenders to write more Loan Modifications.  Specifically according to one of the Sponsors, the Bill “will force lenders to modify qualified mortgages, create a homeowners assistance program and give states a bigger role in mediation efforts”.  The goal, as he says is to “keep families in their homes and to help lead the way toward economic recovery”.  No question, a noble intention.  To make sure that the lenders comply with these noble efforts, lenders will face “new penalties” and the legislation would “let borrowers overturn foreclosures if lenders fail to comply”.

So what will happen if this proposal becomes law?  A great question!.  Certainly, it will offer homeowners a number of other avenues and government backing to ‘work out’ their delinquency.  It may even allow some homeowners to get that Loan Modification or forbearance that they would not have gotten before.  One other thing that is for sure, it will prolong the foreclosure process.  In that there is good news.  Homeowners can benefit from a longer process if it allows them time to work things out and get back on financial solid ground.  However, if the Homeowner cannot foresee a successful resolution, this legislation, if enacted, might just boost the Investor’s ability to get a Short Sale completed.  How might that happen?

We’ll, if :

  • lenders are FORCED to take a longer harder look at a Loan Mod and if
  • time just startes to pass endlessly and if
  • lenders are facing punitive penalties for technical violations

they may start to see that a Short Sale is a much more reasonable option than going through all of the trouble.

So, while we may argue debate, discuss and disagree about a lot of things going on in Washington these days, we can agree that whatever laws that they do pass, can have unintended consequences that can actually help Homeowners and Investors make more progress in really allowing market forces to get this housing crisis resolved.