1 out of every 6 US homeowners is underwater. There’s probably no better indicator than being underwater of a mortgagor who is likely to end up in foreclosure. That’s very worrisome. And it means that foreclosure prevention plans that don’t address the problem of underwater homeowners aren’t going to help a lot.
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2 responses to “Underwater Homeowners”
Unfortunately, this is starting to affect those of us who considered ourselves prudent with our finances. My husband and I bought a modest starter home, in 2005, sadly. We now owe more than it’s worth, but we still make payments on all our bills, have 401Ks, and the only credit card debt we have will be paid off by the end of the year. If my husband loses his job, we’d face default, and it’s not because we’re low-income, high-risk debtors…but then again, I suppose, now we are…
With the housing market in total disarray, the lenders loosing money, and the economy on the verge of crumbling, the banks would rather modify your loan terms then take on another Foreclosure. Equity in homes has shrunk and in many area’s become negative, leaving homeowners upside down on their loans. Banks would rather reduce the payments and/or balance than foreclose on another property. The fact that banks are willing to negotiate lower payments brings about this part of the real estate cycle know as “The Modification Period”. Although extremely rare, during these periods, both the bank and the borrowers are deemed powerless. Both face tough times ahead and only as a team can the banks and borrowers pull out of this deep tailspin. They must work together to keep Americans in their homes but also to begin to turn this recession around. Loan modification often equates to immediate financial losses for our banking institutions, but the long term gain will well outweigh the short term loss. By slowing future foreclosures through loan modifications, the banks will begin to firm up soft markets. This in turn will offer relief to the homeowner’s upside down on their loans.
Using the threat of foreclosure to your advantage to get your loan modified is a tool all homeowners can use to assist in their negotiations. This is information they would rather you not know. That’s why this book can make all the difference between you achieving success or not: knowledge is power!! The government is putting a lot of pressure on these banks to step up and begin modifying its customers that might not otherwise be able to refinance. With so many others attempting the same Modification, knowing what the banks are looking for will set you ahead of the pack. There is a lot involved in the process, so be prepared to get organized and learn a lot about your current financial condition. You may not like what you see, but its all part of putting the right offer on the table with your lender, as well as showing you how to get back on track so this never happens again!!!
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