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Foreclosure: The Stop California Home Loss Blog

Are you at risk for foreclosure in the state of California? Proper-t-Solutions' presents Foreclosure: The Stop California Home Loss Blog. This blog is the homeowner's guide to determining your options when at risk for foreclosure. Read our articles, leave your comments and let's beat foreclosure and stop California home loss.


Reducing Debts With A Short Sale To Stop Foreclosure in California

Stopping foreclosures California and throughout the nation is proving to be a difficult task for our leaders.  President Obama and Governor Schwarznegger are also working hard to stop foreclosure California so homeowners can stay in their properties.  In response, last year we saw the largest stimulus spending ever in the United States.  While this has helped prop-up the stock market and real estate prices somewhat, the bad news is that this stimulus is also rapidly increasing our national debt.  This is of major importance because this ever increasing level of debt is very destabilizing for our economy, and could actually delay any meaningful recovery to our economy while not doing nearly enough to stop foreclosure in California. 

To make matters worse, the stimulus may be starting to wear off.  The stock market is going down again, and it’s hard to predict how much more stimulus the government can afford.  Our national debt already exceeds $13 billion, which is roughly equal to the US’s annual gross domestic product.  At the current rate of growth, our debt will soon surpass the country’s debt-levels in 1945, after WW II ended. 

Stimulus Plan Is Not Stopping Foreclosure California

This has important implications for homeowners who want to stop foreclosure California, but are having difficulties making their monthly mortgage payments.  As the stimulus wears off and banks are forced to wrestle with the growing backlog of unpaid mortgages, it appears that we will be unable to stop foreclosure California.  When this happens, prices will likely fall below current levels in California and around the Country. 

Strategic Mortgage Default

This is an event that banks hope to avoid.  As the economy worsens and real estate prices decline, more and more families may be forced to walk away from their properties.  In addition, strategic mortgage default is becoming more popular.  It is estimated that more than 25% of all real estate is worth less than the mortgage balance.  Until this economy hits rock bottom, you can expect this percentage of “underwater” properties to increase.

Stop Foreclosure California With a Short Sale

While the government appears powerless, there is something homeowners can do when they cannot afford their home.  They can dump their debt using a short sales.  Using a short sale, the homeowner will lose the property, but they will be minimizing the damage to their credit rating.  Under federal guidelines, a homeowner who does a short sale, can purchase another home using federally insured mortgage after two years. 

This is often a better solution because, today, many distressed properties are worth much less that the mortgage.  By selling and purchasing a new property two years later, the homeowners will be getting a fresh start without having all that debt, which was the real problem for them! 

The important thing is for the homeowners to find someone they can trust who will perform the short sale correctly, so they are able to eliminate taxes and avoid a deficiency judgment from the lender. This requires a careful evaluation of the homeowner's debt and taxes.


Permanent Loan Modifications California: Too costly for homeowners 

Up to 75% of permanent loan modifications CA are estimated to redefault within the first 12 months of being approved, so say the Fitch Rating Agency. The agency rates the performance of banks, reports that between 65% to 75% of all approved permanent loan modifications California will re-default. The reason given for such a huge redefault ratio is because the payments levels are too high for the homeowners.  Loan modifications California may work for the bank, but don't appear to be sustainable for the homeowner as the loan modification rate leaves little money for food, clothing, utilities and other important family expenditures.

Fitch indicated that the results for the federal Homelloan Affordable Modification Program (HAMP) are expected to be similar. Treasury Department officials are trying to put a positive spin on these results, indicating that the program is helping at least some homeowners keep their homes.

However, the truth is that loan modifications California appear to be creating more harm than good.  Only a fraction of applicants receive permanent approval for the loan modification California program. Even if accepted into the loan modification program, homeowners are expected to make burdensome monthly payments to the lenders, making other options such as short-sale vs loan modification far more acceptable.

Part of the problem with loan modification lies with the lengthy approval process. Some homeowners are waiting for over 12 months for loan modification approval, only to discover they are ineligible for loan modification in California or worse still, denied for technical reasons. 

Given most homeowners are already in distress BEFORE applying for loan modification, having to wait up to and beyond 12 months (while still being expected to make the mortgage payment) is creating even more stress and problems for the homeowner. To make matters worse, the loan modification payment required by banks for most loan modifications California also appear to be unrealistic and far above what most homeowners can reasonably afford.  According to Fitch, the average monthly loan modification payment is 64% of the homeowner's pre-tax income.

This is causing many families to deplete the little financial savings they have, including the families who never received permanent loan modification approval.


Government Efforts to Stop Foreclosure California

According to a June 16, 2010 article in the Wall Street Journal, the government-administered adrenalin into the economy is wearing off, and the housing market is flagging again.  As a result, government efforts to stop foreclosure California and in other distressed states is not working.

Foreclosure Stop California

This is bad news for the economy, and hopefully, will be a wake-up-call to the Obama administration and Governor Schwarzenegger.  The State and federal and governments have been working to stop foreclosure California through various efforts that include stimulating the economy, providing bailout funds to troubled banks, and loan modifications (California).  Last year, the governor also signed a bill creating administrative delays in the foreclosure stop-California process.  Lenders are required to review alternative to foreclosure with the homeowner before the starting the foreclosure process-California.

Many homeowners have been attempting to obtain loan modifications (California), and because of the long delays, have taken a wait-and-see attitude.  However, this is a risky strategy as time is running out for many homeowners.  It is recommended that these homeowners re-evaluate their options to stop foreclosure California. 

Home prices have fallen considerably in the state, making it much better for homeowners who are able to stop foreclosure (California).  These homeowners will be better able to more easily purchase another home before prices increase again.  Short sales are a good option because this option can help preserve the homeowner's credit rating. 

To ensure success, it is important that homeowners obtain assistance evaluate their best options.


Need to Reduce Debts While Avoiding Mortgage Foreclosure (California)

Many distressed homeowners are hoping to avoid mortgage foreclosure California and to reduce debts.  This is becoming extremely critical as we witness the effects of our nation’s largest stimulus spending begin to wear off.  The stimulus helped prop-up the stock market for a while, but it is slipping again; except now we are also witnessing the most rapid increases in our national debt.  The federal government should focus on reducing debt levels because too much debt is destabilizing for our economy, and will likely delay any meaningful recovery. 

US Must Reduce Debts

Our national debt already exceeds $13 billion, which is roughly equal to the US’s annual gross domestic product (GDP) and roughly double the debt ratios during the Reagan administration.  Because the stimulus requires the issuance of more debt and the printing of more money, creating and financing additional stimulus is problematic.  At the current rate of growth, our debt will soon surpass the US debt-ratios in 1945, after WW II ended.  

Mortgage Foreclosures California Appear To Be Unavoidable

This has important implications for homeowners who are having difficulties making their monthly mortgage payments.  As the stimulus wears off and banks are forced to wrestle with the growing backlog of unpaid mortgages, there will be much more mortgage foreclosures (California) and the falling prices will encourage more strategic mortgage defaults.

Strategic Mortgage Default

This is a scenario that banks are hoping to avoid, and that the federal government should realize that it cannot prevent.  As the economy worsens, more and more families may feel compelled to choose strategic mortgage default to avoid depleting their savings.  It is a simple question – would we rather save what’s left of our family’s finances or the bank’s?  

As strategic mortgage default gains more popularity, I am seeing marketing campaigns from lenders and the federal government attempting to characterize it as immoral.  To the contrary, strategic mortgage default is both moral and appropriate for many families. 

Are More Mortgage Foreclosures (California)  Inevitable?

It is estimated that more than 25% of all real estate is worth less than the mortgage balance.  If distressed homeowners find themselves in a losing battle to save their homes, strategic mortgage default is the wisest of decisions because it is much better to conserve some funds for other family necessities.  However, it does not have to mean that more foreclosures will result.

With the proper help, strategic mortgage default can be implemented in a way to avoid mortgage foreclosure (California).  For example, short sales are a viable strategy if capable assistance is used to ensure a successful outcome.


Lenders' Incentives To Grant Loan Modification California

Loan modification can be a useful strategy.  However the loan modification needs to make sense for both the lender and the homeowner. Are you looking for Loan Modification - California?

Lenders' Often Lack The Incentive to Grant Loan Modification-California

Lenders generally lack the incentive to grant permanent loan modifications to homeowners who:

  • Have no hardship -- Loan modification is granted to solve a problem.  If there is not a problem the loan modification will solve, then why go through the loan modification process!
  • Have unresolved or unresolvable hardships -- If the hardship is not resolved or resolvable in the very near future, then it will probably look like the homeowner cannot afford the property, and a loan modification will not be granted.
  • Cannot afford the property -- If the homeowner cannot afford the property, loan modifications are unlikely to solve the homeowners problem. However, despite the lack of affordability issue, lenders are likely to grant a "temporary" loan modification in this case while other options are persued.
  • Don't need outside help -- If the homeowner is likely to make the monthly payments without the  lender’s financial assistance with a loan modification, then why should the lender incur any losses if they don’t need to?

Loan modifications are more likely to be granted where a hardship existed that is now resolved.  By approving loan modifications, lenders believe they are helping homeowner get back on their feet financially so they can resume regular monthly payments.  Lenders are in business to make a profit and they understand the need to give a little bit when it helps them in the long-term.

Be Cautious With Your Lender On Loan Modifications-California

A word of caution -- it has been shown that lenders will provide a temporary loan modification even when they know the homeowners cannot afford the property.  The intent is to get the payments, and they do not generally care what the sources of funds are, or if it creates other hardships for the homeowners. Lenders want to maximize their revenues, but in the end, are not concerned if this depletes the homeowners savings and creates other budgetary imbalances for the homeowners.

From the lender's persepctive, it is the homeowner's responsibility to understand what they can afford, not the lender's.