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Showing posts with label strategic default. Show all posts
Showing posts with label strategic default. Show all posts

February 7, 2012

Options For The Underwater Homeowner

Good Afternoon, and Welcome Back, one and all!

   If you happened to catch my last post, "Strategic Default To Stop The Bleeding", we discussed the "taboo" topic of walking away from your Home Loan (and thus, your home). Of course, if you have some equity in your home, a Strategic Default would not make sense, therefore, the discussion was within the context of "Underwater Homeowners" (those homeowners that owe more on their Home Loan that the Home is actually worth).

   In a quasi-sequel to the above-mentioned post, I cannot stress just how major a decision it is to walk away from your home, and you (only you), would need to take a look at all of the factors (financially, legally, etc). What I will say is from some research done by Tara-Nicholle Nelson in her Inman.com story, "6 ways to save your underwater home", Nelson said that she noticed that "most upside-down homeowners don't really want to default on their mortgages". If that is the case, what alternatives do you have vs. walking away?

   At least 6 alternatives.

   Nelson laid out 6 alternatives, which include:
     * Get Rid of credit card balances and your debts.
     * Get a second job ("It won't last forever", says Nelson)
     * Start a side business/Monetize your spare time.
     * Rent out a room/rooms in your home.
     * Apply for loan modification and Government programs.
     * Short-sell your home with a local agent, attorney, etc.

   One other alternative is to keep your eyes and ears open. For example, there was a recent Bank of America special event that invited struggling BOA customers to meet in person with "home retention specialists", in a story from Leslie Berkman, titled, "Borrowers may meet with retention specialists". Some of the options for these customers were home loan modifications, among other alternatives.

   In summary, Nelson says that fortunately, your options for avoiding a foreclosure "are not so limited as they might seem at first glance". However, if you at that point of making this big decision, she highly suggests that you "consult with a reputable real estate broker, mortgage broker, local attorney and local tax professional -- at minimum".

   Are there any other alternatives that you can think of that were not included here. Please share it with your fellow readers.


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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #StrategicDefault #HomeLoan #underwaterhome #loanmodification #BOA #avoidforeclosure #retentionspecialist #realeestatebroker #mortgagebroker

February 3, 2012

Strategic Default To Stop The Bleeding

Happy Friday,
   Hope it's been a great week for you.

   The thought of picking up and leaving your home behind, while still owing money on it, might seem like an extreme option, but for some, it might be their only option.

   An Arizona couple with an "underwater mortgage" was recently profiled in a story on Yahoo Finance ("What Happens When You Walk Away From Your Home?" by Chris Taylor). The couple's home was appraised at nearly $400,000, but with the market downturn, they were told they'd be "lucky to get $200,000 for it", so with their $260,000 loan, they were substantially under water. The couple was faced with a tough decision; make the payments on their new home plus the payments on this older one, or stop paying the mortgage on the older one.

   Strategic Default.

   "I constantly get the saddest e-mails from people saying, 'I've exhausted all my life savings, my retirement is gone, and now I have to default,'" said Jon Maddux, CEO of YouWalkAway.com, in a comment included in Taylors' article. As applied to these particular Arizona couple, they had to "wrestle with it", with the reasoning that they work so hard and so long to build strong credit, with an element of pride as a factor, as well. Ultimately, they looked at the numbers and realized that just cannot continue paying both loans.

   With some numbers Taylor provided from CoreLogic, almost 11 million homes are underwater, with 1.5 million of them already in the foreclosure process (as per RealtyTrac). These numbers are due to spike, with a far-reaching impact on housing prices and the market in general. What's an underwater homeowner to do?

   Taylor lists a few things to keep in mind, for example, "companies default on their obligations when it makes financial sense for them to do so, via the bankruptcy process", and that "It's not personal; it's business". As for penalties, your Credit Score will bear the brunt, and a few years will need to go by to start removing the bruises and the blemishes.

   What else should you keep in mind?

   Taylor suggests that a Strategic Default should be a "last resort", and you should consider refinancing, as well as government programs "designed to keep you in your home". Your location is key, since each State "has its own rules and regulations regarding foreclosures". You should also talk to a professional about the implications, including tax implications, before deciding.

   "Strategic default isn't a decision to be taken lightly, of course", Taylor says, and adds that it's not desirable, "but not the end of the world either".

   Has a Strategic Default been an option you have considered at some point?


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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #Arizona #underwatermortgage #StrategicDefault #strongcredit #foreclosureprocess #housingprices #homeowner #bankruptcy #refinancing #governmentprograms

November 4, 2011

Short Sale Caveats for Realtors

Hi Folks,
   Welcome to your weekend !

   The "Wild West". This conjures up thoughts of lawless times and renegades going from town to town and old fashioned "Shoot-em ups". When using the terms "Wild West" to describe Short Sales, this should indicate that dangers abound, and everyone, including Realtors, must be wary.

   Sarah Stelmok writes on Truliablog.com that listing a short sale is a "little like venturing into the wild, wild west", and says that there's only "a little order, lots of imposters, and laws are broken without much penalty."

   Stelmok outlines 3 primary things agents should know about Short Sales in her story, titled, "3 Things Agents Should Know About Short Sales":

1. "Market Value Matters" - Short sales sell for market value, says Stelmok, and adds that a bank will "typically agree to a short sale if the numbers make sense".

2. "Only Real Hardships Get the Help" - "Strategic default is never a good idea", Stelmok says, and adds that banks actually analyze hardships that are reported by a seller, and ones that are acceptable are financial/economic issues, "medical issues, divorce, disability, significant loss of income, death, unemployment, and relocation."

3. "Laws are local" - Since there are currently no national short sale laws, Stelmok says that it's important to "know your state’s foreclosure laws",

   As Stelmok summarizes, "This type of transaction is constantly evolving; however there are a few things that remain the same, and that every agent needs to know when working with short sales."

   What's your experience with Short Sales? Do you have any tips from the trenches (or should I say, from the Wild West?)?

Would You Like Our Blog Posts Sent Directly to your E-mail? Here's How:
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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #shortsales #foreclosure #realtor #strategicdefault #marketvalue #agent #laws #hardship