I was scanning the news today. According to sources from RealtyTrac July Foreclosures were 179,599 up 9% from June and 93% from 1 year ago. Now I know there where not as many foreclosures in prior years so these increases seem greater than they are at first glance. According to HUD this is more of a correction which started about 18 months ago and had this not have started until 2009 & 2010 we would have been in a crisis. Now you have all kinds of politicians calling for Time Outs and Forbearance agreements, $100 million to $1 billion dollar bailouts. The chair of Century 21 Thomas Kunz said "it was a great time to buy with 4 key elements in place: 1. Jobs (low unemployment), 2. Income, 3. Interest Rates and 4. Inventory. Naturally a Sales Agent is going to say its a great time to buy and naturally a politician (especially one seeking to overthrow the other party) is going to paint a bleak picture requiring more aid. I see the emphasis on finding a great bargains the bank bailouts but what about the ones losing their homes. In Stockton, CA 1 in 27 homeowners will lose their homes, 1 in 33 in Sacramento, and 1 in 31 in Las Vegas, NV. HUD also mentioned the new FHA Legislation when Congress meets again. While this may help first time home buyers how does it stop the bleeding?
The key falls back on the home owners and the lenders. The home owners need to call the lenders when they are in distress and ask for alternative methods to stay in their homes. Lets look at credit cards. I used to be a collector for a consumer finance company. I later spun it off into debt consolidation helping the credit challenged with mortgage financing. Credit cards are unsecured debts unlike real estate and auto loans. So while a creditor can threaten a poor credit rating or even small claims court on lower balances what is really gained by the creditor when Borrowers either do not care or are not able to pay? So the creditor attaches a lien on the debtor. So what? If the payment can't be made it does no good. The alternative for the debtor to wipe it all away was bankruptcy. The creditors needed to get creative and find a compromise to save their money. Where they were charging 9% to 25% interest on credit cards they would reduce it to 0% to 5%. The end result a lower payment. I also worked consumer credit on revolving and installment debts and frequently made these decisions to keep my consumer and protect my companies assets. I know first hand the banks are willing to work with those in distress. Now will the distressed homeowner take the first step and CALL or in most cases call the lender back before it gets worse?
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