What Everyone At Risk Of Home Repossession Needs To Know!

Anyone who owned property during the last house price crash in the early 1990s will remember constant headlines about negative equity and home repossession. Between 1990 and 1996 over a million individuals experienced mortgage repossession as they struggled with mortgage payments when interest rates doubled.

A lot has changed since then. The U.K. economy is much more stable, we live in a low-inflation environment and the Chancellor’s decision to pass responsibility for setting interest rates to the Bank of England is acclaimed by many as a master stroke. So, not much chance of a repeat of the early 90s misery, then?

“It’s different this time” has been the downfall of many a pundit, whether they are referring to stocks and shares, the housing market, or anything else. Because whilst there are certainly many differences between now and the early nineties, dig a bit deeper and there are quite a few signs that everything in the garden might not be as rosy as we would all like it to be.

Take household debt for example, now at over £1 trillion. Or to put it another way, around £17,000 of debt for every man, woman and child in the UK! The Nationwide Building Society recently calculated that debt is now at a record 2.75 times disposable income compared with the previous record of two times income in the early 1990s.

Or interest rates. They may be low – but the five successive interest rate rises last year actually equated to a 35% increase! As rising house prices in recent years have encouraged many people to take out the biggest mortgage they can get, this type of increase will have been very unwelcome!

Or employment. A record 28.3 million people are in jobs. However many of these are part-time or short-term contracts. Many more have benefited through the massive increase in public sector employment. But if the economy wobbles, and particularly if as many predict the government needs to reduce public spending, these jobs are vulnerable.

So maybe it’s not so surprising that figures from the Council of Mortgage Lenders show that the number of home repossessions increased by a whopping 70% in 2005 compared to 2004, with the trend looking set to continue this year.

If you are in danger of home repossession, or might be affected in the future, what should you do?

We asked Richard Watters, Managing Director of A Quick Sale Ltd. for his views as his company receives hundreds of calls each week from people worried about losing their home because of eviction as a result of home repossession by a mortgage lender. He suggested sticking to the following 10-point checklist:

1. Don’t panic. Lenders normally use home repossession as a last resort. The first thing to do is to talk to them, explain the situation and ask for their support. Many of them will be able to offer repayment holidays or a short term reduction in the monthly payments, instead of repossession. You can request that your repayments be converted to ‘Interest Only’ which can significantly reduce monthly repayments.

2. If you can’t afford to pay what they request, pay them a regular amount that you can afford – this demonstrates that you are trying and haven’t lost control of the situation.

3. Know your rights. Your property can only be repossessed after a court hearing and judges are sympathetic to people in these situations, particularly if they have children.

4. Understand the process. The website http://www.a-quick-sale.co.uk/repossession/ has information on how the home repossession process works.

5. Get legal advice or speak to your local Citizens Advice Bureau. Don’t try a DIY job – your home is too important! http://www.citizensadvice.org.uk/

6. If the case goes to court – always attend the repossession hearing. Explain your situation and suggest a period over which the mortgage arrears can be repaid. Always suggest a plan you know you can stick to – even if this means the mortgage arrears will not be cleared until the last monthly payment is made in 20 years time!

7. In most cases the court will grant a suspended possession order. This means that if you stick to the agreement to repay arrears, you won’t be evicted and your home won’t be repossessed.

8. If the court grants the Lender a possession order, you will normally have about 4 weeks to move out – otherwise you will be evicted. It is often possible to find a buyer within this period, and avoid repossession of your house. You may have to accept less than you would like – and might end up with little in your pocket - but this is usually preferable to home repossession. Some property-buying companies are able to offer a rent-back option so you can continue to live there.

7 Big Reasons To Invest In Pre-Foreclosures

Looking for an "in" to real estate investing?

Working a nine to five job swapping time for money can be incredibly dispiriting. After the futility of it all hits home, it's all you can do to limit the number of home business opportunities you investigate to twenty per week.

One of the more compelling home business opportunities is real estate investing. Real estate investing is the perennial wealth builder, and the transition from working a job to achieving wealth through real estate investing is becoming increasingly well documented.

You've probably thought about investing in real state yourself but you've not gone for it because you thought you needed tens of thousands in savings for a down payment, and perfect credit along with strong banking relationships.

Well, you can get all that together if you want. It doesn't hurt to have those resources. But it's not necessary to have a huge pile of cash and perfect credit to buy a house cheap and resell it for a profit.

It's especially not necessary in the preforeclosure market. Preforeclosures are houses in the default phase of foreclosure; where the bank has filed initial foreclosure papers but the Sheriff Sale or Trustee Sale where the bank auctions off the property, or repossesses it if no-one buys at the auction, hasn't occurred yet.

Buying during the preforeclosure period is one of the best ways for anyone to get involved in real estate investing. With little more than a few hundred dollars and some specialized knowledge you can buy a house at a substantial discount and resell it retail picking up a five figure profit check in the process.

Don't believe it?

Well, let me give you seven reasons why it's true:

1) When people are in default on their mortgage they have stopped making payments to the bank. So when you are negotiating with the seller, and the bank, right up until the point where you buy, no-one is making the payments. For novice investors worried about holding costs this is a huge advantage.

2) Preforeclosures are a very well defined niche market. One of the most deadly mistakes rookie investors make is trying to be a jack-of-all-trades, going after any and everything they can lay their eyes on. The result of this lack of focus is they are soon back at their jobs. By being a very defined market, preforeclosures allow you to develop focused marketing campaigns and standardized processes to get deals completed and closed.

3) One of the fundamentals of real estate investing is contacting and talking "only" to motivated sellers, and avoiding all the rest. Sellers in preforeclosure are some of the most motivated sellers you will find. Their world has been turned upside-down, they are about to lose their house, and their motivation is such that they just want out of the house and the bank off their back. By buying houses from people in preforeclosure, creating 30%+ equity spreads on houses often in good condition is not a difficult thing to do.

4) Buying houses in preforeclosure enables you to create unusually large equity spreads. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. If banks had to take back all of the properties that went into foreclosure the FDIC would shut them down. They know this, so they try not to take properties back they don't have to. By requesting the Lender discount what is owed on their payoff, large spreads of equity can be created on houses that are totally "maxed out" with loans. This can't be done on loans not in default.

5) Because Lenders are under pressure to liquidate bad loans rather than take the property back, large discounts can be negotiated. After becoming familiar with the issues that cause Lenders to discount, larger and larger discounts can be achieved as you hone your negotiating skills.

6) If your plan is to buy and hold the property, having good enough credit and financials to get bank financing excludes a great many people from getting into real estate. On top of that, if you do get a bank loan, your financial exposure is at it's maximum when everything is in your own name and personally guaranteed. Buying houses in preforeclosure allows you to simply take over the existing financing already in place. No qualifying needed. You can take title to the property in a Land Trust, begin making payments on the existing mortgage(s), and still get all the tax advantages, appreciation, depreciation without any of the risk of being personally liable for the mortgage and the property.

7) If you have ever bid at auction for property at the courthouse steps, you are only too aware of the competition breathing down your neck. Lots of mind games. The 40 thieves are talking trash to you trying to get you not to bid. If you are Larry Bird, no problem. Make sure you have $500K on your credit line though. However if you are not the 'Bird' and you don't pack half a mil' of credit, you can sneak in and avoid this NBA showdown by buying the house during the preforeclosure period... before the auction.

Make no mistake about it, there are many ways to make healthy profits in real estate investing. But when you look at how easy preforeclosure makes it to buy houses cheap and resell for five figure profit checks, all the while helping people out of agonizing life circumstances, it makes little sense to pursue real estate investing any other way.

Flipping Houses: Bargains, Distressed Houses, and Fixer-Uppers Explained

If you're interested in making money flipping houses, it still can be done in a slow real estate market. In fact, many investors are looking for other ways to make money so the competition isn't as fierce. Also, sellers become more anxious every day their home sits on the market.

Flipping houses for money success doesn't depend on an active real estate market or in thirty percent appreciation. Your ability to make money in real estate depends on your ability to buy a bargain property and to sell it or rent it for profit.

Bargain Houses Have Distressed Sellers

Real estate investors make money when they find a bargain property which they can purchase for less than market value and resell or rent for profit. The key may be a "distressed seller" who needs out right away because of overwhelming problems like financial difficulties (pending foreclosure, lack of money to pay bills), divorce, death, addictions, job loss, or transfer. Sometimes a seller wants to use the money to purchase another property or start a different business and is willing to offer a bargain price to move on.

Distressed Houses Are Fixer-Uppers

A "distressed house" is one that needs help to bring it up to saleable condition--a fixer-upper. Owners of fixers are not always distressed sellers. They might not be in foreclosure or facing financial problems. They may just lack motivation or know-how to fix up the property and haven't sold it because most home buyers want a house in good condition.

You can make money buying both bargains and fixers. It depends on whether you want to work with houses in good condition or fixer-uppers. Some investors only buy houses in prime condition from sellers who are willing to discount for a fast sale. In today's market, you must know how you're going to make a profit before you purchase a house. If you know the market is still active in your area and you have a strong chance of reselling in a couple months for full price with the right marketing strategy, you can make an offer that gives you plenty of margin.

If you want to turn a fixer into a new owner's dream home or rental, you must know how much the house will cost to fix. Many investors buy fixers with rehab funding and don't risk their own money. After fixing the house, they refinance and rent, take some profit out, and have the tenants make the payments. House flippers fix and sell right away for fast cash.

Of course, if you want to fix houses, you want to find a fixer-upper that is also a bargain property for the highest return on your investment--money, work, and time.

By: Jeanette Joy Fisher