Denial, anger, and misunderstandings cause many to dig in their heels
Approximately 14,500 homes were in the process of foreclosure throughout San Diego County as of October 18, 2010. Yet of those foreclosures in process, only around 1,000 (7%) are listed for short sale whereby the owner settles the debt with their bank. This means that 93% of these San Diego homes will foreclose within the next few months and their owners may suffer the negative impacts for nearly 7 years.
The reasons why home owners choose foreclosure over a short sale are varied but can largely be grouped into three categories:
- Owners unaware of alternatives: The current housing market is complicated; and media, banks, and the Government are often confusing the details. This group of homeowners effectively throws up their hands, unable to make sense of the conflicting messages.
- Owners in denial: this group doesn’t open letters from their bank or simply waits for a (non-existent) safety net from the U.S. Government.
- Owners angry at their bank: tempers run high, especially from those who have attempted a lengthy modification or believe that their bank should simply lower their principle. They feel that the bank is unfair and choose to fight—yet there are no winners here.
Few home owners in these three categories perform the critical due diligence steps to avoid foreclosure. Emotions are allowed to take over rational thinking much too often.
Making matters more ominous is that the investors of delinquent loans are squeezing the banks and loan servicers to expedite foreclosure procedures and timeframes. This means that delinquency and foreclosure proceedings will no longer be a way to get “free rent” in the near future.
The media has reported that banks are reevaluating their foreclosure procedures but this is only to make sure they are prepared to handle the new directive to streamline their foreclosure process.
The end result will be that foreclosures will be executed much quicker and delinquent home owners will need to be more proactive in considering alternatives to foreclosure.
Foreclosure statistics for selected cities in San Diego County
|
City |
Homes in foreclosure proceedings |
Owners attempting a short sale |
Percent heading towards foreclosure |
|
Carlsbad |
442 |
49 |
89% |
|
Oceanside |
1,022 |
63 |
94% |
|
Solana Beach |
46 |
2 |
96% |
|
Encinitas |
160 |
9 |
94% |
|
Del Mar |
28 |
2 |
93% |
|
San Marcos |
551 |
44 |
91% |
|
Vista |
540 |
33 |
94% |
