Due to the overabundance of homes for sale and declining economy, a lot of homeowners are facing problems when trying to sell their homes. The competition of resale homes on the market, along with the increasing number of distressed properties, are causing prices to be driven downwards. Many people are finding that if they were to sell their homes, the money received would not be enough to pay the mortgage debts.
Recent years saw lenders giving "exotic" loans to people that perhaps should not have qualified for a loan. We are all familiar with 100% financing, 80/20 loans, even 105% Loan To Value mortgages. But what about NINA's (No Income given, No Assets given) or NINJA's (No Income given, No JOB stated or verified!! And no assets given)? Seriously - As long as your credit score was fairly good and you could fog up a mirror with your breath on a cold day - you could buy a house.
As a result mainly of the exotic and sub-prime loans, we are facing a huge housing crisis. Many of these people had the ability to pay. Many of them still could if the 5 year re-amortization or interest rate jump had not occurred. During the past year, many homes have entered distressed state or even foreclosure, because the lenders will not work with the homeowner! Recently the federal government gave billions to banks to bail them out, while banks continued to foreclose! In the past few weeks, public outcry has led to the banks to start to work with their borrowers. A lot of improvement is still required, but at least this is a start.
Imagine the impact a loan modification could have to a distressed homeowner? They will be able to continue making their payments and keep their home! It really should be this easy! A bank loses on average $50,000 per house it forecloses on. They would be much better off to do a loan mod and continue with the mortgage.
This $50,000 saving is the reason why banks have finally woken up and many are willing to negotiate payment terms with homeowners who are facing a loan foreclosure. Instead of losing about $50,000, banks would rather earn small amounts from payments by homeowners. The problem now lies with homeowners because they do not know about loan modification. The media is all about broadcasting doom and gloom. If they would advertise loan mods, short refi's or the other methods for owners to keep their homes, the current housing industry problems would be eased
Loan modification is a definitive solution both for homeowners and lenders to prevent foreclosures and help the declining housing industry.
To contact a Distressed Property Expert in your area, please contact the Author.
Nigel Chapman, Certified Distressed Property Expert
515 321-8094 Nigel@RealEstateConcepts.net
Read all my blogs at http://www.DesMoinesBlogger.com
Nigel Chapman Managing Partner, RE/MAX Real Estate Concepts, 550 36th Ave SW, Altoona, IA 50009. Each office independently owned and operated. Equal Housing Opportunity. Licensed to sell Real Estate in Iowa.
Nigel: I visited with a seller this week who broke down sobbing because she was so upside down on her home. For responsible people who don't want to run away from their obligations, loan modification could be a big help. Thanks for this post.