On The Fence and Facing Foreclosure
This article is primarily written for the home owner who is in a hard financial position with questions about what steps they should be taking to solve the problem, but it serves a greater purpose, and that purpose is to provide valuable information for the public to chew on.
The holidays come once per year. It’s no surprise. At least it shouldn’t be. So it really doesn’t make a lot of sense for any of us to treat it like it is a surprise, but we do. We hold out until the last minute, all the while wondering where the year went, and then we proclaim that Christmas sorta just “snuck up on us.”
As a result of this perception, many people tend to put extremely important things on hold and then use the familiar phrase, “after the holidays have passed.” Now, if you couple the knowledge of Christmas coming once per year, with the habit of “putting off” until “after the holidays,” you can quickly see that 1/12th of (December) your life could very well be spent procrastinating. That’s not including any other time that you spend putting other things off until another day.
Right now, in this country, especially in areas like Florida, Las Vegas, and Phoenix, millions of people, perhaps even you, are in an extremely difficult financial position, and can be classified as house-poor. They just simply cannot afford their homes, and they’re scared to take the next step.
In the meantime, the lenders, the “big banks,” who have billions of dollars to hire the smartest psychologists and behavioral scientists to advise them on how to retain as much of their money as possible, have extended this “imaginary hand” to “help” you through the prospect of loan modifications so you can stay in your home. What this translates to directly is, “so you will continue to pay them as long as possible.”
Banks don’t care about you. Period. They don’t care about your hardships. They don’t care about your job-loss. They don’t care about anything but your money. That’s what they do. They borrow your money at insulting rates of return, and they loan it out like legal bookies charging a criminally insane rate.
The Truth about Loan Modifications – FAIL
- The united states treasury predicted that government programs would help 3 to 4 million home owners improve their mortgage situation through loan modifications by the year 2012 (that’s about a year from now.)
- They have actually only helped a little over 500,000. FAIL.
- Roughly 100,000 of those who have successfully modified their loans with their lender are back in 90-day past due status, headed for foreclosure anyway.
- 60-70% of the remaining successful modifications will default and eventually foreclose. That’s a shared opinion amongst us “real estate” types.
- The number of trial modifications that are actually converted into full modifications have dropped every month since June.
Fred Weaver, another experienced short sale expert of Group 46:10 insists that we need to redefine the term Trial Modification and call it what it is: “The we’re going to screw home owners payment plan.” I completely agree. He goes on to more clearly define it. “It’s an application fee to possibly take a look at your file…”
What many home owners are finding, at the end of their “application” period, is that they don’t qualify. But hey, who cares, the bank just got more money out of you, and you’re still headed for foreclosure. In markets like Phoenix, where nearly 80% of the homes are worth less than is owed on them, it’s far less likely that a loan modification will even make financial sense anyway. That is why banks are more willing to either foreclose, or allow a short sale.
Loan Modifications Serve One Purpose
Put your money in their pocket.
Get off the Fence
Foreclosure sucks. I get it. But the reality is, many of you are inevitably headed for it. It may not happen for 6 months, or a year, or maybe even longer, and it may be prolonged by emptying out your 401K and selling off all of your belongings, but it’s absolutely critical to your financial future to come to terms with the direction your finances are headed LONG BEFORE it actually happens. Why? Because the longer you wait to get off the fence, the harder it is going to be to short sale your home.
If you have done the math and those numbers guarantee that your retirement will be lost along with your home due to financial hardship, then your best solution is to get that house on the market and get it sold, now, not after the holidays.
Let a professional take the burden away for you. It’s our job in the real estate community to be the experts and to handle the details so you can relax and go about your life as peacefully as you would like it to be.