Working, slowly, toward 'normalcy'?

Author:Castle, Caren Jacobs

IT'S OFTEN SAID that from great challenges come great opportunities, and we certainly have had our fair share of both over the last few years. we can only hope that our industry makes the most of those opportunities as we move forward.

What we do know for sure is that we continue to navigate through unprecedented challenges. They include nearhistoric reductions in home valuation and record volumes of borrower defaults.

We have also learned to work through myriad government-and lender-sponsored programs to help solve the financial and foreclosure crises. These have had the goals of keeping people in their homes, which should help stabilize home valuations and also restore a healthier balance of supply and demand. And throughout this time, our industry has faced continued attacks on our work product from regulators, legislatures, the judiciary and consumer advocates.

Given these issues, one might conclude that this ship will never get righted, and that we will not return to a predictable environment for addressing borrower default and completing foreclosure actions. On the other hand, reflecting on what we have confronted and all that we have accomplished in the face of these new rules, procedures and challenges, we are confident that there is indeed stability ahead.

The incredible cascade of 'bad' news

Thinking back to 2006, just seven short years ago, it was still a "green light" era for home buying and mortgage lending--including waves of refinancings that included products such as 125 percent loan-to-value (LTV) ratio and nodocument loans.

Few seemed concerned with the ease with which new mortgage brokers could set up shop or if the paperwork process was less than perfect. Property values kept rising and houses were selling quickly. Then, in short order, the default world was turned upside down.

January 2007: Housing sales continue to fall--the greatest plunge since 1989;

September 2008: Fannie Mae and Freddie Mac are placed into conservatorship;

September 2008: Lehman Brothers files for bankruptcy and we learn the term "too big too fail"; and

October 2008: The nation is officially in recession.

Soon after, unhappy with the high number of foreclosures and issues with the securitization of loans, the government stepped in. Many of us remember waiting in February 2009 for the Department of the Treasury to announce its initial foreclosure-prevention program.

Change was on the way, and it came in the form of a new program called the Home...

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