Archive for October, 2007

Foreclosures continue to grab the headlines right across the nation without any signs of abatement. In fact it seems to be getting worse. The sub-prime mortgage sector is being primarily held responsible for this foreclosure fiasco. Under this viral attack millions of houses are tumbling like ninepins. Loan sharks goaded by commissions and investing greed lured the hapless into mortgage debt traps knowing fully well that the borrowers would never be able to live up to the commitments. Mortgages were made into packets and bundled off to distant investors.

The loan scenario was no longer confined to the local borrower and the local bank. The sheer number of foreclosures overwhelmed the socio-economic scene dragging into its vortex both the lender, the borrowers as well as the economy of the entire country. With foreclosure sale signs dotting the country the regions became a playground for vagrants and overgrown gardens with stinking swimming pools. Politicians and social outfits began to stir themselves as never before. International markets began to feel ripples. It has become an uncanny situation making all uncomfortable and alarmed.

Nevada has one of the highest foreclosure numbers in the entire country. For the ninth successive month till September the average ratio is that one house out of every 185 slipping into the foreclosure net. Its Governor Jim Gibbons is determined to stem the tide. The steps that he is taking to make this effective are now news.

Gibbon started off a new website to assist house owners cursed with foreclosures. It gives details about the various escape routes – the options, the manner of contacting lender, warnings about scammers and house buying trips for potential buyers. The first important step is to immediately contact the lender. The next thing is to be alert about scams. This has become an added dangerous nuisance – something like a secondary infection. Gibbon is optimistic that the site will answer questions like where to go and what to do. It will also give a detailed picture of the Nevada foreclosure scenario.

The office of the Governor is now planning to hold housing fairs all over the state to connect the troubled owners with lenders and non-profit groups working for their welfare. As yet no specific dates have been set but work is progressing and the news media is just waiting to pass it on.

Search Images

For several months news about foreclosures have been capturing the headlines. The latest report is that the number of foreclosures in September 2007 is double to what it was during the same period in the previous year.

Michigan is one of the five top offenders as regards foreclosures. The sub-prime is to be primarily blamed for this crisis but other causes like loss of jobs and the general decline of the economic health of the country from rising of interest rates cannot be ignored.

Eaton County is pockmarked with for-sale signs and the local newspapers are cluttered up with endless foreclosure listings. The County government is alarmed because of the general effect it has on everything in the locality. It is optimistic that an educative and awareness campaign will help to somewhat mitigate matters. The main idea is that the people should continue to light their home fires in their own houses.

With this objective in view the Eaton County Community Development Department plans to host a workshop on the evening of 30th October in the community room located in Courthouse Drive, Charlotte. There are many options by which the ugly foreclosure process can be forestalled and parried. It will somewhat relieve the tension.

The course includes teaching the participants about alternatives to foreclosures, educating them about mortgage terms and definitions and identifying the personnel in a mortgage corporation who will come of help. As in all matters – it is knowledge that is power. The pen is always mightier than the sword. The worst thing to do is not to know what to do and behave like an ostrich and ignoring the situation until too late.

The point to understand is that foreclosures are good for neither party. The lenders too want to avoid it as it involves time and money. So it is prudent to know that the lender is also keen to come to the negotiation table. A fervent appeal has been sent out on behalf of the local administration asking all the foreclosure victims to attend and arm themselves with the sword of knowledge.

Foreclosures are causing the government to sit up because the sheer numbers is overwhelming. Abandoned houses mean stinking pools spreading fever and vagabonds stalking localities. With the properties being in a state of limbo there is none to pay taxes. It is a no go situation for all.

Search Images

It happens within minutes – the foreclosed property is snapped up every Wednesday supervised by the Sheriff’s Department of Brown County. Buyers and sometimes a hapless former owner crowd in the first floor room as the drama progresses in sharp succession. But few are aware of the behind-the-scene tears and tales of frustration. Swiftly more than $1 million worth of foreclosed in Green Bay’s Broadway district property change hands before one can blink.

One such tragic story is that of Robert Lepak who had lost his Casco farm to foreclosure seven years ago. The wound is still festering – the foreclosure scars do not heal easily. 56-year-old Lepak recounts the loss of not only his farm but also his farm machinery and everything else he had. With this zero balance in his pocket what chance has he of a dignified survival?

The tales of horror continue. In Broadway district a property valued at $1.18 million was sold back to the lender after the borrower Steve Boyer was careless about meeting mortgage commitments. Personal matters took him away for sometime and he forgot to pay his dues. The result was foreclosure. However some say that it is all for the good as regards Broadway because till now Steve had neglected it and let the property stand idle. Now something will be made out of it – at least there is a good chance of this happening. Many of the Broadway units will require rehabilitation and perhaps a new mixed lot will move in and pep up the economy.

The foreclosed properties are a mixed lot – both residential and commercial. Some are occupied but others continue with business as usual. Those that will have to move out with the tag of foreclosure after their name will find it difficult to make a new beginning. That is where it hurts most. Business cannot be started anywhere anyhow. It requires capital and good will apart from drive and zeal. Foreclosures seem to have snapped up everything. Those who are residents will find it tough getting new rented quarters. Landlords will be naturally suspicious. Most of the foreclosed units swallow up equity also so that hardly any money is left over after paying mortgage and tax dues to fix up another house to crawl into. Reports of suicide are coming in. The whole socio-economic structure of the nation is wobbling.

Search Images

In September this year California foreclosure filings rose by six times compared to the same month in 2006. This has had a negative effect on the general economy in California. The number of foreclosed houses is high and there are relatively few buyers. This is causing real estate prices to fall drastically. Once the average price of a house in California was $593,000.

In San Diego there were 2,734 filings last month although it did not top the list in the State. The top ranking cities tagged with foreclosure stigma were San Diego, Chula Vista, Oceanside, Escondido, El Cajon, Spring Valley, San Marcos and Vista.
A brokerage firm reported that the rate of vacancy is at an all time low at 2.71% in San Diego. It is down by 2.87% from what it was during the same time (3rd quarter) in 2006. North County and South corridor sub-markets had the lowest vacancy rate with 1.4% and 2.2% respectively. The national vacancy rates are about 7%.

There is pressure for retail space because of fall in supply in San Diego County. Lease rates are going up. In the second quarter it has gone up by 1% in comparison to the same period in the previous year. The prediction is that this upward trend will continue with an increase ranging from 5% to 7% during this year.
In San Diego about 727,000 square feet of development is under way incorporating 3.7 million square feet for retail space. In 9000 buildings there is currently about 130 million square feet of retail space. The R&D vacancy rates are 11.6% during the third quarter. During 2006 in the second quarter it was 11.2% and 10.8% in the third. The central suburban market (Kearney Mesa, Mission Gorge, Moreno and Sport Arena localities of the city) has a low vacancy rate of 4.6%.

Analysts opine that absorption rates are down while lease rates up for R&D estates. Rental rates are also expected to rise this year.

Thus from whatever angle one looks at the problem this foreclosure crisis is not contained within a limited economic zone or locality but is spilling out and spreading to all sections of the nation and even touching international markets. There is high demand for rented houses while thousands of oreclosed units are lying vacant – deserted, gloomy and menacing for the entire neighbourhood. This is the paradox.

Search Images

Foreclosures are causing loss not only to the individual but also to the nation at large. It is estimated that more the $1000 billion of real estate will be affected and government coffers will find itself less by $917 million in taxes by 2009. These findings are based on a recent congressional finding.

The Joint Economic Committee calculates that these losses will be the direct outcome of 2 million house owners entering foreclosures zone by the end of the forthcoming year. Senator Charles Schumer (D-NY) who has come forward with some remedial suggestions leads the committee that he has been trying to enforce for some time.

The study reports that in New York State $9.4 billion of property value will just vanish and property taxes will be less by $102 million. The worst affected are those on Long Island. Thus it is clear that the foreclosure crisis covers far more than the borrower-lender zone. It embraces in its tentacles the socio-economic structure of the entire nation. Right now all that can be done is to see that further financial strain is not put on Nassau and Suffolk region from where the highest property taxes are collected.

Those not in the foreclosure dragnet will see their property values plummet down because of the general picture. They will collectively preside over the loss of $32 billion in housing value across the nation and $4.3 billion in the state.

Schumer is focusing on prevention of future foreclosure and simultaneously to help those already in its clutches he is appealing to lenders to modify loan terms. The Federal Housing Administration is being given more teeth by way of funds to step in with refinancing help and amending bankruptcy rules to allow judges greater freedom about loan modification.

The Mortgage Bankers Association however disagrees with the report, which stands on the premise that house values will go down by 20% and that another 2 million will be facing foreclosure. It will in reality hover around 1.1 million to 1.2 million. The value of housing will not be uniform but will concentrate in certain pockets. An area where there are many foreclosures will naturally see a reduction in real estate prices in general.

Another economist criticizes the report for not taking into account the economic downfall of the individual and its impact on families.

Search Images

Foreclosures in the core of the capital region are keeping in tune with the trend all over the nation. From January to September 2007 there have been 1,125 filings in the four counties. During the same period in 2006 the number was 470.

Experts are not surprised, as they had apprehended this situation some time ago. Those dealing with foreclosure help lines find that their workload has tripled during this current year. Fumbling for causes many are of the opinion that the excesses in the sub-prime category are to be blamed. Those who could ill afford loans were saddled with these ARM’s and now the entire nation is paying the price. The loans were targeted far and wide and now the repercussions are equally far and wide. A year ago one could just walk in and avail of a loan. It was as easy as breathing! No questions about income were asked.

Online tracking groups note that 223,538 foreclosure filings have been listed in September this year – twice of what it was in the previous year. Foreclosure is a process consisting of many steps – default and sale notices, followed by auction and repossession. The rising numbers are causing all round concern and there is pressure on the government to address the matter. Unless the lenders cooperate nothing legally can be done for those already boiling in the foreclosure soup. But steps can be initiated to prevent a repeat performance of this fiasco.

Governor Eliot Spitzer has been approached to fund the setting up of counselors and provide for other types of financial assistance. There was also a cry for the government to set up a tracking devise to note the actual figures of the foreclosures across the country. There is concern for the senior citizens of America who have been main victims of foreclosures. Spitzer declared the setting up of a $100 million fund but critics say that the schemes does little for those already reeling under foreclosures. There has been a response of sorts from the Spitzer administration but more needs to be done.

Others are not sitting back as regards finding solutions. Better Neighbourhoods Inc in Schenectady will start classes to raise the level of awareness. In November innumerable properties will crumble like houses of cards under the onrush of foreclosures. Large corporations who have invested in mortgages are impossible to track.

Search Images

If the real estate market is to flow again the REO properties too have to move quickly. Foreclosurelistings.com tied up with Indymac Bank (R) to speed up sale of thousands of Real Estate Owned estates through the Internet. Thus another major lender (7th largest in savings and loan ventures) will add its name and operations to solving the foreclosure crisis.

Foreclosurelistings.com is renowned for keeping figures of foreclosures across the nation. The statistics is detailed with separate numbers of pre-foreclosures, foreclosures and bankruptcies. On a single site will be available particulars of sales by owners (FSBO), tax obligations and specific location of the units. The Internet has exposure to innumerable interested clients and is the ideal route for genuine proper buyers to connect with the right deal.

More than 80% of the buyers have already got into the habit of surfing the net for making house searches. Foreclosurelistings.com hopes that by tying up with Indymac Bank (R) more REO listings will come off the shop shelves and be sold. This will add pep and zest to the real estate market – spelling good news for all concerned.

After viewing the properties those who are interested can make appointments with agents and brokers. Contact can be made over phone or e-mail. These agents cum brokers will guide the buyer through the entire process of deciding and finally purchasing the unit. According to figures the market so far has been untapped with 83% being spent chasing 20% of the buyers. Times have changed and the modes of operation must change also. Only the Internet can manage the huge numbers of fallouts from foreclosures rolling in. Indymac Bank (R) and Foreclosure. Com have very timely come up with this appropriate scheme.

Foreclosurelistings.com is not only about listings but its site also contains educative material so that buyers get intimately acquainted with what is going on. One of the main reasons for the foreclosure debacle is that the general public was not and is not yet properly financially literate. Nobody has taught them to read the fine print of the agreements that contain the catch. This mood of trust has led to this atmosphere of despair. Foreclosures are not a localized phenomenon but has touched not only the entire country but also sent shudders and ripples around the globe.

Search Images

The Attorney General of Texas, Abbott is not happy about just standing and watching the threatening foreclosure clouds. He and few others like him want to do something. Foreclosures in Texas are as big as the state. In September the number touched 14,000 making Texas rank 9th in foreclosure ratings across the country.

As a preliminary step the Attorney General asked three of the largest lenders in the state for a meeting to thrash out the foreclosure problem and bail out the sinking victims. It was stressed that lenders, loan agents and public officials must all work at tandem with the sole object of helping those about to lose their houses and homes. The housing industry is one of the pillars of the economy of Texas and therefore it is to the interest of all concerned that it is put back on rails.

The mortgage companies could help by converting the floating loans to fixed ones. In the long run this will benefit lenders, loan agents and of course the house owners. Foreclosures are a hassle for lenders as well. Secondly the lenders were requested to be friendlier in their approach and not start off on the wrong foot by initiating intimidating tactics from the start. They should be ready to talk with and find out the difficulties of the defaulting borrowers.

By reviewing each particular case there would be a better chance for mortgage houses to collect their dues causing money to flow again. Thirdly the lenders were told to warn the consumers well ahead if there was going to be rise in the ARM’s. Fourthly they should do away with penalties and fees while tackling those consumers who cannot meet the bare essentials of the loan. To enforce all this an in-house resolution committee should be set up to see to the complaints pouring into the office of the Attorney General.

Abbott made the right noises and steps but the Texas Attorney General is a state official while federal laws control the mortgage lenders who have precipitated this foreclosure fiasco. Wherever there is a clash it is the federal rule that prevails. On the positive side Abbott’s measures exposed the fact that American borrowers are practically unprotected and without a change in the legal structure, the offending lenders can always hide behind the federal veil.

Search Images