Murfreesboro Information and Resources

Q:  I don’t see any way that my home will regain the value it has lost in the past few years, so I’m considering a ‘Strategic Default’.  What are the pros and cons of doing this?
 
A:  A ‘Strategic Default’ is when homeowners who have the capacity to continue paying their mortgage choose to walk away from the house, allowing it to go into foreclosure, simply because they owe more than the home is worth. 
 
Unless you live in a state that does not allow deficiency judgments (Tennessee does allow banks to pursue deficiency judgments), there really are very few benefits to choosing this course of action, other than you no longer own the house that was underwater.  I can tell you that the banks look at this strategy as using a fancy name to justify walking away from your obligations.  And lenders are now striking back at people who employ this strategy.  Fannie Mae has already announced that Strategic Defaulters will be ineligible for a Fannie Mae-backed mortgage for seven years and they are very likely to aggressively pursue deficiency judgments in those cases.  Expect other lenders and investors to follow suit.  And all of this is in addition to the havoc the foreclosure will create with your credit.
 
The bottom line is that if you are having trouble paying your mortgage, you need to talk to your bank or a competent real estate professional about foreclosure avoidance alternatives.  If you can continue to pay your monthly note, you may be forced to stay where you’re at or rent out the home if it has lost value.  But it’s worth the effort to talk to your bank about what options might be available.  For instance, some lenders consider a job transfer a suitable hardship to approve a short sale on your home.  You never know what you can get worked out until you ask.

This weeks Tuesday Morning Coffee is excerpts from John Jones' interview last night on 100.5 WGNS. Topics include short sales, foreclosure, and marketing real estate, as well as little information about what makes John Jones and John Jones Real Estate tick.

There has been lots of talk about the National foreclosure rate, which is up 81% from last year (6% from January and 30% from last February) and a staggering 225% from 2006. Tennessee's foreclosure rate is is currently 16.5 per 1000 homes making the state foreclosure rate 1.65% which is not nearly what you'd expect given the National media coverage of the "foreclosure scare". The REAL problems are in Nevada, Arizona, Florida, and California respectively.

Who's to blame you ask? That's a matter of debate.

• Banks lending money to home buyers who had no business buying a home in the first place. (Trust me I was one of them. Knowingly got a loan I couldn't afford for a home that wasn't really worth what I borrowed on it. Fortunately for me I was on my up the income ladder.)
• The job market. With more and more people losing their jobs, being laid off, taking pay cuts, and job openings becoming few and far between how are we expected to make our mortgage payments. This is a HUGE problem and it is not the real estate or banking / lending industry's fault!
• The inflated home prices of 2006-esque housing markets mostly. When you inflate a baloon too quickly and it bursts you deflate even faster (almost instantly). That's exactly what the National housing market is seeing happen.

The good news? We are not the national housing market.

Just 25 of Murfreesboro's current 1,384 real estate listings are foreclosures. That's 1.8% of homes on the market in Murfreesboro, and 7.15% if you count the 75 "short sales" that are trying to avoid being a foreclosure statistic.

Are you facing foreclosure? There is a way out. John Jones Real Estate is Middle Tennessee's first CDPE (Certified Distressed Property Expert).

We've set up what is undoubtedly the area's permier resource for avoiding foreclosure www.TheHomeSaverGuys.com. With tools, information, resources, and explanations that go in-depth to help you save your credit, save your home, and save you a lot of heartbreak, this site is your comprehensive resource.

Already received a foreclosure notice? Don't wait any longer. Call our certified experts NOW! 1-800-239-2513 ext. 2044

By: Melinda Hudgins, Business Writer

Posted: Sunday February 8, 2009 in The Daily News Journal

Broker earns designation in Mid-Tenn.

As the economy began its downward spiral, the number of property foreclosures steadily increased. However, homeowners in financial distress have other options, and now they have help, too.

Joe Hafner, managing broker of John Jones Real Estate recently earned the designation of Certified Distressed Property Expert - the first in Middle Tennessee to do so - which allows him to educate and assist individuals who've found themselves facing foreclosure.

"This training has put our entire team in a position to help people who are experiencing hardships that put their home at risk," said company owner John Jones. "We can now offer our clients facing financial stress access to the tools, resources and expertise that can help them avoid foreclosure and save their credit."

Hafner has dealt with foreclosure since the beginning of his real estate career in the mid-1990s, but added that the training further educated him on the subject.

"We sit down with people, help them understand just what they are up against, and usually show them they do have options other than foreclosure," Hafner explained.

While there are several alternatives to foreclosure, Hafner said that nearly everyone qualifies for either a short sale, assuming they haven't waited too long to begin the process, or a loan modification.

A short sale is possible once the bank allows the sale of a home at a discounted price.

"The banks look at it like a kind of risk management," Hafner said, adding that the process is made easier when a buyer is on hand.

And because a short sale appears like an ordinary real estate transaction from the outside, there isn't the added embarrassment on the homeowner's part as there would be with a foreclosure.

"Keeping their dignity is the biggest thing we can do for these people," Jones added.

Additionally, the homeowners credit rating is saved, whereas a foreclosure can affect credit scores by 200 to 300 points for seven to 10 years and must be listed in every future home loan application.

It can also negatively impact employment, especially when security clearance is needed.

On the other hand, a short sale generally only affects between 50 and 150 points for roughly two years because of defaulted payments.

"Some people get scared and panic, and that rush decision impacts them for the next decade," Hafner said.

Jones added, "I feel like we're saving them years of their lives."

One Smyrna woman couldn't be more grateful to Hafner and Jones for their assistance in helping her avoid foreclosure.

"I had already gotten a few months behind on my mortgage," Tina Pritchard recalled, "so I contacted Joe. He introduced me to the short sale and explained what I needed to do to get things started."

"Joe worked all the way through and stuck with me until we could get everything done," Pritchard said. "I walked away with everything paid and my credit good."

Although she is renting now, Pritchard said one day she plans to own a home again.

"And Joe will probably be the one to put us in our new home," she said.

The John Jones Real Estate company has set up a website at www.TheHomeSaverGuys.com and a no-obligation toll'free foreclosure hotline 800-239-2513 ext. 2047 where homeowners can learn more about the foreclosure process, the horrible impact it has on credit and how to escape the foreclosure nightmare.