FACING foreclosure can be one of the most stressful experiences in your life. It is easy to get overwhelmed and feel like nothing can be done about the situation. Some people are paralyzed with fear and do nothing until the day they are forced to move out. Some fight to the bitter end and still end up losing their home.
Well, here’s a little bit of “good news” (if you can even call it that) if you are currently facing foreclosure. According to a recent USA Today article, banks and mortgage servicers are taking more time to foreclose on homes due to the increasing volume of defaulted mortgages. Loan modification reviews are taking a lot more time than originally expected and because eligibility rules under government programs keep changing, this makes the process more difficult and time-consuming.
Thus, the bit of “good news” I was referring to above is that on the positive side for homeowners, delinquent borrowers are able to stay in their home much longer without paying. Did you know that it is estimated that the average delinquent borrower now stays in his or her home an average of 19-20 months without paying before they are forced to move out? By the end of this year, this average is expected to increase to 22-23 months. Before the foreclosure crisis, the average was about 8 months. Thus, even for homeowners who eventually lose their home, the fact that you can stay in your home for almost 2 years without paying is a benefit to be gained from the current foreclosure backlog. In other words, the more time you can buy, the better chance you will have to consider all other options such as filing for bankruptcy, doing a short sale, etc. if in fact those are viable options for you.
One thing that certainly results from the foreclosure delays is greater uncertainty. Potential buyers hesitate to buy because they are not sure whether prices will continue to fall. Weak sales will be inadequate to offset increasing inventory as foreclosures continue, thus putting the real estate market in limbo and prolonging the housing slump for years. So the big question that everyone is asking is: When will recovery ever start? It seems like no one, not even the government has the answer.
Some experts are suggesting that the delays could put more pressure on banks to modify loans. Approximately 23% of mortgages are “under water” which means that their market value is lower than the existing mortgage loan. People who own these homes are more likely to walk away from their homes in spite of the certain damage it will do to their credit. Approximately 2.2 million homes were in foreclosure at the end of January. Lenders have assigned more workers to handle defaulted mortgages in recent months but they are still understaffed to handle the huge volume. If you’ve been trying unsuccessfully to get a loan modification from your lender, you already know that these lenders are far from equipped in processing these loan modification applications.
A lot of homeowners are frustrated with their lender because they feel that unless they are in default, they will not get their lender’s attention in order to obtain help. Thus, a lot of them choose to stop paying even when they can. These homeowners believe that their property is not even worth keeping and find it unfair that other homeowners who are not even paying are getting the most help while they are being denied the same. So they feel that they are “being penalized for being good”?
Important: In spite of what I stated in this article regarding the current foreclosure delays, you have to understand that every situation is different and if your lender has already initiated foreclosure proceedings in your case, the clock is ticking and your time may be very limited. For a free office consultation, please call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos, West Covina and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
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