As we have have been hearing in the news lately, Utah has been experiencing a higher than normal percentage of foreclosures. There have been a number of factors that have contributed to this:
· Increased leniency over the past 5 years in the subprime mortgage market. This resulted in mortgages being issued to clients who did not have the financial means to repay the mortgage. These homeowners have a variety of resolutions that are discussed below. Each situation will differ, thus the solution will differ from one case to another.
· In some areas there has been a rapid decrease in home values over the last few years. There are a fair number of homeowners that purchased a home in the last few years and are now in a situation that requires them to sell their home. Because of the rapid decrease in home values these homeowners are in a situation where they owe more on their home than they can sell it for in the current market. These homeowners are candidates for a short sale agreement.
· Land prices became over-inflated in the last few years. Many homeowners who purchased homes in new developments now owe more on their home than the current market will support. This is primarily due to the fact that they purchased their land at the height of the market and the current developer is now selling land in the same area for substantially less than what the homeowner had originally paid. Thus, devaluing the property and causing the homeowner to owe more on the home than could be recovered by selling in the current market. These homeowners are also candidates for a short sale agreement.
· Some lenders issued second mortgages on homes that have experienced a rapid decrease in value over the past few years. These second mortgages leave the homeowner in a situation where they owe more on their home than they can sell it for in the current market. These homeowners are also candidates for a short sale agreement.
· In some cases, lenders issued second mortgages for more than the value of the home that secured the loan. These lenders were assuming that the market would keep appreciating and secure the second mortgage as the home continued appreciating. Many homeowners with a second mortgage such as this are unable to sell their home for what they owe. This is another good example of homeowners who may be candidates for a short sale agreement.
These are some of the major issues that have lead to the recent increase in foreclosures. There are undoubtedly many more reasons for the increase in foreclosure rates. However, these are the situations I seem to be encountering most frequently on a day to day basis.
Below you will find some solutions available to distressed homeowners:
· Forbearance Agreement-This is when the lender determines that the deficiency on the mortgage was a influenced by a temporary situation which caused the borrower to become default on his/her mortgage. The lender agrees to “hold off” on foreclosure to allow you the borrower to remedy the situation and repay the debt.
· Loan Modification-In some cases a lender will re-negociate the terms of the borrowers loan. This enables the borrower to stay in their home by providing the homeowner more beneficial financing terms, thereby lowering the mortgage payment.
· Repayment plan- When a borrower has become default on their mortgage the lender will sometimes agree to allow the borrower to pay back the default amount through some sort of lender negociated payment plan. The borrower is still responsible to make payments every month in addition to the required payment of the deficient amount.
· Deed in lieu of foreclosure- This is used when a foreclosure is deemed inevitable and the borrower signs the deed of the home over to the lender. This avoids the foreclosure process and the headaches that can accompany it.
· Short Sale Agreement- A short sale is an agreement with a lender allowing for the sale of a property to a third party for less than the amount owed on the mortgage. Under this agreement, the lender accepts less than the amount owed and releases the borrower from the mortgage, thereby preventing foreclosure.
I am dedicated to assisting distressed Utah homeowners by working with homeowners and lenders to determine the most appropriate solution for each of my client’s unique situations. My primary goal is to assist my clients in understanding the foreclosure and pre-foreclosure processes. After which, we can determine the most appropriate resolution and discuss how each process may affect my clients financial well being and future credit worthiness.
If you have any additional questions or if you would like me to prepare your complimentary home and mortgage terms analysis please contact me. To contact me just click here.
FHA TO PROVIDE ADDITIONAL MORTGAGE ASSISTANCE TO STRUGGLING HOMEOWNERS. More Info.