Independent Woman Homeowner

Foreclosures Can Happen To Anyone...Even You!

Many savvy, financially sound women believe strongly that a foreclosure could never happen to them. This may have been true in the past couple of years, since North America has not seen a lot of the run-down, forsaken-looking bank-owned homes in the nicer neighborhoods.

(I think we only saw one or two homes in Danville during the past twelve months that were clearly foreclosures or bank-owned properties). We have seen many more short sales, where the owner of the house owes more on the loan(s), than the house is worth, thus causing the lender to choose between agreeing to release the lien for a lesser amount, or letting the home go to foreclosure, in which case they may get less anyway. In addition, many of the properties being foreclosed, had riskier sub-prime loans, but this year will also see adjustments to prime mortgages of good credit homeowners.

However this is going to change: foreclosures in 2010 are expected to increase in the more affluent areas, according to a recent DataQuick report which evaluates mortgage distress by zip code. According to the San Francisco Chronicle report, DataQuick Analyst, Andrew LePage said “The problem is moving up the ladder”. A year ago 52% of default notices were in the state of California’s more affordable sub-markets, in the 4th quarter of 2009, only 34.9% of the default notices were in the less expensive markets. Affluent homeowners being affected by unemployment and the recasting of option ARM loans (which were frequently used to buy more expensive homes) are the primary reasons for this expected increase.

Home values have continued to erode, even in the more affluent markets, since 2007 due to the posted short sales, the increased housing inventory, and the lower demand. If sellers wanted or needed to sell during the past two years they had to price it lower than the most recent comparable sales. This has caused a negative equity position (where you owe more than the home is worth) for many people. This in of itself is not a big problem…you only lose the money when you sell the home. If you can ride it out…great! But what if you become unemployed? Or your loan adjusts, or both? This is what is expected to happen in areas, like Danville, Alamo, and other affluent areas throughout the state of California.

So ladies, if you are looking to buy a home in these areas, and you do not have a home to sell…well congratulations your chance of getting a good deal is getting better! But if you are someone who is contemplating selling your home: you must face your grim choices…1) be prepared to ride out the market for the next 18 months to two years or 2) get your home on the market ASAP!! Making the decision may be tough, but waiting until you have no equity left will make it even tougher!