Chicago IL – There is a hidden secret in the foreclosure business. Many lenders are rejecting their borrower’s loan mod attempt. Then, they foreclose the house and sell it bank owned. However, they lose more money from foreclosure versus if they had accepted the loan mod. Let me explain.
A person buys a house for $300,000. The local housing market declines and the house is not only worth $220,000. The homeowner’s income drops and now they can only afford to pay the equivalent of a $220,000 mortgage payment. They request a loan modification. Their lender turns it down. The house goes to foreclosure.
Eventually, 18 months later the home is foreclosed upon. The homeowners move out. The lender lists the home for sale. Because of the continued decline in the housing market, the house is now only worth $200,000. But, it sells for $180,000. Why?
Because the lender doesn’t keep up on it. The house is dirty and the lawn hasn’t been mowed for 3 months. This is because it usually takes 3 months for lenders to list a property after the homeowner moves out. The other reason the house sells for less is because the buyers know it is a bank owned property.
After all, it says it right there in the MLS. As a result, they all make lowball offers. The moral of the story is: The lender would have been better off accepting the $220,000 loan modification versus foreclosing and selling the property for $180,000. Stuff like this happens every day. Unfortunately, no one is telling their story.
What do you think? Do you disagree? Are you one of those people who thinks the following? I hear people say this a lot. “Since those homeowners agreed to pay the lender $300,000, they should find a way to do it. Go get an extra job or mow lawns on the weekend. You know they can pay it, if they just wanted to”, they say. Let me know your thoughts by putting a comment below.
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Thanks for reading this, Phil Buoscio.
Phil is a Real Estate Agent at Better Living Realty – Buoscio Brokerage, Inc..
Phone: (312) 953-6725. email@example.com.
View My homes for sale at www.BetterLivingRealty.com.
Phil Buoscio specializes in loan modifications and short sales in Chicago Illinois. Chicago Loan Modification Help. Chicago Short Sales. Chicago Short Sale Realtor. Chicagoland Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor. We do business in Pilsen. McKinley Park. Bridgeport. Wicker Park. West Town. Ukranian Village. Lincoln Park. Near North. River North. East Village. Logan Square. Uptown. Edison Park. Portage Park. Hermosa. Lincoln Park, South Loop, West Loop. Bronzeville. Hyde Park. Kenwood. Oak Park. Brookfield. Cicero. Berwyn. Evanston. LaGrange. LaGrange Park. Riverside. We sell condos, single family homes, lots, land, multi units, two flats, three flats.
Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Buoscio’s personal views and do not reflect the views of Better Living Realty – Buoscio Brokerage, Inc.. This information is provided as a courtesy to our viewers to help them make informed decisions.