LOOK out! Economists have been warning about it and now we see it starting to form - the next wave of US foreclosures is maturing, even as you read this.
The last wave, made up of sub-prime borrowers and others with risky adjustable rate loans, is washing out, according to data from the Mortgage Bankers Association, and a new crest is building.
This time it consists mostly of prime (good-credit) homeowners who have simply lost jobs in this poor economic climate. I have repeatedly mentioned that the RE market has not bottomed yet and it’s because of the entire shadow inventory that is lingering waiting to mature.
Will they hit the market soon? I hope they do but not all at once. Here are my own theories as far as all that’s happened with the foreclosure market and the mortgage delinquencies. I have started to help my readers understand the modification and foreclosure process the past four years, started to help homeowners work out a short sale approval in the past three years or so.
I saw homeowners back in 2008 as very eager and ready to get rid of their mortgage headaches and underwater properties by shortselling their properties. Banks were more loose then because the problems were just starting.
The following year or so -- which I am guessing was the second wave of foreclosures or short sale --where homeowners tried to modify but failed and wanted to stay in their homes longer and stretch out the short sale or foreclosure process. Banks now have too many short sales that hit them and they were not prepared for them.
Now, I believe most of the homeowners that are still holding on to their properties that have negative equities have, at one point, paid someone to modify their home loans and they are trying much harder to hold on to their properties. They may be more vulnerable to fraud because they seem to insist that there is an answer to their problems. Banks now, on the other hand, are well-prepared and are tougher on Modifications and Short Sales.
If you’re thinking that you can challenge the banks especially now, please think again and clear your mind first. Realize that a “No” is an answer that may be a challenge for you to convert to a yes, especially for mortgage modifications. I have never gotten so many calls from very cocky callers who think that they can beat the system. There is more fraud going on now and they are coming in through different sales pitches and gimmicks.
A repeat caller from about a year ago called and said that they are still trying to modify their loan. I initially suggested that they directly get help from their lenders. They did, but got declined due to “no hardship” as far as the lenders are concerned. The caller contemplated hiring a company that is supposed to be a group of investors that will buy your note back from the lenders and resell them to you for the current market price. The fee is $ 9,000 which was paid in two payments within 30 days.
I had advised these callers before signing up to make sure to get proof that they have helped others in writing and to actually call their references. Per caller, the company is incorporated and is legitimate. I say legitimate until they either get in trouble or close down the operation to re-open under another name. This supposedly Miracle Company refused to provide a reference or show proof of their successful track record due to confidentiality. I call that a “GREAT WARNING SIGN” for you to hang up and never talk to them again.
Listen, if this company actually helps you reduce your loan balance by $200K for $9K would you not go crazy and give everyone hugs and kisses? Or talk to all their customers and praise them like Kings? I would work for them for free.
We must keep in mind that according to OTS Mortgage Metric Report, 90% of loans serviced by the major banks are owned by others - by Fannie Mae, Freddie Mac, smaller banks, pension funds, credit unions, thrifts, Federal Home Loan banks, individual investors, foreigners and others. The vast majority of these loans sit in mortgage-backed securities (RMBS).
I just heard on the news that the California Attorney General is teaming up with Department of Justice to start prosecuting, heavily and aggressively, companies defrauding innocent homeowners. More news should follow and hopefully it stops enough scammers.
I believe that if there were completely no rescue scams out there, our foreclosure problems would have been over sooner. To discuss the final stages of the wave of foreclosures is this bottom of real estate downturn. Now, with what is going on with jobs and the world economy, I feel that we are going to be in this for a much longer period – our recovery will still be around 3-5 years whether you like it or not.
For those who would like references for my services, I am open to provide as much as you want. Someone just ask me who to believe and what is in it for me. I told this person that in every situation both have to benefit in order for some kind of fairness to come into play. I help homeowners understand the whole mortgage and modification process for free, but if someone would be willing to short sale their home, I would like to help them negotiate and list their properties for sale, then the banks would pay for my fees at closing with the sales proceed. Fair enough? I am a mortgage broker and have been for the past 24 years and would love your referrals.
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Please send your comments, inquiries or thoughts about these topics or anything else that you might want to talk about which might be helpful to others. Please send a message to This e-mail address is being protected from spambots. You need JavaScript enabled to view it or call Ken Go of 1st Innovative Finance at (562) 508-7048. Thanks for sharing your thoughts and inquiries.
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