What Suze Orman Doesn’t Know About Foreclosure
Are a lot of homeowners facing foreclosure just freeloaders?
My Tivo picked up an episode of the Suze Orman show this weekend. She opened the show by discussing a new “trend” that’s been discovered: people are now paying their credit cards, but not their mortgages.
She implied that people were taking advantage of the opportunity to “live rent-free” as long as possible, while enjoying themselves along the way.
She said said that this approach was short-sighted and these people were taking the “road to financial hell.” After all, “where would they find a landlord who would rent to them” with a foreclosure on their record, and a rock-bottom FICO score?
Frankly, foreclosed homeowners are supplying a steady stream of renters to landlords who have had a rough go of it for several years. With the flow of easy mortgage money, people who would have otherwise rented went out and purchased homes. This left landlords with a really weak rental population. Now that some of these people are going back to renting, landlords should begin to see rents rise where they’d been flat for a few years. And, these new renters are accustomed to living in homes, so there’s increased interest in single family homes for rent. And, if a homeowner has saved even a little bit along the way, they should be able to pay a few months in advance, or offer a higher security deposit.
So, I don’t think renting will be that big of a deal, particularly with the amount of people who are losing their homes right now.
Her solution? “Go down to your bank” and offer them a “deed in lieu of foreclosure.”
Sure, Suzi. Offer your lender the thing they’re least likely to accept.
Last I checked, servicers were taking one deed in lieu for every 183 loan workouts.
In addition, Freddie Mac pays servicers just $250 for DIL’s, whereas they pay nearly TEN TIMES that ($2,200) for short / pre-foreclosure sales.
There’s no incentive for the servicers to mess with these and clearly, the investors don’t want them, or they’d pay more to get them.
I believe that Suze truly wants to help people.
I just wish that someone with as much influence would do a little more homework as to what really works in the real world.
If you’ve been getting your information about how to avoid foreclosure from the mainstream media, or from the financial “gurus” out there, you might want to take a few minutes to find out what works from someone who specializes in foreclosure prevention.
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