Housing Crisis Gets Personal
Are you one of the hundreds of thousands of Americans who received a Notice of Default last month? Well then, now this housing crisis is personal.
Over 200,000 Notices of Default went out last month. If you are one of the recipients then you are likely dealing with some pretty strong emotions now. These emotions can propel you into action or paralize you.
This is not for the faint of heart. You have now embarked on a journey through foreclosure, CA-style. So, suck it up and get ready to get even more uncomfortable, for a good cause – YOU!
Never has so much wealth just dissappeared. And the problem became global as our financial markets sold mortgage backed securities worldwide. About 15 million Americans purchased homes during the market run-up from 2004-2006. It is likely that more than 8 million will go into foreclosure between 2009 and 2012.
It’s bad right now, but the worst is yet to come. Far more numerous than the sub-prime loans that started the declinethousands of Alt-A Option Adjustable Rate Mortgages (ARMs) are resetting to higher payments. Some $2.5 Trillion of these “slightly-less-than-prime” loans were made during the housing market run-up and it is now estimated that more than 50% of these will fail and require some type of remedy, like a modification or short sale to adjust to new housing market realities. This”Third Wave” of foreclosures is on our shores now. And, the modification initiative, part of the President’s Making Homes Affordable Program, is only a stop-gap measure, meant to stem the rising tide of foreclosures. It does nothing to address the actual problem of lost value. That pricey problem is still “out there”. Recently announced efforts to offer principal reductions – announcements from banks, government and private “hard-money” lenders – are still theoretical.
Nationwide there are over 20 million homeowners who are upside-down on their home mortgage. That is, they owe more on the mortgage than the home is worth. And, while that is sobering, it’s even more so in states like Florida, California, Arizona and Nevada where homes are (or were) more expensive than average. In these states, some counties report more than 70% of homeowners are significantly upside-down!
The numbers are shocking, aren’t they?And the problem is personal to tens of millions of us. We are struggling with a personal financial crisis in need of a bailout. This is personal.
Dealing with it means the following: 1) Understand all foreclosure workout options, 2) Asses your resources, 3) Asses your legal vulnerabilities – can the lender hold you liable for any “shortfall”do they have “recourse”? 5) Assess your tax consequences, 6) Understand your housing options – rent vs. own and 7) Think thru the credit score issues and make peace with them.
Thankfully there are plenty of resources out there for homeowners. That makes it possible for us to get through it. BUT, you have to take action. Passivity will result in failure.
Rockwood is a homeowner advocate and foreclosure expert based in Torrance, CA.Visit Rockwood’s site about DIY Loan Modification at Home Loan Modification Grab a totally unique version of this article from the Uber Article Directory
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