May 27th, 2010 by D.J. Rausa
San Diego County has seen a decrease in the foreclosure rate, but that may not be such a good thing to be seeing for a variety of reasons.
First, the mortgage lenders now have added the staff to complete the foreclosure process to sale. Meaning that more homes are being sold at auction.
Secondly, this has motivated homeowners who are struggling with their mortgages to sell before they go into foreclosure in an attempt to get the best price for their property.
Home sales are up as is the number of building permits, which clearly indicate a slow recovery. Interest rates are at one of the lowest rates which have helped boost home sales.
The nationwide trend may be a little different, however. The governmental plans to assist home owners have failed miserably. There is no other way to state it. The Federal Government has a complete inability to watch over mortgage lenders to ensure they comply with the regulations and help distressed property owners. Mortgage lenders are unmotivated to make the process timely or efficient. This only leads to a completely frustrating experience.
The trend is called “Strategic Default” and it effects even the most reluctant and proud homeowner. Once they have concluded that the existing mortgage is not going to be adjusted to make the home affordable, they plan the timing of the foreclosure. Often times this planning involves the school year, graduation, work relocation, etc.
The major question becomes “How much longer can I remain in my house until I am forced out?” This is where the engagement of a professional is so critical. Once the move becomes a reality, the timing of the move becomes the focus.
As an article about strategic default practices said, severe negative equity is a massive and corrosive problem across the country. If the value of the home is far less than the balance of the primary mortgage, then there is negative equity. If there is a second mortgage on the home, then the negative equity is far more acute. The problems that are associated with a second mortgage can be even more devastating as the second mortgage holder may, and probably will, pursue the collections of balance of their loan after foreclosure. This could also result in a heavy tax liability in the form of a capital gain for forgiveness of debt.
It is critical to engage the services of a professional San Diego bankruptcy firm early, long before the foreclosure begins and long before the liquidation of any retirement accounts.