subject: Reasons Behind Foreclosures [print this page] A number of reasons are responsible for the foreclosures taking place. These reasons are common for the foreclosures that are taking place across the states.
In the case of divorce, when the husband and the wife are busy fighting each other, then they dont pay attention to the payment of the mortgage loan. More importantly each considers that the mortgage obligation is for the other to pay. In other case, where the wife gets the right to the house, they want the husband out or vice versa. The other spouse in this case also refuses to make the payment for the mortgage loan. Finally in cases, where the husband has to pay a huge alimony to the wife along with maintenance fees and the lawyers fees, often they are left with very little savings. In such cases, the husband is unable to make the payments for the mortgage loan. When this happens and the husband doesnt have a steady income, it makes him miss the mortgage payments. Finally if the husband is unable to talk to the lender about their financial hardship, the property becomes foreclosed.
Prolonged illness is another reason for the homeowner missing the payment. In case, where there is prolonged illness in the family either that of the head of the family or any of the members, the medical bills can eat away in the mortgage payment for the house. When this happens, the mortgage payment is skipped. Once a series of mortgage payments are skipped, the lender will take action. This leads to foreclosure. This is the reason that when homeowners find that they are incapable of making the payments, they should approach the lender as soon as possible. The lender can refinance, modify or even suspend the payments for some time. This will give ample time for the homeowner to stay in the house and continue in making the payment for the home. In this way foreclosure can be avoided.
When homeowners find that they have upside down mortgages or underwater mortgages, they are unable to make the payment. Underwater mortgages are those mortgages, where the mortgage loan is much higher than the current price of the property. While the homeowner took the mortgage loans often at sub prime rates, the rate of interest or the total payment is quite high. On the other hand the value of their homes is incredibly low. When this happens, the homeowners have negative equity in their house. For the homeowners, foreclosure seems to be a better option that making a payment for the expensive mortgage loans.
The homeowner can be easily liberated from such situations by refinancing the loan to the actual clue of the home. In this way they can save the house and stay in their house. If the lender doesnt agree for making any changes to the mortgage loan, then the options that are available to the homeowner is a short sale or deed in lieu of foreclosure. Both options allow the homeowner to walk away from the home without getting a damaged credit report. Foreclosure can damage the credit report to an extent where it can be difficult for the homeowner to get another mortgage loan for many years.
