Are the number of foreclosures being overstated
Certainly, any foreclosure is terrible for all involved, the homeowner, the lender, the neighborhood. As I said before, any foreclosure is terrible for everyone. The mortgage market is currently in chaos and lenders are failing, loans that were committed to are being withdrawn and there is rampant fear of risk from Wall Street to Main Street.
A new report indicates that the number of foreclosures is being overstated by Realty Trac, the source for the news media, Congress and others for the company's personal gain. Because a homeowner may have a first mortgage and a second mortgage and both are delinquent, it is possible that the same house is being counted twice in the data. There may be other miscalculations and Realty Trac promises to rectify the situation by changing their methodology in future reports.
When you read articles or watch the news, you might wonder whether there is anyone who isn't in foreclosure with the percentage increases being reported. Of course, percentages can be quite misleading because if there you double a small number to a large number, the percentage increase will be that much higher and more alarming. In June, Realty Trac calculated an 86.8% increase in foreclosures.
There are pockets of foreclosure activity that are significantly higher than others, after all, real estate is local. The largest problems are focused in 4 states, Nevada, California, Colorado and Florida. According to statistics calculated previously, Nevada had 1 foreclosure for every 175 households, California 1 of 315, Colorado 1 of 317 and Florida 1 of 347. The national average was 1 foreclosure for every 704 households and thankfully, South Carolina is not on the list. Those states having high foreclosure rates had either unsustainable and unrealistic price appreciation over the past few years leading to serious affordability issues or states including Michigan, Ohio and Indiana where the fading industrial base has led to a deteriorating job market.
There are solutions. There are still many lenders who can and will make sound lending decisions in today's difficult mortgage environment. With documentation of your income, debt and credit history, you can still obtain a mortgage, have it funded and buy your dream home.
If you are in trouble with your current mortgage, talk to your lender and see if you can't get your loan restructured. Don't ignore it thinking the problem will go away, it won't. Your lender would prefer that you are able to continue to make payments and not be forced to foreclose on your house.
My friend Cathy Clark talks about a story of a restructured loan with a happy ending on Jay Thompson's Phoenix Real Estate Guy.