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.

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.

Before Your Lender Forecloses On Your Home

Posted by admin on Oct 31, 2008

The number of Massachusetts homeowners that have received foreclosure notices is rapidly skyrocketing.  2007 was the worst year in history for foreclosures in Massachusetts and thus far 2008 doesn’t seem to be getting any better.  However, having received a foreclosure notice does not mean that you are in a hopeless situation. You can still keep your house. Although the clock is ticking, there are still available options for you before your lender forecloses on your home. We call these steps foreclosure workouts. These steps are aimed at stopping the foreclosure process. These are available to give you the option of keeping your property with easier paying plans or suspending current payments; or a graceful exit from your home without bad credit or declaring bankruptcy.

1. Loan modification
This option allows you to keep your house. Loan modification is a request made to your lender for an adjustment of the loan terms. Of course, the adjustments should be favorable to you and your budget. The lender may agree to reduce your interest rate or even the principal payment, suspend your payment and extending your payment terms, thereby lowering the monthly installment, or combinations of these.

2. Short sale
With the lender’s consent, you can sell your property at a price lower than its actual market value. Although this may sound like a desperate measure, it is a whole lot better than a foreclosure. The best option you can get from this is to make your lender agree that the amount for which the house can be sold will cover what you owe. Any deficiency will be considered as paid.

3. Forbearance
This is basically a request to suspend the payment of monthly amortization within a specific period. This is ideal if you are experiencing temporary setbacks in your budget. After the agreed suspension period is over, and hopefully your crisis also is over, your payment shall continue as usual.

4. Deed in lieu of foreclosure
With a deed in lieu of foreclosure, you and your lender agree that you will give back the property in exchange for the forgiveness of all your payables to them, including whatever fees and deficiencies. Although this will appear in your credit records, it will not be as damaging as a foreclosure.

Any of these steps requires huge amounts of work and time. As you will notice, all of the four steps above depend on the lender for their success. This makes it a very complicated task. This requires the dedication of a professional who has experience in these kinds of settlements. It is very important to seek the help of foreclosure workout experts to ensure results.

Find a third party that has a team of professional and dedicated experts to help you in identifying the best steps for you to take. Once identified, these experts will negotiate directly with your lender, on your behalf, to expedite the process.  The real key here is to do something before it is too late.