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In trouble with your mortgage?  Feeling a bit desperate?  What to do, what to do?

Don’t fall for a scam that offers you quick and ready help.  Instead, call a counselor.

Counselors work, according to a recent study by the Urban Institute.  Since 2007, when the National Foreclosure Mitigation Counseling program was founded to help distressed homeowners, $410 million has gone into the program.  Over 750,000 were helped through the end of 2008.  These borrowers were 60% more likely to keep their homes if they received counseling.  Their monthly payments were decreased to an average of $454.

Part of the counselor’s job is to help homeowners evaluate whether they can afford to keep their homes and then to help them gather the loan documents the lender needs to consider a modification.

This is an interesting finding in view of recently released statistics that 51% of loan modifications in the last year were in default by the end of 2009.  Did something change in the finances of those counseled?  Did counseling standards change as new federal programs encouraged more people to seek a counselor?  Were counselors too optimistic and those served so anxious to keep their homes that they agreed to a payment schedule that was still too high for their income?  Further studies into why re-defaults occurred in 2009 will undoubtedly reveal some needed insights.

The newest federal program announced that March 26 attacks the double-headed monster of negative equity and unemployment.  Most analysts of past housing remedies blame the failure of lenders to reduce principal and bring housing values and loan values more in sync.  The new program offers lenders incentives to offer principle reduction and provides temporary help to people who are unemployed.  Even though the program is only hours old at this writing, no one expects that this is the silver bullet that will “fix housing” either.

Counselors are constrained by available programs to offer their clients.  Regardless of the program, counselors link those who can be helped to ways to get help even if the help is not the final answer to their problems.  This stark reality does not undermine the findings from 2008: Counseling works!

Want to sell your house fast?  Your house worries can be behind you in two weeks by calling Express Homebuyers.  We buy homes for cash and can have $2,500 in your hands even before your deal closes.

The dilemma today for many considering loan modifications or even considering whether to move from the trial to the permanent phase of the process is whether it is worth it in the long run. Current programs lower interest rates and make the payback longer but do not address the loan’s principle.  With many homes worth less than the principle or “under water,” some owners feel negative about paying for a home that could not command the price they paid.

This is encouraging some homeowners to strategically default on their loan before they are even delinquent. Knowing that delinquency might affect their ability to apply for a new loan or even to get a decent rental, they are getting their next step in place before they make a move.  Even if they can pay the loan, the decision to strategically default may be based on the math of it all.  They determine that over the life of the loan, they will pay 10’s of thousands of dollars more for their property than it is worth.  They know their credit score will take a hit, but they anticipate that by the time their credit rebounds they will have saved a bundle.

This is a new variation on what some homeowners do out of frustration: walk away from a house they are delinquent on and mail the keys back to the bank.  Banks hate this “jingle mail.”  While it may seemingly solve a problem for someone already deep in debt, they may well receive a double whammy: they now have bad credit AND a bank may be coming after them.  The bank may come after the first group too, but the strategic defaulters are betting this won’t happen.

According to a new study by credit bureau Experian and Oliver Wyman Consulting, twice the number of people who did this in 2007 did so in 2008.  Based on their evaluation of 24 million credit files, strategic defaults are heavily concentrated in negative-equity markets where home values zoomed during the boom and nosedived since 2006.  The study found a 68% increase in strategic defaults in California, compared to a 9% increase elsewhere.

Not surprisingly, banks are less enthusiastic about strategic defaulters than regular walkways.  The major credit bureaus are developing tools to identify strategic defaulters and refuse loan modifications to this group, as they are likely to strategically default even after the modification.

All of this lends some background to what can be a more personal problem: the need to sell your house, fast. If that is the case, contact us at Express Homebuyers. We buy houses, no matter what the condition. We’ll give you a fair shake and you can sell your house for cash, fast. Check out our website for some useful secrets to selling your home fast, then give us a call at 1-877-804-5252.