In early 2007 I started real estate investing and within 4 months I was facing foreclosure. This blog shares the knowledge I've gained from that experience and how I stopped my foreclosure. You will find lots of helpful advice from myself and foreclosure specialists on this blog. Don't forget to download the free report on the left, it's filled with every foreclosure solution known to man.
Read More About Dean Williams...In recent years the real estate market has been in a nose dive. The average U.S. home price doubled between January 2000 and April 2006, according to the First American Loan Performance index. Since then, the average home price has fallen 30%.
If you’ve been trying to sell your home, or just own one, then you’re no doubt concerned with the recovery of the housing market. Here are ten critical questions that you should be asking about the current housing market:
The number of U.S. homeowners who owe more on their mortgages than what their homes are worth has ballooned to 23%, threatening the chances of a near term correction to the housing market.
According to First American CoreLogic, a real-estate information company based in Santa Anna, CA, some 10.7 million homes had negative equity during the 3rd quarter of the year.
Homes that are underwater are a serious threat to a housing recovery because these homeowners are more likely to walk-away from their mortgages. They also affect the liquidity of the housing market as owners are not able to sell their underwater homes. Prices have fallen so far that as much as 5.3 million homes are tied to mortgages that are worth 80% or less of their mortgage principal.
However, most U.S. homes have equity, and 24 million homes have no mortgages at all, according to the same First American report.
About 588,000 borrowers defaulted on mortgages last year, even though they could afford to pay, that’s 2x as much as in 2007.
In March 2009, President Obama introduced a plan to use government money in order rescue families that are having trouble to paying their mortgages. Essentially a mortgage bail out.
Called “Making Home Affordable,” the program is expected to save up to four million families from foreclosure and cost around $75 billion. The Home Loan Relief Plan by the Obama administration is said to only apply to mortgages made on or before January 1, 2009 and will be in effect until January 2012, unless extended.
The Home Loan Relief Plan’s role is to not only provide relief to helpless families, but also guard neighborhoods from the side effects of foreclosures: such as lower home values, blight, increase crime, and homelessness.
This Home Loan Relief program requires lenders and banks to decide whether lowering the financial burden on families — with help from the federal government — would cost them less than foreclosing on a home. If they determine that lowering the monthly payments does cost them less, they would be required to do so. If not, then the banks could still make the mortgage modifications—but at their own discretion.
Banks who conclude that foreclosure would be less expensive than modifying the conditions of a loan still would be required to examine other options before seizing the home.
Other options to the Obama plan include a short sale, in which the house is sold for less than the outstanding mortgage amount at no penalty to the lender, and a Deed-in-lieu of Foreclosure where the homeowner turns over the home voluntarily.
Ultimately, the purpose is to have at-risk homeowners spending no more than 31% of their gross monthly income on housing. Currently, many are spending between 40% and 50%.
Guidelines also state that can use cash incentives from the government to bring the percentage down to 38% by lowering interest rates, setting longer mortgage payback periods, or reducing the amount of principal owed. From the 38% mark down to 31%, the government will give lenders a dollar-for-dollar match in cash.
So far, 16 mortgage servicers, representing 80 percent of home loans nationally, have signed on to Making Home Affordable, according to Deputy Treasury Secretary Seth Wheeler.
To find out if you are eligible for the Obama Home Loan Relief Plan, visit Making Home Affordable
Have you applied for the Obama Home Relief Plan? How has it helped you?
The City of Philadelphia has experienced some success from its pilot Foreclosure-Diversion program, and many other cities are beginning to take notice and considering implementing this program in an effort stop rampart foreclosures that are destroying home values, and subsequently their property tax base.
What It Is:
The Foreclosure-Diversion Program contacts a manager or other individual with the power to modify a home loan from the lender to sit down with homeowners (represented by pro bono lawyers,) in front of an arbitrator so they can try to find an affordable way for the homeowner to keep their home.
The Results
Over the inaugural year of this program, some 5,000 homeowners in Philadelphia participated in the program with 1,400 of them finding a way to avoid foreclosure. That’s a 28% success rate, not too bad. This does not include the 700 homeowners who were able to postpone their foreclosure auctions so they can continue negotiations. All said the program helped about 41% of the participants.
Granted this program started before the Obama Home Relief Plan, but it still provides a model that other cities and counties can model to protect the interest of homeowners in their districts.
Does your city or county have a foreclosure-diversion program in place? How does it compare to the one in Philadelphia?
