What caused the foreclosure crisis ? What can Real Estate Agents do to help ? Team Synergy has some answers and solutions.
Bursting of the housing bubble that made home prices tumble, sub prime lenders that gave adjustable rates to borrowers who could not afford the payments and joblessness are all causes of the current foreclosure crisis in America.
What can we do to help home owners facing foreclosure? We cannot do as much as banks as they are the ones who can offer different options to homeowners. We should get training and education to handle short sales and foreclosures.
There are many resources out there for people who face foreclosure. Unfortunately many home owners do not know about these resources. The easiest way for them to be made aware of their options would be for lenders to mail them the information because they are the only ones who know that the homeowners have not paid their mortgage. So the answer to the foreclosure crisis may not be creating more programs but implementing the programs that are out there. There are several programs already ,so rather than creating more programs the administration should be stricter with lenders by requiring them to look for the best solution for the home owner.
Jennifer Fivelsdal says, " Homeowners facing foreclosure mentally shut down, so it is important for there to be some local awareness programs. Monthly seminars could be sponsored by banks or non profit organizations as well as townships because foreclosures affect their tax base. Many communities have access to public TV, that is another avenue that could be pursued to educate the consumer about options."
Our job as Real Estate agents is to help people purchase homes . We helped them with the American Dream of home ownership . When our past clients or others call us we should have a basic knowledge of the latest programs to help homeowners facing foreclosure, so we can at least direct them to appropriate web sites so they can try to save their home from foreclosure.
Realtors usually find out from a seller when it may be too late to save the house. At the initial interview, we should ask the home owner if they would like to continue to live in the house if there were options and if they did not have to sell. We can give them information about links to Fannie Mae, Freddie Mac and Hud web sites. We may not give them legal advice, but we can suggest they talk to the lender about loan modification. They can talk to HUD approved loan counselors. In our eagerness to get a listing, we may be tempted to be silent . We should always suggest that they seek legal advice.
Another thing real estate agents can do to help distressed home owners is to write blogs about foreclosure options and the resources available. Active rain and Localism with 208,000 members can certainly reach a large number of home owners.
There may be many homeowners who do not qualify for a loan modification. Once the lenders determine that the homeowner cannot afford to live in the house, then the homeowner can contact real estate agents. Homeowners who lose their home to foreclosure, or are forced to sell for hardship, may find it difficult to find a rental home. Yes, cash for keys can help as the cash will be required when they sign a lease, but many landlords do not want to rent to people who had a foreclosure. Real Estate agents can help by finding them a home. We work with landlords who respect our opinion, and if we find that the client will be able to afford the rent based on current situation, we should suggest that they give this person a second chance.
We should inform them of Fannie Mae's Deed for lease option, where they may be able to lease the property at current rates and live in the house by giving the deed and paying rent which may be more affordable than the mortgage.
The homeowner should know the difference between a short sale and a foreclosure and how it will affect their credit. Again, agents should be careful and have them talk to HUD loan counselors .They may prefer to short sell their home and this is where we can help them. We can keep track of the date for the sherriff's sale and keep in touch with the lender so that the house does not go to foreclosure, when we are negotiating a sale.
What can we suggest that banks should do when they list a foreclosed home -REO?
Banks do not seem to care about the physical condition of the homes. They list it in as is condition and do not bother to clean it up . The utilities are usually turned off. Banks, however, expect to get close to market value . As the market is going to have a constant supply of foreclosures, banks should stage the homes just like a regular homeowner would do. They can rent furniture and have utilities turned on. When they contact us to list the home, we should suggest they clean it and have utilities turned on. They can have a home inspection on file. Buyers would know in advance if there were too many repairs needed and if that would cause a problem with obtaining financing. They could choose to get FHA 203 k financing. Lenders should offer similar financing for repairs for other types of financing. Some states have enacted laws that require banks to maintain the yard of pre-foreclosures. Many townships have similar nuisance laws. Maintaining the yard is important because overgrown weeds bring down property values of other homes. The listing agent should mention the law to the banks and hire someone to take care of the yard.
Irene Kennedy says," I have never listed a foreclosure where the bank has not paid to have it cleaned out, secured and had electricity turned on. I've even convinced several to spend a bundle to get electric working when wires were down." Irene points distressed property owners toward information that will enable them to make decisions and assists them further only if that decision entails listing their home for sale. She gives a list of web sites and phone numbers that represent both state and federal programs, as well as contacts for their particular mortgage companies.
The agent's role in selling a foreclosure is to list the home, preferably at slightly below market value, market it well and make it easy to show with lock boxes and keys. The showing agent is going to show all homes on the market and point out other homes that are in better condition and better value to the client. If banks want to be competitive, the homes should be a good value compared to other homes. Buyers looking for foreclosures are looking for bargains.
To summarize : Hud, Fannie Mae, Freddie Mac and the Treasury Department should make it easy for consumers to know that they have options and direct them to resources that are available.
Lenders should give consumers information about options and resources that are available. They should try to provide loan modifications if possible, and if the home owner does not qualify provide incentives so that they will take care of the house until it sells. Lenders should give the home owners cash so they can use it toward finding another place to live. They should consider 'lease in lieu of deed ' where possible. When banks acquire properties due to foreclosure, they should maintain the property and price it to sell. It should be listed with an agent who can service the home. If it is a short sale, they should respond to offers in a timely manner and not let it go to foreclosure, so they can benefit.
Agents should get education in handling short sales and foreclosures. They should provide consumers with list of resources when they are contacted by desperate home owners. They should treat reo listings the same as other listings and take time to describe the home in mls with pictures . They should market them well. They should help distressed homeowners find suitable housing.
Real Estate agents once helped the economy by selling homes and we can once again help in the recovery.
This post is a combined effort by Jennifer Fivelsdal, Irene Kennedy, Barbara Todaro, Maureen McCabe, Tim Kennedy and Gita Bantwal.
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