Avoiding Foreclosure tips for Sellers in our Phoenix Valley

How to Help Clients Avoid Foreclosure
The NATIONAL ASSOCIATION OF REALTORS^®, in a partnership with the Center for Responsible Lending and NeighborWorks America, introduced a new brochure today at NAR’s 2007 Midyear Legislative Meetings & Trade Expo. "Learn How to Avoid Foreclosure and Keep Your Home" is the fifth mortgage-related brochure in NAR’s consumer education series.

CRL estimates that 2.2 million American households have lost or will lose their homes as monthly payments rise on high-risk mortgages in the next few years. Nontraditional and other new types of mortgages that opened doors to homeownership or refinancing just a few years ago might soon be showing some borrowers the door, as interest rates reset, payments adjust, and monthly payments become unaffordable for families at greatest risk.

“Foreclosures threaten the very communities that REALTORS^® work to build,” says NAR President Pat V. Combs. “REALTORS^® care as much about keeping families in their homes as we do about helping them find the home of their dreams, which is why NAR has partnered with the Center for Responsible Lending and NeighborWorks America to give our members tools to help clients and customers at risk and educate home owners about their options if they’re facing foreclosure.”

Why Foreclosures Have Jumped

In recent years, people with imperfect credit or minimal cash reserves who may have previously been unable to qualify for a mortgage were able to become home owners because lenders began offering new types of mortgage products in the subprime market. Many of these new mortgages kept initial payments down by offering a very low “teaser rate,” interest-only period, or the option to pay varying amounts each month. When the initial period ends, the monthly payment increases, often by a significant amount.

Compounding the problem, subprime borrowers are often the people least able to afford these large increases, given their limited cash flow and past credit problems.

“We estimate that families will lose as much as $164 billion in home equity due to foreclosures in the subprime mortgage market,” says Mike Calhoun, president of the Center for Responsible Lending. “Government agencies, lenders, nonprofit organizations, REALTORS^® and home owners must all work together to minimize foreclosures and foster responsible lending practices to help ensure the stability of these families, their communities, and the entire mortgage financing system.”

Avoiding Foreclosure

The new brochure illustrates examples of mortgages that can put certain borrowers in danger, cautions consumers about predatory lending practices, identifies housing counseling organizations and other resources, and suggests steps home owners should take as soon as they think they might not be able to make a monthly mortgage payment.

Home owners in this situation may have more options than they know, including:

Forbearance. Lenders may let a borrower pay less than the full amount of the mortgage, or skip a few payments, if there is a reasonable plan to become current on the loan.

Reinstatement. A home owner may be able to make a payment that covers all of the previous late payments, usually at the end of a forbearance period.

Repayment plan. Lenders may allow a borrower who has fallen behind to make additional payments each month until the amount past due is paid.

Loan modification. Lenders will sometimes change the terms of a mortgage to help home owners avoid foreclosure.

“This is an issue that affects individual families as well as entire communities,” says NeighborWorks America CEO Ken Wade. “We share NAR’s concern and are committed to reaching out to consumers through our 50-state network of organizations, working one-on-one with borrowers, and continuing to develop long-term solutions that not only help people to become homeowners, but also ensure that they can afford to keep their homes.”

10 Most Overpriced Markets

10 Most Overpriced Markets

According to the Forbes magazine, it has calculated what it considers the most overpriced U.S. housing markets by estimating a “price-to-earnings” (P/E) ratio for each of the 40 largest metro areas.

Just like the P/E of a stock, this value attempts to measure the price a home owner would pay for $1 of return. It was figured by dividing each market’s median home price by annual rents minus taxes and insurance. The average P/E for the 40 markets is 28.

The magazine also incorporated a second metric. It calculated an affordability score based on how many residents pulling down a median income could afford to buy a property, assuming a 6 percent mortgage rate.

Based on these metrics, here are the 10 most overpriced cities and the 10 least overpriced:

Most Overpriced Markets