There seems to be a definite turn in the situation between delinquent borrowers and the banks. The banks have finally it seems, "given up the ghost", as we say in the deep south. Between a long housing downturn, record foreclosure rates and unemployment, my recent transactions are all indicating that the situation is really beginning to see some movement in a direction that is positive for distressed homeowners.
I have had a 100% success rate for the past 6 months, stopping pending foreclosures, thereby allowing adequate time for the homeowners to move, and do a short sale, rather than face foreclosure and possible eviction.
In my most recent case, a borrower who was 10 months delinquent, and had just recently found a new job after several months of unemployment, was granted a reduction in interest rate from 8% to 5.5%. This resulted in a monthly payment reduction from $750 to $603, which will really help this borrower, who has suffered a significant reduction in income over the past two years.
In addition, they added the unpaid payments to the back of the loan, and essentially started the loan over with payment 1, and to boot, gave the borrower two more months to make the first payment! But this was once an unheard of occurrence. I've been in real estate for over 15 years, and this is the first time I have ever seen such an offer from a bank. But we did ask for one, and used the argument that this homeower was never late with a payment until the housing crash reduced his income. Plus the borrower had a strong desire to stay in their home of 10 years, and did not want to walk away. You can fight to save a clients home if you really want to. There is not much money in it when you actually avoid a sale, but lately it has been more of a humanitarian effort, to help homeowners with extreme situations.
Another client, also a good friend, had a 32 year old son who was dying, and leaving behind two children, ages 6 and 10. The clients were looking at losing a son, taking in two grandchildren and losing their home of 10 years after the grandfather had been laid off from his job. The situation was so dire, that we quickly submitted the paperwork to Bank of America, and called them pleading on behalf of this family. After weeks of "no", B of A finally relented just 5 days prior to the foreclosure auction and suspended the foreclosure. The son died 4 days later, and was buried on what would have been auction day. That foreclosure is still being evaluated, but I fully expect to get some kind of modification for this family, as the property is only worth about 40% of the loan payoff. It just doesn't make sense to foreclose at this point. Hopefully this family will be offered a well-deserved opportunity at a second chance.
The government is also exerting pressure on banks and lenders to be more lenient with owner occupants who wish to keep their homes. Borrowers who are interested in keeping their homes should do all they can to work with their lender. It is definitely possible to get the banks to agree to terms right now, that were once considered nearly impossible to achieve.
As agents, there is not a lot of money to be made from saving a home from a foreclosure, but the human value is hard to put a price on. Maybe we agents can help undo some of the damage by helping save a few friends or family from foreclosure.
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