There isn’t a person unscaved from the harsh reality of the recent rise in foreclosures.
The statistics are alarming as the world of real estate sees the market shift from a sellers market to a buyers market. As I drive through the streets of Chicago there is a sea of boarded up properties that bring a gloom to some neighborhoods. Illinois is ranked 15th in the nation among foreclosures and 84% of Illinois foreclosures are here in Chicago.
Is it the adjustable rate mortgage, or are there bigger culprits? According to Irvine, Calif-based RealtyTrac Inc., 45% of foreclosures are a result of job loss while 28% of foreclosures are attributed to ARM resets at a higher interest rate. Mortgage fraud is responsible for only 9% of foreclosures. As a result of urban revitalization and the surge in condos, there are several other factors that must be taking into consideration. Lenders were eager to give a 100% financing and allow the homeowner not to escrow their taxes. These homeowners are in total shock when twelve to twenty four months after their purchase they received their first fully assessed tax bill that might be double what the homeowner had anticipated.
We are only in the infancy phase of foreclosures. Between October 2007 and December 2008, 900 billion dollars in ARM’s will reset to a higher interest rate causing the avalange to thrust forward with additional force. Most homeowners were well aware of the fact that they had acquired an ARM at the time they purchased or refinanced their property. What they didn’t realize was that their property might not continue to appreciate or that over forty lenders would leave the market place leaving high LTV borrowers and borrowers in need of a stated loan with no option of being able to refinance their property. The ARM has proven to be problematic but it’s only one of the numerous problems that the homeowner has to face.
Always use empathy and not judgment when dealing with a seller/client who is facing foreclosures. There was a time when foreclosures only plagued the lower income now trends are showing that the middle income and affluent are also being affected. Sellers are in desperate need of an educated Realtor® to help them as they are being approached daily by scam artist looking to drain them of any equity they might have left.
Over the past year foreclosures business has increased by double digits. Now is the time for Realtors® to educate themselves on how to service their clients in this foreclosure driven market. REBAC has designed an information packed 8 hour class that allows Realtors® to hone in on there buyer agency skills, learn how to unveil opportunities for their buyer/clients in pre-foreclosures, unveil the secrets on how to negotiate a short sale and still earn a commission, and complete an elective for the ABR designation.
There is light at the end of the tunnel. Realtors® have to go back to the basics. The first step in this process is to receive the proper education and training on the foreclosure process. If business isn’t coming to you, you have to go where the business is and currently that is in foreclosures.
