Massachusetts Foreclosure
Posted by admin on Nov 19, 2008
The first three quarters of 2008 have seen a continued increase in foreclosure deeds. According to Warren Group, Publisher of Banker and Tradesman, Massachusetts’ foreclosure rate soared 70 percent as compared to the first three periods of last year.
Although foreclosure filings declined in the third quarter due to the new state law imposed last May which postponed the first step of the foreclosure for delinquent homeowners, it was but temporary. For most of these delinquent homeowners, the 90-day suspension is over and most of them were not able to cure their delinquencies.
As the year is about to end, analysts are expecting a recession-level foreclosure rate not only in Massachusetts, but nationwide. Although data regarding completed foreclosures are not readily available, analysts believe that the number is huge.
Looking back, in the year 2007, the increase in foreclosure rate climbed 70 percent higher than it was in 2006. This raises the question as to why this had been happening and what could be done to stop the steady increase.
Last year, the Community Affairs of Boston presented a discussion paper outlining the possible reasons and solutions to this Massachusetts crisis. Contrary to common belief, unemployment is not a major contributor as research shows that employment in Massachusetts had been steadily growing since 1993. An analysis showed that rising mortgage payments is one of the causes of rising foreclosure rates. Many homeowners were attracted to adjustable-rate mortgages, also known as “teaser rates,” because of low initial payments. Many homeowners in this type of mortgage have seen a dramatic increase in their payments in a fairly short time after origination.
Another reason is the weakening housing market that Massachusetts had been experiencing in recent years. However, the worst culprit could be the increased number of sub-prime adjustable-rate mortgages, not only in Massachusetts but also nationwide. With all these causes combined, foreclosure rates may continue to increase.
The Average Age of People in Foreclosure
Posted by admin on Nov 19, 2008
Research data shows that the likelihood of a foreclosure seems to come with age. In a study conducted by AARP last year, out of 2.5 million people sampled, about 1 million of them are aged 50 or over, more than half of the over 50 age-group are delinquent on their mortgages, that is 634,000 and another 50,000 were in foreclosure and had lost their homes during the six-month course of the study. The study also revealed that older Americans have 100 percent more of a chance of being affected by negative equity, such as loan-to-value ratio, than younger Americans.
The researchers have found out that in this age group, people are buying homes they simply could not afford. This is not a result of a miscalculation or a reckless decision, but some little things that sometimes negatively effect people in their daily lives. These little things can mount up to something considerable at a later date affecting their budget and their mortgage. These little things may include a loan to pay for the kid’s education, or health bill.
When buying homes, these little homes are usually not considered in the long term budget. Homeowners are usually concerned with paying the mortgage and these little things are usually neglected until they are large enough to interfere with the mortgage. If it is neglected to long it can have an extremely negative effect on ones life.
The study recommended that people need more sound advice in deciding how and when to acquire a property. Americans need to be more intelligent when it comes to their budget and should start making informed decisions when it comes to a mortgage. In most cases, people are making self-defeating decisions usually due to listening to mortgage lenders and loan officers and thinking of them as counselors. This is especially true with the elderly.
How to Consolidate Your Debt and Increase Your Credit Score
Posted by admin on Nov 13, 2008
In the United States, the ability of an individual to have a loan approved largely depends on his credit score. The higher the credit score, the more likely that you are going to be approved for a loan and of course the opposite is also true.
In most cases, you may sustain a low credit score because of unfortunate circumstances that were beyond your control. This situation further limits you from obtaining the necessary resources to live a descent life, such as availing a mortgage for a house.
One reason that your credit score may be low could be due to small outstanding debts that you may have from different sources which will be negatively reflected on your credit report. Every outstanding debt is counted against you and will decrease your credit score. If you want to improve your credit score, one option would be debt consolidation.
Debt consolidation is basically taking out one loan to pay off the other unsecured loans at a lower interest rate. So when you get rid of your other loans, you are essentially cutting down on the supposed interest rates of those loans if they had been paid in the long term. By consolidating your debt, not only have you saved a considerable amount of money but it will also be good for your credit score. This reduces the length of your credit history.
Having one loan instead of many, reduces the chance of having past due items, which is another way to increase you credit score. More importantly, you eliminate your number of loan accounts which is also favorable to your credit score. Having lower interest rates on your consolidated loans, gives you a much greater chance of paying off your loan.
How do you consolidate your debts? One option is to obtain the services of a reliable company that deals with debt consolidation. This company can negotiate with your creditors on your behalf to either get your delayed installment waived or reduce your interest rate and your payment. Taking the path of debt consolidation should make you more confident that you’ll be able to pay off your loans sooner than you expect and can relieve you of the tension of having a bad credit record.
Is “Short Sale” Worth the Sale?
Posted by admin on Nov 10, 2008
As home prices continue to drop in the state of Massachusetts, the increasing number of loan delinquencies has been steadily on the rise during the past few years. A lot of homeowners today realize that what they owe is actually more than what their homes’ worth. As a result, foreclosures in Massachusetts are on a surge to a level that the average American homeowner is not prepared to handle.
One of the solutions that are being offered to these homeowners is the “short sale.” A short sale is actually selling the mortgaged property with the consent of the lender at a price that is lower than its mortgaged value. This is done to avoid all other problems that come with a foreclosure. Although they do not keep even a dime of the sale, homeowners are spared from having a bad credit report. A homeowner may lose around 250 or even up to 280 points on their credit score in a foreclosure; whereas in a short sale it would only cost them around 80 to 100 points. It’s kind of a reputation saver.
Lenders are sometimes forced to agree with this settlement, rather than incur greater costs that come with a foreclosure. Although the sale needs their approval, they are not totally in control of the situation especially in some states where they are not allowed to run after defaulted homeowners.
A short sale is being viewed as a lifesaver for homeowners. It takes careful and thorough research and analysis before anyone can engage in it. It actually takes a greater amount of time to seal the deal on a short sale than it does any regular real estate transaction. A short sale also tends to be more complicated when it comes to technical aspects of the sale.
Having convinced the lender to approve a short sale, the sale requires strict scrutiny from an accountant, a real estate agent, and a real estate attorney. You also need the assistance of a real estate broker to assess the property value, which is known as a BPO or broker price opinion. Finding a buyer is another story. A third party specialist can assist you in the process of a short sale.
With a lot of properties nearing foreclosure in the state of Massachusetts, buyers are scarce and it’s forcing prices to go even lower. Buyers are increasingly becoming conscious of short sales and are becoming more and more skeptical when entering into these kinds of deals. The longer the time spent in hunting for the right buyer, means mounting amortization and sends the price of your property to the bottom. This makes the process even more frustrating.
Another trend that makes a short sale a difficult move is private mortgage insurance. While it’s true that lenders lose a lot of money in a foreclosure, chances are, they can recover it through payouts from private mortgage insurance. When this is the case, it becomes virtually impossible to convince a lender to agree to a short sale. They would rather choose to foreclose so they can evade all the bottlenecks in a short sale.
Because of these un-welcomed surprises when entering into a short sale, most homeowners in Massachusetts are now seeking ways to keep their homes instead of loosing them to foreclosure or short sale. One of the best options today is ‘loan modification.’ Instead of selling a property at a loss, Massachusetts homeowners can put in a request for long-term adjustments in their loans. This way, they are provided with a better option to ease the burden of paying for their homes. Either way if you want to sell your house on a short sale, short refinance, negotiate forbearance or modify your loan, expert assistance should be sought for this type of loan servicing to ensure its success. Remember you only have one shot at working out a deal with your lender. If you mess up the first time there are no second chances.
