Foreclosures are everywhere. People are losing their homes in record numbers. We would all like to think that this can’t happen to us, but we would be mistaken. It doesn’t take very long to move from a responsible bill payer to someone unable to meet their obligations and be forced to face the loss of their home. A simple life occurrence such as a job loss or a serious health issue can change everything. Statistics show that 32% of people who experienced a job loss fell behind in their home payments. Another 25% found they were unable to keep up with their obligations after a health crisis. With that thought in mind, this would be a good article for everyone to read. Even if you are fortunate enough not to have this experience yourself, chances are you may know someone who is going through this difficult time.

When financial problems arise, regardless of the cause, the first thing a person should do is discuss the situation with your mortgage holder. Call the number provided on your statement and ask what they can do to help you resolve this problem.

Usually a mortgage company will respond by putting you on a repayment plan. This will generally involve reducing, or possibly suspending, your payments for a period of time. You will still be responsible to pay this money, but it will be rolled back into your loan at a later date. Meanwhile, this action will give you a chance to find a job or, perhaps, recuperate from an illness. If this plan does not resolve the situation, it is possible that the company will offer to modify the loan’s interest rate.

If you do not find that your lender is cooperating satisfactorily, you may be able to obtain help elsewhere. One of your first contacts should be with an organization called HOPE NOW. This is an alliance of counselors, mortgage services, and investors who can be reached at (888/995-HOPE).

If you are still dissatisfied with the help you are receiving, it might be time to find a credit counseling service, but be certain that they have a housing counselor on staff. Information on counseling services in your area can be found on the web at www.HUD.gov .

]]> http://www.homemarketthoughts.com/2008/09/ways-to-respond-to-threat-of-foreclosure/feed/ 0 http://www.homemarketthoughts.com/2008/09/real-estate-appraisers/ http://www.homemarketthoughts.com/2008/09/real-estate-appraisers/#comments Mon, 01 Sep 2008 22:33:55 +0000 admin http://homemarketthoughts.com/?p=8

These are particularly difficult times for a real estate appraiser. The past few years have been extremely tough for these professionals because of all of the pressure they are receiving to bring the homes in at the selling price, or above, so financing can me offered.

Appraisers are in the unenviable position of being hired by the real estate people who are offering homes for sale, or by the lender who wants to finance the loan. Unreasonable demands are being placed on the appraisers requiring them to state the value of the home at or above the selling price, even if their calculations disagree with this decision. Purchasers have a specific down payment available to them and this must equal the percentage required by the lender. If the appraisal is too low, the down payment will not be sufficient and the sale is then in jeopardy. Imagine how the selling agent feels if he loses a sale because of the appraisal number. He will no longer hire that specific appraiser because he or she is costing him his sale and his commission. In some cases they become very upset telling the appraiser they should never have accepted the assignment if they weren’t going to arrive at an appraisal comparable to the selling price. It is a terrible cycle and has been for years. As appraisal values increase, homes are selling for more than their actual value, and the result is the falling home prices that we are currently seeing. Many homes were appraised at an excessive value, and then the housing slump hit and these homes decreased rapidly from their inflated value to the actual possible selling price. This left people with mortgages they could not afford and the inability to sell their properties for the amount they needed to recoup. This is how we arrived at the current state of our economy.

Real estate appraisers realize that by appraising a property for more than it is worth, they are continuing the current decline of the housing market. They know that the home they are appraising is worth a specific amount. To raise their appraisal puts that home and the homeowner on the path to foreclosure. It would be hard to sleep at night if you knew your decision could cause a family to lose their home and eventually lose their entire investment.

It is difficult for an appraiser to ignore the pressure and submit an honest appraisal on a piece of property. Yet, this is what we hope they will do for both the benefit of the homeowner, and also the economy. The current situation must be addressed and the appraisers, if they stand by their values, can have a large influence on how we resolve this problem.

It seemed ridiculous when we first read about them and apparently they were. I am referring to the undocumented loans that were being offered by banks and mortgage companies a few years ago. These were loans with no income verification. The mortgage industry named them “liar loans” since they required no proof of income or existing assets. Some of these people were not even employed when these loans were approved. Obviously, the people granting and approving these loans were motivated solely by their own greed.

Just as we believed the housing market was possibly starting to improve, many of the “liar loans” are defaulting in record numbers. Most of these mortgaged properties are located in states where home prices have decreased the most, such as California, Nevada, Arizona and Florida. The homeowners with these loans are unable to refinance because they paid record prices at purchase and the homes have since sharply devalued. This leaves only foreclosure as an option.

Many of the lenders who provided “liar loans” are now defunct and others may soon be following. Brokers who provided borrowers with this type of loan earned greatly inflated commissions, as the loans themselves carried substantially higher fees and interest rates. A broker who might earn between $2,000 and $4,000 on a normal mortgage loan was earning close to $15,000 on a “liar loan”. Unfortunately, we, the taxpayers, are picking up the cost and dealing with the problems generated by this unseemly business practice.