The good news: the housing market recovery is on the way…

The bad news: it’s probably 2 years away…

The problem:the large number of distressed properties that were being held up in the banks by the courts from hitting the market. These properties are referred to as the ‘shadow inventory’. Now, this shadow inventory is beginning to be released into the market as state courts allow the banks to continue the sale process, which was being investigated. This will cause the market to be “flooded” with distressed properties which will a) attract buyers away from non-distressed properties and b) lower comparable home values that assessors use.

How does this translate into a housing recovery?

Homeowners aren’t behind on their payment in as high numbers so the shadow inventory isn’t growing as quickly. So, once these homes get in the market and get sold, the market can come back down to normal inventory levels; recovery.

What’s this got to do with me?

If you’re thinking of selling, get your house on the market NOW! Once the market is hit with all these home, your sale price will likely drop significantly. Otherwise, consider call us in 24 month

Cheers,

Brian

 Today in the United States there are more and more homeowners facing the devastating financial challenge of foreclosure. Many times it can be avoided. Here are a few options besides foreclosure, along with a short explanation of each.

1. Reinstatement: This option is extremely simple, but the most difficult. The homeowner asks the mortgage company the total amount owed and pays it all, including fines and fees. It does not require approval, and lenders will allow this up to the day before the final foreclosure sale.
2. Forbearance or Repayment plan: This is when a homeowner negotiates repaying their back payments over a period of time. Usually, the homeowner makes their current payment as well as a portion of the back payments owed. Most lenders require homeowners to be qualified for this option.
3. Mortgage Modification: This plan is when either the interest rate of the loan, the principal balance or the term of the loan is reduced. The result is generally a lower, more affordable payment for the homeowner. Homeowners need to qualify for this option and must supply all necessary documentation, while the lender has to be actively pursuing modifications.

For more information on ways to avoid foreclosure go to the HUD website.

With the large number of foreclosures that are occurring all over the United States, people should know the many options they have to avoid one. Here are additional options (Part II.) for foreclosure:

• Rent the Property: If your mortgage payment is low enough that market rent will cover it, this option will allow you to keep your property indefinitely.
• Deed In Lieu Of Foreclosure: Sometimes known as a “friendly foreclosure”, because it allows the homeowner to return the property to the lender. It does require lender approval, and the homeowner must vacate the property.
• Bankruptcy: If the homeowner has non-mortgage debts whose payments are causing them to fall short of paying their mortgage, a personal bankruptcy will eliminate these debts. Bankruptcy can be very costly.
• Refinance: If homeowner has sufficient equity in the home and their credit is still good, a refinance is a possibility. In some cases it may lower payments, but it is an expensive process.
• Service members Civil Relief Act (Military Personnel Only): If a an active member of the military is experiencing financial distress, they could qualify for lower payments on all their consumer debt as well as mortgage payments.

Today in the United States there are more and more homeowners facing the devastating financial challenge of foreclosure. Many times it can be avoided. Here are some options (Part I.) for foreclosure, along with a short explanation of each.

Reinstatement: This option is extremely simple, but the most difficult. The homeowner asks the mortgage company the total amount owed and pays it all, including fines and fees. It does not require approval, and lenders will allow this up to the day before the final foreclosure sale.

Forbearance or Repayment plan: This is when a homeowner negotiates repaying their back payments over a period of time. Usually, the homeowner makes their current payment as well as a portion of the back payments owed. Most lenders require homeowners to be qualified for this option.

Mortgage Modification: This plan is when either the interest rate of the loan, the principal balance or the term of the loan is reduced. The result is generally a lower, more affordable payment for the homeowner. Homeowners need to qualify for this option and must supply all necessary documentation, while the lender has to be actively pursuing modifications.

Some key points on Obama’s foreclosure-prevention plan:

• Loan terms may be modified by reducing payments for distressed borrowers
• Refinancing for those current on payments, but have little or no equity in their home
• Plan starts right away and is strictly for primary residences that are not vacant or condemned
• Call your loan servicer for help to see if you qualify
• There are no fees for this type of loan modification
• To be eligible, your loan must be owned or guaranteed by a government-backed mortgage company such as Fannie Mae or Freddie Mac
• Modification plan ends on December 31st of 2012
• Loans can be modified one time only

More information is available at financialstability.gov

For anyone facing a foreclosure life can become extremely stressful, as there are so many new issues that you will be faced with. In this time of change and uncertainty, there are actually people out there that are preying on others going into foreclosure. Scam artists are coming out of the woodwork and are offering homeowners facing foreclosure a “deal” to renegotiate their loans for a fee. What people need to know is that in many states it is illegal for a person to ask homeowners for an upfront payment to renegotiate a mortgage – unless the Department of Real Estate holds record of them meeting license and registration requirements. You can verify this information and also check to make sure that your real estate broker and attorneys have valid licenses at www.dre.ca.gov.

Always be skeptical and remember to never give anyone money in advance of any services they are offering. There are many non-profit groups that offer legal aid for free of charge to homeowners that are having trouble making their monthly payments. See more information at this avoiding mortgage foreclosure website.