He claimed that the term is not synonymous to foreclosure and one is very different from the other. He believes that better understanding of the concept and term will help distressed homeowners avoid repossessed home.

Also, understanding the concept of short sale can help buyers find and choose better deals in the current housing market.

Treasury Secretary Tim Geithner recently unveiled plans of the U.S. government to promote short sale as a way to control the flood of repossessed home that is pulling down home prices and causing devastation on the housing market.

Short sale is a transaction in which lenders allow homeowners to sell their distressed properties at less than their total mortgage. The federal government will encourage lenders to accept short sales by providing incentives for them.

Board of Realtors President-elect Mark Seltenrich explained that the term comes from the understanding that a homeowner is short in paying his mortgage. He added that with short sale, both the lender and the homeowner benefit from the transaction.

Lenders want to avoid foreclosures because they are time consuming and expensive. Meanwhile, a homeowner’s credit will be totally ruined in foreclosure, but not so in short sale, according to Seltenrich.

He added that is there is no standard way on how banks will report a short sale to credit agencies. Therefore, it is difficult to determine the real impact of short sale, but it will be better than dealing with a repossessed home, Seltenrich pointed out.

On the other hand, Calder admitted that short sale is a good alternative to foreclosure but what hampers the transaction is the difficulty of the process. He pointed out that many realtors find foreclosure easier than short sale.

He explained that a short sale is for delinquent homeowners whose mortgages are more than the value of their houses. He added that it is important that homeowners understand how they can qualify for the transaction.

He suggested that homeowners who are considering short sales to avoid repossessed home should hire a real estate lawyer for advice.

1. Organized criminal groups might be lurking around your area and looking for potential victims. Make sure that you know the people you are approaching for help so that you can stop foreclosure and not fall into any scam. Be alert.
2. A lot of “foreclosure rescuers” have emerged through the past months. This is because people are now more desperate now and more willing to succumb to seemingly good deals. You should be wiser and more proactive in dealing with your plans.
3. There are a lot of predatory groups that pose as legal groups but in reality are criminals who just aim to take away what you have. Beware of fake companies that would not give you the real value of your house. Some would even pretend to be lawyers who would take all you have until you go bankrupt. Make sure that you do your homework. Research well, perform background checks and speak with professionals so that you would be able to do your part to avoid foreclosure.
4. Beware of offers that are too good to be true. As much as you want to keep your house and stop foreclosure, you should still be able to judge whether an offer is worth it or not. A lot of foreclosure scams promise to pay off your loan or buy your house to help you stop foreclosure. There is no easy way to avoid foreclosure, and you would really have to take the hard steps for you to get out of it. A very important tip: NEVER pay your mortgage if not to your loan provider or lender. Also, never transfer your property deed or title without the help of a trusted lawyer present. Contact someone that you know can provide you with the right information before taking any action.
5. Foreclosure is a problem that would be really hard for anyone. However, it happens, and quite frequently in the past months. With all the things that would enter your mind, you would feel unsecure and afraid of the possible things that can happen o you and your family. To prevent foreclosure, you should be proactive and optimistic. Look for options by researching in the Internet and asking your lender or loan provider.

Vice president of National Urban League’s housing and community development Cy Richardson pointed out that lenders discriminated when they offered subprime loans to borrowers who are eligible for fixed-rate or conventional mortgages.

CRL statistics showed that over $92 billion losses have been incurred by Black homeowners when their homes turned into foreclosure properties since 2007. It is predicted that Black homeowners will lose about $122 billion in the coming years. Meanwhile, Latino homeowners are expected to incur losses totaling $98 billion.

The Obama Administration’s foreclosure properties prevention program has identified homeowners who have at-risk loans and offered incentives to banks and lenders to modify mortgages.
Under the program, monthly mortgage payment should not be over 38 percent of the borrowers’ monthly gross income. Furthermore, homeowners who have good credit scores are eligible to refinance for affordable payments, with no equity.
However, not all troubled homeowners may qualify for the foreclosure properties prevention program.
Here are some tips to help distressed homeowners who do not qualify for the program save their homes from becoming foreclosure properties:

• Contact immediately your mortgage lender. Experts agreed that contacting your mortgage lender as early as possible gives you a greater chance of saving your property from foreclosure. When you call, inform the operator right away that you are going to modify or refinance your loan.
• Do not avoid or ignore efforts of your mortgage lenders to communicate with you. Most mortgage lenders would prefer to work out a payment scheme with distressed homeowners rather than foreclosed on a property.
• Ask assistance from any Housing and Urban Development-certified counselors. They will be able to help you understand your options.
• Find organizations that may help you connect with culturally competent counselors.
• Know your rights as homeowner. If you know your rights as a homeowner and what are entitled for you, you would be able to renegotiate affordable home loan payments.
• Lastly, research and learn everything you need to know on how to avoid foreclosures.

Several strategies and programs have been created to address the rising tide of foreclosure properties in order to stabilize the housing market towards the country’s economic recovery.

The federal government’s “Making Home Affordable” mortgage rescue plan is designed to help millions of distressed homeowners avoid losing their homes to foreclosures.

As of February 2008, more than 290,000 housing units were on the verge of becoming foreclosure properties, an increase of 30 percent from the previous year. This means that one in every 440 homeowners received foreclosure notices, a 6 percent increase from the January 2009 figures.

Arizona, California and Florida still lead the states with highest number of foreclosure properties in February 2009.

Most everyone hoped that the federal government’s foreclosure properties prevention plan will reduce distressed homeowners’ monthly mortgage payments to allow them to continue paying their loans to avoid losing them to foreclosure.

Housing experts are putting much on the Obama Administration’s refinancing and loan modification programs to help millions of distressed homeowners.

Distressed homeowners who previously failed to qualify for loan refinancing because the market value of their properties were below the required amount may have the chance of qualifying under the current foreclosure properties prevention plan. Qualifying may give them the advantage of lower interest rates and affordable monthly payments.

To qualify for refinancing, homeowners must have mortgages that are owned or backed by Federal Home Loan Mortgage Corp. and Federal National Mortgage Association.

Homeowners must declare their distressed homes as their primary residences. They must not be behind on their loan payments for more than 30 days.

Furthermore, distressed homeowners’ mortgages must not be more than 105 percent of their houses’ market value.

The loan modification component of the foreclosure relief plan allows mortgage lenders to lower the interest rates on loans by 2 percent, defer or lower principal for affordable payment and extend loan terms.

To be eligible, payments made before the modification must not be more than 31 percent of borrowers’ gross monthly income.

For owners of single-unit homes, they must have unpaid balances on their principal of not more than $729,750 to be able to qualify for loan modification.

Millions of Americans are struggling to pay their monthly mortgages which increase to almost half of their monthly income. Majority of distressed homeowners are currently in a financial quagmire because they took out adjustable-rate loans which they could hardly afford to pay.

Because of these, the number of homeowners who lost their properties to foreclosure shot up rapidly and brought an encompassing and horrendous damage to the housing market and the economy.

Obama’s anti-foreclosure homes plan aims to reduce struggling homeowners’ monthly mortgage payments to not lower than 31 percent and not over 38 percent of their pre-tax income.

The anti-foreclosure homes plan works by appealing to lenders’ self interest. The U.S. government has agreed to subsidize a portion of the loss that mortgage lenders will incur if they modify loans to enable homeowners to pay their monthly mortgages at lower interest rates.

Additionally, mortgage lenders would be eligible for cash incentives and other government payments if they decide to make some adjustments on interest rates to ease homeowners’ burden of paying high monthly mortgage loans.

The whole idea of the anti-foreclosure homes plan is to lower monthly mortgage payments to allow homeowners to remain in their properties and prevent the increasing number of foreclosed properties from destroying neighborhoods and communities.

On their part, mortgage lenders would prefer to avoid foreclosure homes because it would costs them a lot if they foreclosed on a property than work out an amicable loan term with the distressed borrower.

However, just like any other government programs, Obama’s anti-foreclosure homes program has its limitations. The plan will not totally eradicate oreclosures but rather make concessions on mortgages with predatory terms.

Also, the focus of the plan’s incentives is mainstream loans and does not cover subprime loans packaged and sold as mortgage-backed loans.

However, Obama proposes to overcome limitations by providing consumer relief under a bankruptcy law. Under the program, bankruptcy judges would have the authority to modify loans in cases that mortgage lenders failed or refused to work out loans for homeowners who want to save their properties from foreclosures.

According to counseling services, more than half of distressed homeowners who are facing the threat of foreclosure have renegotiated their mortgage terms and thus, saved their properties from foreclosures.

Nonprofit advocacy organization, Neighborhood Assistance Corporation of America (NACA) has helped owners of distressed properties negotiate their mortgages with lenders. NACA is known for demonstrating outside the homes of bank executives on behalf of owners of foreclosed homes.

NACA Chief Executive Officer Bruce Marks pointed out that lenders can help distressed homeowners avoid losing their properties to foreclosure by making their mortgages affordable permanently.

He explained that NACA help troubled homeowners avoid foreclosure by determining their expenses and net income, formulate an affordable mortgage payment and restructure mortgages to make them affordable permanently.

On the other hand, the Washington-based foundation HOPE NOW is operating a 24-hour telephone counseling service which is supported by advocacy groups and mortgage companies.
The Federal Trade Commission also recommends the free hotline service to homeowners who are worried that their properties would soon be added on the growing list of foreclosed homes.

According to HOPE NOW executive director Faith Schwartz, mortgage lenders would rather give troubled homeowners a chance to pay their mortgages than foreclosed their properties.

She explained that it would cost more for mortgage lenders to foreclose and they would be left with more abandoned and vacant properties than they could handle.

Schwartz also pointed out that mortgage lenders do not like homeowners to abandon their distressed properties because it would not only affect communities but also the market value of other houses in the neighborhood.

Aside from renegotiating mortgage terms, counseling services also help homeowners avoid being victims of scam artists.

According to counseling services, many homeowners, who are desperate to save their properties from foreclosures, have fallen prey on fraudulent agencies that charged them with upfront fees or short-change them into signing over their property deeds.

The Federal Trade Commission has warned that some of these fraudulent agencies have been using names with words like HOPE NOW or HOPE to confuse distressed homeowners.

Senior director of Foundation Center’s research, Steven Lawrence said that the grants are just the start of institutional giving during economic recession.

His report about institutional giving showed that charitable organizations are responding to economic hardships and are committed to helping owners of distressed properties.

According to Lawrence, many organizations have experienced a decline in their assets in 2008. But despite this decline, many of these organizations are still committed in institutional giving, especially in helping people who lost their homes to foreclosure.

In fact, the Bill and Melinda Gates Foundation had announced that it would step up its charitable giving by 7 percent from 5 percent. The foundation made this announcement despite an almost 20 percent decline in its assets.

This indicated that many charitable organizations are increasing their institutional giving more than 5 percent of their assets as required by the U.S. Internal Revenue Service to continue supporting their causes, such as helping owners of repossessed homes.

Lawrence believed that despite the severity of the economic crisis, many charitable organizations have made adjustments to allow them to honor their commitments and better respond to immediate problems such as foreclosure.

According to Foundation Center’s report, most of the big charitable organizations have focused their emergency giving local.

For example, the John D. and Catherine T. MacArthur Foundation donated a total of $34 million grants for foreclosure prevention and to help renters retain their houses in Chicago, Illinois.

MacArthur Foundation President Jonathan F. Fanton disclosed that the value of the organization’s assets declined by 20 percent in 2008. But the organization was able to give away $25 million higher than the total amount it donated in 2007.

On his part, Lawrence was curious over the large amount donated by foundations to help borrowers avoid foreclosure, claiming that this is not a standard area of institutional giving.

The $700 billion TARP is aimed at halting the flood of foreclosure properties and boosting credit flow to help in the recovery of the struggling United States economy.

It is expected that a part of the TARP bailout fund would be used to help homeowners who are facing the threat of foreclosures.

The economic team is also trying to develop ways to expand TARP to help provide loans to small businesses, consumers and municipalities.

Under the program, the economic team is considering giving the Obama government more shares in financial companies. However, financial firms that will receive funding will be facing more limitations on executive compensation.

On the other hand, Geithner is planning to create a bureau within the Treasury Department to manage TARP.

According to outgoing Treasury Secretary Henry Paulson, President-elect Barack Obama will decide on how best to apportion the remaining 50 percent of the bailout fund. Paulson allocated over $350 billion of the money for loans to automobile manufacturers and investments in financial companies. The issuance of the remaining 50 percent of the bailout fund still needs approval from the Congress.

Paulson has been criticized by some lawmakers for his decision to use over $350 billion of the bailout funds to boost financial institution.

Some Democrats are insisting that a part of the remaining bailout funds should be used in providing aid to homeowners of distressed properties to help the housing market recover from the effects of the foreclosure crisis.

Meanwhile, a report released by a congressional panel has criticized the way the Treasury handled the TARP, claiming that it failed to provide aid to homeowners facing foreclosures, neglected to disclose its strategy on how to stabilize the financial market and failed to consistently monitor usage of the funds.

These companies that are controlled by the Federal Housing Finance Administration (FHFA) have ordered mortgage servicers and attorneys handling foreclosures to prohibit eviction and sales of single-family or multiple-unit properties with mortgages that are owned by these GSEs. These companies have been making headway in preventing foreclosures for at least three out of five beleaguered homeowners and would like to provide families in trouble of losing their homes some assurance at least during the holidays.

Servicers of mortgages owned by these two entities are working with troubled homeowners to find options for them to stay in their homes. Activities include a review of their mortgages and financial capabilities, and possibilities on restructuring the mortgage to make payments current.

With 140,000 mortgages still delinquent, the brief suspension will provide ample time for these servicers to finalize details of the Streamlined Modification mortgage program with borrowers and ultimately avoid foreclosures. The program is set to take flight on December 15, and is targeting delinquent homeowners who were not able to pay their last 3 monthly amortizations.

Unemployment rates have been on the upswing, and this month first-time filings for unemployment benefits have reached 27,000 cases and have flooded welfare offices. This has been the highest level since July of 1992. Economic indexes also fell by 0.8 percent in October. This is a strong indicator that the economy is getting weaker and would have a profound impact on foreclosures. Unless these two mortgage giants step up on their campaign, together with other sectors also bent in dealing with foreclosures, homeowners will be facing tougher times in the year ahead.

People do not just end to buy the first house they see while they are house hunting. Since a lot of money is involved, buyers seek the best ones that real estate agents and magazines have to offer. In a lot of times, people want to stick with their allotted budget. This is where foreclosed homes come in.

Foreclosure properties are those units that were made as payments or guarantees for debts or mortgages. They are being sold because their owners have given them up to their lenders. Once the properties have been foreclosed by the lender (usually a bank, finance company or cooperative), the properties are assessed and sold to the public as foreclosures. Often times, lenders announce the sale of the acquired foreclosure properties in major news papers to attract buyers and speed up the sale.

What is best about foreclosure homes is that these properties are almost always in a good state. As a matter of fact, some of them would even qualify for a valuable price have they not been classified as foreclosures. However, there are still units that would require a little tweaking and refurbishing.

Buyers eying a particular foreclosed home must do their assignment. They have to take time to visit the unit and inspect its structure. Doing a little research about how the property ended up in foreclosure would also be beneficial. Buyers should also check the rates of the units in the area to ensure that they are being offered the right price.

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