Renters Hit By Foreclosure Market

For an interesting article in today's Washington Independent, click here. It talks about the Phoenix market and how renters are hit by the foreclosure crisis.

As owners/investors land in a bind and either are forced into foreclosure or a short sale, they need to do the right thing when it comes to their tenants.

WHAT TO DO?

You’ve ridden your investment property as long as you can and have determined that it just doesn’t make sense to keep making the payments.

The reasons are probably one of the following:

1. You don’t have enough money to keep making payments (due to job loss, other major expenses, etc.),

2. You feel so insecure about your current source of income that you need to pay on only those things that would be left if/when you DO lose that income,

3. Your rental property is so upside-down and/or market rent is so much less than your mortgage payment that it is a poor financial decision to keep throwing money at it, or

4. Some or all of the above.

You have a few options. They include working things out with your lender to keep the property under freshly negotiated terms that work for you, short-selling the property, or letting the property go into foreclosure. The latter will produce the worst effect on your credit.

Despite what you may have heard about lenders working only with borrowers in owner-occupied scenarios, lenders WILL work hard to create a workable outcome for investors. If you would like to keep your property but need relief on payments or past-due balances you should discuss this with your lender’s loss mitigation department. You’ll be surprised at how receptive they are to talking productively.

If you cannot or don’t want to keep the property, you should attempt to short-sell the property before the bank forecloses. The lenders are very willing to work with you to do this (much more willing than six months ago), because it provides them with a much better outcome than having to foreclose on the property and pay the costs of a trustee sale. Find a licensed real estate agent who has experience in this area.


DON'T WAIT UNTIL PAYMENTS ARE MISSED

These first two options can happen prior to missing any payments on your loan. In most cases, borrowers don’t start these negotiations until they have missed one or more payments—giving them less time to reach an agreement with the lender. In either case, keep open lines of communication with the lender letting them know of your intentions and current situation.

Have questions or need an experienced property management company to assist you? Contact HomeLovers today at http://www.homelovers.com/.

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