Professionals, Your Input Needed

By
Real Estate Sales Representative with Fieldstone Real Estate

Lenders and Agents, you are on the front lines, so I NEED your input here.  Tell me of situations that you see that result in foreclosure.  Don't get into blame... I want to know what the situations of the homeowners are, why it is their only choice.  I don't (for purposes of this question) want to know who caused the situation, just what the situation is, and how we could/should be keeping it from getting worse.  Things that are of interest to me....

1. Was there a hardship that caused the home to become unaffordable, and if so, what?

2. Was there an ARM that adjusted that caused the lack of affordability?

3. Was this supposed to be an investment property or a primary residence?

4. What kind of loans do they have (80/20 with 2 banks, 1 bank; something with PMI or government insurance (VA, FHA, etc.); was this no money down or how much cash did they put in originally?

5.  How far upside down are they (both in NET dollars - after the cost of sale - and in % of the value of the loans)  I need both to understand the national picture?

6.  Was this subprime, no doc, or some other high risk category?

7.  Where will they live after the foreclosure?

8.  Before relenting to foreclosure, what efforts did they expend to prevent it and what results came of that (i.e. did you try a short sale and get 10 offers but the bank wouldn't talk or did they take the ostrich approach and stick their heads in the sand)?

I am hoping your answers will help me/us develop some ideas for solutions... once we have the ideas, we still have the uphill battle of getting people to implement them; but maybe we can make a difference here.  I for one, am willing to try.

THANK YOU for taking the time to share.  Remember - "Be The Change You Wish To See In the World"... we all agree someone has to do something... why should't it be us?

 

 

 

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Rainer
105,859
Travis Newton
Salem and Bend Oregon FHA, VA & USDA 503.931.4490 - Salem, OR
FHA, USDA, VA, LOAN EXPERT - Salem OR Homes For Heroes SALEM OREGON

Vanilla, 30 year fixed loan. Fantastic buyers, great Credit scores, 20% down.....you name it...they were perfect.

Then the wife lost her job making $40,000. Took her 5 months to find a new job, it was too late.

 

Sad story, but they happen all over the country.

Jul 30, 2008 03:38 AM #1
Rainer
51,442
Holly Lynch
Keller Williams Greenville Central - Travelers Rest, SC

I think when it comes down to it..us Gen Xers and Yers lived the Nike rule. Just do it. Many got in over their heads to keep up with the Jones' and it backfired. Yet they did it to be in the mainstream. That's what I've seen. Most should Never have been approved in the first place. There's so much blame to go around but what it comes down to is realtors and mortgage lenders who were selling anyone anything because we could..even offering it to people who should not have bought. And now we're reaping what we sowed. Certainly there are those who lost homes due to medical crisis or job loss. 80 of bankruptcies are caused by these and it all trickles down.

Rental is the only option...a good steady job and hard cash. Unfortunatey many Americans have lost their work ethic....

Jul 30, 2008 03:51 AM #2
Rainmaker
108,709
Vicky Chrisner
Fieldstone Real Estate - Leesburg, VA

Example A - couple owns a primary residence in Maine; a piece of land in Maine; and an investment condo in FL.  Due to hardship, they lost a $70K/yr stream of income.  Due to market conditions, rent on investment property is going down, down.  Other properties all have mortgages, too. Need to let go of or do something with FL condo - lenders won't even talk with them because it was an investment property.  (don't know the numbers)

Example B - Husband and wife separate, now can't afford home payments, upside down by 125K (about 20%).  Bank won't talk to husband to try to short sale or do loan mod b/c he doesn't live there. Wife is on anti-anxiety pills and can't deal with it - so taking ostrich approach.  Both parties are willing to short sell, bring $20K extra to the table, and sign unsecured note to repay the difference - not looking for any debt forgiveness here.  Banks won't talk.

Example C - Evil lady did cash out refi at peak of market, bought retirement home in another city free and clear, and is trying to negotiate a short sale w/debt forgiveness on 1st house, but is fully willing to let it go to foreclosure since she never plans on applying for another loan and THINKS they won't be able to touch her lovely new home that is owned with no mortgage.  (upside down about 100K, 30%)

 

Jul 30, 2008 04:06 AM #3
Rainer
18,460
Sharon Wager
Hunt Real Estate - Camillus, NY
"Your Blue Jean Agent"

What I've been hearing is just the generic "trouble making ends meet", especially medical expenses.  No catastrophic illness or anything, but illnesses and injuries combined with poor health care coverage and high expenses.  The downward spiral is a steep and slippery slope.  It only takes one small unplanned expense to start big problems down the line.

Jul 30, 2008 07:51 AM #4
Rainer
42,840
Richard Mielke
RE/MAX Results - Gettysburg, PA
REALTOR, Gettysburg Pennsylvania Real Estate

My foreclosure/bankruptcy client bought as an owner occupied, lost her job. Unemployment ran out. Burned through savings, tried to do a modification on the loan. Only one loan. Client ended up filing bankruptcy due to problems with other properties they own(ed).

Jul 31, 2008 01:49 PM #5
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Rainmaker
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Vicky Chrisner

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