The news the past year has been about the effects of the sub-prime melt down and the affects of the high number of individuals that are walking away from their home due to their inability to pay.
Let me first explain what events took place to get us where we are today. Historically, real estate values have usually always gone up in this country. Read any books on investments and almost all will say that real estate is a solid investment. Just about every part of the United States saw prices sky rocket in 2005 and I heard many real estate land developers, Realtors, home builders and mortgage lenders make statements that the boom was going to last 3, 5, 10, 15 and even 20 years.
We have all heard about the power of positive thinking. Many books have been written about the power of the mind. Well, this is exactly what happened across the country in 2005. The same people that said the market of 2005 was going to be sustained for years to come really believed this with their whole heart and soul. Millions of dollars were invested in real estate in 2005 based on those beliefs that had no concrete foundation to sustain it.
Many "Hybrid Mortgage Loans" were made by mortgage lenders that were "Stated Loans" where individuals simply "stated" what they were earning without being required to prove either employment or credit. These loans were usually zero down and many 80/20 loans were made.
The reason many mortgage lenders and mortgage investors felt good about these loans is that they felt they would be "covered by equities" which means that property values would increase rapidly, quickly raising the value of real estate and the borrower's equity. This works great until reality sets in and real estate values stop increasing and that is exactly what happened across the country. When real estate values stopped increasing and in many cases declining, many homeowners ended up owing more than their homes were worth.
Why did real estate values stop rising? It is a simple case of supply and demand. Too many developments took place and too many homes were built for the supply of buyers that were qualified to purchase homes. I saw this happen in farming. The price of wheat goes up and farmers double or triple the amount of acres in wheat and make a lot of money until the over production causes prices to fall.
Many of the borrowers that took out these hybrid or "adjustable rate mortgages" were told not to worry. They were told they could refinance their home before their rate would be re-adjusted as called for in the note they signed. As soon as the high inventory of unsold homes started to come on the market, mortgage lenders tightened their lending requirements and many homeowners were stuck with loans they could not refinance.
If you are a homeowner facing Idaho Foreclosure there are things you need to know. Read Idaho Foreclosure Facts you need to know. I recently heard about a couple back east that fought foreclosure and won. They were qualified to purchase a home valued at over $330,000 on a annual income of less that $30,000 per year. When they were unable to make their mortgage payments their mortgage lender started foreclosure and even embarrassed them publicly.
The homeowners sought assistant through a private company and an attorney. The attorney took the case and claimed "Predatory Lending" had taken place which means the lender knowingly made a loan to these borrowers where they misled them as to the type of loan they were executing and pressured them into signing mortgage documents. The judge in the case ruled in favor of these borrowers and stopped the mortgage companies foreclosure process.
If you think you may have been victimized you need to seek proper counsel to determine the type of loan you have and what events took place during the course of the loan qualifying process. Also, before you get to the point of foreclosure you need to seriously look at the option of a "Short Sale". A short sale is simply a type of sale where your lender has agreed to "discount" the amount of money owed to them so that you can discount the price of your home and sell it to a potential buyer before your home goes to foreclosure.
Why should you look at a short sale? A short sale will have a much less damaging affect on your credit when compared to a foreclosure. A short sale is comparable to a credit card company "charging off" a debt that is owned to them. You can usually explain a situation like this and get your credit repaired in a reasonable amount of time. A foreclosure however will have a much more serious affect on your credit that will haunt you for a minimum of 10 years.
If you don't understand what needs to happen to get the ball rolling to execute a short sale you can blow your opportunity of working a successful short sale out. I have been a licensed Idaho Realtor since 1980 and have helped hundreds of individuals with their short sales. I have a team of qualifed title companies closers and attorneys I have worked with for years that understand what mortgage lenders require in the short sale process.
Once you get past the short sale or foreclosure not all is lost. There are things you can do to repair your credit and increase your ability to borrow money again at competetive rates. Read the import credit repair facts that have been proven to repair credit in 6-8 months.
We will get past this housing crisis we are in just like we have made it through every other crises in this country. We still have the best financial system in the world. There are times when greed cause institutions and indivuduals to make bad decisions that have severe impacts but we always seem to be able to work through them and we will work throught this housing slump as well.
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Posted By: George Tallabas - Boise Idaho Real Estate Agent - Associate Broker
with RE/MAX Advantage, Canyon Counties #1 Brokerage in sales and listings
specializing in Boise Idaho Real Estate and Southwest Idaho Real Estate.
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