When you miss on your mortgage payments the lender initiates a legal process to repossess the property, which is known as foreclosure. If you owe more than your property’s worth, the lender pursues a deficiency judgement. Both of these actions will have negative impact on your future creditworthiness and, hence, should be avoided as far as possible.
Sometimes, the foreclosures become unavoidable because of certain personal or financial reasons, such as: relocation, arrest, divorce, serious illness, job loss etc. In such circumstances your anticipated monthly income may stop or dwindle. In such cases you may become financially incapable or mentally unwilling to continue with the regular mortgage payments.
The Horror of Foreclosures
The scourge of foreclosures has hit like horror on the American society during the recent past. According to the statistical figures cited by RealtyTrac nearly ten million homes have fallen to foreclosures within a few years since 2006. In normal times it would have taken two decades to reach such an astounding figure. The calamity of such large scale foreclosures indicates an endemic social and economic malaise afflicting the nation.
Housing is one of the basic necessities of a society. It takes lifetime’s savings to have a decent roof over one’s head. An individual has perforce to borrow money to buy a home and has to struggle for years paying regular monthly installments to clear the mortgage.
A Case Study
A 58 year old former social worker, Joseph Keller, suffering from multiple ailments, went broke and could barely survive with available resources. Sometime in the year 2009, he was trailing 10 months behind in mortgage payments to the lender JP Morgan Chase. That was time he received the shocking foreclosure notice. Already a pauper, he could not think of any other solution but to abandon his home of 13 years in Columbus County, North Carolina. He moved elsewhere with his wife Jennifer thinking that it is the end of his headaches.
For a year he had nothing to worry about except scraping day-to-day living. In 2010 he received a notice from the county office that his house in shambles, already cleaned out by scavengers, violated the local housing code. He also started receiving mounting municipal bills and tax notices. Chase’s debt collector too started harassing him for unpaid dues which, inclusive of penalties and interest charges, reached a formidable sum.
The worst blow came when recently the Social Security Administration rejected his application for disability benefits because he owned a house in Columbus. Keller now thinks he will not live to see the end of this year.
Some Helpful Steps to Follow
- Do not ignore any notice from the lender. You can explain to the lending bank’s mitigation office your inability to pay the instalments and seek relaxation in the terms.
- Give complete financial information, income and expenses, with whatever available documentary evidence.
- Do not abandon your home. If you do, you may not be eligible to get any benefits from organizations like Social Security. Hope for Homeowners’ program offers the benefit of 30-year fixed rate mortgage only to owner-occupiers.
- Contact any housing counseling agency nearest to you. These agencies are valuable resources for information on government as well as private and community programs that could be of immense help to you.
- Some housing counseling agencies also offer credit counseling. Usually their services are free of charge.
Auctions of Foreclosed Properties
The lending institutions are usually do not want to hold the foreclosed properties indefinitely. Their intention is to recover as much of the outstanding dues as early as possible. They hand over the foreclosed properties to professional auctioneers to auction those properties off at auction sales.
Today’s advances in computers, communications and information technology make it pretty easy to conduct online auctions. There are several websites which are dedicated to online auctions. Auction.com and RealtyBid.com are just two such popular websites.
Online auctions provide a convenient platform for the general public to participate in the bidding process from their respective homes or offices. The websites provide a wealth of all relevant information. The bidding process is fair and transparent. Overall, it is time-saving besides being cost-effective.
Hedge Funds
It is a general rule that wherever there is the lure of making quick money, the vultures of all kinds abound. Hedge funds constitute groups of high net worth investors explicitly come together to earn huge profits on their investments in as short time as possible. Be aware, they would try every means in their power to edge out competition from small fries like you.
Conclusion:
Jeff Adams, the popular online columnist, advises you not to get disheartened by big hedge funds. “If you cannot beat them, join them by circumventing their game-plan,” he says.
