Is anyone out there buying houses? Sure there are. However, the numbers have dropped significantly and experts predict that the real estate market will get worse before it gets better. This leaves distressed homeowners who need to sell their home quickly in deep trouble.
 
Buying houses today is completely different than it was just a few months ago. Declining property values ​​have left many homeowners owing more than their home is worth. Borrowers with subprime loans are unable to pay their mortgage and many are facing foreclosure.
 
With the current credit crunch, buyers are unable to obtain financing. Owners cannot sell their house. Real estate agents are not paid. It is a vicious circle that has far-reaching effects. Those who are buying homes are either paying cash or participating in alternatives such as seller-return mortgages and lease-purchase agreements.
 
Homeowners facing foreclosure can ask their lender to enter into a short sale agreement. Although a short sale is quite complicated, it boils down to the lender agreeing to accept less than what is owed on the loan. Why would a bank do this? Because it can save them money in the long run.
 
A report published by Freddie Mac indicated that the average cost of a foreclosure is around $60,000. A recent study shows that foreclosures take approximately 18 months to complete. Also, when banks have delinquent loans, the Federal Reserve limits the amount of money they can borrow. If they can’t borrow money, they can’t lend money. As you can see, foreclosures have a severe and negative impact on banks’ balance sheets.
 
Although many banks received bailout money, this act has not yet changed their course of action. Homeowners are still facing foreclosure and filing for bankruptcy to buy a little more time. The problem with bankruptcy is that it is usually a temporary solution. Many people don’t realize that filing for bankruptcy to stop foreclosure requires them to pay off mortgage arrears and outstanding debts. These debts are distributed over a period of time; usually three to five years.
 
Chapter 13 payments are in addition to your regular monthly expenses. If the debtor is having a hard time making their mortgage payment, how the hell are they going to pay extra money? In many cases, people get out of bankruptcy within the first year.
 
Once a debtor fails to make their payment to the Bankruptcy Trustee, creditors can petition the court to request dismissal. When bankruptcy is dismissed, the debtor loses all court protection and creditors can proceed with collection actions.
 
If the debtor was on the brink of foreclosure when they filed for Chapter 13 bankruptcy protection, foreclosure actions can pick up where they left off. For example, if the debtor was within five days of eviction, that is where the lender can start if the debtor defaults on their payments.
 
Homeowners who fall behind on their mortgage payments need to be proactive right away. Experts say that more than 50 percent of foreclosures occur because the owner failed to act. Instead of living in denial, being proactive from the start puts the homeowner in the driver’s seat instead of under the wheels.
 
Sellers who need to sell their home quickly should seek out private investors who are buying homes in the area. There are many investors waiting for a good offer with cash in hand. Professional investors will help explore all available options and develop mutual benefit for all parties involved.
 
As with any real estate transaction, it is important to engage in due diligence to ensure that you are dealing with a credible person or entity.