In the past few years many people have watched as the stock market has dropped and companies have gone bankrupt. Families are eating out less often, taking less trips to the ice cream stand, and watching their budget closely. They have found themselves in a position that they never thought would come their way. As many people have watched their bills pile up, they have been forced to either pay up or give up. Since many don’t have the funds to pay up, giving up seems to be their only option, ending in a foreclosure and a feeling of emptiness.
It is often wondered why people choose to foreclose rather than be forced into foreclosure. Emile Hawkins, business professor at Southeastern University has found that many who choose to foreclose, do so as a last resort.
“The loss of jobs and over extended financial commitments tend to be the cause for mortgage companies foreclosing on a property,” said Hawkins, “In short, greed is the culprit of many mortgage woes.”
To fully understand how foreclosures happen, it is important to know the foreclosure laws. Cyprexx is a national field service company that provides property preservation, maintenance, repair, inspection, tenant occupied services and vacant property registrations and additional services to the largest financial institutions in the world. Brady Liette, graduate of Southeastern University and Training coordinator for Cyprexx explained that every state has its own foreclosure laws. Liette said that 23 of the states are what are called a redemption state. This means that after the Mortgage holder stops paying their mortgage and they are Foreclosed on, they have a certain amount of time to redeem their property.
“This could take up to a year, meaning they don’t pay anything to live where they are for year,” explains Liette. Property owners in these states have a certain amount of time to redeem their property, hence redemption state. Some states give them 20 days to redeem their property; some states give them 2 years. “So the process can take years if the people are difficult. A lot of the time it ends with an eviction,” said Liette.
What people don’t realize is that banks are not in the Real Estate business.
“Banks hate foreclosures, they lose money on foreclosures and they have to hire dozens of companies like Cyprexx to take care of the influx of foreclosures they have come into,” explained Liette. Banks do not want to foreclose on people and they definitely don’t want to pay people to leave their houses so they can re-sell it. Banks want to make money on interest accrued by Mortgages and Loans. “So the whole idea that banks are the bad guys is crazy because they are just doing what they can in accordance with what all of the laws are,” said Liette.
The Real Estate Owned Industry has seen a huge influx in foreclosures over the past four years. “According to economists, the downturn has impacted the number of homeowners to enter foreclosure,” said Hawkins.
A lot of foreclosures stopped and began having lengthy court cases, costing the banks billions of dollars because the people were allowed to live in their homes without paying. The next step was the “bailouts” of the banks because they didn’t have enough money. The government was forcing each foreclosure to go through such a long process that it was merely impossible for them to get the occupants out of their houses and re-sell the mortgage to someone else. “Not only were the banks not getting paid for the mortgage, they weren’t able to sell the mortgage to someone else because it hadn’t gone through pre-foreclosure, foreclosure, redemption, and then eviction,” explained Liette.
No one wants to have to get to the point of foreclosure, and it can often be avoided with hard work, sacrifice, and extra budgeting. Hawkins recommends having an emergency fun to cover up to six months of income, if not more. He quotes Dave Ramsey in saying, “an emergency fund makes an emergency less of an inconvenience.”
Liette says that foreclosure can be avoided with one simple step above all else, “Pay your bills.”