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11192012 – LTV – Loan to Value is a key indicator in residential defaults

by Connor T. MacIvor on November 19, 2012

A couple of Real Estate news stories touting that an independent research firm figured out the formula:  When you have a High Loan to Value – the chances of default by that homeowner are greater than if someone had a low loan to value.

Low Loan To Value = Equity

High Loan to Value = upside down (of course, a homeowner could be – close or even –  with a High LTV too)

So then the question comes in whether or not a person should default on their mortgage because they are “upside down”.  What do you think?  I know we have some clients that are completely and vehemently opposed to this type of action.  In fact, they are going to pay their obligation to their financial institution no matter what.

Unfortunately, very tough circumstances are created when job loss hits or the three D’s – Death, Divorce and Disease.  When that trauma hits the “upside down” seller described above as being “vehemently opposed” to a short sale or foreclosure – it is twice as painful.

Some of our short sale sellers are looking at it as a business decision.  (fyi – we are not the judge – we do our job)  I thought I’d throw that disclaimer in so you’d get it.  We are Realtors – while we take the “middle of the road” stances when it comes to what our sellers and buyers need and want, we’d turn down any real estate related action that was against the law or unethical.

If that is something a buyer or seller is considering during our initial interview phase – I kindly explain we are not the Real Estate agents for them.  (trust me when I say they will find someone… probably with the next phone call :) )  click here to read our Paris911 Code of Ethics

With both Short Sale Seller types, the three D victim or the strategic short sale seller, there needs to be communication above and beyond the “typical”.  No matter what type of short sale seller you are, in some cases, short selling is not the best option for you.  This is why our Short Sale Consultation is so very important.  So you can get a handle on your best course of action and to develop a plan of attach with our REMAX of Santa Clarita CA Short Sale Team.

These same “necessary” requirements are also mandatory for our Standard Sellers and real estate buyers.  Sitting down with our team at our Santa Clarita real estate offices will arm you with the knowledge you need about today’s current real estate market.

FYI – we moved our Subscription link below each post and page – I thought our blog Margins were getting a bit too crowded.  When you are ready – just enter your email address below and we will send  you our Bi-Monthly Santa Clarita REMAX newsletter by the Paris911 Team.  Be Safe – talk soon and thank you for sharing, emailing, commenting and liking.

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