If you answered yes to any of the following situations, then there is a QUICK AND EFFECTIVE SOLUTION! But first, let’s take a look at the devastating effects and consequences of a foreclosure that most people are unaware of:
* If you go to apply for a job and you have had a foreclosure, and that is a question that is asked of you, employers say that is potentially one of the top reasons they rule out a candidate for employment! Also, there are some employers who do periodic checks on people’s credit, and if they’ve had a foreclosure, some employers will immediately terminate you!
* In a foreclosure, the homeowner’s credit score will drop 200- 300 points!
* If you’re going through foreclosure, it might be five to seven years before you will be able to buy a house. You’re really risking a lot!
THE SOLUTION: A SHORT SALE!
What is a short sale? In a short sale, the homeowner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds to the lender usually in full satisfaction of the debt.
In this housing crisis, more and more homeowners are faced with the possibility of foreclosure. Yet so many are still embarrassed to the point they will not accept help when offered. Many are quick to say they are taking care of the problem. When in reality, they are falling further and further behind. No one wants to lose their home. But ignoring the situation will not ensure you keep your home. Sometimes selling your home is the only option. Many properties are worth less than the mortgage owned on it. In this case you have to sell as a Short Sale. Some homeowners think that a Short Sale is not a good choice for them because they will have to pay taxes on the difference, or the bank will come after them for the difference. This is a possibility depending on your situation, but in most cases you will be exempt on both counts.
But if you do nothing and your house goes into foreclosure, guess what? More than likely, the bank will file a Deficiency Judgment against you. You will have to pay the difference between what you owed the bank, and what they were able to sell the house for at Auction. Chances are that difference will be much higher than the difference if you were to do a Short Sale.
THE TRUTH ABOUT LOAN MODIFICATIONS:
The crux of the problem lies in the fact that so many homeowners are now underwater, meaning they owe substantially more on their mortgage than what their home is now worth. The new Loan Modification plan creates two major hurdles that can't be overcome.
1. The Fannie-Freddie refinance portion of the plan only allows people to refinance if they owe less than 105% of the loan-to-value. According to research firm First American CoreLogic 19.8% of all U.S. homes with mortgages are underwater with another 10.5 million on the edge of negative equity. If home prices fall even another 5% (certainly not unreasonable in today’s market) then 1 in 4 homeowners or 25% of the market would be priced out of the refinance portion of the Loan Modification plan.
2. Homeowners who are upside down and continue to see unemployment rise (maybe they're the next victim) have no incentive to stay in the home and continue to pay on something that continues to lose value, they'll just walk away adding to the growing number of vacant homes.
The second part of the Loan Modification plan, is also very ineffective. This portion of the plan attempts to get a homeowners payment equal to no more than 31% of income. In order to achieve this goal, the plan must follow 3 successive steps.
First the interest rate is dropped to 2% (but not lower), if that doesn't' work the term of the mortgage is increased to 40 years rather than 30. If that doesn't work then they forbear principal which means a homeowner no longer pays interest on a portion of the principal, but they still owe it and will pay it in the form of a balloon payment when the home is sold or refinanced.Who wants that ball and chain around their neck?
Statistics from 2008 already show how ineffective loan modifications have been with nearly 60% are falling behind again after they've been modified. The Loan Modification plan only allows for one modification.
I've said it before, and I'll keep pounding the table, the solution to the housing crisis is to reduce loan balances. However, it should not come in a socialized form from tax-payer money. It needs to occur on the free market between the various private parties that agree to the new terms.
This is exactly what a short sale does. The bank takes less than is owed on the principal balance bringing the amount owed substantially below the value of the home. The homeowner saves his credit and gets out from underneath a huge debt burden and has a fresh start.
COMMERCIAL FORECLOSURES ARE THE NEXT WAVE OF DEFAULT!
The foreclosure crisis is born out of the downward-trend of the US economy. The foreclosure tornado first hit the residential property sector; made millions of American families forfeit their homes to the foreclosure process and walk-off from their long-lived residences.
The chain reactions caused by the down-turn of economy - foreclosure crisis; credit crunch in the banking sector; erosion of confidence in inter-banking activities; withdrawal of foreign investments; bankruptcies of renowned financial institutions including Lehman Brothers; increased unemployment rate; depletion in purchasing power of the people, and the story continues endlessly.
Eventually commercial property sector has been hit inevitably, due to above reasons. Dearth in occupancy of hotel rooms; vacancies of office complexes; lack of customers in shopping malls; thinning out of crowds in entertainment avenues and enjoyable resorts and clubs - all point towards one thing - loss of revenue and therefore inability to meet mortgage commitments ending in default.
Experts in the field predict that commercial property sector is in for the next big default wave. Of all the types of commercial property foreclosures, the front runner looks like the retail sector - connected directly with buying consumers. According to statistics, retail property prices declined 19.3 percent in the first quarter of 2010, in the top-ten Metropolitan Statistical Areas of Philadelphia; Los Angeles; New York; Washington D.C.; Detroit; Houston; Atlanta; Dallas and Boston.
The dip is coming mainly from retail prices. Here again, the chain reactions of not-so-healthy economy play their roles. Consumer prices are lowered by the Retail Industry, so as to meet the demands and attract the varied interests of the unemployed poor.
The large retail chains are put to pressure in offsetting the loss, by cutting costs, with prices dropping all-around. Cutting costs reflect in postponing or totally abandoning expansion. By curtailing expansion, the whole commercial industry suffocates and the commercial real estate sector ultimately suffers.
With the financial and real estate market in trouble in much of the United States, it has created the opportunity to explore nontraditional methods of selling and buying residential and commercial properties and great opportunities in purchasing property for fast profit or long term cash flow. At EKR Investments, we can assist property owners in selling or purchasing properties and provide the knowledge to help them make the best decision with their real estate transactions. For a brief presentation, click HERE!
Whether you are looking to buy a property or sell a property,we can assist you through the process!