I want to point out a different perspective on foreclosures
Foreclosures are a blight on not just the homeowners losing their houses, but the banks and local community of San Antonio, too. Everyone loses in a foreclosure. But today I want to show you how taking a new point of view will prepare you to take actions to avoid foreclosure at all costs, literally.
Getting perspective on a difficult situation means looking at it from another angle. When you peer behind the curtain you see reality in a whole different light.
You already probably know what a foreclosure means to you. You’ll be moving; that’s a given. Your credit will be shot for years. Your neighbors will suffer loss of property value when your house is boarded up and claimed by the bank (with a lovely sign out front displaying the news). And your dream of being a homeowner is done for, at least for awhile.
Now I want you to challenge yourself to look at it from the bank’s point of view. Even if you are angry and you think the bank is just out to get your house from you, this little perspective trick will point the way to a solution. I promise.
Did you know that the average foreclosure costs a bank around $50,000? You may think the bank holds all the cards in this unfortunate situation. But truthfully, they’re on the hook for a lot of money, too. Let’s break it down and see why foreclosure is a last resort, not a driving desire to “get a house back” from a homeowner who’s late on mortgage payments.
1. Loss on loan. First there is the loss on the loan itself, and often a significantly reduced market value of the property to boot. This is the major chunk of the loss to the bank.
2. No payments coming in = lost revenue. PLUS lost interest on the revenue. (The bank was counting on that, too.) This loss could bleed that bank for many months.
3. Property maintenance, clean-up and repair. The bank is responsible for getting the house in shape to put on the market again and to keep up the lawn, etc. while waiting for a new buyer. Again, this monthly cost doesn’t go away until the bank sells the house.
4. The appraisal fees. A less expensive report called a “broker’s price opinion” (described here) may also be used to assess value.
5. The bank is now expected to pay for hazard insurance. An empty house doesn’t pose much of a threat, but what if someone slips on ice on the driveway? The bank is liable after a foreclosure, thus the insurance fees.
6. What about the costs to sell the house again? That’s the broker’s commission and his/her marketing costs. Surprise: marketing a new house in the listings costs about 6% of the loan amount.
7. Finally, there are legal fees. There are always lawyers to be paid in a foreclosure.
Now say the foreclosed-upon house is sold. A happy ending for the bank? Not necessarily. After a foreclosure is sold again, the original buyer is still expected to pay the bank for the difference between the loan amount and the amount it sold as a foreclosure. Given the situation, it’s highly probable that the foreclosed-upon homeowner doesn’t have that kind of cash lying around. The bank has to wait for those funds for months or even years.
Framed in this different way, do you still think the bank wants your home? It does not. The bank’s loss is more than it ever bargained for when it made the loan. It wants to avoid foreclosure just like you.
Once you see the bank’s incentive to avoid foreclosure, you may consider trying to work out something to stall a foreclosure before it becomes inevitable. That’s where we need a professional help. Dealing with the process can sap the life out of you and your family, but the bank will work through other options. Before you take this step to start negotiations, the best thing you can do is to get a professional opinion.
Remember, a new perspective can make the difference between a losing situation and an opportunity. Our team at Markette Properties communicates with the bank on your behalf, smoothing out the path to a real solution that serves both the bank and the homeowner.
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Photo Credit Flickr CC: Legal Help Lawyers