Bad news for lenders; good news for you.

It seems every day, we read about the crushing amount of foreclosures ocurring throughout the US. Courts in states like California, Nevada and Florida continue to be inundated with massive amouts of foreclosure filings. Take for example: Lee County, Florida an area that's near and dear to my heart. They are dealing with a caseload of over 20,000 foreclosures and more to come down the pike.

The massive amount of foreclosures back up the court system and put downward pressure on prices. Both of these things are good news for homeowners with mortgages in distress. Because the court system is backed up, the lender will have to spend over a year and a lot of money in court costs and lawyers fees to foreclose on an asset that is generating no revenue. Moreover, there is a massive downward pressure on prices. Depending on the market, a home today may be worth only half as much as what it was worth at the market's peak (sometime in 2006). All indications are that prices will continue to fall in the near future and will probably remain stagnant for quite a while after that.

Lenders are in the business of making money. So why would they want to spend a lot of money to take back an asset whose value declines on a daily basis. It is in their best interest to keep you in the home and find a way to allow you to make the payments. If they have to modify the interest and even the principal, it is a better deal for them than to foreclose. Most lenders have come to that realization. I believe that in the very near future, it will become a lot easier to avoid foreclosure. In the meantime, hang on as best you can and call your bank, you may be surprised at how much more friendly it has become.