The foreclosure crisis is an epidemic that is affecting every region in the United States, and while the current crisis outweighs most declines in the real estate market up until this point in history, foreclosures will always follow the dream of home ownership for many Americans. Typically it only takes 3-6 missed payments for a bank or lender to initiate foreclosure proceedings on a property. Because so many Americans are out of work and house prices continue to decline, many purchasers from the beginning and middle of the decade are finding payments to be unmanageable and are stuck under a wave of debt.
The Obama administration is doing what it can with the problem it inherited in many ways. On top of the skyrocketing number of loans in or going into default, the credit markets are essentially broken, with credit becoming almost impossible to access, even for the most credit-worthy borrowers. No one knows who is to blame for the current state of the market, but it is clear that conditions are bad for both lender and borrower, and is especially difficult on the homeowner who sees that future mortgage payments will be too high to manage, but cannot refinance or sell their property in time for a price that will get them out of the situation.
As long as Americans dream of home ownership, foreclosures will be soon to follow. While credit was easy to access 5 and 10 years ago, that well has dried up, and the market is correcting in a very severe manner affecting even those with good credit that had little to do with the current housing crisis. Property values have ceased to increase, and many are lucky to sell for a price they paid as long as 5 years ago. The bottom line is that foreclosure and borrower default is a part of home buying. The luckiest people who can pay for a property still have to worry about defaulting on tax bills, association fees and construction liens. It is an issue that goes hand in hand with real estate investing, just as potential gains and losses are part of investing in stocks or commodities.
However, never before has our federal reserve and banking system been flooded with so many defaults at once. Many banks are desperately trying to sell off those toxic assets to clean up their balance sheets, but are finding that the market for these products is so low that the bank could risk going under if they were to realize these massive losses in home value. There are many investors and bottom-feeding real estate investors who are interested in purchasing the properties at 50 cents on the dollar or less, but most banks are being given quite a bit of lead-way by the federal government, and many think have not been forced to feel the pain of the market as others have. This reluctance to accept where the market will be for these assets is part of the problem, and as long as banks sit on the properties as REO’s the slower the nation’s housing recovery time will be.
If you are in foreclosure or feel that your upcoming payments are going to be too difficult to manage, consult with a loan modification company as soon as possible, or contact your lender and see what options are available. It is better to find out sooner rather than later so that you are prepared for what is to come. You can still find time to stay in your property, and if you have missed payments, your lender may be able to provide time with which to work with you to get back on track.