The Mortgage Man

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No “Hope Now” For Government Program

Hope Now government sponsored mortgage bailout program falls short.

While the Hope Now organization claims to have helped more than 1 million home owners since its inception late in 2007, a recent inquiry by another high ranking government official claims that the numbers are much lower.

For anyone who thinks that the government is going to swoop in and save you from your problems, here is yet another glowing example that government programs suck up tax payer money while providing little help.  According to a recent investigation by the treasury department, only 187,000 home owners have been helped by the program.  Of those, only 30,000 resulted in an actual mortgage modification.

This of course is no surprise to me, or most people in the real estate industry, but it is an example that you are better off in the private sector than muddling through a government program.  A press release posted on PRWeb.com today makes mention of a new company here in Pensacola that is seeking a solution (or at least more help) for the problem with foreclosures.  In many cases, the problem is deeper than a modification.  If you can’t afford to keep the house, you are better off selling to avoid foreclosure so that you can be in a better position to buy in the future.

PreForeclosureFSBO.com is using the simple concept of a short sale to help home owners sell with no equity to escape foreclosure.

What Is A Short Sale?

A short sale allows you to avoid foreclosure by selling your home for less than you owe.

Short Sale to avoid forelcosure

A short sale is a term that describes the sale of your property when the mortgage holder agrees to accept a payoff that is less than the outstanding balance as payment in full. In a short sale, the lender agrees that in an effort to avoid foreclosure, they feel that accepting the lower payoff is a better financial decision than foreclosing on the home and selling it at auction.

Why would a lender agree to a short sale?

On average, a foreclosure costs the mortgage company $25,000 to $50,000. In addition to the legal and carrying costs associated with the lender holding a home in foreclosure, there is the liability of owning a vacant and abandoned home. If curious kids jump the fence, and one drowns in the pool, the liability falls on the owner (who in a foreclosure is the lender). But, first and foremost, lenders are not in the real estate business, they are in the money lending business. Any activity that takes away from that core business model costs time and money. If there is an offer on the house that is less than the current balance owed, it is very likely that the offer will at least be considered if it can be justified that accepting the offer is less costly than actually foreclosing on the home.

For more information on short sales and how you can avoid foreclosure through this process, visit PreForeclosureFSBO.com .