Pre-Foreclosure Calls from the Voters

Citizens are calling on the Governors of many states to be part of the mortgage solution by ensuring that all homeowners facing foreclosure can obtain desperately-needed assistance and stay in their homes.

According to the New York State Banking Department's report the 2007 Spring Review, more than 50,000 foreclosures were reported in New York for 2006, which was a 40% increase from the previous year. 49,000 foreclosures were filed in New York during the first six months of 2007. This foreclosure rate is highest in the sub prime market, particularly for loans carrying adjustable rate mortgages.

Opportunities and Caveats

With the ongoing foreclosure flood rising and expected to crest in 2008 and 2009, Pre-Paid Legal Services, Inc., a lawyer referral service, is taking measures to better educate its sales force on how the company's legal membership can assist homeowners.“If you are in the market and pursuing purchasing a pre-foreclosed property, there is a lot you should know if you have never done it before Yes, there are tons of great deals to be had in the market these days, but there are different stages of foreclosure and the more you know, the more you can protect yourself.”

Pre-foreclosure is when the homeowner still owns the property and knows there is potential for foreclosure. They’re likely not current on their payments and are in danger of destroying their credit and losing any equity they have. Buying at this stage is tough - the sellers may be on a deadline and things have to happen quickly. The sellers will be extremely motivated and may work out a short sale if the bank allows and they can find a buyer fast enough.

The Need for Training and Education

Some lenders, with their own agenda, say short sales take time because of negotiations required with multiple parties and the process required to calculate just who's losing what in the deal. Frequently the wait is too much for buyers, who end up walking away. After all, the market is loaded with other houses, frustrated Realtors note. Many agents tell of banks rejecting a short-sale offer they made for a buyer on a house in pre-foreclosure, only to see the house go into foreclosure and back to the bank, and then reappear on the market later at an even lower price. However, this is a matter of opinion depending who you ask.