First American/Core Logic just released a report showing “Shadow Inventory” of foreclosure homes in the U.S. increased 54% in 2009, threatening another decrease in home prices for hard-hit areas like Valley Center, CA. and increasing short sales.
This potential “Foreclosure Tsunami” threatens to start another round of price reductions and force even more homeowners into short sale situations.
Most news reports only count the number of homes already owned by banks as “Foreclosures”…but we have LOTS of information about all the homes that are about to be foreclosed…the “Shadow Inventory“…take a look at this chart:
Whether you call these homes “pending foreclosures” or “Shadow Inventory” the result is the same, there are HUGE numbers of homes about to hit the resale market in Valley Center.
Look at this chart, green represents the present foreclosures, yellow and red the “Pending” foreclosures.
Owners with problem mortgages need to act quickly, make a plan, and start working toward a solution…but how do you decide if you are going to have a problem?
The first sign of a problem mortgage is the type of loan you have. We all sign loan paperwork and for the most part forget the details…but those details are important!
The three most popular loans were ALT-A, Option-ARM, and Sub-Prime. Sub-Prime mortgages generally exploded last year. In 2010 and 2011 the ALT-A and Option-ARM mortgages will be the big problem, because they’re going into “Interest Rate Reset” periods….where rates can increase rapidly.
Take look at this chart showing the loan resets by month for the next couple of years…and remember that most of these loans were made in Southern California:
Your first action step is to dig out that original loan paperwork and read ALL the details about resets and how fast they can change your rates.
Most of these loans are tied to LIBOR rates…today we are seeing the 6-month LIBOR rate at 0,5% and the 1-year LIBOR at 1%. Most loans have a “point spread” over the rate….sometimes 2% to 4 % over the going rate.
The 1-year LIBOR is forecast to increase to 1.5% by next July, and higher by the end of 2010…possibly reaching 5% by 2011…add a three-point spread to that and an affordable 5% mortgage becomes an impossible 8% burden…so be certain to look at the numbers carefully!
Your second step is to meet with a financial planner or CPA that can help you decide which option is best for you.
We see lots of Lawyers and Loan Modifiers advertising on TV and radio right now…but why would you go through that process…and pay all that money…if you still can’t afford the payments?
Finally, when you have the financial information you need, you can decide if you qualify for a loan modification or short sale, or if you need the protection of a full bankruptcy.
No matter what you decide we’re here to help you each step of the way, providing referrals, showing you your options, helping you complete your plan…and if a short sale is best for you we can give you the highest quality service and make the process as painless as possible.
If you’re in a situation where you’re late on payments, have received a Notice of Default ,or Notice of Trustee Sale, you have very little time…call me right away and we’ll get you pointed in the RIGHT direction
Phone Calls are Free….Knowledge is Priceless Call Bob at 760-525-0123
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