Hello All, I am new to AR and thought I would jump right in and offer my two cents...
I wanted to speak to the tremendous fallout from loose lending practices and inflated property values. Many homeowners find themselves in great difficulty with rising monthly payments due to resetting loans and the decreased worth of their investment.
There are many outs, however. Most lenders will work with distressed homeowners in order to avoid adding another property to their books. Banks are in the business of lending money, not managing property. Also, repossessing your home further weakens their lending power. Because of this, many lenders are taking losses on portions of unpaid notes so that they can free up the funds necessary to continue lending.
Assitance for homeowners comes in the form of loan modifications, buy-back programs and short sales.
Typically, a loan modification can be done prior to or even after a homeowner has begun defaulting on their mortgage. An agreement with the lender is reached where a lower payment plan is assumed and any back payments are added to the loan amount.
Buy-back programs involve the homeowner working with outside investors who agree to loan the funds necessary pay the lender. The homeowner, in turn, agrees to pay the investor for a short period (6-24 months) until such time as they can "buy-back" their home. This option, however, appears to be losing favor as many homeowners in great difficulty cannot show strong credit-worthiness.
A short sale is simply an agreement struck with the lender to allow the homeowner to be forgiven of any debt created when the home is sold for an amount less than what is owed.
These forms of assistance have become very popular, but they can require a fair amount of paperwork and experience.
I have had some experience working with lenders, appraisers, mortgage brokers, inspectors and attorneys on short sales and I can tell you there are pitfalls around every corner. The good news is that, for the most part, lenders are beginning to understand the gap between what they perceive a property to be worth and its actual value. That's all I have time for now...good luck!