Why Lenders Don't L
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Sep 14, 2019
2:30 AM
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Although it may be hard to believe, lenders don't like foreclosures, and the best way to stop foreclosure is to keep the lender informed as soon as you know you may not be able to make the payment.
In general, lenders are willing to work with the homeowners to avoid foreclosures - for several reasons:
o Foreclosures are expensive. Depending on what steps the homeowner takes and how long the court proceedings take, legal fees alone can cost thousands of dollars.
o Foreclosures very seldom manage to satisfy the outstanding debt. Foreclosures can happen through three main ways:
1. You sell your home and pay the lender back. Sometimes, this takes care of the amount owed. In the current real estate market however, the likelihood of making more than the cost of your mortgage is slim.
2. You sell your home through short sale, meaning that the proceeds won't cover the entire loan. The lender doesn't realize their predicted return on investment (ROI), and you still have remaining debt.
3. You sign the deed back to the lender. While this clears you of debt, this leaves the lender holding the property.
o Foreclosures leave the lender holding the property.
Why is this a bad thing for the lender?
Lenders work with liquid assets or assets that can be liquidated quickly. In other words, money. Money makes the world go round, and this is especially true with lenders. To do what they do, they have to have those liquid assets.
Property is not only a real asset; it's also an asset that isn't easily liquidated. For an example, look at the current housing market. The real estate market is so unsure, a lender could easily lose thousands of dollars in an attempt to sell the property. Not only are they stuck with holding property they can't get rid of, they're also stuck paying property taxes and upkeep, which means they're losing money that way, as well.
If you're one of the many people worried about foreclosures, or you're facing a foreclosure, remember that it's the last thing most lenders what. Keep them informed and, while you're at it, educate yourself to find out what you can do!
Article Source: http://EzineArticles.com/2120336
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