Bankruptcy & Foreclosures

Let’s cut right to the chase. Imagine you’ve let your mortgage payments slip and now you are threatened by foreclosure. The first question that comes to mind is what do I do now? The answer, of course, begins with the reassurance not to panic. You have options regardless of how bleak things may initially appear. In today’s post, we’ll take a look at some of these options.

Just last week a coalition of the nation’s six largest lenders met up with the goal of giving delinquent homeowners an additional month’s breathing room before proceeding with foreclosure. This comes after the interest-rate freeze for homeowners with subprime adjustable rate mortgages.

Customers who don’t fit the criteria for these programs still have options. In fact, the truth of the matter is that individuals who don’t qualify for the lender’s direct efforts to help may actually have more options to choose from. The best advice is to either contact your lender directly or (and we strongly recommend this option): contact a housing counselor.
Lenders have the ability to make decisions based on homeowners’ unique financial situation, even if you’ve already fallen behind.

Your lender is likely willing to collaborate with counseling agencies to make sure they are properly equipped with the information needed to develop a plan of repayment unique to you. Bank of America, JPMorgan Chase, and Citigroup all admit that they commonly work with such agencies to gain such client knowledge. Citigroup, in fact, set up a special team within its Office of Homeownership Preservation just to work with counselors.
You may be surprised to hear that lenders prefer when delinquent borrowers come to them through counseling agencies on account of the fact that these agencies come equipped with necessary information from the borrower (you).

Keep in mind that a housing counselor knows the process and has an established relationship with the lenders. They can aid you in working out a repayment plan specific to your needs. Analysts claim that these days are some of the most lenient as far as foreclosures are concerned. If you’ve fallen behind, don’t be afraid to put this reality to work for you.

Sadly I have most always been an advocate to telling my clients to consider dabbling in the stock market when they ask for advise in investments with fairly immediate returns.

Recently economic instability has caused some pretty ugly affects on the stock market as individuals fear these patterns are a long-term situation. Investors reacted nearly instantly to Federal Reserve Chairman Ben Bernanke’s announcement that economic conditions are likely to worsen before they improve which caused a slump in stock value.

Today, things didn’t improve. In fact at the time of this posting, stocks further slid this morning. Sadly this comes despite Bernanke stating that the economy should avoid a full-blown recession thanks to the fiscal and monetary policy currently in action. We’ve witnessed the effects of these policies through the government’s $170 billion fiscal stimulus plan (tax rebate) and recent interest-rate cuts.

No need to panic though as by and large, the U.S. economy bounces back from these rough spots with little evidence of their existence. A very similar situation took place in the 1990s whereby the housing market caused initial problems followed by the collapse of the savings and loan industry. Using this slump as an example, we learn that quick action from the government nipped the problem in the proverbial bud. The same is expected to happen now.

As far as investment advice is concerned, the best suggestion for current share holders is to hang onto your stock and wait out the slump. Things will eventually stabilize (they always do) and the only surefire way to avoid severe stock investment loss is to hold your ground until the storm passes. A more secure (albeit long-term) investment of late would have to be the bond market, which has been showing the opposite effect of the stock scenario.

It seems like in each post, I come on and preach of economic doom and gloom. I try to be positive amidst the turbulence and finally have a hint of good news to report. According to the Energy Information Administration ‘s weekly Inventory report, crude stocks (supply) are on the rise. Oil stock rose by 7 million barrels last week, which put us in the middle curve of the average range for this time of year. This is the lowest level at which oil has traded since January 24, when oil temporarily dipped down to $87.01 per barrel.

What’s being credited to this increase in supply? Why a decrease in demand of course (for those who forget their Intro to Economics lessons). People are literally driving less due to the economic crunch proving that some good can come out of the turmoil. After all, the United States remains the world’s largest economy and fear of recession has global repercussion.

Unfortunately, we’re not going to get through this Money management post without a little bad news. The National Association of Realtors has released word today that home prices are likely to continue to decline in 2008 (for the second year in a row). Just a month ago the Association was predicting an ugly start to 2008 but a rebound in the second half of the year. Now their forecasts are looking a bit more bleak; with hopes of 2009 (and beyond) representing the earliest periods of recovery.

Since oil trading and domestic housing represent only two of dozens of markets credited with influencing the economic situation, these opposite reports do not cancel each other out. The positive spin is to hope gas prices continue to drop at the pump while we wait-out the proverbial turbulence.