Website weighs loan options

A local real estate agent is offering a product to educate homeowners about alternatives to foreclosure, which she predicts will be a growing problem in Orange County in the coming months.

Jodi Bakst, a broker with Team Jodi, a group of real estate experts who specialize in Chapel Hill and Durham properties, created a website which lists the pros and cons of all the options homeowners have when they default on a mortgage.

“Next year, mortgages are going to reset, and so I’m focusing on foreclosure solutions because we are going to see more numbers in the short run,” Bakst said.

When a homeowner initially takes out a mortgage, interest rates and monthly payments are relatively low, Bakst said. But when the mortgage resets, interest rates increase, pushing up payments as well.

There were 88 foreclosures in Orange County in 2010, compared to 11 in 2007, according to RealtyTrac, an online marketplace of foreclosure properties that uses public records to list bank-owned properties in over 2,200 counties.

Daren Blomquist, spokesman for RealtyTrac, said while other areas were hit harder early in the national mortgage crisis, Chapel Hill will likely see an increase in foreclosures next year as mortgages reset.

“There is a risk that some people who were not hit by foreclosures early on will be hit with them now,” he said.

Blomquist said mortgage resets generally take place every five years.

Of the many foreclosure solutions that Bakst has on her website, short sales are the best option for many homeowners, said Tim Burrell, a real estate broker at Re/Max United in Raleigh.

Short sales occur when a buyer offers to pay off the mortgage on a distressed seller’s home for less than the balance of the loan.

“Short sales used to be such a burden,” Burrell said. “You had to hope that the seller would qualify and that the bank would accept them.”

Now, the short sale process and qualification has become easier for homeowners, he said. To have a short sale approved, the homeowner must be experiencing financial hardship or be unable to make monthly mortgage payments.

Short sales require more work for real estate agents but are a good solution for homeowners, Burrell said.

“Families maintain their dignity, credit score and are able to buy real estate in two years,” he said. “It takes five years with a foreclosure.”

Short sales are also better for banks because they receive 20 to 30 percent of the sale instead of paying heavy fees for foreclosure, Burrell said.

Blomquist said the national foreclosure crisis was caused by too many low-income families receiving loans they could not realistically pay back. The interest rates started low, but went up when the mortgages reset.

“Those are the types of loans that trigger foreclosures,” he said.

Contact the City Editor at city@dailytarheel.com.