Are you upside down with your home mortgage?
Why you should push for a loan modification payment you can afford.
There is a hidden secret in the foreclosure business. Many lenders are rejecting their borrower’s loan modification attempt. then, they foreclose the house and sell it bank owned. However, they lose more money from foreclosure versus if they had accepted the loan modification. Let me explain:
Let’s say a person buys a house for $300,000. The local housing market declines and the house is now only worth $220,000. (they are upside down) The homeowner’s income drops and now they can only afford to pay the equivalent of a $220,000 mortgage payment. They request a loan modification. Their lender turns it down. The house goes into foreclosure.
Eventually, months later the home is foreclosed upon. The homeowners move out. The lender lists the home for sale. Because of the continued decline in the housing market, the house is now only worth $200,000. But it sells for $180,000. Why?
Because the lender doesn’t keep up on it. The house is dirty and the lawn hasn’t been mowed for months. This is because it usually takes 3 months or so for the lenders to list a property after the homeowner moves out. The other reason the house sells for less is because the buyers know it is a bank owned property.
After all, it says it right there in the MLS. As a result they all make lowball offers. The moral of the story is: the lender would have been better off accepting the $220,000 loan modification versus foreclosing and selling the property for $180,000. Stuff like this happens every day. Unfortunately, no one is telling their story.
What do you think? Do you disagree? Are you one of those people who thinks the following? I hear people say this a lot: “Since those homeowners agreed to pay the lender $300,000, they should find a way to do it. Go get an extra job or mow lawns on the weekend. You know they can pay it, if they just wanted to”, they say. Let me know your thoughts by putting a comment below.
Thanks for reading this. If you or anyone you know needs real estate advice, please do not hesitate to contact me.
Donna Bishop Realtor call me (239) 560-3149 or email me firstname.lastname@example.org