Mortgage foreclosure has become one of the major contributing factors to the downfall of the U.S. economy. Steve Preston, secretary of the U.S. Department of Housing and Urban Development, states "HUD anticipates seeing more than 2 million foreclosures by the end of 2009."
The rise in mortgage foreclosure began due to subprime lending practices. Housing prices were overinflated and borrowers were allowed to purchase homes they could not afford. The banking crisis in the fall of 2008 set off an unprecedented series of events including the highest unemployment rates seen since the Great Depression.
Skyrocketing unemployment led to the second phase of mortgage default. According to a recent report published by the U.S. Department of Labor, "the fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.767 million."
Nearly one-third of the unemployed filed personal bankruptcy in an attempt to avoid foreclosure. Others simply walked away from their homes, leaving neighborhoods all across America bearing the burden of foreclosure homes.
The Center for Responsible Lending published a report in May 2009, projecting 2.4 million mortgage foreclosures will occur in 2009, with an additional 9 million more occurring between 2010 and 2012. The report goes on to claim, "property values will drop an average of $20,300; resulting in a total of $1.9 trillion in real estate losses."
When individuals borrow money from a lending institution or private investor to purchase real estate, a mortgage note is executed outlining the terms of the agreement. The property is used as collateral to secure the note.
When borrowers become delinquent on their home mortgage, lenders send out a Notice of Default, outlining what action they will take if borrowers do not repay their debt. If the borrower ignores the lender, the next step of action requires lenders to file a Lis Pendens through the court.
Lis Pendens is often referred to as preforeclosure; meaning the borrower still has an opportunity to stop foreclosure. This can be accomplished by curing mortgage arrears, obtaining a loan modification, or authorization to short sale the home.
If borrowers discover erroneous information in the Lis Pendens, they have twenty days to respond to their lender and challenge the mortgage foreclosure lawsuit. The court is given forty days to respond to borrowers' complaints and show just cause for foreclosure.
Mortgage foreclosure challenges can continue back and forth between borrowers and the courts; slowing down the process for a year or more. If borrowers are able to resolve the issues and devise a repayment plan, they can stay in their home. Otherwise, lenders will eventually force them out.
Most people do not understand the economic impact foreclosure property causes. Not only do lenders incur financial losses, entire communities are affected. Vacant homes are a magnet for unscrupulous people; attracting graffiti artists, drug dealers, squatters and vandals.
Many vacant homes become dumping grounds with overgrown weeds and unattended swimming pools; creating health hazards within the community. Code enforcement agencies are left with no choice but to file liens against previous homeowners, which in turn create a financial burden for local taxpayers. Law enforcement agencies are over burdened with crime activity. It's a never-ending cycle.
As a real estate investor, I have never witnessed a crisis such as the one we are currently facing. While I do not claim to have the answer, I can provide solutions to individuals facing mortgage loan foreclosure.
I buy houses from borrowers unable to continue making mortgage payments. If you need to sell your home to stop foreclosure or satisfy a short sale, submit information regarding your property via the "we buy houses" form. While I cannot single handedly solve the foreclosure crisis, I might be able to help you stop yours.