Tennessee Bankruptcy Protects Underwater Homeowners from Expected Flood of Foreclosures
It looks like the days of a homeowner staying in a house for months - or years - after ceasing mortgage payments are coming to a close.
Now that a $26 billion settlement with five major mortgage lenders has been approved, banks are ready to get back to the business of repossessing homes, according to a report by CNN Money.
Millions of foreclosures had previously been on hold while banks revised their repossession policies following the 2010 robo-signing scandal, in which lenders are accused of allowing employees to sign off on numerous foreclosures without proper documentation.
As a result, a large number of delinquent homeowners were permitted to stay in their houses long after they'd made their last payments. The average foreclosure timeline in the U.S. stretched to over a year - and as long as 861 days in Florida and 1,000-plus days in New York.
Not any longer. In states where court scrutiny is required for banks to repossess properties, foreclosures are already on the rise.
Already-low home values, artificially buoyed by the withheld foreclosures, are expected to fall 3.7 percent before the year is out.
Experts believe banks will be in a hurry to push all the foreclosures through at once in order to get the initial market shock over with quickly, so the market can (hopefully) begin to rebound.
For underwater homeowners hoping to find relief, the increased foreclosure activity may seem to come as a blow. In fact, it could be viewed as a wakeup call.
When homeowners stop making payments but don't take steps to find a solution, the end result will always be foreclosure - whether it takes two months or two years for it to happen. But with a longer process, borrowers' credit scores spend more time taking a beating.
A foreclosure isn't an easy way out; it's a stressful, expensive, and drawn-out experience that also ends with your house (and any equity) being stripped away.
By filing for Tennessee bankruptcy, homeowners can stop waiting for the other shoe to drop and start taking back control of their finances and their freedom.
More Blog Entries:
Flood of Foreclosures to Hit Housing Market, by Les Christie, CNN Money