The Price of Homes Are Increasing, But Foreclosure Prices Are Dropping What Does It Mean For You?
A recent report from RealtyTrac shows that the number of distressed properties is on the decline. The decline is a direct result of real estate values increasing across the Nation. Simultaneously, the number of foreclosure filings across the country is on the decline as well. The decline in foreclosure filings is directly attributable to the number of homeowners who are beginning to see the potential for equity in their homes for the first time in years.
Interestingly enough, RealtyTrac also reports that the price of foreclosed homes has decreased as the price of non-distressed properties increased. This presents great news for those shopping for foreclosures on the active market. However, it is not good news for the banks or for those individuals who were foreclosed upon in the past.
In the state of Florida, the banks are granted deficiency rights to pursue the Borrower for any amounts still due and owing on the promissory note that were not recouped by the sale of the property. For instance, if Borrower A took out a mortgage for $250,000.00, paid the mortgage down to $225,000.00, but then stopped paying and was foreclosed, the bank would then have to list the property for sale. If the bank was only able to recover $150,000.00 from the sale of the home, they would have the right to pursue the Borrower for the $75,000.00 difference still due and owing on the note. Accordingly, if the prices of foreclosed homes are on the decline, the likelihood that the bank will turn to the Borrower to pursue the deficiency increases.
Another problem with this scenario is that if the banks cannot recover enough money from the sale of bank owned properties, they will likely slow the release rate of properties in an attempt to drive prices up. That is bad news across the board. It means that we will continue to see a backlog of foreclosures and empty homes in our neighborhoods. It means that houses will sit vacant longer, will stay in the foreclosure process longer, and generally deteriorate further than before.
Therefore, it is imperative that Borrowers take preemptive steps when facing a foreclosure. While the numbers of homeowners with equity in their homes is growing, there are still many that are underwater or cannot keep up their current payments. If you are one of these impacted people, be proactive. Call and speak with a real estate attorney regarding your options to avoid foreclosure. We are always here to help.