Experts aren’t expecting a surge in recession-style foreclosures, but that number should continue to rise as the US housing economy returns to “normal.”
SARASOTA, Fla. – Experts say a 2008-style housing crash is unlikely now, simply because lending standards are much tighter than they were before the Great Recession. Still, foreclosures are starting to tick upward.
Fewer than 31,000 homes nationwide were foreclosed in May, according to property data firm ATTOM. Last year he was up 185% from May, although that’s only a 1% increase from April.
And while the percentage of borrowers in any stage of delinquency in the first quarter was the lowest ever, CoreLogic reports that more than one-third of delinquent mortgages are six months or more past due.
Luckily, if you’re among borrowers who can’t make payments, there are plenty of options available. From getting permission to miss a few payments from your lender to getting back on your feet, sell your place before the gavel hits.
But you have to move quickly. Taking it too long can be costly, especially since house prices can start to retreat quickly in some places. please
The first step is to call your loan servicer. A servicer is a company that collects payments, pays taxes and insurance, and otherwise manages your mortgage. Depending on the circumstances, the servicer may offer several options. Each case is different, but usually next he is given one of four options.
- Temporarily suspend or reduce your monthly mortgage payments for a specified period of time until you are confident you can resume payments.
- Pay the delinquent amount by adding that percentage to your regular payments over a specified period of time until your mortgage becomes effective.
- Defer overdue amounts until the end of the loan term, keeping monthly principal and interest payments the same.
- Change the original loan terms, possibly the payment amount, loan term and even the interest rate.
Each of these options has its advantages, but all allow you to stay home and avoid foreclosure. However, you must qualify. If the servicer decides you can’t dig out, no help will come.
Another option is refinancing. But with loan rates soaring to 6% levels recently, that alternative is basically out of the question. Nationwide, he has fewer than 500,000 homeowners for whom refinancing makes sense now, the lowest number in more than 20 years, according to data firm Black Knight.
However, all is not lost. Because you can still sell the house at this point. Depending on when you bought the place, it might even be profitable. Two important points here:
- Home prices haven’t fallen yet, but they haven’t risen at the breakneck speed they’ve seen recently. They eat with gratitude.
- Of course, if you recently bought a home, it probably isn’t well valued and has fewer paper profits to dig into.
Proceed to next point. A foreclosure is not an event. it’s a process. Depending on where you live, it may take months or years before the sheriff knocks on your door. It just gives me a little more time to breathe.
You can sell during the foreclosure process until the judge’s gavel is slammed down, but it’s much better to sell before the process begins. Whatever you do, don’t divulge the fact that you have a payment problem. Be sure to be honest with your agent. If prospective buyers get wind of it, they may assume you are hopeless and rate their offer low.
If you can sell it at a profit, pay the lender what you owe, pocket the rest, and move on. But if you sell at a loss and can’t pay the lender the full amount, you’ll need to convince the lender to approve what’s officially known as a pre-foreclosure sale.
It can take weeks, if not months, to obtain servicer approval for a short sale. You have to prove that you have long-term difficulties. that you were unable to sell at a price that would cover what you owe; that you were or were about to be foreclosed; And you can no longer afford to live there. You also have to fill out a pile of paperwork.
If your lender agrees to your short sale, a buyer is landed, the sale is finalized, the proceeds are sent to the servicer, and a shortfall waiver is issued exempting you from liability for the remaining balance.
Your credit score will suffer. But otherwise you are free to move on.
© Copyright 2022, Sarasota Herald Tribune, All rights reserved. Lew Sichelman is a regular contributor to numerous Shelter magazines, housing and mortgage industry publications.