Is anyone buying houses? Sure there are. But the numbers have dropped significantly and experts predict that the housing market will worsen before it improves. This leaves distressed homeowners who need to sell their home quickly in serious trouble.
Buying houses today is completely different than it was just a few months ago. Declining property values have left many homeowners owing more than their home is worth. Borrowers with sub-prime loans are unable to pay their mortgage and many face foreclosure.
With the current credit crunch, buyers are unable to obtain financing. Homeowners cannot sell their home. Real estate agents are not paid. It is a vicious cycle that has far-reaching effects. Those who are buying houses are paying with cash or participating in alternatives, such as seller-return mortgages and leases with purchase option.
Homeowners facing foreclosure can ask their lender to enter into a short sale contract. Although a short sale is quite complicated, it comes down to the lender agreeing to accept less than is owed on the loan. Why would a bank do this? Because it can save you money in the long run.
A report published by Freddie Mac indicated that the average cost of a foreclosure is around $ 60,000. A recent study shows that foreclosures take approximately 18 months to complete. Also, when banks are delinquent, the Federal Reserve limits the amount of money they can borrow. If they can’t borrow money, they can’t loan money. As you can see, foreclosures have a severe and negative impact on banks’ balance sheets.
Although many banks received ransom money, this law has not yet changed its course of action. Homeowners still face foreclosure and file bankruptcy to buy a little more time. The problem with bankruptcy is that it is usually a temporary solution. Many people don’t realize that filing bankruptcy to stop foreclosure forces them to pay off mortgage arrears and outstanding debts. These debts are spread over a period of time; generally three to five years.
Chapter 13 payments are in addition to your regular monthly expenses. If the debtor is struggling to pay his mortgage payment, how the heck is he going to pay extra money? In many cases, people fail in bankruptcy within the first year.
Once a debtor fails to make payment to the Bankruptcy Trustee, creditors can petition the court to request dismissal. When bankruptcy is dismissed, the debtor loses all court protection and creditors can go ahead with collection actions.
If the debtor was on the brink of foreclosure when they filed for Chapter 13 bankruptcy protection, the foreclosure actions can start where they left off. For example, if the debtor was five days away from the eviction, that is where the lender can start if the debtor defaults on his payments.
Homeowners who fall behind on their mortgage should be proactive immediately. Experts say that more than 50 percent of foreclosures happen because the owner did not act. Rather than living in denial, being proactive up front puts the owner in the driver’s seat rather than under the wheels.
Sellers who need to sell their home quickly should locate private investors who buy homes in the area. There are many investors waiting for a good deal with cash on hand. Professional investors will help explore all available options and develop mutual benefit for all parties involved.
As with any real estate transaction, it is important to perform due diligence to ensure that you are working with a credible person or entity.
