I wrote this article for a recent news release and thought everyone could benefit if I included it here. The Foreclosure epidemic coming into 2007 is looking worse than 2006 and it’s time for massive action from all corners of the arena. The numbers and statistics are what they are. Most of us already know that the signs are all there showing that 2007 is expected to be twice as horrific as this year and the Foreclosure rates are due to rise across the country. More Americans are losing their jobs especially in our once solid auto industry. Are we headed for an economic downfall or are we already there?
With the wealth of information and statistics flooding the market it’s surprising to see that homeowners are not preparing themselves a little better. A study recently conducted by the Center for Responsible Lending predicts that 1 in 5 subprime loans issued in the past two years will enter some stage of Foreclosure. These statistics will heavily impact 2007 statistics on the Foreclosure rate considering that subprime loans make up a quarter of all home mortgages. This will be an estimated $164 billion cost to homeowners.
In addition to subprime loans, another driving force is the housing market. Appreciation has come to a complete standstill in some states and some states are entering the negative zone. This is going to have a negative effect on the housing market as a whole and is only going to increase the number of foreclosures in the coming year.
With homeowners doing their homework on the Foreclosure rates and different loan types contributing to this increase, they are less willing to try these creative loans methods that were common in 2004 and 2005. Lenders are being warned to be more selective when reviewing the initial loan application to ensure that the homeowner can afford the loan 2 years from now. This Foreclosure epidemic is having a negative impact on the mortgage industry as well as all other real estate professionals that are not working in the Foreclosure arena.
Looking ahead and 2007 the Foreclosure rate is expected to double from 2006. With 1.4 million homes entering some stage of Foreclosure in 2006 that means that almost 3 million foreclosures are expected in 2007.
These predictions are grim to say the least. Not only for American homeowners grasping to their ”American Dream” but also for those real estate and mortgage professionals not offering Foreclosure prevention type alternatives. On the other hand there are some real estate agents and mortgage brokers that have realized that adding Foreclosure prevention type services is not only going to increase their bottom line but insure that these clients of their’s come back themselves and refer others as well. Diversity in the real estate and mortgage industry is a must coming into 2007. Without the ability and foresight to diversify, incomes for these professionals are going to feel a strong pinch in the coming years.
There are companies that offer partnership and/or training on Foreclosure prevention alternatives and they are seeing a flood of brokers and agents stepping up to the plate. In a recent interview with the president of Freedom Foreclosure Prevention Services,LLC, Jeff Segal, he stated “It’s not only imperative for mortgage and real estate professionals to add to their current services, come 2007 it will be absolutely necessary if they want to survive. In the past six months our company has developed a unique partnership program that works well for these professionals to offer services and actually experience relief in this economical whirlwind we have all been experiencing. If they have clients coming to their front door that are facing Foreclosure and they can’t offer a solution, they send these clients away and will never lay eyes on them again or their business. If they are able to offer a viable and ethical solution, even if they are just referring them to someone, they are securing that client’s raport, business and the most powerful advertiser still today - word of mouth referrals. It’s time they realized that diversification is going to be the life raft of 2007 for most of these folks.”
It is refreshing to know that there are still people out there looking out for the homeowners. Hopefully, in 2007, we will see more Americans helping Americans. It’s the only way to survive the market that lies ahead without losing sleep over possible unethical practices just to stay afloat.
