nancywoodward.com

I try to put myself in the owners place.  Homeowners who have received legal documents leading to Foreclosure are in a very stressful situation. They are grasping at anything they can to make this situation go away.  Some homeowners remain in denial for a long time. 

Situations beyond their control can cause a financial drain resulting in default such as:

1. Medical problems
2. Divorce
3. Death
4. Loss of a job
5. Natural disasters

I have considered this issue many times.  I have never been in this position and have trouble imaging how the homeowner feels.

I created a list of questions to review before contacting a homeowner for the first time:

1. How would I feel if I had defaulted on my mortgage loan?
2. How would I feel if I were receiving a ton of mail offering to abate my foreclosure?
3. Can I trust the people sending this mail to me to help me and treat me respectfully?
4. How will my family and friends perceive this situation I am in?
5. Will I ever be able to buy Real Estate again?
6. Will I be forced to file bankruptcy?
7. Can I sell this house myself?

I find if I spend a moment reviewing my list before I knock on the homeowners door, I have more compassion and listen well before I speak.  I bring homeowners my Foreclosure Assistance Guide.  I make suggestion they can pursue on their own. 

I explain the reasons they should stop the foreclosure and some of the misconceptions related to this process.  I provide a list of questions they can review with their mortgage broker, attorney and realtor, and the foreclosure agent in the Loss Mitigation Department. 

For many months now, real estate foreclosures have been on the rise.  We hear this on the news regularly.  The causes are many – a major cause was the creative financing in the form of adjustable rate mortgages which now are adjusting upward.

More than one million foreclosure filings were reported in the United States this year.  That represents 42% more than the foreclosures reported in 2005.  The increasing number of foreclosures creates an opportunity for Real Estate Investors but have a different affect on the current market trends.

In Atlantic County, New Jersey, most homes sold are ones that are priced right.  This means the price that the buyer is willing to pay for the property today.  For many homeowners this is not easy to do.  It actually means the under priced homes are the ones selling in a reasonable amount of time.

The purchases represent those who plan to occupy the home.  The market is much slower and the appreciation in homes will continue to be slower for some time.  The day of swift appreciation allowing investors to sell the home quickly for a substantial increase are over for the moment.

Purchasing a pre-foreclosure property might be the right action for you to take if you have been considering buying a home and felt you could not afford to buy one.  You can get a better value if you do your due diligence.  Research the market before you begin.

Many investors, including myself, will offer a pre-foreclosure property at below market prices.  This allows the investor to make money but still move property more quickly.  If you are able to find one of these properties, you can get a good deal.

As usual, do your due diligence.  Good luck!

If you are in this position, you have certainly experienced financial difficulties.  You may or may not be behind in your mortgage payments.  When you realize you are having problems, you should make a list of your creditors and begin contacting them.

The worst thing you can do is to ignore the situation and assume it will take care of itself.  Lenders and creditors do not want to take legal action.  They are willing to work with sincere people who are experiencing temporary problems.

So, you should:

1. Write a complete list of your creditors
2. Find documentation of your loans to obtain the following information - 
1. Your loan number
2. Payment amount
3. Due date
3. Calculate your current living expenses.
4. Determine if you need to decrease expenses and/or payments of liabilities and for who long.
5. Call your lenders

While this sounds simple in theory, you may experience problems reaching persons in authority who can help you.  You need to find the right department and person who are handling your account. 

Create a spread sheet.  Track all calls you make and the conversations you have with lenders.  You should know the name of the person you are talking to and what their position is in the company. You need to follow up yourself.

Ask your mortgage lender for help and information.  Perhaps they will allow you to refinance your mortgage, take out an equity loan, or pursue forbearance. Once you make it clear that you are willing to work with them, you will stand a better chance of avoiding foreclosure.

Real Estate Foreclosures – What is Forbearance?

By Nancy Woodward

Forbearance is a process taken by a lender which allows the borrower to temporarily stop or decrease the amount of their payments for a period of time. The lender may allow the borrower forbearance of principal, interest or actually both. 

Forbearances have a limited time span.  Twelve months is the maximum amount of time allowed. This process allows the borrower time to get on his feet again. 

Lenders are not required to offer forbearance to borrowers.  They may choose to do so for a good client experiencing temporary problems.  It generally is considered for those who are willing to make their payments and are suffering a temporary problem that would be helped out with this process. 

If your problems have had an adverse effect on your credit, pursuing forbearance will not change anything related to this.  I would suggest you contact your lender and creditors before your problem gets out of hand.  Many lenders and creditors will work with you once they know how sincere you are.

Foreclosure is now a sad reality of life for many homeowners

By Nancy Woodward

Foreclosures in general have been on the rise for over a year.  At this time, sub prime borrowers are scrambling to refinance their loans.  They payments have now skyrocketed and homeowners realize they must find a way to reduce the loan payment now.  Tighter lending standards put into place by Federal Regulators in recent months are making it more difficult to refinance subprime loans. 

According to Brett Warren, president of Buyer’s Home Mortgage Inc., as recently as six months ago, most requests to refinance were from homeowners wanting to reduce their interest rates or take equity from their property.  Today, most requests are coming from subprime borrowers trying to reduce payments.

Many of these homeowners obtained loans with teaser rates and high fees.  Some now find themselves in a position where the equity in their home is negative.  As the number of resetting loans increase, so will the foreclosure rate. 

Philadelphia and New Jersey have a majority of mortgages in the prime rate area.  These seem to have a lower foreclosure rate according to Mortgage Bankers Association.  The highest increases in foreclosures last month were in California and Florida, followed by Ohio and Michigan.  The firing of employees in the automotive industry had a direct impact on this.

While this number will continue to increase, homeowners should seek help before they reach the foreclosure point.  There are ways to solve the problem.

Sub-prime Loans and Foreclosures in New Jersey

By Nancy Woodward

The mortgage market has seen a large increase in the sub-prime market arena.  This type of loan is fairly new.  These loans provide the opportunity for those with low credit scores to become homeowners. Unfortunately this type of loan has also created an opportunity for purchasers to obtain loans without truly understanding the ramifications and, in some cases, the cost they will be paying in the future. 

 Lending practices in the sub-prime market contributed to the increasing number of foreclosures that is shaking the Real Estate Market in New Jersey.  A new version of loan – the exploding ARM – is responsible for the increase.

These loans are hybrids of the ARMs we are familiar with.  They start with a low rate, and run for thirty years.  The rate resets after two or three years.  The new rate which is significantly higher creates a much higher mortgage payment.  In 2005, initial rates were set at seven percent increasing two ten percent after two years.  This rate can increase in six months to a year from now. 

In 2006 Fitch Ratings reported that 2/28 sub-prime ARMs carried an average ‘payment shock of twenty-nine percent over the initial rate even if the short-term interest rate remained the same.    For those given loans with very low rates based on the income they reported when obtaining the initial loan, this increased payment can be a disaster.

The current state of the housing market is softening.  Interest rates are increasing and home sales prices are declining.  This situation increases the possibility of financial problems.  As the sub-prime market loan’s reset at higher rates, this will result in more delinquencies.  It is possible for homeowners to find they cannot refinance their loan. The declining prices result in declining equity and perhaps larger loans than the remaining equity in the property.

As usual, I suggest you do your due diligence before signing on the dotted line.

Sub-prime Loans and Foreclosures in New Jersey