In my experience working with buyers and buyer agents they tend to not understand the process of buying foreclosures and get stubborn and in the end they loose. In the end its all about your attitude and what you bring to the table when negotiating  with Asset Managers and foreclosure properties. 

If you get your offer in first, continue to negotiate, and keep your emotions in balance then you will be successful. If not then ” If you Dont Succeed Try and Try Again”

Its kind of scary the banks are actually thinking logically here with a program that might actually help the housing market. As a realtor involved in the distressed market I have been consistent with my feelings that the only way to solve the houseing crisis is too look at the whole picture.

I support this concept of Principal reduction as I feel it is a WIN WIN WIN situation for all homeowners whether you are in distress or not.  If principal reduction is done properly then the housing crisis will begin to correct itself.

First Principal reductions should not be automatic. It should be based on current market values. Anyone could be eligible to refinance their home at the current market value with one stipulation. The amount reduced is not forgiven but just a forebearance until the property is sold. So inother words homeowners will become equity partners with the bank on the forebearance amount of the new loan and will share in the future benefits when sold. This is a paper transaction so banks show no loss on their books and preserve their capital requirements, continue to get stream of payments on the new loan, and can start lending on new loans. Win for Banks.

For the homeowner it is also a win. Those who are struggling will now be able to afford a new mortgage since it is based on Principal reduction, lower interest rates, and longer terms thus keeping mortgage payments affordable. This is what is needed to keep people in their homes. Win for Struggling homeowners.

Finally those homeowners not struggling will also benefit by this because as more homeowners struggling are able to refinance and keep their homes less homes will be foreclosed and home values will begin to stabalize. This is a Win for homeowners in general.

I wish Fannie Mae and Freddie Mac would embrace this Principal Reduction Plan and see it as a way to stabalize the housing market.

When your income falls short to cover your debts and expenses, it means bankruptcy and foreclosure are not far away and you should take immediate steps to get your finances back on track. However, by preparing an effective budget and working with your mortgage lender for a convenient and affordable repayment plan, you may be able to pay back your debts and can manage to stay in your home. Read on to know how debt consolidation can be a possible solution to your worries and foreclosure issues.

 Debt Consolidation

If you are a homeowner, who is struggling with unmanageable debt obligations, consolidation may be your greatest tool to keep bankruptcy and foreclosure at bay. By consolidating your existing debts and replacing them with a home equity loan, you can simplify your repayment procedure. You can use the equity in your home to pay down the high-interest debts at low second mortgage interest rates. This savings on interest often provides more breathing room in your monthly budget, allow you to pay down your debts and most importantly help you to stay current on your mortgage. However, stay alert and keep in mind that a default on a second mortgage loan can result in foreclosure, as your home serves as collateral for the second mortgage.

  Foreclosure Solutions

As soon as you realize that you can’t make your mortgage payments, contact your lenders and confide you current financial impediment in them. Mortgage lenders can certainly help you to pay back your missed payments or to modify your current mortgage terms. Lenders have several tools at their disposal to make your monthly payments more affordable. For expert guidance, you can seek help from the U.S. Department of Housing and Urban Development, or HUD, which offers free or low-cost mortgage counseling in every U.S. state. HUD-approved counselors can assist you to explore your viable debt relief options, as well as teach you to cut back unnecessary expenses. 

 Bankruptcy

If you have no other way but filing bankruptcy, it could also resolve your debt and foreclosure issues to some extent. Under the Chapter 13 bankruptcy, you can reorganize your debts and can repay them over the course of three to five years.  Once you file a petition for Chapter 13 bankruptcy, the bankruptcy court put a halt to foreclosure proceedings and allows you to stay in your home. However, if you can not catch up the past-due mortgage payments over the stipulated period of time, you may lose your home.

Warning

Last but not the least, if you are looking for a third party to negotiate your debts or mortgage, make sure they are reputable and reliable concerns and not shady companies, blowing their own trumpets. According to the Federal Trade Commission, the companies which claim to be nonprofit, yet charge steep up-front fees, and may even require you to stop making monthly payments on your loans and credit card accounts, should be strictly avoided. Make sure you check the reputation and reliability of the third-party debt negotiation companies with the Better Business Bureau, your state’s Attorney General and your local consumer protection agency, before making the final deal.

Regina King is a financial writer and currently associated with Oak View Law Group. She has been consistently providing people with unique advice on investment,budgeting and debt settlement since 2007. You can reach me at: regina.king85(at)gmail(dot)com.

NILES TOWNSHIP LECTURE SERIES PRESENTS:

” Foreclosures, Tax Sales, and Our Troubled Economy”

 I have been invited to be part of the panel this Thursday, October 21, 2010, 7:00 pm.

As part of the panel I prepared the following information to share with people who will be attending the lecture.

Real Estate Market in Niles Township – 12 months

The following data comes from the MLS. The author of this report makes no representation to the accuracy of the data provided by the MLS.

Real Estate Market in Niles Township – 24 months

The following data comes from the MLS. The author of this report makes no representation to the accuracy of the data provided by the MLS.

Summary and Conclusions:

Short Sales and Foreclosures continue to dominate the real estate market in Niles Township. During the past 12 months the total number of  sales is down compared to last year. This may be the result of several factors from loss of the  First Time Home Buyer Tax Credits, unemployment  in the area or the economy in general.

On a positive side the average sale price of homes is remaining stable. Huge price declines as a result of the number of foreclosures appears not to be affecting the Average Sale Price of Homes in the Township.

I  began my search at the  Cook County Sheriff Sale site. This site lists the time and location of all properties up for auction.

Today there are 106 Residential homes ( Single Family, Condominiums, and Townhomes)  up for Auction in Cook County.

While this may seem like a tricle it is not a complete halt. The Moratorium on Foreclosures includes the big banks (Chase, BOA, CitiMortgage, and Well Fargo)  not the smaller banks.

While some banks see  Red light when it comes to the Moratorium on Foreclosures other banks see Yellow and are proceeding with caution.

 It was reported that the financial markets will not recover for another 3 to 7 years.

As I see it Real Estate is the last to recover.  I predict it will take 7 to 10 years before Housing will recover.

Why would anyone want to hold onto real estate for that long and continue to take a loss each year?

The argument of “what is the right and ethical thing to do”  is no longer  a valid argument.

 I say the proper thing for people to do is ask themselves “should I continue to throw good money after bad money” or ” should I just pull out and take the loss now” ?

 These Economic decisions are beginning to out way ethical or moral decisions and this is why I say we are going to see more strategic defaults.

Many people bought second homes, investment properties and these so called investments are now liabilities instead of assets.

Soon people will learn that true wealth is not measured by what one owns rather how one lives and saves.

A home can be a necessity or an  asset when it is paid off in full or it can be a liability and long term debt.

“The Richest Man in Babylon” did not become the wealthest man in his day by spending more than he earned.

 But let me start this story from the beginning not the end.

 It was July of 2009 that I met with the seller. She purchased 3 condos with an Option Arm loan and paid $170,000 for each unit. The last unit sold in the building was $29,000 and this was a 2 bedroom/1 bath foreclosure sale just like my sellers unit.

I had the unit listed for sale at  $50,000 and the “Highest and Best” offer was $35,000 cash offer. The unit was listed for 340 days and was seen by 337,000 people on Realtor.com. This really was my best offer.

Chase Bank was the servicer of the Loan while BOA was the investor. In the end Chase bank would not submit our Cash offer to the Lender because they said it was too late and the file was too old.

Poor Excuse. In the end everyone looses.

• The Bank looses because any offer in the future will be less than what they received today.
• The Seller looses because they end up with a foreclosure on their record.
• The Buyer looses because he does not end up buying something they want.
• The Tenant looses because he has been paying rent and now is being forced to move even though he did nothing wrong.

 I am starting to think both Chase and BOA are doing nothing but C-T-A (Covering their Asses) when it comes to the current real estate market.

We need to change that soon.

The new buzz is there is a large shadow inventory of foreclosures yet to hit the housing market.

Keeping this inventory of homes off  market helps to stabalize prices of homes in the short term.

Imagine all these homes coming on the market at one time. There would not be enough buyers to absorb the number of homes for sale and this would  cause home prices to tumble.

But lets say we hold onto the homes and keep them off market. 

The result would be a steady flow of homes for sale and a more steady market and this would be good for the real estate market.

Why because the ratio between home buyers and homes for sale is an important number. This is called the Absorbtion Rate.

If there are more homes for sale than buyers this is called a buyers market. In a buyers market home prices will be lower.

If there are more buyers than homes this is called a sellers market. In a sellers market home prices will be higher.

So the logical thing for banks to do right now is to keep homes off the market until there are fewer homes  than buyers. By keeping homes off the market banks feel the homes will be worth more. 

 In math we were taught the theory of  ”two negatives equal a positive”. 

 I am not sure this is the right position for the bank because we are talking about money here and the value of money does not remain stable over time.

We can see that now in the stock market and in the Euro Zone, and  Greece. What was worth a dollar today may not be worth that in the future. So if the bank holds on to a bad asset too long it might be actually worth less. This is a gamble the banks are taking.

According to this new study, there were 9,302 completed foreclosure auctions in the first quarter in the region. This number was the largest number recorded in a quarter since 2006.

This number represents a 56% jump when compared to the first quarter in 2009.  Within a six county region, Kane County saw the largest  increase with a  122% year over year completed foreclosure auctions.

According to the Woodstock Institute the reason for the increase in Foreclosure auctions maybe the result of the statewide moratorium on foreclosures in support of the Home Affordable Modification Program (HAMP). In January the moratorium was lifted.

It  also appears from early data on HAMP that 50% of all loan modifications fail. As they fail lenders have no other recourse but to begin the foreclosure process.

Geoff Smith of the Woodstock Institute asks ” Did the moratorium help borrowers in the end?” “Are these foreclosure provention programs working” ” If HAMP was working you’d have less completed foreclosures.”