Last week we talked about how 4,400,000 households in the United States today still owe more than their house is worth by 20% or more (negative equity). What’s interesting is that most of these households that are “underwater” are able to avoid foreclosure.  When you look at the overall market of foreclosures and non-foreclosure mortgage solutions, the ratio is 1 to 4, respectively. This is according to data released in July 2015 by Hope Now, a non-profit alliance.

Win WinWhat does this mean?  It means that for every 1 foreclosure done, there are 4 non-foreclosure mortgages done. Great. So, what is a non-foreclosure mortgage solution?

Those would include short sales, mortgage modifications (usually a lowering of their payment by 10% or less and almost never a reduction in principal), deed-in-lieu of foreclosure, and other programs.  In July there were 122,000 non-foreclosure mortgage solutions and only 29,000 foreclosures.  This ratio has remained the same over the last 12 months.

However, the decline in foreclosures year after year is more than double the decline in permanent loan mods. This means that servicers, in general, continue to work with families to avoid foreclosure when possible.

That is why we are getting such positive responses from servicers when we offer our Short Sale Repurchase program to them. In this program, we buy the family’s home in a short sale, the family stays in their home and leases it from us, and then they repurchase the home in 3 years.This allows the servicers to get the property off their books, avoid a foreclosure, and they receive their Community Reinvestment Act credits that are not easy to get.

It is making the best of a bad situation with a win-win for everyone.