Tracking real
estate companies and economists have been compiling information on foreclosures
for years. Many analysts have begun to see dangerous trends developing since
2003. Usually delinquent homeowners feel pressured to start the foreclosure
process, which actually begins when the first payment is late.
When a payment is
missed, a number of triggers are activated and begin to prepare the foreclosure
transfer credit procedure. Usually foreclosure sales are completed within 6-9
months. The lender then becomes the owner of the property.
Investors are the
only real estate category who like and
are interested in foreclosures. Banks lose money, homeowners lose their home
and suffer embarrassment and communities brace for the worst. A 2005 report
entitled "Municipal Cost of Foreclosures" reported that each heap
foreclosure costs the municipality as much as $ 34,000. These costs include
court costs, inspections, monitoring police and fire unpaid water, garbage and
sewer fees.
On the other hand,
banks lose, usually a minimum of $ 0.20 per dollar. The average loss is
actually much more, ranging up to $ 0.40 per dollar. This ratio means a fifth
up to almost a half of their income. Before the recession, lenders have
reported an average loss of $ 50,000 per foreclosure. Since the recession, the
losses are more severe.
Delinquent
homeowners are often surprised by the willingness of creditors to discuss
changes and even tolerance. What many homeowners do not understand is that the
company is not communicating with the owner of the mortgage. Instead, the voice
on the phone is a service company.
Delinquent
homeowners should aggressively pursue the lender. The only way to change is to
arrange work directly with the mortgage holder, and not to a service company
contracted by the lender.
Meanwhile,
mortgage holders began to build relationships with investors. Investors who
have relationships with mortgage holders can often put together very
advantageous package deals. As owner, the investors challenge is to locate the
right lender. Make connections to creditors to submit their investment plan and
qualifications will be welcomed.
Dean Graziosi
considers that, In general, the consensus is improving, but once homeowners are
in the foreclosure cycle, they are not able to derail the process. Lowering
foreclosure rates relate to the creditor's efforts to implement change programs.
Generally, lenders initiated 1.7 times as many mortgage modifications as new
foreclosures during a quarter .The number of aggressive actions to prevent
avoidable foreclosures were up 5 percent from the fourth quarter of 2009 and
more of 61 percent year-over-year comparisons.
Analysis
conducted and collected by Dean Graziosi show that there were more than 630,000
retention actions in the first quarter of 2012, and more than 100,000 modifications
and 190,000 trial plans through Home Affordable Program, and almost as much as
these through non-governmental programs.
Unfortunately,
even the default rates on new modification programs remain elevated. OCC and
OTS reports state that over 57% of mortgages that have been modified were at
least 60 days late after a starting period of only 12 months.
Fortunately, a
new trend offers exciting alternatives for today’s real estate investors, and its
Short Sales. This alternative continues to gain momentum, with an increase of
9.2% in the first quarter.
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