| Coping with Foreclosure: Foreclosure Solutions |
| Articles - Mortgage |
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If you are facing foreclosure, you are one of thousands of people who are losing their homes. Unfortunately, thousands more will be in the same situation before the economy improves.
If you are facing foreclosure, you are one of thousands of people who are losing their homes. Unfortunately, thousands more will be in the same situation before the economy improves. The Foreclosure Epidemic The increase in foreclosures began with the subprime mortgages that ultimately led to the mortgage melt-down. Many are placing the blame on the mortgage industry; however, no one could have predicted this. The adjustable rate mortgages, known as ARMs were one example of creative financing methods that were great for some people. The benefits of this plan included 100% financing at a low interest rate that was only fixed for 3 years. The plan was to refinance before the ARM reset and rates were increased. Unfortunately, the economy took a devastating downturn. With unemployment on the rise, many people lost their jobs and defaulted on their mortgage; therefore, they were unable to qualify to refinance their home. Now, they are stuck with a mortgage payment that they cannot afford. In addition, real estate market values declined sharply, making homes unable to appraise for anything near the amount owed on the mortgage; therefore, another roadblock to refinancing. To Make Matters Worse The foreclosure crisis continues as people are forced to walk away from their homes. Lenders and investors are losing money and mortgage guidelines are tightened. People with perfect credit are having difficulty getting a new mortgage with an affordable fixed rate. Bad things happen to good people! Foreclosure hurts, no matter what the cause. People facing foreclosure are devastated; many feel helpless, hopeless and depressed. They wonder who to turn to as they receive countless phone calls and letters from their mortgage company, demanding payment. To add to the confusion, they receive letters from lawyers or other companies promising to save your home from foreclosure or stop foreclosure now. Some of these companies are somewhat reputable, but many are preying on your last dollar as they demand an up-front fee for a service that gives you false hope and ultimately does not provide a solution. Generally, a reputable company will not approach you, call you, or send letters to offer their services. This is the behavior of a predator that got your name from a foreclosure list that they subscribed to. Foreclosure Options Now that I have explained how we got into the foreclosure crisis, I will cover some of the options available to you. One is to just walk away. Though many people are doing this, it should be your last resort. A foreclosure is very damaging to your credit report and it is one of the items that take the longest time to be removed from your credit history. There are cases where this is your only option, but there are others to consider as well. Some lenders are open to discussing a loan modification plan to make the mortgage more affordable. They may reduce your interest rate or amortize your payments over a longer term. Ive even heard of cases where the lender stopped the foreclosure process and reduced the balance owed, allowing the homeowner to start fresh with a brand new mortgage. This practice was not common years ago; however, things have changed drastically and lending practices have followed suit. You might try selling your home, even though it is likely that you owe more than it is worth in todays market. There is a good chance that your lender will accept what is called a short sale, where they agree to take less than what is owed to them. Many lenders realize that they can cut their losss by taking a short payoff now, rather than waiting out the foreclosure process, evicting the homeowners and listing the house for sale. They stand to lose more money as the market values continue to decline. Homeowners can negotiate with their lenders to reach a solution; however, many do not know how to go about it, or they are just too stressed out and emotionally drained to handle the task. It is important that you know what to say and how to present your case so your lender will be willing to cooperate. There are reputable companies who provide these services for a reasonable fee. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. This article was written by David Smith (734-756-6050) of U-Move-On, a service to help people decide the best solution to their foreclosure problem. David offers the resources and services for help with the entire foreclosure process, credit repair, finding a newhome, moving expenses, legal help and more. Dave enjoys using the many skills he has learned during his career to help people in foreclosure Move On with their lives in the best possible way. |