Rescue plans for distressed property owners offer new hope
The global financial crisis has left thousands of distressed home owners in its wake, and South Africans have not been unaffected.
Certified distressed property expert Jeff Gordon, of Cape Region Home Sales, says it is crucial to act before a foreclosure takes place.
To counsel distressed home owners, Cape Region Home Sales initiates the process of understanding the causes of distress as well as identifying the five stages of grief - denial, anger, bargaining, depression and acceptance.
Distressed home owners are taken through all the options and solutions:
The forbearance or repayment plan: this involves negotiating with the bank to allow back payments to be repaid over a set period. Home owners are required to make current bond payments in addition to a portion of the back-payments owed.
Bond modification: this involves the reduction of either the interest rate on the loan, the principal balance of the loan, the term of the loan or any combination of these. These changes require bank approval and result in a lower payment for the home owner and a more affordable bond.
Reinstatement: this is often the most difficult for home owners to achieve as they are required to pay the total amount owing to the bank, which immediately reinstates their good standing at the bank.
Refinancing: this differs from bond modification in that home owners acquire new loans based on their current credit ratings. If they have already missed bond payments, their credit ratings may make it difficult to obtain further loans with lower repayments.
Renting out properties: in this instance, home owners are required to rent out their properties for enough money to cover their monthly bond payments. The cost of maintaining rental property must also be accounted for when considering this option.
Short sale: this allows home owners to avoid foreclosure, minimise financial damage and move on from burdensome, unaffordable bonds. In many cases, short sales allow borrowers to qualify for new bonds shortly afterwards, as opposed to 25 years after a foreclosure.
Short sales are then negotiated with banks by Cape Region Home Sales on behalf of sellers on the following three conditions:
First, home owners must indicate some type of financial hardship.
Second, monthly shortfalls must reflect that sellers' monthly expenses are greater than their income.
Finally, proof is required that sellers' debts are greater than the value of their assets.
"This representation is a summary of the solutions available to home owners in distress facing foreclosure. Cape Region Home Sales can provide more information and offer its services as a lifeline to those who wish to regain hope for the future," says Gordon.
"With the right assistance, the stress of facing foreclosure may become manageable.
"Certified distressed property experts have the knowledge and training necessary to assess all possible foreclosure avoidance.
"They are also well equipped to deal with the banks on the clients' behalf and help alleviate further stress."
Call Jeff Gordon on 082 559 5731 or 021 911 1150.
Weekend Argus (Sunday Edition)