Gillespie County has managed to keep its number of foreclosures low

Posted on April 17, 2009
Filed Under Fredericksburg Texas Real Estate News |

By Greg Oehler

Sign Of The Times - Foreclosure
Creative Commons License photo credit: respres

The first Tuesday of the month is “Foreclosure Day” in Texas.  Foreclosure happens when a Lender is unable to collect on a mortgage to a borrower.  In Texas, the Lender posts a public notice (usually on the Courthouse bulleting board) at least 21 days in advance of the first Tuesday of the month in which the property will be foreclosed.  Holidays are no exception.  I have seen foreclosures occur on January 1st and on July 4!

The postings that are not worked out in advance of the first Tuesday are then sold on the Courthouse steps to the highest bidder.  Often times, the Lender turns out to be the highest bidder, but the public can bid as well.

Thankfully, we do not have many foreclosures in Gillespie County.  Some parts of the nation are overwhelmed with foreclosures and when lenders foreclose on collateral in mass, the foreclosure re-sale market can take control of retail real estate sales.  That means there are more foreclosure sales than retail market sales.  When that happens, the area generally sees a drop in value.   Why buy at retail when you have a large selection of foreclosures?

Although Gillespie County does not have many foreclosures, I see five to ten postings per month on the courthouse bulletin board.  Not all of the properties posted go through with foreclosure. Lenders and borrowers sometimes negotiate for additional time, or sometimes the borrower manages to come up with additional funds in desperation.

Why do foreclosures happen? There are various reasons, including the following:

…employment circumstances and/or job loss adversely affected the Borrower’s ability to repay the mortgage;

…health complications prevent the Borrower from earning income and the there is insufficient insurance;

…the Borrower’s personal life becomes an issue due to divorce, loss of a family member, etc;

…economic conditions - some Borrowers were incapable of repaying the loan from the beginning and were relying on market appreciation to cover the loan expenses.  When the cycle of appreciation stopped due to adverse economic conditions, they were left with no alternative because the Borrower was not able to sell the collateral for enough money to cover the loan;

…failure to pay personal income taxes;

…failure to pay a judgment;

…fraudulent borrowing/lending practices; and,

…default on other parts of the loan agreement such as payment of ad valorem taxes, HOA dues, insurance coverage, etc.

You may know of other situations that led to foreclosure, but this should cover the majority of reasons.

If someone is having difficulty keeping current on their mortgage, they should notify the Lender and keep them abreast of the situation.  Sometimes, a Lender will modify loan terms to be more affordable, especially mortgages where a balloon payment comes due or an interest rate adjustment creates an increased monthly payment.  In other cases, a Lender will allow a “short sale” and allow the collateral to be sold for less than the full payoff.  The important thing to do is contact the Lender!

While no one likes to see a lot of foreclosures, it is a necessary part of the real estate and lending business.  Lenders have to have recourse when their loans are not repaid.  When a Borrower signs the mortgage, somewhere in the language it usually includes the words “I promise to pay.”  Therefore, be careful when you become a Borrower and take on only the debt you are certain you can repay over time.

I plan to go into a little more depth in the foreclosure process in the next blog.  This will cover the actual sale and some of the things to watch out for when you purchase a foreclosure.   Until then, I hope you steer clear of foreclosure with your own mortgage!

Share/Save/Bookmark

Comments

Leave a Reply