No Good Deed Goes Unpunished: Homeowners With Good Employment and Grea…

No Good Deed Goes Unpunished: Homeowners With Good Employment and Grea…

We are in a very rare time; prior to this one would be hard pressed to find a point in history when home prices increased only to retract below original values. The rapid increase in home values, fueled by cheap money and loose lending criteria, met with an equally devastating crash has left some 11 million homeowners upside down mortgage on their mortgages. The Economist reports that perhaps 25% or more of these upside down homes are worth as little as half of their mortgage. While this is all old news, there are companies offering new solutions and sets for homeowners in trouble.

Firstly, homeowners aren’t alone. While navigating one’s options on what to do with their negative equity is daunting, given that state, federal, and IRS rules all factor in, there are sets out there that provide homeowners guidance on what to do. One company you walk helps homeowners determine their deficiencies/obligations with regards to “walking away” from their mortgage.

Most importantly one must always seek the advice of an attorney. Especially when one is at risk of receiving a deficiency judgment on their mortgage. An attorney will help the homeowner determine if their mortgage is classified as “recourse” or “non-recourse” and if a foreclosure proceeding would be conducted as a “Judicial” or “non-judicial” foreclosure.

Strategic Default has entered our lexicon with this recession. While there are attorney’s and sets to help homeowners. there are also government programs obtainable for those in financial distress. If a homeowner lost their job, or experienced a meaningful drop in income, the FHA in addition as other agencies have funds obtainable. Also edges are open to short sales for individuals, however based on latest statistics and anecdotal evidence it is a fair calculate to say the only 10% of short sales close.

For homeowners with an upside down mortgage who can provide their housing costs, have good income, and stable employment there are no programs obtainable to them for their negative equity – and there never will be. already if one has no knowledge of the financial industry, shared sense dictates that bond holders of the mortgage assets are not going to offer to take a loss when their investment is performing. in addition, no government can legislate an investor to take a loss on an investment without offering compensation. If the government were to legislate write down some calculate put the loss at $761 billion. An amount the federal government would have to borrow.

However, there is one program for homeowners with good credit, good income offered by Clean Slate Funding Inc. Their program is designed specifically for homeowners entering strategic default who love their home, would love to retain it, but cannot fathom paying off negative equity for the next 25 years. Their program is a Lease-to-Own strategy where the company purchases the home from the bank, during foreclosure, while the homeowner nevertheless resides in the character. The home is then leased back to the homeowner for a period of five years, the rent is fixed for the 5 year term and most importantly the buy price is set to the value of the home on foreclosure. They use a standard Lease Agreement with Option to buy applicable to the state the homeowner resides in (offered in California, Florida, Nevada, and Arizona). The amounts are fixed and prices guaranteed.

Past housing market crashes in other countries are a good indicator of how long the US may keep in this mess. Alberta, Canada was home to a major housing meltdown from 1979 to 1981. Homes values increases were consistent by the oil industry and cheap rates. While the meltdown was sparked by the NEP and chief rate increasing into the double digits. If that past bust is any indication it may take 20 years for aggregate home values to rebound to their original levels. Very interesting times.

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