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Foreclosure Is Often Avoidable and Unnecessary




In any given market there are always a certain percentage of distressed homeowners.  While Oklahoma and Tulsa have fewer homeowners in default on their mortgages than most of the country, the numbers are growing.  A recent Tulsa World article states that Tulsa countys first quarter rate increased 35 percent.  One in every 204 households is in default in Tulsa county.  With foreclosures at an all time high and expected to get even higher there is no category of residential property that will not be affected.  In fact the fastest growing category is luxury real estate.  Space does not allow a full explanation of how we got into this crisis.  Lets just say millions of borrowers were allowed to gain mortgages that they were never qualified for and should not have been given.  The question is what do we do about it and where do we go from here. 


Property owners who are facing foreclosure often do not understand that they do have options.  Amazingly, most homeowners in default do not take action and they lose their homes and destroy their credit needlessly.  These individuals are facing the most painful financial situation they have ever faced and they are usually facing it alone.  Next to death of a family member or divorce a forced relocation due to financial crisis is the worst experience a family will endure.  Homeowners in default need to understand something.  Banks do not want their houses.  By the time a bank forecloses, repossesses, appraises, manages, repairs, maintains, and markets a house they only regain a very small percentage of their investment.  Banks want to work out solutions.  Heres what a homeowner in default needs to do.  Hire three professionals.  Consult with an attorney, an accountant, and a REALTOR who is certified to market depressed properties.  Not just any real estate agent will do.  Find a specialist.  There are legal and tax consequences in avoiding foreclosure.  Two of the most common techniques the real estate professional will employ are mortgage loan modification and short sale negotiations with the lender.  In some cases the lender will modify the loan thereby creating a payment program that the borrower can perform and avoid losing the home.  If that is not possible a short sale can be negotiated.  A short sale is an extremely detailed and complicated negotiation process in which the lender allows a borrower to sell the house for less than is needed to pay off the loan.  Many conditions apply and that is why using an expert is critical.  In a short sale the banks loss is much less than a foreclosure and the home owners credit damage is reduced significantly.  A foreclosure reduces a persons credit score as much as 300 points.  A short sale drops it as little as 50.  A foreclosure follows you around for ten years.  A short sale is not currently reported to credit bureaus.  Therefore a short sale is not a challenge to a persons employment or security clearance and makes future credit available sooner and more easily.  Foreclosures are ticking time bombs.  Time is of the essence to stop them.  If you know of anyone in default on their mortgage tell them to rush to a REALTOR for help.  Be sure to ask for a Certified Depressed Property Expert (CDPE) or a trained short sale specialist.  Avoiding foreclosure is good for the family and the community.  Keeping families in their homes , saving banks from losses, and protecting real estate values in the community is a win win situation for us all.

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