In an article written by Sean O’Toole of Foreclosure Radar, he states that the Home Affordable Modification Program currently being pushed by the administration is the new exotic mortgage that will drive the homeowners who are experiencing harship into digging another hole.  The modification put the homeowners into a trial modification and convert them to a permanent modification by temporarily lowering their mortgage payments for five years.   

This is the same scenario when the homeowners took ARM loans despite the fact that they knew that they will not be able to afford the payments when their loan skyrockets in five years.  They were just banking on the fact that their equity will increase as property values improve within five years and never considered what it would be like should values decline.   Nowadays, the risk of a job loss is greater now than it used to be, not to mention the need to relocate due to job transfers, illness in the family or other unexpected situation. O’Toole states that these new loan modification programs are much worst than the mortgage programs they are replacing.  

There is always that possiblity that the market will not improve in five years.  These homeowners will be in exactly the same situation they were in when they took the toxic loans they are replacing.  We are falling into another trap and we fail to see it.  When will we ever learn?

Bank of America recently announced their principal reduction program as their new loan modification program. While it may sound good to everybody now, IF they will really approve it, the most important issue of negative equity is  being overlooked. 

Elizabeth M. Eugenio, Certified Distressed Property Expert, Certified Residential Specialist, Short Sale and Foreclosure Resource

(909) 376-8615 | Elizabeth@HomesByLiz.com | www.HomesByLiz.com

The Truth About the HAMP Program is a post from: Chino Hills Real Estate Resource Center

Foreclosures hit record high in the first quarter.  In California, foreclosures and short sales comprise 46% of the housing market inventory.  According to The Mortgage Bankers Assnociation, nationally, 1.3% of loans started the foreclosure process in the first quarter. 

Most common belief is that the cause of borrowers defaulting on their loan is because of high mortgage payments. According to the Federal Reserve Bank of Atlanta, unaffordable loans is not the main reason.  Why do borrowers default on their mortgage?  The main reason is unemployment.  The FED paper estimates that a 1% increase in unempolyment increases the chance of a 90 day delinquency by 10%-20%.  

The paper also loooked if it is in the best interest of lenders and investors to modify delinquent loan instead of foreclosing on the homes back by those loans.  Although the gains from modifying the loans rather than foreclosing runs as high as $180 Billion, they feel that modifications don’t save much and many modifications fail. 

So how do we prevent defaults and foreclosures?  More attention should be placed on programs to help prevent job losses.  Another solution is to boost short sales where lenders take a loss on the sale of the house that has declined in value.  Short sales should be explained clearly to homeowners.  There is so much misunderstanding and myths regarding short sales.  Many homeowners have the erroneous belief that it is better for them to let their home go into foreclosure rather than do a short sale so they deliberately walk away and let their home go into foreclosure which hurts home values in the neighborhood and the economy all the more.

For a better understanding of short sales, request your free copy of a report entitled: “Short Sale VS. Foreclosure”.

Elizabeth M. Eugenio, (909) 376-8615Email: Elizabeth@HomesByLiz.com, Website: www.HomesByLiz.com

Certified Distress Property Expert (CDPE), Certified Residential Specialist (CRS), Graduate Realtore Institute (GRI)

How can we minimize foreclosures? is a post from: Chino Hills Real Estate Resource Center

The Obama administration is putting a lot of effort to help the country’s economic recovery.  However, did you ever consider that we also have a responsibility to help with this gigantic effort of recovery and not leave it to the govenment?   How can we do our share? 

As I go to different neighborhoods and talk to people, I often hear homeowners tell me that their neighbor left and abandoned their home.  Most of the time, they did not even make the effort to talk to their distressed neighbor.  Could it be that they are embarrased to talk about such matters or have we develped an attitude of ”it is none of my business”.   Since property values in the neighborhood decline by at least 9% when a house goes into foreclosure, we should all make an effort to help prevent foreclosure.  Additonally, the lender spend more money on a foreclosure sale against a short sale so that means less money is available to lend to borrowers.

Many homeowners in financial distress end up in foreclosure because they did not know what to do or where to go for help and some just simply go through a period of denial and by the time they take action, it is too late to help them.  The best way to avoid foreclosure is to educate themselves so they are aware of all their options.  While there are many agencies to go to, there are also many scammers out there who prey on desperate homeowners.   If we can all go out of our way to help one family at a time by encouraging them to get the right help, then we would have done our share in preventing foreclosure.

Economic Recovery is everyone’s responsibility is a post from: Chino Hills Real Estate Resource Center

While loan modification has benefited numerous homeowners lower their payments and save their home,  scams are on the rise.  There has been a lot of coverage lately in the news regarding foreclosure prevention scams and it is good because it weeds out the scammers who take advantage of homeowners who are already in financial hardship.  

Here are some points to remember to protect yourself:

• Don’t sign anything unless you completely understand it.  If in doubt, have all documents reviewed by a trusted real estate provessional or an attorney.
• Don’t deed your property to anyone.  When you deed your property to anyone, you still have mortgage obligations
• Don’t let anyone assume your loan without your lender’s permission and without them formally releasing you from liability for the mortgage
• Don’t move out of the house because you were promised that someone was going to make the mortgage payments for you
• Do not let your insurance lapse.  When the lender finds out, they may initiate foreclosure proceedings
• Don’t list your home with a Realtor that is not experienced with short sales
• Don’t sell your home without determining the approximate market value 
• Don’t pay up-front fees for any service or loan, borrow more money or take out a loan without considering your abiity to make the payments
• Avoid refinancing with inflated fees, a prepayment penalty, excessively high interest rate or a ballon payment due
• Be leery of anyone who contacts you and promise they will solve all your problems and save your home
• Get all terms and promises in writing
• Check for complaints about any company that offers to buy your home.  Your State’s Consumer Protection office will have this information.

Elizabeth M. Eugenio, (909) 376-8615

Email: Elizabeth@HomesByLiz.com, Website: www.StopForeclosureRemedies.com

Certified Distress Property Expert (CDPE), Certified Residential Specialist (CRS), Graduate Realtor Institute (GRI), Certified Foreclosure Specialist, (CFS).

Beware of Mortgage Loan Modification Scams is a post from: Chino Hills Real Estate Resource Center