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FOR MANY DELINQUENT HOMEOWNERS, Lender Workout Arrangements Hard to Come By!

By
Real Estate Agent with Dean's Team - Keller Williams Realty Partners Chicago IL

Happy Thursday, Gang!

Did you see the Season Finale of Smallville tonight?  (Neither did I, but I bet your teenage kids did!)

Remember last fall, 2007?  The sub-prime crisis still boiling, adjustable loan rates facing reset, and many homeowners staring at loan delinquency, or, worse yet, foreclosure?  Frustration was rampant among many who had a home mortgage loan!

A coalition of large, national lenders, with support from President Bush and his administration, established the "Hope Now Alliance."  It was geared to give distressed home borrowers more time to stave off foreclosure, and to create a more open door policy from lenders to offer forbearance and repayment plans, or mortgage loan restructuring, to those facing financial difficulty and in possible danger of losing their homes.

Higher loan payments with adjustable rate resets, it was feared, would make many middle-income homeowners unable to keep up with their loan payments. 

Selling a home to get out from under the mortgage debt became less workable.  In many areas of the country, including certain Chicago Neighborhoods and suburbs,home appreciation rates plummeted, as did the average homeowner's home equity, as many took out 95%, 100% or even 103% loans when they purchased their homes.

Today, some six months after many of the "Hope Now Alliance"  actions took effect, 70% of borrowers who are at least two months behind in their mortgage payments are having difficulty negotiating work-out payment arrangements with their mortgage lenders, despite their best efforts trying to contact their lending institutions.  Many of these homeowners now face foreclosure action. (Data from the State Foreclosure Working Group, out of New York).

There is a bit of good news, however.  Some mortgage servicers seem willing to re-negotiate the original loan terms, rather than creating the shorter-term solution of forbearance and repayment.  Better terms - perhaps a reduced rate, or an extended payment time-frame - creates a long-term solution, permanently more affordable to the delinquent homeowner.

See our post today at BlogChicagoHomes.comtoday for more information, as well as a link to J.W. Elphinstone's story in last Sunday's Chicago Tribune.

DEAN & DEAN'S TEAM CHICAGO

Comments(1)

Steve Shatsky
Dallas, TX

Hi Dean... I can't really address statistics but I can tell you that the lenders that I am dealing with on short sales seem to be making it easier to get these transactions processed and (maybe it's my perception) seem to be giving the homeowners less static about qualifying for a short sale.

Oh, and for whatever it is worth, I'm not certain, but to the best of my knowledge, George Bush has not intervened on any of my clients behalf! LOL.

May 01, 2008 03:21 PM