U.S. homebuyers are less likely to purchase a foreclosed property today than they were a year ago, according to a recent survey by Trulia & Realty Trac. Some 45% of U.S. homebuyers say they are at least somewhat likely to purchase a foreclosure today, compared with 55% who said that same a year ago.
Only 1% of homeowners who carry a mortgage say walking away from their home would be their first option if they are unable to pay it, while 59% say they would not consider walking away no matter how much their mortgage was underwater. More than 2/3 of homeowners, (69%), say modifying their loan terms would be their first choice if they aren’t able to pay their mortgage.
The survey also finds that fewer homeowners have a negative view toward foreclosure properties this year, (78%), compared with last year 85%. Homeowners who believe there are negative aspects to purchasing a foreclosed home say they are most concerned that there will be hidden costs, 68%, that the process is risky 49%, and that the home could lose value, 35%.
Fannie Mae has launched a new website to help homeowners who are behind on their mortgage payments or are facing foreclosure.
Knowyouroptions.com features practical information and resources homeowners need to avoid foreclosure and either stay in their home or sell it. Resources include a list of local foreclosure prevention events, housing counselors, Fannie Mae resources, credit score information, forms, videos, calculators and more. The site also provides important tips for recognizing and avoiding foreclosure scams. For more information, visit www.knowyouroptions.com.
Facing the possibility of foreclosure, California homeowners may be hit with more than just losing their homes. Due to a loophole in state law, they also can be sued by their lender. To prevent this, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is sponsoring Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro), which will extend anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure.
KEEP THIS IN MIND
• Currently, if a homeowner defaults on a mortgage used to purchase his or her home -- known as a "purchase money mortgage" -- the homeowner's liability on the mortgage is limited to the property itself. Unfortunately, the original law did not extend the purchase money protection to loans that refinance the original purchase debt, even if the refinance only was to obtain a lower interest rate.
• Californians who refinance a property currently do not have protection if they default on a mortgage greater than the property’s value. Called a "deficiency" liability, under current California law, the lender can sue the former homeowner for the amount of the deficiency even after taking back the property.
• Recent years of low interest rates and aggressive marketing campaigns by lenders have induced tens of thousands to refinance mortgages. Few homeowners realized that by refinancing their mortgage, they were forfeiting their protections and now are personally liable.
from CAR's Market Matters e-mail update
Fannie Mae and Freddie Mac will suspend foreclosure evictions from December 19, 2009 through January 3, 2010. To help struggling families over the holidays, both owner-occupants and tenants living in properties foreclosed upon by Fannie Mae will not be evicted. Freddie Mac's suspension of evictions will be limited to properties up to four units.
In a similar move, Citigroup Inc. will suspend foreclosure sales and evictions for 30 days through January 17, 2010 for loans it owns. Citigroup's foreclosure moratorium, however, does not extend to loans it services on behalf of other investors. Given these developments, other lenders may follow suit, so check with the lender if appropriate.