Upside Down Home Owners Facing New Challenges

It's no big secret that real estate values in the Santa Clarita area have stabilized and even somewhat decreased from the "hot" buying frenzy that we saw in recent years.

What's not so obvious is that some of the newer homeowners were put into loans that just about guaranteed that they'd be facing foreclosure after their introductory interest rates expired.

With 100% financing and an automatic payment increase when their intro rate expires, many homeowners just can't afford to stay in their new homes any longer. Nor can they sell in the normal manner since they loan is likely more than their home's value, or at least there isn't enough equity to cover closing costs and commissions as well as the loan payoff.

So what's a homeowner to do? Very likely a short sale will be the answer for many homeowners. This is where a Realtor negotiates with the bank to allow the sale of the home at less than what the bank is owed. There's a lot of paperwork and negotiating involved in this process and the sellers will walk away with no cash in their pockets, but at least their credit won't be ruined as it would be with a foreclosure on their record.

A good primer to read is Stop Foreclosure Now in California so you can get a full understanding as to how the California foreclosure process works.

If you're a homeowner in this situation, be sure to call a knowledgable Realtor who can help you discover what your options are. Beware of the "we buy homes for cash" signs and others who may come knocking on your door as soon as it's reported that you're behind on your payments! It also may be a good idea to talk with another lender or a bankruptcy attorney, so if you need a referral to either of these, email me and I'll introduce you.