Home Foreclosure News: 9 Million Homeowners Could Go Into Foreclosure Between 2009 & 2012

Home Foreclosures Rising for Prime Borrowers

 

As we’ve talked about here on this blog ad nauseam, the home foreclosure crisis is now affecting those with previously good credit, ie, the average Joe who had a steady job, good credit and always paid his bills on time.

 

 

Now, with home prices continuing to plummet and the “jobless recovery” making it hard for those who’ve been laid off/lost a job to find new work, it’s these – the middle class who seems to hold everything together in this country – who are suffering.

 

Who’s coming to their rescue?

 

Home Foreclosure: Why the Average Joe Is in Deep Doo Doo

 

According to the article, Foreclosure crisis phase 2: The negative equity dilemma:

  

“In the next 12 months it’s going to be tragic – most people are just starting to fall behind now … According to the Center for Responsible Lending, a nonprofit research and policy group, as many as 9 million homeowners could go into foreclosure between 2009 and 2012.”

 

As the title of the article alludes to, the middle class homeowner is in a financial pickle like never before. They’ve lost jobs – and equity in their homes at the same time. Without equity, they can’t refinance, sell or take out a home equity loan.

 

Many middle-class homeowners are accustomed to being able “tap their home for equity” (eg, take out a home equity loan/line of credit) when things get tough or they need extra cash to send the kids to college, pay for a new roof, or pay for an unexpected illness not covered by insurance, for example.

 

That option is gone.

 

 

Will the Government Rescue “The Average Joe” from Home Foreclosure?

 

So, what’s the solution? There is one, as discussed in the aforementioned option, but it’s controversial on many levels.

 

An option that’s being floated is for “banks to write off part of homeowners’ troubled loans” (ie, write down principal balances to help homeowners keep their homes). But, of course, they don’t want to do this. This is AFTER we’ve bailed their a**es out.

 

But if the government doesn’t step in to help, or banks don’t come to their darn senses, the outcome is going to be the same because if a homeowner doesn’t have the means to pay, then the home is going to be foreclosed on anyway.

 

This means the bank will probably have to sell it as a short sale, which means that, on average, they will be getting 20%  less than what it’s worth any way. Note: On average, when a home is sold as a short sale, it’s sold for about 20% less than what it’s worth.

 

In this market, I’d argue that they’re going to be losing even more because some homeowners have lost 25%, 30% or 40% of the value of their homes.

  

Home Foreclosures: Many Homeowners Have Lost More than Half the Value of Their Property

 

A friend of mine who owns property in a suburb of Atlanta was checking home prices in her neighborhood and she found out that there’s a six-bedroom home in the community going for . . . are you ready for this $129,000.

Just five or six years ago, the homes in the community were selling for $160,000 to $200,000. Now they’re selling for as low as $110,000 — these are 3-6 bedroom homes in a lake community.

 

Now you tell me, why wouldn’t a bank work with a homeowner to keep them in their home – in a community they’re already invested in?

 

While some may argue that writing down principal balances is not fair to other homeowners (and it’s definitely not), the point is, it’s a done deal. When a home is foreclosed on in a neighborhood (and subsequently sold as a short sale, for example), the neighbors lose value in their homes anyway.

 

And I keep coming back to this — WE the American people – bailed out these big banks. They got to get a lot of the “bad assets,” which were primarily subprime loans when this whole foreclosure crisis started, off their books.

 

Why doesn’t the Average Joe get the same kind of help to help him prevent foreclosure?

 

Stop Foreclosure: Learn the #1 secret your lender won’t tell you that can prevent foreclosure.

P.S.: While the home foreclosure crisis has meant heartbreak for many, it’s meant opportunity for others. Read how one foreclosure cleaning business owner makes up to $40,000/wk.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.