Are You at Risk for Foreclosure?
I’m usually wary of numbers, but these numbers released recently ring true, loud and kinda scary: Foreclosure activity (defaults, listings, sales) are up 48% from the same time last year.
Here’s why foreclosure numbers alarm me in terms of ripple effect: Foreclosures aren’t just bad for banks and the former homeowners who have been through the true agony of losing the roof over their heads, they’re bad for everyone. It’s like having a black hole of ‘value’ open up down the street. The sucking sound gets stronger and stronger as more and more ‘holes’ open up, and those holes start siphoning off your home’s value more and more as time goes by. Bloomberg reports that foreclosed properties will bring down national home prices by 6 percent.
And if you’re one of the thousands heading toward foreclosure now or fearing the inability to make your mortgage payments, the best thing you can do—after finding, re-allotting and putting as much money as possible into keeping your home—is to call your lender ASAP. If you’re in touch with them before you’re in default, you’re much more likely to benefit from the new plans put into place to limit foreclosures. Talk about refinancing or a short-sale. Both have traditionally been a tiny portion of bank business and rarely an option for anyone, but times are showing mortgage lenders that they have to get creative and flexible to lower their losses too.
Are you heading into foreclosure? Have you seen the Foreclosure Bus going through your neighborhood? What’s going on where you live? Write me! Carmen@cnbc.com
I bought my house in 2003 and the payments will adjust in another year by $800-$1000. I feel misled by the entire lending industry. The brokers, the agents, and the lenders all deserve the losses that have accumulated. If they were honest and forthcoming individuals, instead of self serving people, maybe we would'nt see the meltdown that we are experiencing today. My family will not recover this equity for years. It may not be the right thing to do, but morally we feel obligated to stay put and continue paying our home. I have reached out to our lender (Countrywide) and they will not help until we have defaulted. --S.P., CA
Posted on: 17 June 3:55 P.M.
I buy 5-10 homes a year. Frequently, the seller would have to bring a check to closing. People were using their house as a piggy bank (refinancing several times over the years) and were surprised when they find out they spent all the equity. Sadly, many consumers raise their standing of living to meet their salaries, the old keeping up with the Jones' philosophy. It's not hard to understand that you can't spend more than you make. I hope my tax dollars are not used to bail out those who can't manage money. --Dan, GA
Posted on: 17 Jun 2008 3:54 P.M.
Foreclosures are bad for everyone? Um, hello idiot, 40% of us are RENTERS, not owners, and anything that drops home prices are GOOD for us. Or, do we just not EXIST to you? --Steve, CA
Posted on: 17 Jun 2008 3:00 P.M.
My wife is a real estate agent and her income over the past two years has been decreased by about 75%. We have gone through all of our savings (something I now regret).
This month was the first month that we missed our mortgage payment. I called last month to see if the bank would help out but all they did was transfer me from phone to phone in a cold and emotionless interaction (when I was able to speak to somebody) for 1.5 hours before I gave up. Two days after I missed the first payment they called for collection and are still unwilling to help us in any way. Bankers and customer service do not care, sadly. For those that say they will help you are either VERY lucky or niave in your thinking.
We have decreased our house (it is for sale) by around 20% and still have no bites on it at all. Even trying for a short sale.
This is the worst I have seen in my 41 years of life. Rates are going up, inflation is going up, jobs are going away, the economy is in the dumps.
The American way of life is drifting away (certainly for us). --Dan, CA
Posted on: 17 Jun 2008 2:42 P.M.
I have been in the Title Insurance business for over 20 years and we have never seen a downturn of this nature. Inventory is high and homes are moving at a snail's pace. I've recently jumped into the short sale processing industry to help negotiate payoff amounts on mortgage for borrowers. I've recently recieved my real-estate license in Florida a little less then a month ago and I already have five listings...let's just hope they move. --Josh, FL
Posted on: 17 Jun 2008 2:07 P.M.
Florida is known for booms and bust, But this market is the worse. I am a realtor and I deal with teachers, sheriffs, and everyday people who are just scrambling to find find funds to keep there homes. A lot of people who were living off home equity loans are finding banks are shutting them off.
The most concerning thing is even prime home loan borrowers are thinking about walking away from there depreciating assets. The fact that real estate fed the entire job force, there are no good paying jobs and too many people are really hurting.
The one good thing in our area are buyer's are finally seeing value and some inventory is selling at very attractive prices. --Keith, FL
Posted on: 17 Jun 2008 12:22 P.M.
My family and I are in a heap of trouble. We bought at the peak of the market in 2005, with an adjustable rate mortgage. Our payments are going up by $700, and we cant refi because of all the foreclosures bringing down the comps around us. Our lender refuses to help us until were 3 months behind. I guess its my fault for listing to our realtor who told us Real Estate is ALWAYS a great investment and the market will always keep going up. Now I know, its like asking a used car saleman if its a good time to buy. Buyer be aware. --Mike, CA
Posted on: 17 Jun 2008 10:45 A.M.
Please don’t tell people to wait to sell their house until the market gets better. Home prices went up because the lending industry had low rates and even lower underwriting standards the last 5-8 years. Banks have lost so much money, that there is no way underwriting standards will be anywhere near as easy as before. Inflation isn’t going back in the bottle anytime soon either, so rates won’t see 5% again. There is only one conclusion. Home prices are falling and aren’t coming back for a long, long time. Sell your house now and don’t listen to the National Association of Realtors or anyone else about waiting to sell your home. It will cost you money to wait. --Paul, MD
Posted on: 17 Jun 2008 10:20 A.M.
RE: Tim of IL, we are on the same boat. I used to make consistent income and over $200K in last 15 years. Now that income is completely gone...dont know what to do next. I tried internet marketing but it seemed like i need to spend more in order to make money. Hope that I can find a job that would generate me the same amount of inc per month or else...I would have to give up this million dollar home that I live in right now. --Kat, CA
Posted on: 16 Jun 2008 10:00 P.M.
We are currently wanting to buy a house, we both have good credit scores but have a lot of debt that we want to consolidate. Using the non-profit agencies to consolidate, does that affect us in getting a loan for a house? --Zenaida, TX
Posted on: 16 Jun 2008 4:42 P.M.
Carmen says: Zenaida - It's great news that you have good credit scores but they could be better if you had less debt. Consolidating your debt will bring down your score, though by how much depends on what kind of consolidation you get and arrangements you make. Most consolidation requires taking out another loan to pay the rest and opening up new credit and more debt brings down your score. What you could do that would put you in a much better place to home-buy and bring up your score, is lower your debt load. So do whatever you can to bring more money in, from taking on additional work to advertising on your local message boards or Craigslist your skills or services such as babysitting, catering, proofreading or freelance work similar to what you do full-time. Finding more money--go over your spending with a fine tooth comb too!--to put toward paying off your debt is the sure route to owning a home with the best credit score you can have. Good luck! --C
Posted on: 16 Jun 2008 4:49 P.M.
I have been a top producing mortgage professional as a loan officer for the past 15 years. Business is soooo bad that I am trying to rent my home out so I don't end up in foreclosure. I plan on moving in with family, so that I can pay off credit cards, my car loan, and equity line. Those all add up to roughly $60,000.
I'm about to cancel my health club membership too. That will save another $100 per month. I'm getting rid of my home phone and only using my cell phone. --Tim, IL
Posted on: 16 Jun 2008 4:40 P.M.