The organization, which administers the National Foreclosure Mitigation Counseling (NFMC) Program, said 54% of homeowners who received counseling via the program reported reduced or loss income as the primary driver of foreclosure.

“For the last year this nation has witnessed the highest unemployment rate and the largest number of job losses in over a generation,” said Ken Wade, CEO of NeighborWorks America.  “Our report proves what many already believed to be true – no longer are mortgage payment increases, or even health issues or divorce, cited as the top reason homeowners are facing foreclosure.”

Loss of income was cited as the top reason for foreclosure by 41 percent of homeowners in the October 2008 report, 45 percent in the February 2009 report, and 49 percent in the June 2009 report.

In our office at Home Solution Counselors a large number of clients report the same thing…loss of job or reduced hours.  While divorce is another driver which inherently reduces income the unemployment rate rising over the last year, it should be no surprise that loss of income is now the leading reason countless homeowners are facing foreclosure

If you or someone you know if facing a foreclosure or struggling to make ends meet with their mortgage payment please have them seek help early.  Texas foreclosure laws and procedures are not only quick but unforgiving.

-          The Bank Slayer

As reported by Stephanie Armour in USA Today, the next wave is poised to roll in, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.

These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.

About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.

“There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,” says Mark Zandi at Moody’s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.

Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.

There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why:

•Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.

•Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.

•Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.

•Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.

If you are looking to short sell your home make sure:

1. Your REALTOR and/or Loss Mitigation Company knows exactly how to “sell” your short sale to the bank using: BPOs, appraisals, insurance repair  estimates, letters of declining value, mortgage audits and REO comp matrixes.
2. You leverage State or Federal laws to back your lender/bank into a corner to force their hand and tell you exactly what they will take for your house.
3. If necessary, put your lender/bank over a barrel with a with highly focused lawsuit.

- The Bank Slayer

When: The first Tuesday of every month.

Where: Usually at County Courthouse.

When: Auction typically starts at either 10am or 1pm

Primary Instruments: Promissory Note & Deed of Trust

Type of Foreclosure: Both Non-Judicial & Judicial

Timeline: Typically 60 days.  As fast as 21 days.

Right of Redemption: No, unless tax only foreclosure

Deficiency Judgments: Yes

In Texas, lenders may foreclose on a Note in default through the powers granted in the Deed of Trust (different from your Warranty Deed).  This can be either a judicial or non-judicial foreclosure process.

What’s the difference?

Judicial Foreclosure
The judicial process of foreclosure, involves the lender filing a lawsuit against you and trying to obtain a court order to foreclose.  This is used mainly for Home Equity loans and Cash out refinances.  Generally, after the Judge grants the lender permission to foreclosure, your property will be auctioned off to the highest bidder the same way as a non-judicial process.   These types of foreclosure can be stopped dead in their tracks if attacked early.

Non-Judicial Foreclosure
The non-judicial process of foreclosure is the default process for purchase loans as well as refinances that did not involve cash out; usually called rate and term refinances (you just wanted a better deal not cash out).    In the deed of trust, you pre-authorized the sale of your property in the event of a default.  The power given to the lender to sell the property will be executed by a Trustee.  This is typically the lawyer’s office sending letters informing you that you are in default the time and place they will sell the property.  These are tough to stop without the right kind of help or you paying them the monies they claim you owe.

What happens?

Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a letter of demand, informing the buyer he has twenty (20) days to pay the delinquent payments or foreclosure proceedings will begin.

At some point after the borrowers twenty (20) days have expired, but at least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: 1) filed with the county clerk; 2) mailed to the borrower at their last known address; and 3) posted on the county courthouse door.

The foreclosure sale will take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday.  The sale is by auction to the highest bidder for cash.  Anyone may bid, including the lender.  After the sale, the Trustee records a Deed conveying your property to the buyer even if it is your lender.  If you are still in the house, they will remove you.

The lender may then seek a judgment against you for any remaining balance owed on the Note.  The fact that they “took back” the house doesn’t necessarily relieve you of the money they claim you owe.  If they sell the house for less than you owe, they may track you down and make your life miserable by trying to extract it from you.