Why the Bank Doesn’t Want Your House

Why the Bank Doesn’t Want Your House
by: Karla Jo Helms




An Insider’s View of Why It’s Best to Work With Your Lender – For You AND
the Bank – When You’re in Danger of Losing Your House

Once upon a time, collateral was king when it came to borrowing money.
And your home was typically the crown jewel of your collateral assets.
Home ownership gave you instant credibility to a lender who could quickly
pull up your payment history and deduce from past payment schedules that,
yes, you were a reliable borrower and, even if something went south – a
lost job, a divorce, an illness in the family – with the house as
collateral, the bank would never lose money on your loan.

But now the market is saturated with foreclosed homes, short sales and
defaulted home loans. The value of property in some of the most saturated
areas continues to go down and has yet to hit rock bottom, leaving both
homeowners and bank owners in a precarious position.

According to Robert Sumner, CEO of First National Bank of Pasco (FNB
Pasco) near Tampa, Florida, “Everything is down right now; not only are
we making fewer home loans but we are seeing fewer home improvement loans
as well.”

Sumner clarifies: “Those who still have their homes are simply trying to
ride out the storm and waiting until the market goes back up; they don’t
want to throw ‘good money after bad’ by doing costly home improvements if
they’re not going to get their value back. Unfortunately, others are
losing their homes altogether.”

Sumner is referring, of course, to the staggering amount of foreclosed
properties currently flooding the market. And he should know; Florida
features one of the highest numbers of foreclosures in the country right
now. Nationally, according to CNNMoney.com, “More than 1.5 million homes
are seriously delinquent and close to foreclosure.” What’s more, a new
study finds that “…more than 20% of U.S. homeowners – about 20 million
residences – owe more than their homes are worth.” [Source: CNNMoney.com]

Not wanting to become part of the problem but preferring to remain part
of the solution, now more than ever banks are eager to stay out of the
foreclosure business and do what they do best: banking. In other words,
your bank doesn’t want your house. Rather, they’d prefer to work with you
so that you keep the house.

Banks don’t want your home for two basic reasons.

First, the bank is not in the real estate business. They don’t want to
filter precious assets of time, personnel and energy into inspecting the
residence, listing your home, making concessions or worrying about upkeep.

Further, who will mow the lawn and prune the shrubs once you’ve
foreclosed on the property? Either the bank spends money to hire someone
to do it or lets it alone to become not only an eyesore to the community
but a liability on the already-competitive housing market. Either way,
the bank loses money.

Secondly, when the bank takes over the house the price is drastically
reduced. According to Sumner, “Once the message is out that this is a
‘bank-owned’ property, both savvy realtors and buyers know that they
suddenly have the upper hand; they know the bank wants to unload this
property and they now have a much stronger bargaining chip. We typically
experience a 30% loss on the value of the property the minute we assume
ownership.”

What can you do to avoid missing mortgage payments or, barring that,
avoid foreclosure? Sumner lists three simple steps you can take to work
with your lender to avoid your own financial meltdown:

1.) Reach out before it’s too late: If your income has been affected or
your debts have simply snowballed to the point where paying your mortgage
this (or even next) month is looking less and less likely, don’t bury
your head in the sand but reach out to your lender and start
communicating with them, sooner rather than later. They can’t help you if
they don’t know you’re in trouble.

2.) Come prepared: The bank will need information to help you restructure
your payments, refinance the loan or possibly delay a payment or two to
help you with a current situation. Be sure to bring the latest
information on your income, how it’s been affected, your current bills
and debt load. Calling the bank beforehand (or visiting its website) will
help you gather a specific list for each vendor.

3.) Prepare for the worst: Not every bank can help in every situation.
Short of foreclosure, you will still need to pay your mortgage on time
and Sumner warns you shouldn’t expect miracles. However, rather than take
over your home the bank would rather work with you, realistically, to
help you avoid foreclosure.

Sumner warns there is no simple fix when budgets are tight and your
mortgage continues to be your biggest expenditure per month. However, he
stresses, “avoiding the issue is never the answer.”






About The Author
After handling the PR for an Inc 500 company for several years Karla Jo
Helms was ready to launch out on her own allowing her to bring her unique
take on the world of PR to businesses both large and small. “Public
Relations is a powerful tool that can garner wide acceptance and delve
into arenas that marketing cannot touch,” says Karla Jo, PR Strategist
and Published Author. Helms got her start creating and implementing PR
Strategies for entrepreneurs, which helped her develop a keen eye for how
to hone in on the best use of PR and technology to increase the Return On
Investment of one’s marketing dollars. Her theory on how attaining
critical mass by utilizing all areas of PR and Marketing in today's world
allows her to put together complete strategies for clients that attain
measurable results. A background in sales, business management and media
relations has given her the well-rounded understanding of how to harness
the power of PR to communicate to diverse groups of people...the end
result being a wider sphere of influence and the invaluable commodity of
goodwill garnered on a broad basis for her clients.




Visit the author's web site at: http://www.jotopr.com