Politicians are hoping to help some of those people that took out loans that they could not afford.  Many people took on mortgages with teaser interest rates.  Essentially the mortgages started with interest only payments, or teaser payment rates with escalating payment levels as the loan advanced.

Many of these same loans were also Adjustable Rate Mortgages (ARMs).  As the loans start to include principle payments later on in the life of the loan, the interest rates sometimes start to increase as well.  This serves to hit homeowners with a much higher payment that too many cant afford.

Lawmakers are considering legislation that would lock these payment amounts at their current level, so that people could stay in their home.

How to lock these rates though is problematic.  If banks do not receive a principle payment, the homeowners will never take control of their home and finances.  Some legislators are considering options that would make renters out of homeowners.  Essentially looking at those interest payments as a rental contract and updating the mortgage to reflect this reality with out pushing a homeowner into bankruptcy, foreclosure and a canvas tent.  Its unfortunate that these same lawmakers could not have protected homeowners and borrowers from the predatory lending practices of recent years and even more tragic that lawmakers could not protect US citizens from their own actions when they instituted tougher bankruptcy laws in 2005 that essentially made credit card debt more important than a mortgage in the eyes of the courts and as an indirect result in the eyes of debt holders.

With the collapse of the sub-prime lending markets over the summer, many homeowners have found themselves up the creek. The jury is still out in regards to any “predatory lending” claims however many of the prime suspects have boarded up their shops and left for higher ground. Questionable practices aside, affected homeowners now find themselves locked into overbearing financial commitments.

Many homeowners who are faced with the prospect of foreclosure tend to hit the panic button without taking a look at their options, yes there are options. The first option I would suggest is to contact your lender. You have to remember, banks and credit unions DO NOT want to have an extensive property portfolio. A foreclosure can look just as gloomy to your lender as it does to you. My second recommendation is to contact a local Realtor or licensed professional. Enlisting the help of a professional is never a poor decision especially when searching for foreclosure information. Remember, even if you choose to go it alone, most Realtor’s offer free consultations and have extensive contacts in the lending industry.

Whether you are a homeowner facing California foreclosures or a potential buyer looking for distressed or Florida foreclosures, remember that there are many hazards and pitfalls associated with a purchase and sale of foreclosed property. There are many licensed professionals who have the experience and expertise to help you, take advantage of their knowledge. As I mentioned earlier, there is generally little to no cost associated with a consultation, but there can be a lifetime of cost in an uninformed decision.

This year has become the year of the F Word.  There are home foreclosures setting new records in almost every state of the country.  Foreclosures are a terrible experience for anyone that has to go through the process, but there are ways to prepare yourself so that you can avoid this process or at least mitigate the problem as much as is reasonably possible.  All does not have to be lost.  Furthermore, there is a flip side to foreclosures.

First, if you are or ever get behind on your mortgage or start to run into financial trouble there are things that you can do to avoid foreclosures.  You can renegotiate with your mortgage holder, refinance, possibly even refinance under new governmental programs that are being revamped this fall to enable people in trouble to convert their mortgage to an FHA loan.  You could even attempt to sell your home to pay off the mortgage.  Taking a loss on a sale might be better than foreclosure.

Even as a last resort you might opt to turn your home over to your mortgage holder.  This does not save your home, but it is better for your credit than a foreclosure and might make it possible for you to buy another home sooner than if you go through foreclosure.  Its not pretty but lets you survive to fight another day.

Finally, from a systematic perspective there is another perspective.  To keep the real estate market alive, someone has to buy up those foreclosed homes.  Right now, the real estate market is correcting from a number of bubbles in real estate prices.  Foreclosed homes typically sell at a discount and overall this process helps to reset and correct home prices.  Investing in foreclosed homes is not as simple as it sometimes made out to be on late night infomercials, but for people with the means and possibly with the capabilities to do light renovations, purchasing foreclosed homes could be good for business and good for the economy.  As a final thought, neighbors might even come together personally or through home associations to purchase foreclosed homes to keep neighborhood homes safe and help maintain property values.