In This Issue:
- Temporary Reprieve
- Turn Your Back On Your Mortgage, Say Hello To A Better Future?
- The Default Research Book Club – Raving Fans
If you are looking out your window and all you see is snow, does it make you less motivated to work? If it does, the best remedy for being unmotivated is simple; check out the Default Research listings! The weather is very warm in Florida, California, and Arizona, and Default Research is the industry leader when it comes to foreclosure lists in those hot areas. If you want to be there right now in the sun, trust me, you are not alone. And that is your chance to make money!
Think about the other people around the country trapped in their homes who might want to be spending a relaxing vacation in a rental condo on the beach in Florida or the desert in Arizona. Now, think about all of those properties in foreclosure that Default Research gives you the opportunity to invest in every week. If now is not the time to sell a property, it is still the time to buy, rent, rent again, and again, and again. The vacationers are flocking to these areas and by making an investment in a property, using the rent to pay the mortgage, you are sitting pretty (and in the sun too).
When you get your chance to spend some time in the sun, check out the book, “Raving Fans.” It has become a Default Research office favorite as our staff is practicing even better customer service after reading this quick book. Then, read up on two interesting articles detailing new options provided to families that find they are facing foreclosure. While both alternatives have pros and cons, it is important for any of our savvy clients to be able to present every available option to their clients in distress.
And, that brings us back to the word stress! And snow, which usually equals distress. Try to turn the snow and being trapped in your home into a positive. Explore the lists of those hot vacation spots and, before you know it, you may own a sweet property in the sun!
Temporary Reprieve
If you were facing foreclosure, would you want to go about it blindly or consider your alternatives? Hopefully, you would choose the latter and research a new pilot program from Citigroup called “Foreclosure Alternatives.” The program started last week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio.
According to Citigroup, about 1,000 homeowners are participating in the program where homeowners on the verge of foreclosure stay in their homes for six months as long as they turn over the deed to their property. The effort, also known as “deed in lieu of foreclosure,” basically allows the homeowner to avoid a completed foreclosure. In the program, the homeowner still has to pay the utilities for the home, but Citigroup is offering to pay $1,000 in relocation costs and provide relocation counseling. The program seems to be working because most borrowers who owe 20 percent or more than their home current value are choosing to walk away because they do not see a recovery in the home’s actual value.
The hope for the program is that it will help alleviate the hit the borrower’s credit score will take, even though, the homeowner must still leave the home after the six month reprieve. Another reason Citigroup is launching the program is because some states have lengthened the time of the foreclosure process. This causes the lender to incur a more time consuming, expensive foreclosure process.
Although this program is a last ditch effort for homeowners who do not qualify for any other types of mortgage modification, it is a win-win for Citibank and their borrowers. According to Sanjiv Das, the company’s mortgage executive, “avoiding foreclosure is less painful for our borrowers as well as for us.”
Turn Your Back On Your Mortgage, Say Hello To A Better Future?
Although a strategic default seemed unthinkable before the foreclosure crisis, according to real estate experts and professors, actually going into foreclosure might be forward thinking! Yes, a homeowner who stops making payments, even though they have the money, might be doing the right thing for their own future.
That being said, in no way will this be the right move for the borrower’s credit. Their credit rating will make it nearly impossible to obtain loans or very expensive to borrow money. Also, the defaulting property owner will be denied federal loans for at least 3-5 years after the date of the foreclosure.
But, if you are living in a home where the price of the house drops and the debt owed on the property is much greater than the value of the property (upside down or negative equity), then why not strategically default? Then the borrower has the opportunity to live free of payments until the lender forecloses, and more importantly, can pay down other debt. While the idea of paying off the debt is great, this is not a win-win because of the negative credit that comes along with the strategic default.
Just ask Will Nelson who was interviewed on CNN Money. The father of two felt like he was forced in to the tough decision when his home he bought for $500,000 decreased in value by half.
“I offered to meet my bank more than halfway if they lowered the balance to $400,000,” said Nelson. “They told me flat out they don’t do principal reductions. Now, they’ll foreclose and take a $250,000 hit right off the top. I got the notice of default in February, and my wife and I and our son will be out by mid-May.”
Then came the decision Nelson had to face once the foreclosure was final. “Yes, my credit will be ruined but so a lot of other people’s credit is too. I’d rather have bad credit than be completely broke, which is what would happen if I kept making mortgage payments.”
My question to you is have you seen the strategic default before? Was it successful? Or, did the borrower in default regret the decision? Please let us know so everybody can learn more about this controversial and super hard decision!
The Default Research Book Club – Raving Fans
“Raving Fans” is a must read about, what else, creating “raving fans” for your business! According to the author, “Your customers are only satisfied because their expectations are so low and because no one else is doing better. Just having satisfied customers isn’t good enough anymore. If you really want a booming business, you have to create Raving Fans.”
This book is not only useful for your business; the Default Research staff has become a “raving fan” too. In fact, this book was a reading assignment and our staff has strengthened our values when it comes to delivering top notch customer service. Also, the staff found the book to be a very easy read because of the author really speaks to you – almost like reading a book written in e-mail language.
Sure, sure – you can get bigger books or go listen to somebody talk in much more complicated language, but this book will teach you more and teach you faster. Our staff encourages you to fly to your bookstore and become a raving fan too!