Foreclosure Rates Are Still On The Rise, Despite All The Government Bailout Plans

By Author: Nick Bankruptcy
Total Articles: 197
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Last month there were more homes lost then ever before, which means they are speeding up not shrinking, as some might say. Obviously homeowners want to avoid foreclosure as do the Lenders. Lenders do not want foreclosures written on there books, because it runs the risk of the Servicer failing. People facing foreclosure usually do not want to lose their homes. This means if the two work together early enough, a solution should present itself.

Most of the lost homes are due to poor lending practices at the start of the lending process. Not too long ago, people who were considering purchasing a new home had to produce a 30 percent down payment, as well as one year of employment pay stubs; this established that they did have cash, were good at money management and would likely keep up with loan payments.

Things have changed since then, because recent equal opportunity lending laws deemed those practices discriminatory. At the same time loan originators were getting paid large commissions, based on the value of the loan. This caused many brokers and agents to break the rules and require less paperwork. So with ...
... those two items combined, it was much easier to get a loan. Buyers and people refinancing didn't have to prove as much and large loans were given out to people that could not afford them. These loans were commonly referred to as "liar loans." Most of the bank failures today have come from Banks leveraging mortgage driven securities that stopped performing because of these bad loans.

Millions of new People facing foreclosure were not totally informed on what they were signing when getting their loans. They ended up agreeing to adjustable rate mortgages, usually with interest only introductory periods. When the rates went up or the interest only period ran out, their housing bill usually would triple and most People facing foreclosure could not keep up with the payments.

If you're a homeowner and find yourself in this situation, a loan modification may be your answer. A loan modification is a mortgage plan, were you can get different terms of your loan modified. Think of it as a refinance option, were you can start affording the payments on your home again.

Most mortgage loans are designed around two items, the interest rate and the time period over which the loan has to be paid off. The interest rate is the percentage of the remaining balance that the bank takes as a profit on each payment, if your interest rate is to high, you will find that you end up paying significantly more than your house is valued. Most interest rates are compound interest as well and over the lifetime of most mortgages, that can add up to a very large amount.

Loan modifications will either lower your interest rate or extend the terms of the loan, and sometimes, it will do both. To get a loan modification package you will have to prove to the bank that you have encountered financial hardship and difficulties, that have lowered your monthly income significantly, which has kept you, or will keep you from making your monthly payments.

You will want to get help from a mortgage modification professional to do the negotiating with your Servicer. Especially these days, when the lenders are so busy with people asking for assistance, they usually just tell victims that they are "working" on the file, or it's in "processing" and they are waiting for a response. If you are facing getting kicked out, and the servicer doesn't help you immediately, you need to find help elsewhere.

Working with a loan modification professional can help the process speed up because these people work with the banks all the time, the bank employees know them and will speak to them and get a modification worked out for you. You don't want to be stuck sitting around waiting for your bank to "approve" a loan mod, while they are secretly intending on selling the home right out from under you. Having a professional negotiator in your corner is the way to go, if you want to get a loan modification before your home sells at sheriff's sale.
Nick writes articles about filing chapter 7 bankruptcy and chapter 13. He also has a complete website with bankruptcy guidance and information. Where you can find out about the bankruptcy method and if you will be entitled to file at http://www.bankruptcychapter7and13.com/