There are some great Realtors here in Southern Oregon, dedicated to their profession and their clients. One of them, our 2010 Rogue Valley Association of Realtors President, Krista Bolf, knows where I live and lets me know what sales are happening in the neighborhoods where we own property.  Yesterday, Krista Bolf of Coldwell Banker ProWest Ashland spotted a new listing on our street. This isn’t the first “don’t shoot the messenger” message we’ve received from Krista Bolf, and with the way the local real estate market has been very likely won’t be the last.

There are a lot of ways to deal with financial distress. I’ve listed several of those that pertain to the housing/real estate/ mortgage distress below. Then, there are those that just irk me, like the strategic foreclosure or the high cost loan modification companies.

As of October, there was another Trustee Sale creating a bank owned foreclosure home on our street. There are about to be two bank owned foreclosure homes on the street where we have a rental, too. A sign of the times, hopefully a tide that will be stemmed soon with all of the housing stimulus being poured out. If I’m going to have to foot the bill for these programs for the rest of my life and probably those of my children, I’d like to see this blood-letting of our assets end soon.

The most recent bank owned foreclosure home on our street is a home the owners had for almost 20 years. At some point, maybe from the beginning, this was an investment property for the owners. They wouldn’t have been eligible for the Home Affordable Modification Program through Bank of America/Countrywide/Fannie Mae/Freddie Mac because they won’t modify notes on this program for Investment Property. They paid $85,000 for the home that went back to the bank. But, it didn’t go back to the bank to be foreclosed on for that amount or less. It went back for almost $230,000 owed to Bank of America/Countrywide. So, that tells me the owner used this home as an A.T.M., borrowing against it and borrowing against it until the rents couldn’t sustain the Bank of America/Countrywide mortgage payments, at which time they defaulted on their Bank of America/Countrywide mortgage creating a new foreclosure in our neighborhood. I don’t know about you, but I certainly don’t appreciate the ramifications of what may have been this homeowner’s decisions! No, I don’t know first hand what circumstances led to the eventual loss of our neighbor’s house through foreclosure or their reasons for refinancing; maybe there were health issues that led to outrageous medical bills, or a job/income loss that put them in survival mode - I’d rather think this than that they sucked all the equity dry and walked leaving the rest of us to pay the price. Yes, I am making some assumptions based on case histories I’ve come across repeatedly since the real estate/mortgage industry began the tumble from unsustainable peaks.

So now, Bank of America/Countrywide/Fannie Mae/Freddie Mac has listed the home for sale at a “bargain rate”, something that is done prevalently by banks when selling their foreclosure inventory. Throw the home on the market at a low price, sell quickly, drag the values in the neighborhood down for the rest of us – over and over again if there are multiple bank owned foreclosure homes in the neighborhood, which we are finding happens frequently. This home in our neighborhood is listed for sale for a little over $150,000. We paid $205,000 for our house in 2004. Yes, this REO home is less desirable in condition, lot size and location, but we are similar in square footage and age. We don’t have a lot of turnover of homes in our neighborhood, so this puppy will be setting the stage on values for a while.

So, thanks Neighbor for the choices you made leading to your home going back to the bank (or, forgive me for making false assumptions), and thanks Bank of America/Countrywide/Fannie Mae/Freddie Mac for putting this foreclosure home on the market at this below market rate – NOT! These banks are reminding me of the Robin Hood principle - stealing from the “rich” to give to the “poor”, and I’m getting a little tired of being stolen from! It’s no wonder we’re seeing the level of strategic defaults we’re seeing now. Is this the objective/goal you had in mind Bank of America/Countrywide/Fannie Mae/Freddie Mac? You contributed to it!!!!

There ARE other ways to handle distressful financial circumstances in many cases. Exploring all alternatives, like Home Affordable Refinance or Home Affordable Modification Programs which will now let you refinance up to 125% of your primary home’s value to help you lower your payments and keep you in your home using any lender that offers the programs, not just the one you are already with who you may or may not want to stick with. If you’ve tried one or both of those two Home Affordable options, but you don’t qualify, you may want to get legal/tax guidance for the other alternatives. If you haven’t tried the Home Affordable programs because of the barrage of negative media attention on unsuccessful applicants, TURN YOUR TV/RADIO/ MONITOR off and give it a try! If you’ve tried the Home Affordable route, but haven’t been able to get a credible response/action from your lender, get to a HUD approved housing counselor in your area to help you work through the process – THEY will get the attention of your mortgage holder. Exhaust this alternative, because the next options – short sale/ deed in lieu of foreclosure/ foreclosure / bankruptcy – will have longer term, costlier affects on your credit and your pocketbook. If a Home Ownership Preservation Event (H.O.P.E.) is being held in your area, and you need help on your primary residence, GO TO IT! Make sure you get the proper professional guidance from a knowledgeable reputable source, as bad advice and scams are rampant out there. Chances are anyone who wants to charge you a significant upfront fee for loan modification is operating illegally – they are in California and Oregon, anyway.

See you out there!