With over 1 million foreclosures this year the forecast for next year’s Foreclosure epidemic is dismal to say the least. 

In a recent article, written by Jamie Smith Hopkins of the Baltimore Sun, he reports that ”The Center for Responsible Lending, a nonprofit critic of predatory lending, predicts that 19 percent of subprime loans made to Americans in the past two years for primary residences will eventually end in Foreclosure and home loss, affecting 2.2 million households.”

Let’s talk about what kickstarted our Foreclosure spiral to begin with. 

• Job Loss Across America 

With more and more U.S. jobs being outsourced to other countries our economy is slowly feeling the pinch.  Americans are losing jobs left and right having to take pay cuts or stand in unemployment lines.  We are seeing an increasing need for both parents to work outside the home.  In addition, many americans are having to accept lower salaries and pay because of the surplus in available workers.  Whether in the professional field, service field or a laborer many are suffering. 

• ARM Loans

Another reason for the sudden rise in foreclosures was the popularity of the ARM loans. Now with interest rates rising this past year homeowners are experiencing increasing mortgage payments by as much as 50% each month.  Even if the homeowner’s income is staying the same, which is not the case across the board, homeowners are finding it difficult to make that monthly mortgage payment.  Once a homeowner has fallen behind it can be very difficult to pick up the pieces and move on.  It is possible that rates may rise as high as they were in the 80’s when we saw double digit interest rates.

• Predatory Lending

Another problem that is adding to the Foreclosure problem in America is predatory lending.  With the ever increasing popularity of interest only loans and stated income loans homeowners are finding themselves in a financial situation that they were not properly prepared for.  In addition, many loan officers were falsifying documents to get loans approved.  Americans that wouldn’t otherwise have qualified, are being approved for loan types that their income just can’t support.

Where does this leave America?  In a Foreclosure nightmare!  To add to the American peoples heartache of facing Foreclosure we are seeing more and more scams and wrong doings on the part of some real estate and mortgage professionals.  Some investors are approaching homeowners that are facing a Foreclosure and leading them to believe that they don’t have any other option but to sell.  Most times this is not the case.  Homeowners have options and can find an ethical and reputable loss mitigation or Foreclosure Prevention company to help them in this time of frustration and financial trouble.  Foreclosure is a scary time.  The last thing Americans need is to be taken advantage of by fellow Americans. 

The best thing a homeowner can do when facing a Foreclosure or preforeclosure situation is to do their homework.  Remember, you had a professional help buy your home.  Find a professional to save your home.  Do your research first and check around.  You can find someone through a friend, check with the better business bureau and check for complaints on the internet from other homeowners.  Make sure you have exhausted all your options before letting go of your “American Dream”.  We work hard to buy our homes and give our families something to be proud of.  Work hard to keep it.  Foreclosure doesn’t have to be so scary and you don’t have to go it alone.  Find someone that can help.

With the number of foreclosures estimated to be in the 2 million range for 2007 it’s time for homeowners to educate themselves on their options.  Determine who will benefit more from a transaction dealing with your Foreclosure.  If an investor wants to buy your home but you are able to resume your payments and have a little saved up towards your arrearages THINK twice.  It is very possible you would qualify for loss mitigation where a company will negotiate with your lender directly on your behalf.  You deserve to have someone fighting for what’s best for you!