How Does Foreclosure Impact Your Credit Report? How does a foreclosure effect your credit report is a perplexing question. This is because Fair-Isaac Company, who started the credit scoring system, will not share this information. What complicates Read more...
To a homeowner, foreclosure is a shocking experience. When foreclosure takes place, it is extremely costly to the homeowners because not only have they lost their home, they have also lost any equity they may have built up in the property. (Equity is the difference between the true market value of the property and the balance owed and/or the total amount of all liens against the property). Along with the loss of all equity, people losing their property due to foreclosure also lose the amount of their original down payment and any money spent on improvements since they bought the home.
As we mentioned earlier, there are many reasons why property (home) owners find themselves in the type of financial trouble that could result in foreclosure. Here are some of the most common reasons.
1. Economic Downturn The downsizing of many companies was a major reason for the declining job market in the early nineties. Companies that downsize create employee layoffs and/or changes in job classifications. The economic trend over the last few years has generally required more than one person in each household to work. The combined income created more buying power for the family unit. Company downsizing resulted in one or more family members losing their job(s) and/or a reduction in the number of hours worked by one or more family members. The loss of income created a budget problem for many families, making it hard to keep up with their mortgage payments and other bills.
The downturn in the economy resulted in declining property values. Before the economical downturn in the early 1990s, property values, for the most part, had continually increased. Now, we are again seeing a decline in property values. This decline has created many problems. Lower property values caused an inability on the part of many homeowners to refinance, making them unable to take advantage of the lowest interest rates available in many years. Many homeowners found that they could not refinance or borrow against their home equity to consolidate their debt load (bills). When homeowners lose part of their income due to situations such as economical downturn and the decline of property value, the result, in many cases, is the loss of their home due to foreclosure.
2. Balloon Payments A balloon payment is the final installment payment on a note that is greater than the preceding installment payments and which pays the note in full. Many homeowners bought during the so-called good times, when property values were appreciating/ increasing rapidly. Sellers were able to sell their homes at two to three times the original cost. Many sellers were willing to carry back a 2nd or 3rd mortgage/ note/ loan on the property themselves. The length of time the seller would carry the paper/ note/ loan would generally be three to five years. The new borrower/ homebuyer usually made interest only payments on the carry back. At the end of the three to five-year term, the entire balance on the 2nd or 3rd loan/ note carried back by the previous owner would be due.
Once the note reached the maturity date at an agreed upon time, the entire sum/ balance of the carry back loan would then be due and payable to the seller/ previous owner. Unfortunately, the property value did not always appreciate/ increase, meaning that the new homeowners could not refinance or borrow enough money to make the payment. The missed balloon payment started the process ending in foreclosure.
3. High Payments During the late 1970s and through most of the 1980s, home values increased all over the U.S. Many buyers thought the home prices would continue that upward trend. Many expected the property values to continue to spiral upward, and some even expected property values to possibly double and triple. A number of buyers bought properties they could barely afford with the intent to refinance later at a lower interest rate or possibly to sell and capture the profit. Many persuaded themselves that if they didn’t buy immediately, they would be unable to buy in the future, when prices were expected to be significantly higher. Some buyers made a lot of money buying and selling properties. However, many others lost their properties as a result of high monthly payments they could not maintain. (Many are in trouble right this minute and need help.) This resulted, in many cases, in foreclosure.
4. Speculation Many real estate investors bought on speculation. They theorized that buying several properties, and using them as rentals, would make them millionaires in a short period of time. Some did just that, but many others had problems. The lack of experience in managing rental properties, plus the problems accompanying rental properties, became a nightmare for many. The change in economic conditions created additional problems when the renters could no longer afford to pay the required rent. When the rents were not coming in as expected, the owners could not keep up with the loan payments. Other problems included some of the payments on properties being more than the rental income (the rental income was less than the loan payment), creating a negative cash flow for the property owner. Declining property values also created a situation wherein properties would not sell for enough money to pay off the existing mortgage. Foreclosure was frequently the result.
The above reasons are not the only reasons for foreclosure, but they are some of the most common. Foreclosure conditions have created problems for both homeowners and lenders. In good economic times, foreclosures may not be as costly to the lender as in poor economical times. In good times, they may be able to sell the property for full price and recover their investment/ balance owed the lender. In a poor economy, however, lenders often suffer tremendous losses when they end up with a property. Again, as a reminder, lenders do not like to foreclose; the last thing they desire to have is another piece of property. In poor economical times - in fact, at most times - lenders are very willing to negotiate to avoid complete foreclosure. Quite often, forbearance agreements can be worked out with the lender or lenders.
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Foreclosure Assistance Program By Ingrid Sure If you are searching the Internet for ways to stop the foreclosure of your property, then you should know that there are many companies out there promising services they are not capable to provide. Read more...
How Does Foreclosure Impact Your Credit Report? How does a foreclosure effect your credit report is a perplexing question. This is because Fair-Isaac Company, who started the credit scoring system, will not share this information. What complicates Read more...
3 Reasons To Get Training As A Pre-foreclosure Investor Now By alyssa collins The foreclosure market has always been lucrative to many real estate investors and the late summer and early fall of 2007 is no exception, it looks like the opportunities will continue for at least Read more...
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To better understand, they walk in their shoes - Boston Globe: Massachusetts This is a month in the life. First week: Felicia Fuentes, 30-year-old mom to two teenagers, slogs through welfare paperwork. At school, her kids are forced to sit on the floor and watch as classmates are hauled out for drug possession. Fla. governor supports plan to allow universities to raise tuition 15 percent a year - Star Tribune: Nation This is a month in the life. First week: Felicia Fuentes, 30-year-old mom to two teenagers, slogs through welfare paperwork. At school, her kids are forced to sit on the floor and watch as classmates are hauled out for drug possession. Fannie Mae, Freddie Mac to Suspend Foreclosures Over Holiday Season - Washington Post: Nation Fannie Mae and Freddie Mac announced yesterday that they are temporarily suspending foreclosures and evictions during the holiday season in an effort to keep people from losing their homes.
<p><a href="http://feedads.googleadservices.com/~at/YnXPiu2u5bsyrEUFS6mGKoZSAfI/a"><img src="http://feedads.googleadservices.com/~at/YnXPiu2u5bsyrEUFS6mGKoZSAfI/i" border="0" ismap="true"></img></a></p><img src="http://feedproxy.google.com/~r/wp-dyn/rss/nation/index_xml/~4/9UfC1Hj2pRk" height="1" width="1"/> Home values in Houston dip 2.7% in October - Houston Chronicle: Business The median price for a single-family home dipped to $142,000, after rising 4 percent in September.
<p><a href="http://feedads.googleadservices.com/~a/UqDQIshdxsbIM_zzd-djp35z-i8/a"><img src="http://feedads.googleadservices.com/~a/UqDQIshdxsbIM_zzd-djp35z-i8/i" border="0" ismap="true"></img></a></p><img src="http://feedproxy.google.com/~r/houstonchronicle/business/~4/eg5nAxNjzkE" height="1" width="1"/> Santa Ana leads a bittersweet real estate boomlet - LA Times: Business The Orange County city is flooded with cheap foreclosures, giving people previously priced out of the market the opportunity to buy homes that others have been forced to leave.
Angelica Maciel used to drive through the oak-shaded streets of Santa Ana wondering if she'd ever be able to buy one of the charming little bungalows she so admired. ¶ But the real estate frenzy had overtaken even this hardscrabble Orange County city, and prices kept going up. ¶ Not any more. ¶ Last month Maciel paid a bit under $270,000 for a two-bedroom, 910-square-foot house. It had previously sold for $504,000 in 2006 and was foreclosed upon in July. ¶ All told, 357 homes in Santa Ana were in escrow in October, almost 10 times the volume of a year ago. ¶ They're selling ... Legal aid to low-income Mass. residents drops - Boston Globe: Latest Isabel Miranda got sick of watching roaches and mice scurry around with impunity in her apartment and finally called the local building inspector. Two weeks later, the 28-year-old mother of four got an eviction notice from her landlord. Legal aid to low-income Mass. residents drops - Boston Globe: Connecticut Isabel Miranda got sick of watching roaches and mice scurry around with impunity in her apartment and finally called the local building inspector. Two weeks later, the 28-year-old mother of four got an eviction notice from her landlord. Lawmakers criticize Treasury plan to shift focus of financial bailout plan - Star Tribune: Politics Isabel Miranda got sick of watching roaches and mice scurry around with impunity in her apartment and finally called the local building inspector. Two weeks later, the 28-year-old mother of four got an eviction notice from her landlord. Correction: Talking About Money story - Seattle Times: Business & Technology In a Nov. 6 story about people openly discussing their financial troubles, The Associated Press erroneously implied that Micki LeSueur of Chicago is facing foreclosure on a rental property. LeSueur said she is "upside down" with the property, meaning the mortgage exceeds the market value, but she is not facing foreclosure. Also, the story incorrectly stated that LeSueur has blogged about her money problems. She says she blogs about the economy and finances. The corrected version of this story appears below. City brokers unusual takeover at apartment complex facing foreclosure - Houston Chronicle: Top Headlines Action comes after residents at La Casita were left fearing eviction as managers attempted to abandon the hurricane-damaged property.
<p><a href="http://feeds.chron.com/~a/houstonchronicle/topheadlines?a=n0phzE"><img src="http://feeds.chron.com/~a/houstonchronicle/topheadlines?i=n0phzE" border="0"></img></a></p><img src="http://feeds.chron.com/~r/houstonchronicle/topheadlines/~4/444920104" height="1" width="1"/> City brokers unusual takeover at apartment complex facing foreclosure - Houston Chronicle: Texas Action comes after residents at La Casita were left fearing eviction as managers attempted to abandon the hurricane-damaged property.<img src="http://feeds.chron.com/~r/houstonchronicle/metro/~4/444919139" height="1" width="1"/> Thousands of foreclosure scams yield a small number of criminal charges - Minnesota Public Radio: Business Authorities say a significant number of the 66,000 foreclosures in Minnesota the last three years were the result of toxic mortgages or scams.<img src="http://feeds.publicradio.org/~r/MPR_Business/~4/441896429" height="1" width="1"/> Pets feeling hard times, too - Seattle Times: Local As the region's economy falters and layoffs and housing foreclosures rise, animal advocates say pets can be unseen victims. FDIC Plan Tests Limits of Leniency - Wall St. Journal: Policy IndyMac Federal Bank has become a laboratory test of whether the FDIC's aid program can keep people in their homes. Election issues: The Presidential Race - Star Tribune: Politics As both campaigns enter the final days before the Nov. 4 election, we take a look at how John McCain and Barack Obama stand on the major issues. Election issues: The Senate Race - Star Tribune: Politics As both campaigns enter the final days before the Nov. 4 election, we take a look at how John McCain and Barack Obama stand on the major issues. 6 states account for almost 60 percent of homeowners with mortgages higher than homes' value - Star Tribune: Nation As both campaigns enter the final days before the Nov. 4 election, we take a look at how John McCain and Barack Obama stand on the major issues. Retired voters take new look at what matters - CNN: Top Stories With Election Day looming, retirees say they're not just worried about their own finances and whether they may need to work again. They also have concerns about others, and the kind of world that their children and grandchildren will live in. Read their stories in part three of CNN.com's special report, Battleground Voters. Wall Street jumps again, but no one is exhaling - Minnesota Public Radio: Business Wall Street's best day in two weeks - and one of its best ever -
brought little real reason to celebrate.<img src="http://feeds.publicradio.org/~r/MPR_Business/~4/435805640" height="1" width="1"/> Area's rents up 4.2% in one year - Boston Globe: Business Rents in the Boston area spiked 4.2 percent over the past year, the biggest increase in seven years, while rising foreclosures and a slumping housing market pushed more people into apartment living. Foreclosure crisis drives up rents in Boston area - Boston Globe: Massachusetts Rents in the Boston area are up 4.2 percent in the past year as demand for apartments grows because more families are being forced out of their homes by foreclosure. Stocks' rally met with gloom, not enthusiasm - Houston Chronicle: Top Headlines Wall Street's best day in two weeks — and one of its best ever — was a joyless rally.
<p><a href="http://feeds.chron.com/~a/houstonchronicle/topheadlines?a=Ojm7yX"><img src="http://feeds.chron.com/~a/houstonchronicle/topheadlines?i=Ojm7yX" border="0"></img></a></p><img src="http://feeds.chron.com/~r/houstonchronicle/topheadlines/~4/435489901" height="1" width="1"/> Late-day rally drives Dow up almost 900, but investors don't think surge will be sustained - Star Tribune: Business Wall Street's best day in two weeks — and one of its best ever — was a joyless rally.
<p><a href="http://feeds.chron.com/~a/houstonchronicle/topheadlines?a=Ojm7yX"><img src="http://feeds.chron.com/~a/houstonchronicle/topheadlines?i=Ojm7yX" border="0"></img></a></p><img src="http://feeds.chron.com/~r/houstonchronicle/topheadlines/~4/435489901" height="1" width="1"/> Dow ends up almost 900, but no one is exhaling - Seattle Times: Nation & World Wall Street's best day in two weeks - and one of its best ever - was a joyless rally. Even a manic, final-hour stampede of buying that sent the Dow Jones industrials soaring almost 900 points did nothing to dispel the feeling that the market could turn on investors in an instant. Dow ends up almost 900, but no one is exhaling - SFGate: Business & Technology Wall Street's best day in two weeks _ and one of its best ever _ was a joyless rally. Even a manic, final-hour stampede of buying that sent the Dow Jones industrials soaring almost 900 points did nothing to dispel the feeling that the market could turn ...
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