FORECLOSURE
Curing a foreclosure is a little like curing a potentially fatal disease- the sooner you catch it, the better your chance of survival.
Early on in the default process, consumers can still come back from the brink because they haven't missed more than one or two monthly payments. But as the foreclosure process moves along, the size of the delinquent debt owed and the bank legal costs that customers are usually charged can increase as well. Borrowers who try to ignore their financial problems and their lenders' phone calls, will likely lose their homes.
Because most purchases are made with borrowed money, (leverage) this debt can become a two edged sword. Leverage is great in times of inflation and financial stability and when buyers out number sellers, but potentially disastrous in times of price deflation, and or, unforeseen personal financial difficulties.
Foreclosure is a time of immense distress for the borrower. We sincerely understand this time of distress, and dedicate ourselves to assisting the borrower through the most difficult decisions that need to be made. Most borrowers during this time, experience a degree of denial about their true financial condition, and may literally become paralyzed as to what to do. They subsequently make faulty decisions, worsening their financial condition and waste what little valuable time is left to remedy the situation. We strive to assist those in this condition and execute financial strategies that will lead to resolving the issue as quickly as possible keeping in mind that preserving your good credit is invaluable.
WE HAVE LENDERS THAT CAN HELP GET YOU CURRENT AND STOP THE FORECLOSURE PROCESS!
YOUR EQUITY- PROTECT IT!
From the market bottom of 1995 to the market top of summer 2005, equity in homes had appreciated substantially with most homeowners borrowing on this new found equity, and thus creating a new level of risk as the loan to value increased. Many become lulled into believing that this equity, based on a higher property valuation, is theirs to keep forever. They believed this equity is never going to disappear but, in fact, continue to increase. From 1990 to 1995 real estate prices declined 30-35%, in Southern California, wiping out much equity that had been borrowed on by investors prior to this period. We are now beginning to see real estate prices slow their accent, with the supply of homes increasing and remaining on the market longer. But many investors will be slow to realize this, remaining unrealistic as to the value of their property and their ability to afford increased payments as their adjustable rate mortgage ratchets up, coupled with an unexpected financial set back like a long term job loss or medical problem. The desire to have more than we can realistically afford can be difficult to accept, but an emotion that can devastate sound thinking in making critical decisions as to how to handle the debt and preserve sound credit. Many investors have gone bankrupt with an unrealistic view of the current market and the requirements of refinancing along with the time frame necessary to sell a property in a slowing market.
THE DANGER OF LEVERAGE
Wall Street investors have used what is called “margin" for years. This is a term used to describe leverage, or the borrowing of money to make an investment. Here's how it works. Say one buys a stock at $10.00 and puts up $5.00 in cash and borrows the other $5.00 to make the purchase. The leverage is 50%. The stock declines to $7.00 erasing $3.00 of borrowed money. The brokerage house will issue a “margin call” requiring more capital to be put up or the shares will be sold.
Savvy Wall Street investors have a rule, and they never break it. The rule is “never meet a margin call”. They are constantly making themselves aware that their initial thinking in making the investment was faulty. The reality is that the stock is not the investment they thought it was and so they sell. This kind of action takes discipline, and a complete avoidance of denial; a psychological trap that leads many to not accept reality.
So, foreclosure is much akin to a margin call. Conditions have changed. Something has happened that has thrown the equation out of balance and one is forced to raise additional capital, at more expensive rates, to keep the property. But in foreclosure, time is not a luxury as the lender is demanding immediate payment and does not allow sufficient time for the property to be put on the market and get the an appropriate value. However, if the borrower has suffient Loan to Value (65-70%) we are likely to arrange for a 2nd that will bring the loan current, and additionally, have a enough cash in reserves to make the monthly mortgage payents. More time allows for rational thinking and planning, importantly, if the final decision is to dispose of the property.
GOOD CREDIT-PRESERVE IT!
We all know the importance of maintaining a good credit score. The on-set of a possible foreclosure must be addressed as early as one believes it is remotely possible that they will be late on a mortgage payment. Even a 30 day late changes your credit score and makes a refi, or new loan on a new purchase more expensive. And so for a 60 or 90 day late, and finally a default or Chapter 13, which takes years to be removed from your credit score. Again, if you think that it is even remotely possible that you may miss your first mortgage payment, call us. Do not delay beginning to establish a financial strategy to avert loss of your good, hard earned credit.
Allow us the opportunity to guide you through the process of analyzing your current credit, appraising your property, and finding any possible financing that both lenders, and you as the borrower, can reasonably accept. Our goal is to help you re-habilitate your credit score and get you a brand new, acceptable, mortgage
OUR PLEDGE TO YOU!
Importantly, we are not here to judge you as to how this situation has developed, but that we understand that foreclosure, or other similar hardships, happen to nearly all of us at one time or another. Our pledge to you is that if you need to refinance, or are a buyer or a seller of property in foreclosure, we will put your interest first in helping you find the best rate, or price, and a safe and sane resolution to this most difficult situation.
And don't forget........
Who can find the best loan for you?
