First off if you get a notice of defaults for your lender don't get too upset. Please call a Professional like us at Project Hope for Home Owners 800-604-0281. We specialize in helping people sort out their situation and chose powerfully how they want to deal with this. You have lots of options and time to create a plan. You by no means are alone in this. Salt Lake County Notice of Defaults or NOD's are up 289% over 2007 levels and 150% over 2008.
I want to look at the trend in # for the last 2 years of foreclosures in Salk Lake County. I will be using the Data form New Reach the best real estate data source available for real estate in Salt Lake County. Below is a chart breaking down the Notice of Defaults for sale Lake County for 2007 -2009? It's rather sobering to see that for July of 2009 were up 289% over 2007.
Projecting the # down it wouldn't be out of reality to say we'll see 1,000 NOD in a month by the end of 2009. We could also go over 10,000 NOD's for 2009 if the # continues to escalate. We have been in a foreclosure moratorium for, May to July. Now NOD's are not actually people loosing their home they are people that the banks are legally notifying the owner, they are beginning the foreclosure process. After the NOD is filed the mortgagee has 90 days to catch up the mortgage or do one of the following. Work out a loan modification, sell the home, short sell the home or Do nothing the bank to sell the home as a trustee sale on the court house steps. Yep that is where they do them and after the redemption period they schedule the sale date 3 weeks out and advertise it for 3 full weeks and sell the home for what is owned the 1st mortgage. That in a nut shell is a foreclosure.
Most banks are allowing mortgage holder to get between 3 to 6 months behind before they begin the NOD and wait a month or more after the redemptions period to schedule the sale date. Giving you time to get in communication with them. If you are working on a loan modification or short sale and have a package of documentation in they will postpone that until they have evaluated the options. Not all the people that have NOD lose their home, some will be eligible for loan modification, and some will sell as a short sale. They have looked at the situation and they can't afford the property or it makes no since to keep it because they are so upside down in the home. The majority do end up losing the home in short sale or foreclosure.
The business Journal Loan modification off to a slow start,
The report, which details the progress of the 38 servicers, finds Saxon Mortgage Services, a subsidiary of Morgan Stanley, leads the way, with 25 percent of its delinquent loans in trial modifications. Ocwen Financial Corp, a West Palm Beach-based servicer of subprime mortgages, has just 5 percent. Some of the major banks have done better than others with modifications, including JPMorgan Chase, with 20 percent, and Citigroup, with 15 percent. On the other hand, Wells Fargo had 6 percent and Bank of America had 5 percent.
If you have a Wells Fargo or bank of America loan I fee for you. I have had the ability to help many of the people facing foreclosure chose there outcome of their notice of default. I have help people modify there loan saying up to $800 on a $200,000 loan. I have closed short sale in les then 60 days form listing. Most have opted for Loan Modification on the President Plan to have their mortgage payment equal 32% of their income. I have coached them to success in getting their loan modified. Some chose a short sale, but the conversation for choosing is always a quality of their life, not emotional attachment to where they live, and conversation.
I have had a few people in the hardest hit area of depreciation like Saratoga Spring ask if my home is worth 50% of what I owe, how loan will it be before it come back. My honest answer is no one knows but maybe 5 to 10 years or more. If they are paying 4% on a 500,000 modified mortgage for 10 years they will pay $2,387 a month. If they can buy the same form for $250,000 right now at 5% they pay $1,342 a month or $62,675 over that 5 years or $125,350 over 10 years. That is a huge decision for their family's financial future. If they do get 2 jobs and pay the mortgage, what part of their children's lives, ball games scouts or just being there, will they miss or how much stress on their marriage will that cause. Is it worth it base on a quality of life? The conversation is quality of life and that is how I want everyone facing foreclosure to look at. Most banks will allow a short sale. The down side of a short sale is you will not be eligible for a FHA mortgage for 12 months from your last late payment. The short sale has no impact on qualifying for an FHA Mortgage and is treated as a foreclosure on a conventional loan. Seeing as 95% of all purchase with mortgages are FHA there is really not much impact.
If your mortgage is the purchase money mortgage on your home, you will have no tax repercussion for a short sale but if you took cash out of your home in a refinance and didn't use it for dollar to dollar home improvement you may be liable for some taxable income, because of forgiveness of debt. See IRS Home Foreclosure and Debt Cancellation.
You may be able to do a lease to own with and investor buying a short sale for you to lease and buy back. We have created this to be an 18 to 24% return for the investor. That is including the tax benefits of costs segregation depreciation and return when the purchase option is excited. If you are an investor you can find out about this by email or calling. We have properties ready to purchase. This is a win win because the investor buyer the property at about 80% of today's value and the leaser is getting the property purchase option at today value and slightly higher if they need 2 or 3 years before exercising the option. Most short sellers can qualify for a FHA mortgage in 12 to 14 months and move on with a home that may have equity. The investor will get 18 to 24% return on their investment over 14 to 16 months. If you want to help people and get a good return call us this can be done with as a self directed IRA.
I have created a group of industry experts Realtor and Mortgage Professionals called Project Hope for Home Owners that will consult with you for free call us at 800-604-0281 we'll set up a free phone consultation to assist you in choosing a path.
Welcome to the SpottedHome.com Blog