Utah Real Estate Update and Market Condition Watch

With the way the housing market and economy are right now, it looks like it is going to be a long time until home values rise and the economy improves. We are going to see a lot more foreclosures before things really start getting better. If you are a “home owner” struggling to make payments there are a few ways to prevent foreclosure. Most default buyers don’t understand the foreclosure process, their options, and are embarrassed to ask for help. About half of all foreclosures don’t do anything to try and stop the foreclosures.

Right now, banks are swamped by the huge number of delinquent mortgages they have. There are so many foreclosures in some areas that banks don’t want to foreclose on any more homes. There is a huge back log of “shadow inventory” foreclosures that have not yet hit the market. In a best case scenario banks will avoid foreclosure, here are four different options that can yield a better result for both bank and borrower.

Sell Your House – Putting a home for sale is the simplest solution for default borrowers who have equity. Unfortunately, in the current real estate market, most distressed borrowers don’t have equity. Nearly 25% of U.S. homeowners owe more than their homes are worth. It is still possible to sell underwater homes, but to do so short sales are required.

Loan Modifications – With the state of lending, federal regulations, and the current economy, banks are often willing to renegotiate loan terms.There are some situations where lenders fradulatently administered loans and are held accountable for reconciling their errors.

Deed in Lieu of Foreclosure - With this foreclosure alternative, the distressed home owner voluntarily quit claimes their deed to the bank. For as simple as they are, Deeds in Lieu of Foreclosure are actually very rare. It is almost always financially best for banks to approve short sales, but they have a hard time getting decisions made. Banks have a hard time deciding exactly what criteria they will take to accept a short sale because every home is unique.

Deeds in lieu of foreclosures have some other issues that can make them more complicated. When a foreclosure happens, junior liens are wiped away. They receive nothing. These debts are wiped off the title. The banks who held the junior liens still have a judicial right to attempt to collect their rightful debts, but the debt is no longer tied to real estate. With a deed in lieu of foreclosure, the lender must assume the junior liens. This makes deeds in lieu of foreclosure much less common.

Forebearance – With a forebearance agreement, the lender delays his right to exercise foreclosure and gives the borrower a chance to make current their delinquent payments. The success rate for forebearances are pitifully low. Most people don’t know what is required to be qualify.

A good source of information for Salt Lake Utah Real Estate, regarding foreclosure alternatives is from HUD non profit organizations. Advise from these organizations is FREE and confidential. These organizations aren’t getting paid for providing a mortgage modification, they are simply there to help you out.  Beware of scams when seeking foreclosure alternatives, there are a lot of them out there. It is illegal for people to charge for loan modification services unless they have a mortgage license. So don’t pay anybody money to help you avoid foreclosure.