Many Michigan home owners are facing foreclosures; Independence Township is not immune.
According to the township assessor’s office, since 2005, 129 homes in have been in the process of foreclosing, whether bank owned or in the starting process. Since the beginning of 2007, 51 homes are in foreclosure.
The United States has witnessed 437, 498 total foreclosures in the first quarter (Jan-March) of 2007, according to www.realtytrac.com. Out of that total, Michigan is ranked fourth in the nation just under Nevada, Colorado, and Georgia. Michigan accumulated 29,467 total foreclosures for the first quarter of 2007.
‘Detroit documented the highest foreclosure rate among the nation’s 100 largest metropolitan areas in the first quarter of 2007. The metro area, which comprises Wayne County, reported a total of 16,351 foreclosure filings during the quarter, a foreclosure rate of one foreclosure filing for ever 51 households ? more than five times the national average,? says realtytrac.com.
The Oakland County area was ranked 20th of the nation’s 100 largest metropolitan areas, with a foreclosure rate of one house out of every 143 households.
According to www.getforeclosures. blogspot.com, the number of homes undergoing foreclosure in Michigan doubled from Feb. 2004-Feb. 2006.
What exactly is a foreclosure?
‘Foreclosure is the legal process through which a lender claims an asset from the consumer borrower.? Basically, it is the process of the lender (rather that be a bank, or mortgage company) taking back what is theirs because the borrower failed to meet the requirements of the contract and did not make payment on their loan on time.
A mortgage payment is not like a credit card where you make a partial payment, it is all or nothing.
‘If you fail to make a payment, you get hit with a blemish on your credit,? said Gina Norton, mortgage consultant of Interactive Financial Corporation of Clarkston.
If a payment is not made within 60-90 days the foreclosure process will begin.
Norton and her business partner Dan Rogers said one of the main reasons people end up in foreclosures is because they are convinced to by these ‘exotic mortgage programs? that have teaser interest rates.
‘People think they are getting one percent interest rates for one month, but after that first month is up, interest rates jump seven to eight percent,? said Rogers.
Other reasons for foreclosure include: loss of job, divorce, wage cut, not working the overtime anymore, and maxed out credit cards.
There are steps to avoid foreclosure such as calling your lender immediately to discuss what to do before the foreclosure.
‘If you know that you won’t be able to make a payment call your lender as soon as possible and have your finance documents in front of you, ready to discuss your loan. Also call the lenders mitigation department see if you can’t work out some sort of payment option,? said Rogers.
Borrowers should also know the ways their lender can help them avoid foreclosure. Depending on the seriousness of the situation, lenders can offer retention options, which are ways to keep your house, or liquidation options, ways to give up your house without going into foreclosure.
Retention options include: Forbearance, which generally lets you pay less than the full amount of your mortgage payment for a temporary period; repayment plan, a form of forbearance where you pay the outstanding amount in installments divided over a period of time; reinstatement, where you pay the lender the total outstanding amount in one lump sum by a specific date; or a loan modification, where your interest rate and/or term of loan is altered ? that is the mortgage not itself is changed.
Liquidation options include: Short sale, when you get an offer that’s less than the amount you owe, your lender could consider it as a settlement; deed in lieu of foreclosure, this allows you to transfer your property voluntarily to your lender; or assumption, which permits a qualified buyer to take over your mortgage debt and pay the mortgage payments.
There are generally four stages to a foreclosure.
? Redemption: The lender’s attorney contacts you and gives you a deadline ? known as a cure date, by this date all missed loan payments must be paid back in order to avoid foreclosure.
? Default: If the cure date comes and goes without you doing anything about it a notice of ‘default? gets posted.
? Foreclosure: If the delinquent payments are not paid after the default notice has been posted, the lender will exercise his right under the trust deed he holds to foreclose on the mortgage and take possession of the house. If the borrower is still living there, the lender can get a court order to have borrower evicted.
? Sale: The lender sells the foreclosed home at public auction. This can take place between 30-120 days depending on state law.
Not only can foreclosure hurt your credit scores, but it can affect your life in major way, as a past Interactive Financial client witnessed.
‘I felt like I was losing everything and not able to crawl back out of the hole,? said 30-year-old Megan Ranger.
Ranger said she had to foreclose due to a bad choice in her life, concerning a relationship.
‘Neither of us kept our end of the bargain,? noted Ranger.
After the foreclosure took place and Ranger was in the process of trying to re-establish her credit, she said that she started making better life choices.
‘I stopped relying on other people to help me get out of the hole, and I finally owned up to my own mistakes,? she said.
It took three years for Ranger to finally re-establish her credit and she now has a new house.
‘Now everything is a lot better and I feel a lot more confident,? she said. ‘When Gina called me to tell me I was approved, I screamed for joy. In the same day I won money ($5,000) from 96.3 WDVD radio station,? said Ranger.
Interactive Financial has 15 years combined experience between Rogers and Norton. They are also one of the few companies that deal with Federal Housing Administration (FHA) loans. To deal with these loans the mortgage company must have a mortgage broker license. Only about 30 percent of mortgage loaners have an FHA license.
FHA loans target people with poor credit to help get them from an adjusting rate to a fixed rate mortgage. There is also no pre-payment and it is comparable with conforming rates.
‘There is hope for people; they just have to realize there is a loan out there to help them. That loan is the FHA loan,? said Rogers.
Interactive Financials main goal is to do what’s best for each borrower’s situation.
‘When we sell a loan, we are trying to evaluate a person’s big financial issue,? says Norton. ‘We are not just trying to make a quick close on a sale, we want to put people in the best loan possible for there situation.