Foreclosures are on the rise and what you need to know. I originally blogged on the Freight Train to Foreclosure in 2009. Since then the major lenders have hit the pause button several times regarding foreclosures solely as a means of self preservation. At first the concern was to protect their current inventory and to slow the pace of foreclosures so as not to generally adversely affect property values. Then came the Robo Signing Scandal. This was where the lenders got caught illegally foreclosing on homeowners without the proper paper work as required by specific state law. The fifty state attorney generals came after the lenders. Laws were clearly broken and the lenders once again are being required to get out their check books. Now that the headlines for all of this has passed its time for the Freight Train to Rev Up.

Lenders are exercising their legal rights to take back control of the properties. It’s is strictly a business and not personal. What is important that you must know to avoid being foreclosed upon with all of your moral character and family on the line is that a credible plan is now more important then ever before.

All major lenders will start with the loan modification process. I have discussed this at length many times since 08. They lure you in with a false sense of security. You are either involuntarily delinquent or you are told quietly on the QT from the representative that you need to be delinquent at a certain level before they will consider you for a loan modification. Here is where the fun begins. The lenders will imply that you are eligible for a loan modification and your perception will always be that your payments will be permanently adjusted to your desired level of affordability. I am sorry but this almost never happens. You will get a short term adjustment in your mortgage payment or in most cases a flat out rejection. From here after a couple months you will receive an acceleration letter from your lender and your case will be loaded up on a flat bed rail car waiting for the “Cho Cho” sounds as the Freight Train revs up. You are now at risk of foreclosure in spite of what the nice lender representatives promised or implied to you.

So many people experience foreclosure after venturing down the path of the loan modification. You have to be very careful. The lender will always suggest that you enroll in the modification program again and again. So many people end up down the linear time line facing an ultimate of payment or foreclosure. I believe the statistics of foreclosures and failed loan modifications over the past four years underscore the credibility of what I am telling you. It’s sad but true just don’t let it be you.

If you decide to venture towards a solution with a Short Sale credibility is very important. You many find that simply hiring a local realtor will leave you deficient of financial strategy and more exposed to the risk of foreclosure than you would otherwise think. The fairest way to put it is simply that realtors in general do not have the capacity, the experience, nor are they eligible to represent you in financial negotiations according to FTC rules as compared to licensed attorneys. Caveat Emptor!

There is something else you need to be aware of that is a new development on the subject of realtors and short sales. Major lenders are sharpening their focus on credibility with Short Sales. I have been told recently by upper management at a major lending institution that they have noticed a pattern that has led them to expedite properties to foreclosure much more rapidly then they would have in the past. They have noticed that many independent realtors have been initiating short sales with contracts in an effort to have foreclosures cancelled only to have the contracts consistently die at the 10-12 day mark. The direct comment was that they felt there was sufficient evidence that the realtors were manipulating the process only to forestall foreclosure at the expense of the lenders. Credibility is key. Absent a credible alternative the lender is much better served to foreclose on the property and go it alone. This is a key reason many large lenders are now expediting many properties engaged in the short sale process to foreclosure. The investors and major GSE’s like Fannie Mae and Freddie Mac are on board with this plan. The investors behind the servicers have made the decision to take the losses and get rid of the bad loans. Realtors are now being viewed as potentially part of the problem and not the solution.

Having said this, lenders are going to really focus on foreclosing on homes. Your objective whether you have a real hardship or simply just want a way out of a bad investment should be to avoid foreclosure at all cost. We welcome you to come visit and find a better way at www.thenegotiatedsolution.com .

Know that the lenders are allowed to break the law because they are “too big to fail” and deemed critical financial infrastructure to the economy. They will foreclose on your property and before you know it you will be looking at an immediate wage garnishment at your job. They will come before your groceries and affect your family ….if you let them. Smarten up! This is a huge crisis in real estate. Mortgage rates are down into the mid 3’s but mortgage applications are also down. That means people don’t have equity or simply can’t qualify for a new loan. All of this pressures housing based on supply and demand. You can stop and avoid foreclosure with a short sale.

You have options to focus on just selling the property or you can expand your objectives to credit and asset preservation and debt mitigation. Whatever you decide just get out of the way of the Freight Train. Property appreciation is not going to solve your house and mortgage problem. I think you know this by now with the calendar about to close out 2011. Good Luck. Cho Cho…..

Blogging from the front line of the housing crisis.

GHunter

Submitted on Thursday, October 13th, 2011 at 8:29 am