VIEWS: 104 PAGES: 1 CATEGORY: Lending POSTED ON: 6/16/2009
Recent study by Center for Responsible Lending shows homes that foreclose lower value of adjacent homes, with closer proximity having the greatest, negative impact.
Avoid Foreclosure If you’re trying to sell your home to avoid foreclosure [perhaps you and/or your spouse have recently experienced job loss or some other calamity], you’d do well to learn of your neighbors who are facing foreclosure as well, according to a recent report from the Center for Responsible Lending [CRL], a consumer advocacy group based in Durham, N.C. The CRL report says for 2009 alone, foreclosures will cause an estimated 69.5 million nearby homes to suffer price declines averaging $7,200 per home. Estimated property value loss could total $500 billion. The consequential reduction in financial flexibility is considerable. Even borrowers with good credit and interest rates around 5.25% are very commonplace; many have defaulted on their loans as the economy has faltered. The May report focuses on the ripple effects of foreclosures, suggesting homeowners who are concerned about their property value should watch for signs of trouble among their closest neighbors. Two earlier reports from The CRL had examined the “spillover effects of the mortgage crisis,” but for 2009, the group has used recent findings from a 2008 study that includes researchers at Fannie Mae and the University of Connecticut about how foreclosures affect neighborhood home values. The Fannie Mae/UC study determined homeowners who lived within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home typically see a drop in value of 0.6 percent. John P. Harding, a professor at the University of Connecticut’s Center for Real Estate and Urban Economic Studies, and an author of the study, said properties most affected are those within eyesight of the property neglect that usually accompanies a foreclosure situation. Professor Harding also pointed out job loss as the biggest cause of mortgage default, according to industry experts, so if a neighbor becomes unemployed, take that as a cue to prepare and brace yourself to stop or avoid your own foreclosure…soon. With more and more lenders coming around to the advantages of the short sale to stop foreclosure, and with governmental leaders encouraging the same, the seller who hopes to avoid foreclosure shouldn’t waste time wondering if it can happen to him/her. If you’re in this position, you owe it to yourself and your financial well being to seek out a short sale specialist with the experience and expertise that only comes from many, successful short sale completions. Information provided as a service provided by SellHomeOwner