Please Don't Abandon Your Home!

It happened again today. I spoke to another person who abandoned a home because they thought they would lose it to foreclosure. I understand the hopes and dreams they had as new homeowners are dashed by the economic challenges of this market, and they may feel as though they have no other options. In reality, it may take months for the home to actually be acquired by their bank and in the meantime neighborhood home values will be negatively impacted as landscaping dies, the pool turns green and weeds grow in the yard of this abandoned home.

If a homeowner is struggling financially or feels desperate because their mortgage balance exceeds current market value, abandoning their home is actually the last thing they should do. Contrary to popular belief as well as the folks who answer the phone at the mortgage company, lenders do not want to foreclose on their property. I know of homeowners who haven't made a mortgage payment in over a year who are still in their homes.

Many people erroneously believe that if they miss a mortgage payment the bank will foreclose and this means that they and their belongings will be thrown out into the street. Arizona law protects homeowners by giving them a minimum of 90 days legal notice before the actual trustee's sale takes place. And that notice of foreclosure (which starts the 90-day time period) usually won't begin for months after the first monthly payment is missed.

As in every natural and manmade disaster, there are those individuals and companies who find a way to prosper in the face of others' distress. I've spoken with countless homeowners who have paid companies thousands of dollars to help them modify their loans, seek short sale approval or induce them to sign over their property with the ability to rent the property until some future date when they can purchase it again. The federal government has laid out guidelines and provided financial incentives to mortgage companies to assist borrowers with loan modifications and foreclosure alternatives, such as short sales, at no cost to the homeowner. I repeat: There is no need to pay anyone money to participate in the HAMP loan modification and HAFA foreclosure (short sale) programs and the federal government actually pays the lender money for successful assistance to homeowners under these programs. The truth is that participating in these programs requires unending patience, a lot of financial disclosure and paperwork, and can take months to complete.

Some lenders have actually taken a proactive approach to the challenging real estate market and have streamlined their short sale procedures to the point where approval can be obtained in as little as 10 days! More lenders are watching these pilot programs, with the goal of adopting similar procedures in the coming months.

Rather than moving out of their home while wading through the paperwork and procedures involved and taking on another housing expense in the form of rent and moving costs, financially distressed homeowners are far better to remain in their homes, even if they are unable to make their scheduled mortgage payments.

The real estate market has changed from the skyrocketing appreciation Arizona experienced in the 2002-2005 years, and it will probably never return to those crazy days. The only way for the market to stabilize is to stop foreclosures and the further value declines they create in our neighborhoods.

There are many Realtors who have been extensively trained in dealing with the banks and negotiating short sales, which is convincing the bank to accept a loan payoff which is "short" of the full balance owed. If you or someone you know is having difficulty making their payments or finds their loan balance is so much larger than their home's current market value, interview Realtors to find someone who has been extensively trained and certified in this specialty, doesn't charge a fee up front, and who has a track record of successfully closing short sales. Short sales have been called "the brain surgery of real estate" and while I would seek a family doctor for treatment of the flu, I would seek out a skilled brain surgeon with a successful track record if I needed that type of treatment. We have created a Web site full of helpful information for distressed homeowners at www.CasaGrandeShortSales.com.

If you or someone you know is in trouble with your mortgage or property value, please don't abandon your home. It doesn't help you, your lender or your neighbor's home values.