The Art of Avoiding Foreclosures
July 29th, 2008
Till the other day few had heard about foreclosures – it was confined within the boundaries of mortgages and debts. But the ongoing crisis has elevated it to such a status that to survive, one has to learn the art of avoiding foreclosures. Many know that foreclosures are going up but many do not know that foreclosures can be avoided – as many as half of them can be done away with.
Since the last ten years Freddie Mac has been behind the financing of about 34 million houses. In 2007 nearly 50,000 workouts of loans were made successfully. This calculates to approximately 1,000 workouts per week. Workouts means prevention of foreclosures and allowing families to continue to stay in the houses that are their homes.
Lenders are reaching out far and wide to find ways and means to see that delinquent borrowers are helped. The equation is very simple – those borrowers who contact their lenders early manage a solution to avoid foreclosure while those who do not and remain silent end up in foreclosure.
Lenders are deluged with requests for loan modifications. To make the process simple the borrowers should make it clear from the very beginning whether they are ‘in trouble’, or ‘behind’ or in ‘default’. In the application one should clarify whether the need is for a ‘workout’ or a ‘solution’.
The reality however is that will not be able to avoid foreclosure. They will have to lose their houses. But a big chunk of it may definitely be avoided. Statistics speak for it.
Foreclosures spell a loss for all – the lender, borrowers, government at all levels and the community. This combined negative force impacts on the general economy. To take the example of the housing industry alone – each foreclosure calculates to an average loss of about $50,000. That is why mortgage houses like Freddie and Fannie as well as banks are eager to avoid foreclosure – as much eager as the borrowers and the community.
When the value of the house becomes less than the loan amount many just walk away. The house is not worth fighting for. But the foreclosure remains on their credit history and that makes it difficult for them to get further loans for immediate necessities of daily life like car and student loans.
Under such circumstances the question arises as to why many borrowers shy away from contacting lenders. The answer is simple – wrong impressions and unreasonable fear.
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July 29th, 2008 at 9:11 pm
Thank you for the article. One thing I learned is that Banks don’t really want your property…they will negotiate if they know that you know the rules. I read this eBook called “Defeat Foreclosure” by William Dorich and Merle Horwitz. It is an incredible resource. If interested, here is the website: http://DefeatForeclosure.org
These are scary times and knowledge is power.