Many housing market experts are predicting national foreclosure rates will return to pre-housing market crash levels by the end of 2014. While this is certainly good news and a strong indication that both the economy and the housing market are recovering, a very large group of homeowners remains at constant risk of mortgage delinquency and foreclosure.
The online real estate service Zillow reported in February 2014 that the mortgages of approximately 9.8 million homeowners across the country were still underwater at the end of 2013. In other words, the market values of their homes were less than their mortgage balances. Every one of these homeowners is a hardship away from their home being at risk of foreclosure.
Prior to the housing market crash in 2008, most people who owned their home for even a short time had built equity from rapidly increasing home values. If they experienced a hardship such as extended illness, disability, death of a spouse or partner, divorce, job loss, or underemployment, when all other options to save the home had been exhausted they were typically able to sell the home at a gain and move to a suitable rental property.
These 9.8 million homeowners whose mortgages remain underwater, do not have the safety net of equity to fall back on when life happens. When a hardship occurs, they could face delinquency, foreclosure, and the loss of their home almost immediately. Fortunately there is help available. HUD has a nationwide network of certified housing counseling agencies, as do most state housing authorities. There is no charge for these services, with trained counselors helping at-risk homeowners negotiate solutions with their lenders and connect to available federal and state assistance programs. No one should ever enter into any agreement with any organization that promises mortgage modifications or foreclosure intervention services and requires a payment – you will likely be throwing away money you already don’t have to spend.
The first and most important thing every homeowner experiencing a hardship should do is reach out for this help as soon as they fear they are going to miss their first payment. The earlier a counselor can start working with a homeowner, the more options are available to save the home. If the home just can’t be saved, the counselor can also help the homeowner plan for a dignified exit from their home and begin the process of financial recovery.
Community Housing Network is a Michigan State Housing Development Authority (MSHDA) certified Homeownership Counseling agency, with seven trained counselors providing an array of counseling services. Check out our information on our foreclosure prevention services in SE Michigan.