Mortgage Foreclosure Freeze: How it Affects Homeowners

Oct. 12, 2010 - PRLog -- Andover, Massachusetts October 12th, 2010 –  The country is now in year 3 of the Real Estate meltdown that decimated households nationwide. Home values that seemed to rise exponentially throughout much of the last decade saw a sudden and dramatic drop. Certain regions in the country that saw the largest increases also saw the largest decreases in home values, over 50% in some parts of the country. The consequences of this sudden drop in value are still being felt today. Many homeowners were already tied to a house that they couldn’t afford so when home values dropped, thousands saw their net worth vanish in a matter of months. The following credit crunch that decimated the financial sector also led to large scale layoffs throughout the economy which put even more of a clamp on consumer confidence and spending. The end result, a record number of foreclosures as people could not afford their monthly payments anymore due to income loss or a spike in monthly payments due to rising mortgage rates tied to ARM’s (adjustable rate mortgages).

Just last week the latest shocking news hit the airwaves in regards to these properties that have been foreclosed on. It seems that many of the largest banks in the nation that have been foreclosing on properties have been using less than acceptable standards when it comes to handling the paperwork involved with the process. As a result, many of the largest bank in the nation including Ally Financial, Bank of America, and JP Morgan Chase have all temporarily put a freeze on foreclosures while they review their paperwork and make sure everything is in order. Ignoring the fact that these are multibillion dollar companies that should not have these types of problems, this freeze on foreclosures is just another cloud of uncertainty hanging over the general economy. While it may temporarily improve the housing market as the supply of homes on the market will drop dramatically, the long run consequences will not vanish. The housing market will remain in flux and weak until this glut of homes that are under foreclosure proceeding work their way through the system. Even if you are one of the lucky current homeowners that is grateful for this temporary reprieve from foreclosure, it does not mean you will be able to keep the home moving forward. The mortgages were still legal, you still broke the contract by not paying, and the banks will still repossess what is rightfully theirs. I recommend you use this temporary window of reprieve to focus fully on paying off as much debt as possible and creating an emergency fund for the future.

I want to reiterate, this freeze on foreclosure proceedings does not change the long term outlook of the housing market. All it does is give current homeowners who are being foreclosed on a temporary break while any legal issues are  resolved. It does not raise home values for current homeowners and does not mean delinquent homeowners will be able to keep their homes moving forward.

Readers, are you as shocked as I am by the lack of oversight these industry giants practiced in their mortgage departments? Are you one of the lucky ones that will benefit from this freeze? Will you take advantage of this freeze to work on paying down your other debts?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:                                                        
Stephan Tavernini
Marketing Coordinator
Certified Educator in Personal Finance
Certified IAPDA Debt Arbitrator
stavernini@pfs1.net

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Preferred Financial Services is the leading voice in the debt settlement industry. PFS has worked with hundreds of creditors to help negotiate realistic goals for those drowning credit card debt.