The general perception of many homeowners in Orange County is that the ‘bank is trying to take my home’. That is not true. No bank wants to foreclosure on a property in a declining market such as the current situation in Orange County. The bank lent the borrower the money so they could collect the principal and interest payments and keep the note securitized. If you are paying on time and values are holding or increasing. your mortgage note gets sold and resold for huge profits. Banks make fortunes off borrowers who make every payment on time through the life of a loan.
In 2008’s real estate market, banks stand to lose $0.35 to $0.60 on the dollar for any foreclosed property. This is a gigantic loss, and the banks today would rather collect a lower payment than none at all and own a vacant home. Declining property values combined with constricting lender guidelines and adjusting interest rates have resulted in the modification boom. Basically, when you owe much more on your home that it is worth, you are in deep trouble. No one is going to buy a home for 15% – 30% above market value and no lender is going to refinance that property.
Your mortgage is the collateral for the note that a bank lends a borrower. Realistically speaking, no bank would originate a note lending at over 100% of the value of the property. Even lending at 100% is unreasonable. Millions of Americans have taken out high LTV loans out in markets like Orange county, that were at the time appreciating but now have rapidly depreciated. Then, when the borrowers ARM adjusts and he can no longer make the payment a bank will try to refinance, only to discover there is little chance.
Most believe their only option is to foreclose. Since they cannot make the payments, sell, or refinance, what other options are there ? The first option that a bank gives are a short sale, deed in lieu of foreclosure, or forbearance agreement. With so many Orange County homeowners wanting to keep their home and a vast supply of empty homes, the banks are forced to re-examine their strategy. In today’s economy, banks are willing to modify loans to keep people in their homes. They can reach many more homeowners by doing so and continue receiving monthly mortgage payments.
For more information about Loan Modifications in Orange County, CA., please give our Attorney based Loan Modification affiliate a call at: (888) 530-1212, or drop them an email at: Info@CaLoanModAttorney.com
