Foreclosure Back Log Deepens

Delinquent borrowers are spending more time in their homes without making mortgage payments due to the foreclosure backlog. Once borrowers start missing mortgage payments they spend an average of a year and nine months, or 611 days in foreclosure before banks repossess their homes according to LPS mortgage monitor. That is more than twice as long as three years ago, when the average was 251 days. Earlier this year, the average was 523 days.





The number of defaults in the pipeline has been huge and there are more problem loans than ever before. With so many bad loans, servicers have had to prioritize which ones they can work with and which they need to push aside.




My number one concern is that some homeowners who are facing foreclosure and know they will not be able to afford the home any longer; are not making an attempt to short sale their home. Why should they? If they are able to stay in their home mortgage free until the bank gets more effective and efficient in filing NOD'S and starting the foreclosure process. This mentality I am afraid is very common but here is the problem with that way of thinking; the banks ARE becoming more effective and efficient and it is only a matter of time before they have a strong system in place and they are turning foreclosure notices like MAD. The lenders want these off their books. It will happen.




It has been my experience that homeowners either don't know what their options are or they are simply frustrated and need some guidance. I have spoken to many delinquent homeowners who have changed their minds at the last minute realizing that they did not want a foreclosure on their record however; in most instances it is too late.





Foreclosure will do TWO things:will do two things:




1. Damage a homeowners credit far worse than a short sale due to the period of missed payments.




2. Keep our market depreciating.




This can be bad on so many levels. Here is one scenario:



Lets say a homeowner decides he or she is going to stop making their payments. They try a loan modification but they are not successful. 12 months has went by without a payment and then they decide they want to short sale the home because they don't want the foreclosure to damage their credit. Here is the problem; their credit has already been hit significantly due to the period of missed payments. Not only that; but now the home has depreciated in value even more which will effect the actual offer we get on the property verses what the bank will want to net in order to allow the short sale to go through.




Here is how this should have been handled in my opinion:



The homeowner realizes they can no longer continue making their payments. They hire a Real Estate professional to have a strategic plan of action in place to short sale their property. ( BEFORE THEY ARE MONTHS BEHIND)



This is in the homeowners best interest for the following reasons:




a) It gives us time to get a short sale through without an NOD getting filed giving us the freedom to market the property and negotiate without racing against time lines and still allowing the homeowner to stay in the property while the short sale is taking place. They are becoming delinquent but it is in a controlled manner with a plan attached.




b) Allows us to help the homeowner transition into a rental with a payment they can afford.




c) Allow us to help our client enroll in a credit recovery program to help them buy a home again in 18-24 months vs 5-7 years with a foreclosure on their record. A home that is actually APPRECIATING.




d) Helps us do our part to avoid flooding the market with REO properties.




There has been alot of fear and confusion brought about with the housing market crash. Add the unemployment rate and it feels chaotic for most homeowners experiencing difficulty. But I would hate to continue to see people give up and not take the next indicated step in recovery. It is up to us to be able to educate these homeowners with the truth and reality of the situation. Once we can break that barrier then we can help them get back on their feet with grace and grounding and help them achieve their goals. Scrambling at the last minute does not do anyone any good in the grand scheme of things.







(Quote)



“Nothing profits more than self-esteem, grounded on what is just and right.” John Milton"





"Lotus Realty Group is hiring REALTORS. For more information please give me a call."



REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?





Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.




LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS



At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...