Congratulations to April Partida, of our Independence Virginia Beach office, who had the following blog post featured on Broker Agent Social.
Keep People in Their Homes, Real Help for the Economy
Consumer confidence is down. Mine would be too if I thought I was loosing my home. The number one thing we can do to help this economy is to keep people in their homes.
When folks are concerned about losing their home, they stop focusing on anything else. When folks loose their homes it creates a whole new set of problems for that family, that neighborhood and then the community as a whole. If Joe’s house is lost to foreclosure all the other homes on the street loose value, Joe and his family have to move, the kids have to maybe change schools and friends. The families left behind on the street have lower property values and that limits their choices on how best to deal with any financial concerns they have.
How do we stop the bleeding? How do we return some level of confidence? We stop as many foreclosures as we can. It may not be fair that my neighbor who may or may not have bought beyond their means gets help and I do not but it is good for everyone if folks stay in their homes. If my neighbor is able to refinance his house for a lower interest rate, not a forgiveness of debt but a restructuring of the debt, then he can stay, our property value holds and best of all community confidence begins to build. Joe feels he is working toward something rather than fighting a loosing battle.
As a Realtor, I have seen this so often. Here is a perfect example. I spoke to a woman who owes about $20,000 more than her home is worth. The payments are going up again on an over 9% interest rate loan. She knew she was going to have trouble with the new payments so she was proactive and called her mortgage company to try to work something out. They told her they would not talk with her unless she was three months behind on her mortgage!! So she did not pay her mortgage for three months. She called them again, now they tell her they are sending the file over to begin foreclosure! She tells them she wants to stay. She asks them to just reduce the interest rate. That would be a win win. She is not asking to get any of the amounts forgiven. Just a lower rate that would allow her to be able to make the payments. She asked for 7%. That would allow her to stay and the bank to have a performing loan! They said no. She mailed in the keys and moved.
Now what happens? The bank will spend thousands on winterizing the home and on legal fees. They will pay to have the property managed and then sell it for well under the loan amount and pay a commission to do so. The vacant property along with the eventual lower sales price brings down the value of all the homes in the area and confidence is again shaken. Not just for the folks who have lost their home but for all of us.
Now what happens? With a foreclosure on their record our folks will not be able to buy a home for a few years. Less buyers equals higher inventory and lower home values. Keeping people in their homes is the number one thing we can do to help all of us.
April Partida, Realtor, RE/MAX Allegiance, Virginia Beach, VA 757-375-1777
Awesome post April,
I’ve talked to several lenders in the area that are frustrated with this same thing. I think most want to help their previous client or inquirers refinance or reduce their rates while things are so low, but just like you posted, they can’t because the home may no longer appraise.
It’s just logical sense to reduce the payments of these homeowners rather than pushing them into foreclosure. Everyone wins, even the bank I feel in the long run.
This is something to push to our National Realtor Association to lobby for us in the useage of bailout monies and new programs to help homeowners with increasing interest rates..
The more people that speak up, the sooner we can get back to a healthy real estate market, which in turn will help the economy.
Now..how can we push to make this sensible solution happen..is the question. And what can each of us do this week to put our two cents in? Suggestions?