How Many Homes Were Foreclosed in 2007?

 

 

2.2million homes faced foreclosure filings in 2007. This is more than 50% higher than the 2006 figure.

 

The city of Detroit led the pack. The four states of California, Nevada, Michigan and Florida were the hardest hit. California is not a surprise because it has the largest U.S population but also a very weak regulator whose poor oversight led to reckless lending by Lenders in the state.

 

Now what happens after foreclosure high of 2007?

 

Hopefully, 2007 may be the peak due to the rate cuts by the Feds in order to stave off a recession. Let’s hope this dissuades lenders from resetting rates. This will be a real reprieve

Liens and Foreclosures

A foreclosure on ones home may be necessitated in order to pay off a lien.

What first is a lien and why is it that powerful?

First of all, a lien is a legal claim against an asset/property that is used to secure a loan. A mortgage is therefore a lien because once your property is sold, you are compelled to pay off your mortgage lender first.

One of the most horrid liens is that from the IRS. Many have been forced to foreclose their homes in order to pay off the tax man lest they be thrown into jail. And once the property is sold, the IRS gets paid.

Another is a judgment lien where a house has to be sold in order to pay off a court settlement. America is a litigious society with a tort system designed to encourage large settlements for aggrieved parties. The defendant may have to sell his home if necessary to meet up with this settlement. Some settlements are designed for the sole purpose of bankrupting the defendant. This might have been the case with O.J Simpson who was saddled with a $25million settlement brought about by parents of his deceased ex-wife and lover.

Then there is the mechanic lien which is a legal claim to a property the workers for work carried out on it. Other names for it are construction lien, laborer’s lien, materialman’s lien and so forth, all depending on what type of work or workman was involved.

These workmen liens exist to protect the contractor due to risk of non-payment for services rendered. This is especially true for subcontractors where the main contractor defaults on their financial obligation to them. This provides the tradesmen financial protection in case there is a default.

Of course, the most popular lien that leads to foreclosure is the mortgage provided by a lender. The lender is obliged to receive payment periodically from the borrower and failure to do so, will lead to the foreclosure of the home to enable the lender recover the money lent.

Were it not for the recent cut in Fed rates, millions of homes faced foreclosure this year. Anyway, it is still too early to say. All depends on when the lenders begin to extend the reduction in lending rates to their borrowers as well as happened in the early part of this century.

We are all waiting!

 

 

 

How To Prevent A Wrongful Foreclosure

 

 

Nobody ever wants to have his home foreclosed but circumstances beyond ones control such as increase in mortgage rates, unexpected medical bills, expensive divorce settlements throws unwary soul into that financial quagmire.

 

However, there are circumstances where foreclosure may be wrongful caused either by a glitch in the lenders computers or perhaps out of bad intentions. Such wrongful foreclosure can and should be fought against and these are the steps that can be taken.

 

First of all, take all correspondence from your lender seriously. Nothing should be overlooked. I remember once, speaking from another context when I received a notice from paypal and thinking it was a spam, refused to read it and it almost cost me my account! It is therefore important to take all correspondence from your financial provider seriously especially if you are indebted to the institution. Ignorance is not an excuse before the law!

 

From the mails received from your lender, it will be easy for you to notice any glitch from your lender.

 

For instance, if you were threatened with a foreclosure but found you were paying higher mortgage rates than you otherwise should, you can demand for a refund of the excess charges from your lender and benefit from paying lower rates.

 

All the same to have a foreclosure declared as wrongful, you will need to prove there is a glitch somewhere. You will need an expert to confirm what exactly the defect is and where the fault is from. This will mean consulting a lawyer and examining the paperwork given to you by your lender.

 

What you really need is knowledge and with that knowledge you can prove that there has been a wrongful foreclosure. An expert is the best option on choosing what the defect is.

 

 

 

 

 

 

How to prevent a foreclosure on your home

Are you falling behind in monthly payments on your home? Then your lenders may demand you foreclose. Here are some tips that can help

First and foremost, contact your lender as soon as possible. Do not put off contacting the lender until it is too late. No lender likes to foreclose because contrary to your belief, it cost as much as 25% to foreclose and hence, a foreclosure is usually a last option by the lender. By avoiding the lender, it suggests you have a desire not to meet up your monthly obligations which will lead to your being blacklisted by the lender.

In a situation where your lender is from out of town, it is advised you make a long distance call which is insignificant in these days. And you can even go the skype route to save further on costs. Alternatively, just send an email. Most, if not all lenders have a website nowadays.

Secondly, be open with you lender. Do not lie. Be 100% truthful. If you have been laid off, state so. If it is an expensive divorce settlement, state so. This will provide your lender with data to work with.

Third, you can have a refinancing done in the event there is some existing equity on your home. Borrowing against this equity can be used to offset the monthly mortgage payments until your financial situation improves.

Fourth, you may consider selling your home before your monthly commitments become a problem. This is a very smart move but will only prove timely if the housing market is strong. But where the market is weak, it may take a while to offload the house except you are prepared to make substantial reductions in its real market value in order to achieve a quick sale. The price reduction need not mean that there is no equity still existing in the house! So you can make a little profit as well.

What is crucial about selling in this case is that it forestalls a situation where you have a negative rating with your lender.

Declaring for bankruptcy is another option. This however should be avoided as much as possible as it will damage your credit record and it takes several years for it to be repaired. The only good thing is that foreclosure proceedings are suspended until your bankruptcy has been concluded

The Federal Reserve recently cut interest rates for the purpose of preventing the United States economy sliding into a recession.

The rate cut has another benefit: finally, a cut in mortgage rates! This will be a boon to many hard up borrowers who have seen their charges zoom through the roof over the past 2years especially those in the sub- prime sector.

Borrowers should look forward to cuts of up to 2% or perhaps more over the next one year. This will stave off a large number of foreclosures especially in very vulnerable markets such as that of California where supervision of mortgage lending was one of the weakest.

A cut of 2% is substantial has it can cut as high as $3,000 a year or more for many sub-prime borrowers. This is substantial considering that many of these borrowers are blue collar and hence poorly paid and probably have high consumer debts on their credit cards. That is why they are in the sub-prime category!

The market that will benefit the most from this windfall will be that of the state of California which was threatened with as much as half a million mortgages that would have been reset within the next one year alone. A big reprieve as higher rates would have created not only a lot of foreclosures but also plenty of insolvent lenders as well 

It is best you meet your lender and request when the present rate cut passed by the Fed will be extended to you. A cut of a few hundred dollars a month will not be a bad thing especially if you were soon to be a victim of the sub-prime woes that engulfed the economy in the latter half of 2007.

The foreclosure nightmare may finally be coming to an end. Let’s party!

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