Facing a Foreclosure?

One of the hardest parts of my job as a realtor is working with clients that
are losing their home. Sometimes it seems as if it’s harder for me, than for them!  By the time they reach me, and we are discussing a short sale, they seem to have “let go” and there is a sense of freedom or resignation. Short sales are an alternative to foreclosures and will free you of the debt and often times the banks will offer you cash for keys. According to an article in Realtor Magazine, The “Cash for Keys” program is expected to become a more mainstream option for handling short sales too, not just foreclosures. For example, Bank of America is piloting a program in Florida that will pay up to $20,000 to short sellers as well as forgive their loan deficiency. 

On the flip side, when I show prospective buyers a bank owned, (REO) or a foreclosed home, the energy in the house remains. I feel the remnants of a loving family, of holidays and family gatherings, and a connection to community and neighbors. As I drive through my community, I have seen homeowners packing, eviction notices posted on vacant houses and properties under renovation for a quick sale. It seems as if all of us know someone that has been affected by this. If you or someone you know is facing foreclosure there are alternatives but you must act quickly.

What happened to the American Dream?  In Canada the housing market seemed to withstand and persevere – and they weren’t as affected. The Canadian banks lend at a very low interest rate and therefore the crisis hasn’t hit as hard. However, Canada is beginning to see signs of a bubble. The average American home prices have plunged 34% from their peak in April 2006 as of the most recent reading in December. In Canada, national average house prices fell 9% from their peak in August 2008 before they bottomed in April 2009. The U.S. housing market has recently started to improve, but it’s still far from prerecession levels. Sales of U.S. existing homes rose 4.3% in January, reaching the highest pace since May 2010, the National Association of Realtors said. And the Canadian market is very different because they are more conservative and live within their means, and they’re culture supports it. On a positive note, I have seen many first time buyers opting for a more affordable home, even when they qualify for higher loan amounts. I believe we here in American are learning our lesson!

That being said, many Americans have been faced with losing their homes. In a struggle to keep them - many entrusted attorneys with their hard earned money only to find out they didn’t qualify for a loan modification. The attorneys found a way to capitalize on the housing crisis and my advice to you is be very careful before you hire one to represent you in an attempt to modify your loan.

Home loan modifications can be tricky as well. Banks that agree to offer you a modification will often times tack the outstanding interest on to the end of the loan – while lowering your payment temporarily. Read the fine print when you get your modification (which many have been unsuccessful in obtaining).

If you are trying to modify your loan, there’s the Making Home Affordable government program. http://www.makinghomeaffordable.gov – and some people have been successful but not enough!

If you’re thinking of trying for a modification, The Neighborhood Assistance Corporation of America ("NACA") www.naca.com is a non-profit, community advocacy and homeownership organization. NACA has a tremendous track record of successful advocacy against predatory and discriminatory lenders as well as providing the  program in American with $10 billion in funding commitments.

In addition there’s the Alliance of Californians for Community Empowerment http://www.homedefendersleague.org/ - a statewide community organization working with thousands of members to help ordinary citizens organize and take action. More programs available are http://www.hopenow.com/ HOPE LoanPort® is a web-based tool that streamlines home retention applications on behalf of homeowners at-risk of foreclosure, allowing housing counselors to efficiently transmit completed applications to mortgage companies. It eliminates lost
paperwork and allows for a faster decision on a homeowner’s application. HOPE
LoanPort® provides peace of mind for families at-risk of foreclosure or struggling with their mortgage. 

Moratorium NOW!  http://www.moratorium-mi.org/

Is a coalition to Stop Foreclosures, Evictions, and Utility Shutoffs is a coalition of grassroots activists and organizations, union and religious leaders, farmers, politicians, and concerned individuals from across Michigan that formed in the late 2007 to fight against the foreclosure epidemic brought on by the banks which has devastated our state and the entire country.

They believe that a right to decent, affordable housing is a fundamental human right that supersedes the "property rights" of the banks. The Moratorium NOW! Coalition combines direct action stop foreclosures and evictions with a political struggle for a moratorium to halt all foreclosures modeled on the 1930’s foreclosure moratoriums won in 27 states through community action. They have been instrumental in stopping many foreclosures and evictions since early 2008,
utilizing an approach that combines court proceedings in combination with
demonstrations at banks and homes, mass email and phone campaigns, and move-ins of those who are evicted.

In addition, Realtors are gathering at an upcoming Rally to Protect The American Dream hosted by the National Association of Realtors on May 17, 2012 in Washington, DC.

If you are thinking of refinancing but have been told you don’t qualify, there’s the HARP program http://harpprogram.org/ – this program requires that your loan is owned by either Fannie Mae or Freddie Mac. If you qualify you can refinance your home even with a low credit score and no equity. The Harp II program requires that the homeowner be two months behind with their mortgage payments, but don’t stop making payments to qualify – speak with a lending professional before making that decision. Banks have been known to foreclosure unexpectedly with little notice.