Silent Suffering in Luxury Markets - Foreclosure instead of Short Sale
An excellent article portraying the hardest thing homeowners have to endure before they seek help. .
Remove the emotional aspect of losing a home and realize that:
In a short sale you SELL your home. .in a foreclosure you LOSE IT!
I received two phone calls this week that made me realize there is silent suffering in the luxury markets.
These two phone calls were received from homeowners who live in Lafayette, California which is a high-end market with a current median price of $1,222,500 and many homes priced in excess of $3 million. Both of these homeowners purchased their homes with more than 20% down and verified their income and assets to obtain their mortgages.
Both were referred to me to discuss the Loan Modification and Short-Sale process because they are facing adjustments to their interest-only mortgages and they cannot afford the adjusted payment. Neither can refinance due to declines in market value. Both have had significant reductions in their incomes and both believe they are the only household in the entire community facing difficulties with their mortgage.
The truth is that there are currently 74 homes listed for sale in Lafayette of which only three are short-sales. In the same market, there are currently 36 Notice of Defaults (the first step in
the foreclosure process) and 26 Notice of Trustee Sales (setting the date the home will be foreclosed upon in a Trustee Sale). In short, there are 62 households in this community who are silently suffering and could lose their homes to foreclosure.
Why are they silently suffering? This is a community of highly educated, upwardly mobile and generally very successful people who have never had to reach out for help. They don't know who to call and they don't realize they may have a legitimate hardship for a loan modification or a short-sale. So they work harder and cut back on expenses in hopes that will solve the problem. For 62 households, that hasn't been enough.
Sadly, because they haven't reached out for professional advice, very few are prepared for the credit and income tax ramifications of a foreclosure.
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