There are Real Estate Alternatives to Foreclosures

August 5th, 2009 | Tags: Foreclosures

foreclosure

There are real estate alternatives to foreclosures that may be dubbed as the latent power hidden in the owners of property.

At present there is a record breaking surge in foreclosures in USA that is putting the financial safety and community stability at risk. Each one is today intensely aware of the sharp fall in value of property. The euphoria of the housing boom year has disappeared. Prices have tumbled and equity on homes has nearly vanished. For many, this poses a dangerous threat. Those who purchased or refinanced their homes during the boom time are now finding themselves underwater. This means their loans are more than the worth of the mortgaged houses. Those with ARM’s are finding their monthly payment slab shooting up. For others the situation has been further mired with economic gloom and surge of job losses that have made holes in their pockets making it impossible for them to continue with their monthly mortgage payments.

The statistics is grim. One eighth of Americans is now delinquent on their loans according to Mortgage Bankers Association. Nearly half the new foreclosures were contracted in four states of Arizona, California, Florida and Nevada. 11% of the total number of mortgages in Florida is in some stage of the foreclosure process. In Massachusetts the rate of foreclosures is 2.8%. In 2008 there were 12,000 foreclosures.

The foreclosure calamity is something more than a national disaster – it is a problem for the community that hits everyone everywhere whether in towns, cities or villages. In Massachusetts the highest number of foreclosures is in Middlesex County having noted 1,741 till now in the current year. Billerica has noted 61 foreclosure postings since the start of 2009. It ranks 23rd in the state – having more foreclosures than 335 cities and towns in Massachusetts.

Although powerful economic forces are propelling foreclosures, if handled properly these can be halted. The owners of property are not fully aware of their bargaining powers. Banks do not easily want to opt for foreclosure. They are reluctant to be property owners. The process is very costly for the banks. On top of that there are the costs of repairing damaged Repo homes and putting them back in the market. Average cost of the process is about $60,000.

Thus banks have a strong incentive to sit down to workouts with the borrowers. What is required is making the timely contact.

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