Most American’s Opposed to Homeowners Walking Away from Mortgages
A recent survey conducted by FindLaw.com a legal information website found that 60% of Americans believe that it is “never OK” for homeowners to simply stop making payments on their mortgages. 34% say it’s OK for homeowners to walk away from mortgages, but only if they aren’t able to make the monthly payments. Only 3% believe that homeowners should be able to walk away from their mortgage anytime they want.
Before making any major decisions, homeowners should consult with financial and legal professionals, including accountants, real estate attorneys and financial advisors. Any major change to a mortgage situation could lead to serious and unanticipated consequences involving taxes, contract law, credit scores, ability to borrow in the future, potential for lawsuits and much more.
Cashing in on rental property
One bright spot in the dismal real estate market is the rental market. Demand is up and rents are rising. That’s partly because those foreclosures have turned more than 4 million former homeowners into rents, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.
As with many investments, the best time to get in is when most others are sitting on the sidelines.
Mortgage rates are at a 40 year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities. With this increase, it has allowed landlords to charge more. Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010 to $1,320 a month.
You’ll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors. If you can hang on that long, you have got a good shot at solid gains, especially if you are financing the home.
August Foreclosure Statistics
Foreclosure filing rose in August, as more homeowners fell behind on their mortgage payments.
Filing were up 7% compared to July, but were still 33% lower than a year ago.
According to Realty Tract’s report, 228,098 homes in the US received some kind of foreclosure filing in August. Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly.
The increased in default notices may signal that lenders are starting to finally push through foreclosure paperwork that was previously delayed by “robo-signing”.
The good news is that bank repossessions have been falling. Lenders repossessed 64,813 homes in August, a six-month low and a 37% decline after they hit a peak in September last year.
Meanwhile, foreclosure auctions were scheduled for 84,405 homes, the lowest number in more than three years.
Nevada, California and Arizona housing markets are the hardest hit by foreclosures.
Information from CNNMoney.com
Loan Modification Scammers
One in 240 California housing units was in foreclosure in April 2011, according to Realty Trac, a statistic that places California foreclosures about 2.5 times higher than the national average. Those statistics alone make the state a ripe market for loan modification scammers.
The Lawyer’s Committee is starting to file complaints against Nathanson Law Center and other alleged loan mod scammers. The suit claims that the defendants lured desperate homeowners into paying up-front fees to secure them loan mods, and then did little or no work to follow up on their promised services. While homeowners were offered 100% guarantees that their funds would be returned if a modification could not be obtained, the defendants later refused to turn their fees. Many of the victims lost thousands of dollars – or worse, their homes.
If you believe you have been the victim of a loan mod scam, you are encouraged to call (888) 995-HOPE or visit www.preventloanscams.org and click “Report a Scam!” Victims are being represented free of charge.
Six Mistakes Investors Make
Investing in real estate right now can be surprisingly profitable as rents are on the increase in many areas due to the number of people losing their homes to foreclosures or doing a Short Sale of their homes.
Remember that owning rental property is time consuming, expensive, challenging, and many investors lose money.
Mistake 1: Confusing a cheap deal for a good deal – You can buy homes at a low price but that doesn’t mean you can rent them out. They usually aren’t any more appealing to rents than they are to buyers. Also less-desirable school districts may hamper renting your property.
Mistake 2: Overlooking key costs – Knowing potential rent is not enough. You should also factor in closing costs 3-6%, costs to fix up the place and maintain it, and your holding costs.
Mistake 3: Forgetting that time is money – You lose money when your home is empty, whether you are trying to rent it, in between tenants or painting. You may be better off accepting a lower rent than waiting for a higher-paying tenant.
Mistake 4: Assuming you will sit back and watch the rent roll in – You are a rent collector and sometimes tenants lose their jobs and stop paying rent. Evicting them can take several weeks without rental income coming in.
Mistake 5: Underestimating repair costs – Carpet in rentals typically must be replaced every five years and you may have to repaint after every tenant. The National Association of Residential Property Managers suggests setting aside six months of expenses so that you will have funds if a major repair is needed.
Mistake 6: Assuming that owning a rental is the same as owning a home – You might put up with flaws in a home that a renter won’t tolerate. A property manager can handle most headaches, but you should expect to pay up to a month of rent for finding and screening tenants and up to 10% of the monthly rent for management fees.
