This is the worst economy we have seen since our grand parents’ or great grand parents’ time depending on your generation. Conventional wisdom from their time said pay cash for everything and save lots of money for rainy days. Well, we have our rainy days now, don’t we?
Alternative to Foreclosure - Short Sale
Our memories are short and conventional wisdom has been ignored by a large portion of the population. Word on the street from the last couple of decades has rewarded risk . . . Take money out of your home and invest it in the market! or …Why wouldn’t you finance 100% at such low rates, it’s like free money!! or …Buy more house than you can comfortably afford because your income will come up and a more valuable house will appreciate at a higher rate. Then there was some really creative financing that took place, Stated Income Loans, Low-doc Loans, No-doc Loans . . . You could add to this list many other risky plans that have in part caused financial problems from Wall Street to Main Street.
That leaves us between Wall Street and Main Street. While the official unemployment rate is 9.7%, the effective unemployment / under employment rate is estimated to be as high as 18%. This percentage includes the total number of people currently receiving unemployment benefits added to those whose benefits have run out before they have found employment and / or those who have taken employment at a rate of less than 50% of their prior income. While this is well below the 25% unemployment rate of the Great Depression, it is easy to see why this time is being referred to as the Great Recession.
All of the causes of this recession will take up volumes in business journals and will be analyzed for years to come. Suffice it to say, people are hurting. It could be a medical emergency and a few late payments on credit cards and utilities. Suddenly the rates and penalties skyrocket and there’s more month than money with a downward spiral. It could be job loss. It could be several factors, but for whatever reason, the homeowner who has made mortgage payments faithfully for 10 or 15 years can no longer make the payment.
Prime loans are now exceeding sub-prime loans in defaults. It is estimated that 1 in 6 mortgages are in trouble. People find themselves in a position where they “must sell” but cannot because they owe more on the home than its current value.
One thing leads to another and suddenly a homeowner is faced with foreclosure. This can be a harrowing experience and will de
bilitate the credit score, will compromise future job possibilities and will be a financial and emotional ordeal for the entire family.
There is an alternative to foreclosure, and that’s a bank approved short sale. A short sale is a sale short of what is owed to the ba
nk. The process and the qualifications are straight forward, but lengthy. If you know someone facing foreclosure, please put them in touch with
me. I am a Certified Distress Property Expert and I care. I will keep their situation in confidence and will work with them to solve the crisis they face – no judgements, just solutions.