Maybe Foreclosure ISN'T Right For You!

A very interesting article hit my desk today from the Florida Association of Realtors. It concentrates on the impact on your credit and other risks of allowing the bank to foreclose on property you own that you cannot make payments on. It points out that a foreclosure can drive a person with a mid 700's credit score all the way into the 400's! And may in fact keep you from getting another loan, period. Worse than that - in some states banks have been "coming after" your personal assets after the foreclosure comes up short - even some folk's personal residence. While neither scenario is palatable, folks facing foreclosure might be FAR better served by approaching the lender MUCH earlier in the process and working with a savvy realtor to work out a short sale with the lender. See the earlier entry on Short Sale 101, but be sure to read the article linked below. - Mike W

FORECLOSURES

A growing number of investors are making the drastic decision to walk away from their properties and ultimately send it into foreclosure. But financial advisors say that walking away from a mortgage is almost always a bad idea: You may lose your ability to take out future loans, and the lender could come after your personal assets, depending on state laws and the terms of your loan.

Read the full story:

http://www.floridarealtors.org/NewsAndEvents/n5-102207.cfm

Good News for More Than Just The Banks!

That's right, everyone whose a homeowner should be glad to hear the information from RealtyTrac below showing a national decline in foreclosure activity of 8% and 2% for Florida. Foreclosures have a way of driving down sales prices beyond the home in trouble. When you sell your home, if a buyer needs to get a mortgage, and in MOST cases they do, they will have to have your home appraised and it needs to appraise for enough for the bank to feel comfortable loaning money. A foreclosure as one of the comparables (or "comps") will almost surely drive DOWN the appraisal - meaning the bank will loan less money to buyers wanting to put in an offer on your home. Short Sales have a similar effect but it is seemingly exaggerated with foreclosures as while short sales may run to around 75% of the outstanding loan value foreclosures can go much lower. Factor in things like banks NOT wanting property on their books at the end of a fiscal year and rising foreclosures would have driven down selling prices further. So as the article says.... - Mike W

FORECLOSURES DOWN

It's good news - sort of. According to RealtyTrac, foreclosure activities (defaults, notice of foreclosure sales and REO properties) dropped 8 percent nationwide in September. And Florida, though second only to Nevada in the number of foreclosure actions, saw a 2 percent drop since August. The downward trend is good news, but compared to year-ago numbers, many homeowners continue to face challenges in paying the mortgage. Nationwide, the number increased 99 percent in one year - since September 2006. Florida reported 33,354 foreclosure filings for the month, up 158 percent from September 2006. "U.S. foreclosure activity experienced a fairly broad-based retreat in September," says James J. Saccacio, chief executive officer of RealtyTrac, though it's too soon to suggest a reason for the slowdown. The drop could be just a lull, says Saccacio, or it could be caused by investors jumping into the market and buying foreclosures if they believe the price is now right.

Source - Florida Association of Realtors Early Bird News for 10/10/2007