Blog

The best way to end mortgage foreclosure is not to have them.

When a person/s has a home mortgage it is secured by real property.
A Quadrillion rules/laws regulate the process when non payment occurs.
The owner of that mortgage may be the original lender but in
over 80% of all mortgages the owner of the mortgage is not the original
lender.  Foreclosing allows the owner of the mortgage to make the homeowner
surrender their rights so that the lender can sell the property in a
foreclosure sale for the amount or as close as they can get to the amount
owed on the property.  No one shows up at a foreclosure sale to purchase
the property because the laws do not protect a buyer in this situation
and the homeowner being foreclosed upon has some rights after the sale to
still claim the property. The lender is the one that literally buys the
property at the sale and after a 90 day period are allowed to sell the
property by any means to a new buyer.
In a poor economy and with to many properties on their books the lenders
choose to unload these properties at below market values and without concern
for the effects of sales in the same neighborhood by conventional means and
prices.  A Slew of foreclosures in a neighborhood can devastate the real estate
values and these neighborhoods domino outward with catastrophic effects on
homeowners needing to sell for job relocation, illness, divorce and more.
Lenders could do many things to alleviate the problems. The situation is made
worse because of the amount of Federal and State Laws that handcuff them in
procedural matters.  All of these are useless in protecting the foreclosed upon
homeowner, the bank and certainly the neighbors of the home.
Suppose the foreclosure home did not exist. That a foreclosed home would
never show up as a foreclosure sale or at a foreclosure discounted price.
How would that be possible?
First of all, one must realize that the mortgage loan is a private document between
a homeowner and the home lender. The terms, etc cannot be discussed by the
lender with anyone other then the homeowner. On this basis a bank/lender
cannot discuss the loan until they are in a position to own the property.
Up to this point there is no foreclosure, as since it cannot be discussed
it does not exist.
The lender will get the property back in a private foreclosure proceeding
designed to protect the homeowner’s rights completely through the rescission
process. Until that time, again the property as a foreclosure does not exist.
The lender upon getting the property is now out of the mortgage loan amount,
arrears in payments/interest not made, and some minimal legal costs.
At the rescission time limit they are free to resell the property.
Under existing ways to market these properties the entire process is

contributing to poor sales and low prices in the entire real estate sector

across the country.  Lenders dump the properties below market value

sometimes at drastic reductions. In the downward spiral market existing

they are contributing by these sales to the spiral.

The process needs to stop so that the domino effect will stop and prices
of real estate can neutralize to a normal means of supply and demand
and by normal demographics by location and local economies.

How can the foreclosures never reach the marketplace or be recognized as
foreclosure properties when resold?
The answer is to change the process and that is to make a lender
owned property available to a new buyer not by a sale based upon
appraised values but a sale made upon a contract akin to a contract
for buying a used car. The value of the sale would be based upon the
defaulted mortgage, all the arrears and legal costs so that a lender would
not be out of those revenues. The new buyer would be assuming this
mortgage contract under a 5 year term and upon completion with a
good payment history refinance into a typical mortgage loan or could
resell the property and pay off their contract and keep any profits.
Who would these new buyers be?
The number one home looking group across the country and has the
hardest time qualifying in normal loan markets. Divorced people who
have remarried. Remarried couples, with still screwed up credit from
previous lives and jobs carry this luggage for years and their past
affects their ability to get a new mortgage and buy a home. Most
remarried couples are working, have good incomes, but poor credit scores.
Remarried Couples can save America’s Mortgage Crisis.
By a no qualify means of securing these properties; an endless
supply of homebuyers exists. These people want to move on
with their lives, buy and make a new home for themselves and
families. Under this process the lender would only qualify that
they are working and have the means to make the payments.
The real value of the house would not matter and no appraisal
would be required. In fact under the laws that would regulate
this process, appraisals could not be done. The potential buyer
would make typical due diligence in finding and making sure
the property was to their requirements. They would pay for home
inspections to insure quality or assume the property as-is in cases
of damaged homes for discounts in pricing.
Under this process, the remarried people would be mailed by
marketing firms’ lists of available properties in their area.
A simple and very fast process to purchase the home and move in
would be created.
By this process the lender would not be out of the default amount
of the previous owner.
The new buyer would be assuming that debt. Fannie and Freddie
would buy these contracts from the banks and the banks would
get their money as if they were funding conventionally. The servicing
of the contracts would be handled by a servicing company and future
defaults would be resold in the same manner assuring Fannie and Freddie
of no losses. Under this process, monies are deferred down the road until
the 5 year period allowed for refinancing out or new economies allowing
for sales with profits.
A major winner with this type of sale would be that foreclosed prices would
not exist and neighborhoods would not have those comparables for
conventional sales and refinancing purposes. In most cases the properties
would not be advertised and most neighbors not aware of a change of
ownership until they saw moving outs and moving ins. Because the
process once understood as to why and how it works is known the
future effect on real estate values would be nil.
These mortgage contracts would be protected for privacy as mortgages
are and lenders and servicers would not be able to discuss the contents
and terms with anyone except the owner of the contract.
As guaranteed in the constitution and the reason it even exists in the
constitution is for the importance that a man and a woman are allowed
to reinvent themselves and their pursuit of happiness. By turning the
process into something positive we then contribute to a rebuilding
process, to a positive new home that helps everyone in the process.
The foreclosed upon homeowner gains nothing from this except that
they can move on and perhaps buy back someday with a new partner
and or life.
Misfortune will always exist and unless mortgage lending is going
to progress to eliminate married people from getting loans then divorce
will always be in the equation as the number one contributor to mortgage
default. If a married couple uses two incomes to qualify for a mortgage
loan and then get divorced, it is clear that only one salary cannot support the
home and default is inevitable especially in an upside down mortgage

real estate market.
This isn’t nuclear science after all, it just takes a new way of thinking…
which is mandatory for a new working America.