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May 10, 2012 /24-7PressRelease/ -- Homeowners whose properties escaped foreclosure last year may not be so lucky in 2012. After a lull caused by the problems banks had with improper document processing, the "robo-signing" scandal, indicators this year point to increased foreclosure rates by banks.
The United States Real Estate Market In 2012
In late April, according to one analyst on CNBC, "There are no bright spots," after the Case-Shiller index hit new lows in February from nine cities. Dr. Shiller told the Wall Street Journal that it was unlikely the housing market would turn around any time in the near future.
After suffering the greatest collapse in real estate value (In Phoenix, home values declined 60 percent) since the Great Depression of the 1930s, the lingering recession with the associated lack of job growth, has left the real estate market deeply damaged.
Lack of Jobs
While the initial collapse of real estate values have been linked to the sub-prime bubble bursting, the current doldrums are more related to the aftermath of the economic recession that followed that crash.
A report from Zillow Inc., indicates 25 percent of all American homeowners were "under water" or owed more than their homes were worth in the fourth quarter of 2011. A Reuters story notes the crash of the real estate market eliminated $7 trillion in U.S. household wealth.
Most borrowers who are still in their homes today were not the NINA (no income no assets) borrowers. Those people truly could not afford their properties and have long since abandoned them.
Most of those left are suffering from the downturn in the economy and the accompanying loss of work and jobs. When their hours were cut, or a husband or wife lost a job, they were left struggling to pay all the bills that kept flowing in.
They may have been able to cut some expense enough to get by, depleting their savings, taking loans out against their 401(k), some receiving assistance from the government.
Now, four years after the crash of real estate backed securities, the destruction of Lehman Brothers and the near meltdown of the global banking industry, many people are still waiting for the beginning of a recovery.
Foreclosure to Resume
The banks appear to have sorted out their documentation problem, with five major banks signing a $25 billion settlement agreement with 49 states in February of 2012.
Florida Foreclosures Rise Rapidly
The numbers seem to indicate the increase is beginning, with RealtyTrac, an online service that tracks real estate number estimated foreclosures were up 53 percent in Miami and 64 percent in Tampa from February of 2011.
Many of these foreclosure involve borrowers who may have fallen behind on their mortgage, and suddenly find themselves the recipients of a foreclosure notice. A large percentage of mortgage documents include an acceleration or default clause that allows the bank to accelerate the entire remaining balance after only one missed payment.
Because of the loss of earnings many borrowers face, making up one payment is difficult, and the prospect of make a "payoff" of the entire loan is impossible.
If this is your situation, it may be time to discuss your financial situation with a bankruptcy attorney. If you still have enough income to be able to afford to make your mortgage payment, but have fallen behind and have other debts, like credit cards, that you juggle while trying to stay financially afloat, a Chapter 13 bankruptcy may help.
What a Chapter 13 Can Do To Stop a Foreclosure
A Chapter 13 stops all collection activity, by operation of the automatic stay, which goes into place once you file the paperwork to the bankruptcy court clerk. This stay prohibits creditors from calling you or sending collection letter by mail. It also stops legal proceedings like a foreclosure.
Once you have regained some peace of mind with the ending of incessant collection notices, you submit your Chapter 13 plan. The plan is a budget that allows you to repay your secured debts like a home mortgage or a car loan over five years.
A very important feature of Chapter 13 is that it allows mortgage arrears to be paid in the plan. This means all of your arrears can be spread out over five years, often making an unmanageable debt burden suddenly something you can handle.
Another important feature is that you can devote the majority of your income to paying the mortgage and its arrears, while your unsecured (credit card) debt is paid with what you have left over after you cover your necessary living expenses and your secured debt.
In some cases, this mean you only have to repay pennies on the dollar. This great reduction in unsecured debt is often the difference between losing your home to a foreclosure and be able to remain in your home.
A Chapter 13 is not easy, and you should discuss all of the details with a bankruptcy attorney before you decide to file. They can help you with the paperwork and determine if a Chapter 13 can save your home from foreclosure.
Article provided by B&B Law Group
Visit us at www.tampadebtsolutions.com
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