Archive for August, 2006

Foreclosure filings in Massachusetts increased 66 percent in the second quarter, according to data released yesterday, a trend that is expected to continue over the next year. During the second quarter, 4,292 notices of foreclosure against homeowners were filed in the state, a figure which is up from 2,585 in the same period of 2005.

Many believe this trend is going to continue over the next few years, as the effects of a flooded housing market come to light now that a long period of hot investment has come to an end.

While these numbers do not automatically mean all foreclosed homeowners will lose their homes, it does mean that some will, and that even more houses will be on the market in an attempt on the part of those in default to pay off their debt and salvage some value. However, this will likely only flood the market further, making it increasingly difficult for anyone to sell a home.

Many who used adjustable rate loans to purchase new homes either for investment or summer rental properties are stuck with rising interest rates without any of the planned additional income form the homes to pay for them. The slow market means investors can’t sell houses, and the subsequently weak market for vacation rentals means no extra money is available to go towards the mortgage. This can lead to default, and eventually, foreclosure.

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Experts and foreclosure investors alike have been paying special attention to the southeastern United States, as the region has one of the highest rates of foreclosure in the country. States like Tennessee and South Carolina are quickly moving up the list of states with high foreclosure rates. Florida and Georgia are known as foreclosure

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The U.S. Department of Housing and Urban Development (HUD) announced this week that there is $600 million less in their budget than they predicted they would have to fund public housing nationwide. As a result, it informed housing authorities across the nation that they will also face cuts in their budget, and will receive roughly 85.5 percent of the HUD money they had expected.

This means that many Housing Authorities in cities across the country will have to layoff employees and restrict the services they are able to provide for impoverished residents of public housing. This could have a devastating effect in the near future for many areas that already dealt with inadequate budgets.

Since Housing Authorities will have to cut their staffs, the likely result for residents will be less security, both in the form of guards and technology, and an inability for to attend to repairs effectively.

Housing Director’s across the country are blaming HUD for poor planning, arguing that they should have been able to foresee budget cuts due to overspending and a decrease in federal money being awarded to HUD. The Bush Administration has already cut public housing funds by roughly $1.7 billion, and the additional cuts have left many housing authorities thoroughly strapped for cash.

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Foreclosure filings in Palm Beach, Martin and St. Lucie counties reached a new high for the year in June. Due to rising mortgage costs and insurance rates, new reports show that in Palm Beach County alone, the amount of homes entering some phase of foreclosure went from 849 in June 2005 to 920 last month, an increase of 8 percent.

In Martin and St. Lucie, the number of homes entering the foreclosure process rose at a higher percentage rate, but significantly fewer homes were involved. There was one new foreclosure filing for every 605 homes in Palm Beach County, which is more than double the national average.

However, while Palm Beach and neighboring counties are seeing an increase in the number of homes entering the foreclosure process, statewide, foreclosures are receding from record filings last year. Last month, 8,605 Florida properties reported foreclosure activity, down from 9,778 in June 2005, marking a 12 percent decrease.

Florida now ranks third in the nation behind Texas and California in foreclosure inventory volume, as the state braces itself for the upcoming hurricane season and ensuing property damage.

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According to news reports and statistics, Colorado had the highest home foreclosure rate in the country in June for the sixth consecutive month. In June, Colorado had 5,928 active foreclosures last month, or one for every 280 occupied home.

The number of foreclosures in Colorado fell by more than 1,000, or 18 percent, from January to June, but it wasn’t enough of a decline to knock the state from the top ranking. Texas, Michigan, Ohio and Georgia had more foreclosures than Colorado, but they had lower foreclosure rates because they have far more houses.

Many in the state have blamed loose lending practices and a surge in real estate and housing development in the past few years for the inflated statewide foreclosure rate. Fraud and predatory lending have also contributed to many people getting involved with loans an d rising interest rates they simply cannot afford. Colorado has been a holdout in regulating the mortgage industry. Only Alaska remains as the lone state to not monitor the mortgage market.

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Thousands of Hurricane Katrina victims in Mississippi will soon be receiving some much needed economic help.

The U.S. Housing and Urban Development Department, also known as HUD, has released $3 billion to Mississippi to be distributed and used to rebuild housing along their battered coastline. The money will help thousands of homeowners recover from the hurricane.

Qualified homeowners who suffered loss or damage to their property during the hurricane will soon receive up to $150,000 each in assistance. This marks another step in the work of HUD to assist the victims of Katrina who, outside the assistance of HUD, have not received much in the way of financial assistance from federal government agencies.

Louisiana will also receive $4.2 billion from HUD for the same purposes. This money will obviously contribute to a radical redevelopment of the private and public housing sectors in those areas for years to come.

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New statistics show that Georgia currently ranks highest among states in foreclosure rates to date in 2006.

Georgia has had the highest number of new foreclosures in the months of April and May, and now June as well. In terms of active foreclosures, Georgia ranked second in June.

The new report, issued as a six month report, also shows new foreclosures in the United States rose from 23,982 in January to 26,972 in March, and have remained at a high level, ending the first half of the year with 27,064 new foreclosures in May and 26,802 in June.

Despite these figures, the national inventory of foreclosed homes has remained at relatively the same level, and even saw a slight decline in June. This is a result of the high demand for foreclosed homes and their purchase around the country, which has kept inventory levels stable as they are bought up.

Many feel that a slow real estate market has created an interest and demand for foreclosure homes. Foreclosures

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The following tips are taken from the Federal Citizen Information Center.

What is Predatory Lending?

In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

-Sell properties for much more than they are worth using false appraisals.

-Encourage borrowers to lie about their income, expenses, or cash available for downpayments in order to get a loan.

-Knowingly lend more money than a borrower can afford to repay.

-Charge high interest rates to borrowers based on their race or national origin and not on their credit history.

-Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.

-Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.

-”Strip” homeowners’ equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower.

-Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

How to Avoid Predatory Lending:

-Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved, non-profit counseling agencies.

-Interview several real estate professionals (agents), and ask for and check references before you select one to help you buy or sell a home.

-Get information about the prices of other homes in the neighborhood. Don’t be fooled into paying too much.

-Hire a properly qualified and licensed home inspector to carefully inspect the property before you are obligated to buy. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.

-Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.

-Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of your downpayment, failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and may result in criminal penalties.

-Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property.

-Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert “N/A” (i.e., not applicable) or cross through any blanks.

-Read everything carefully and ask questions. Do not sign anything that you don’t understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved housing counseling agency near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.

-Be suspicious when the cost of a home improvement goes up if you don’t accept the contractor’s financing.

-Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

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