An intelligent home owner can use a little known fact to their advantage when attempting to stop foreclosure by their lender. Did you know that it is less expensive for banks to keep you in your home than actually go through with a foreclosure?
On average, it costs the lender between $50,000 and $100,000 to foreclose on a home. In the long term, it would be less expensive for them to work with the home owner to negotiate a solution to the problem than remove them from their home. Often, the borrower has to be the one to point this out to the mortgage company. It can be a very effective negotiating tactic.
Why is it so expensive to foreclose? To begin with, there are the costs of going through the legal process of eviction. The banks have to hire local law firms that specialize in these types of procedures. Then, there are costs associated with filing the lawsuits and eviction proceedings.
If the home owners fight back, then the bank's legal fees begin to climb faster and faster. Once a foreclosure or eviction filing is final, then the bank has to pay the costs of evicting homeowners if they refuse to leave the dwelling voluntarily. A lender with any intelligence would want to work with a home owner to stop foreclosure.
After obtaining the property from the foreclosed home owner, the bank is then forced to deal with the aftermath. Often, if a home owner doesn't have the funds to keep up their mortgage payments, they also did not have the money to maintain the home. And a number of foreclosure victims, in anger over what was going on, do damage to the property before they leave it. All of this now falls on the mortgage company to clean up.
Whether the property was damaged due to vandalism or spite, the mortgage company will usually not do anything about it. This causes the value of the property to fall and the longer it is left abandoned, the further the value falls. In the end, the lender will be offered far less for the property than what they would have if they had negotiated with the borrowers to stop foreclosure before it began.
Even if the bank does nothing to maintain the property, they still have to confront the other costs in owning that property. Any taxes that are due on the parcel have to be paid by the lender. And, some level of home owner's insurance will need to be purchased for the residence to protect the lender from covered damages to the house. Further, when they try to unload the property, the mortgage lender will need to use local real estate brokers.
That means they will have to pay commission fees to the agent when the property is finally sold. It simply makes little economic sense for a mortgage company to incur those costs when it would be more efficient for them to work with the current home owners. This is just one piece of information that can help you to save your property from foreclosure.
Author Resource:-
Nick publishes articles for the ForeclosureFish website, which teaches homeowners how to save their properties from foreclosure. His site examines many strategies to avoid losing a home, including loan modification and short sales. Visit today to pick up a free e-book on how foreclosure works and how to stop it: http://www.foreclosurefish.com/
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