How to Prevent Foreclosure!!

A foreclosure is a catastrophic event for any property owner and has serious legal, credit and taximplications. Working with homeowners on the verge of foreclosure or in the foreclosure process is challenging for all parties involved. However, as a REALTOR® you can provide expert assistance during this difficult time, but you need the specific knowledge and skills required to effectively counsel homeowners. Understanding foreclosures and the process yourself is the first step.

 

 With this type of knowledge you can make yourself an invaluable source of information that prepares homeowners for the challenges they are likely to face, yet you can offer them some guidance and alternatives to foreclosure. The information provided here is an overview of foreclosures and how to meetwith a homeowner facing a foreclosure and hopefully help them to avoid a foreclosure.

 Please note that the foreclosure process is different from state-to-state and therefore the information provided focuses on the common components fundamental to the foreclosure process.

 Foreclosure prevention must become a core component of what REALTORS® do. Alfredo recommends you become well-versed in the laws that govern the foreclosure procedures in your specific marketplace.

 Why are there so many foreclosures?

You watch the news, hear stories, and know people are losing or have lost their homes. There are several factors that have been contributing to the rise in foreclosures over the last several years.

 Predatory Lending

Loans approved for borrowers who do not have the necessary financial resources tomeet the obligations of the debt; along with, the lenders’ failure to provide sufficient information regarding future adjustments of the interest rates (i.e. Adjustable Rate Mortgage – ARM).

Declining Prices

Millions of homes are now worth less than the loan amount and are referred to asbeing “upside down.” In this scenario, if homeowners are having difficulty making payments, many choose to “walk away” from the property and the mortgage allowing foreclosure to take place. Unfortunately, foreclosed properties are typically sold at “below market” prices which further contributes to price reductions.

 Unemployment

Because the real estate market is directly tied to the job market, the rise inunemployment has had an adverse effect on the market. New jobs are needed to create the need for new homes. It has been estimated that it will take 1.2 new jobs to create the need for one more house.

Increased Debt

The amount of credit card and installment loan debt in this country has been continuallyincreasing for a number of years, as have the interest rates on those loan instruments.

 Increase in Home Inventory

The National Association of REALTORS® estimates that six-months ofinventory creates a neutral market, meaning that there is an equal number of buyers and sellers which causes the price of real estate to remain static.

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