Archive for the ‘Foreclosed Properties’ Category

Foreclosures have increased in Central Texas by 25% - according to latest reports coming in. Central Texas comprises of nine counties. Experts are of the opinion that this rash of foreclosures is not solely because of the sub-prime mortgages that many borrowers contracted to own houses from 2005 to 2006, but because of the slump in the economy. The number of foreclosures across the country had shot up astronomically largely because of the mortgages that were offered without any or negligible down payments and adjustable rates.

Residential Strategies is a firm that keeps track of the housing market According to its experts fewer than 0.1% of house owners in Central Texas who had bought houses during the years stretching from 2005 to 2007, are foreclosing because of sub-prime mortgages The reason, opines the experts, is that the capital of Texas, Austin, is still one of the most affordable places to reside in. Here house prices did not spike during the beginning of the zoom years like they did in other states like Florida and California. This region has seen less than 1% difference in the cost of purchasing a house.

Nevertheless the foreclosure numbers have affected the construction industry in Central Texas. Seventeen thousand houses had been built in 2006. But so far in 2008 fewer than 10,000 units have started to be built. Builders now do not have any incentive to continue. The fact is that 35% to 60% of those who qualified to avail of a mortgage about two years ago cannot be considered as eligible nowadays.

The reason for this is not only the foreclosure related crisis. The seller-assisted arrangement of finance was done away with. In that method the builders or the sellers could purchase down a rate of interest. But that option is no longer there. This was the opinion of Mark Sprague of Residential Strategies. The result has been a sharp fall in the number of those who could qualify to buy a property.

According to predictions of experts, the second half of 2009 will see a spurt of residential building activity. Over and above this there will be a rise in condo sales in the downtown markets – the latter not having slowed down. It is a sure indication that the economy of Austin is still strong and continues to thrive. Texas has always has a record of bouncing back because of its own resilience.

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A casual glance into what is going on behind the scene of the much hyped rescue measures to bailout the nation from the financial crisis will show that the same foreclosure story is about to rerun, if steps are not immediately taken.

In Melville New York is located Lend America. It makes itself known through infomercials and toll free numbers. Borrowers in foreclosure trouble are encouraged to refinance and take fixed-rate mortgages that are guaranteed by FHA. Lend America had anticipated this foreclosure crash and had changed business tactics from 2005 by shifting over from peddling sub-prime mortgages to those backed by FHA. At the helm of this brilliant move is Michael Ashley. This year the firm will be advancing 7,500 loans amounting to a total worth of $1.5 billion. Ashley confidently said, “FHA is a big part of the future. It’s the major vehicle for the government to bail out the housing industry.”
It is strange and perplexing that the federal government should work in tandem with Lend America. Ashley has an uncomfortable past of legal wrongs. In 1996 he pleaded guilty in court in Uniondale New York on two counts of fraud related to mortgage scam of another company run by his family under the name of Liberty Mortgage. He was fined ($30,000) and sentenced to probation (five years). Kenneth Ashley, his father has the dubious distinction of having served a jail sentence of four years. Younger Ashley, now aged 43, defended himself and said, “ I was just a pawn in a chess game between my father and the government”. The current default rate of Lend America’s FHA insured loans is 5.7% or 53% - much higher than the national average.
Lemar Wooley of FHA was asked about overlooking the transgressions of firms that had formerly dealt with sub-prime loans. He replied, “FHA has taken appropriate actions, where necessary, with these lenders with respect to their participation in FHA programs.” According to him First Magnus, Lend America and Nationstar have all met the conditions laid down by federal rules. He however admitted that since 2000 on two instances, Lend America lost its right to issue FHA backed loans because of increased default numbers. Wooley also said that he did not know about the previous convictions of Ashley. Lend America had not projected Ashley as a major representative of the firm. As per rules the lenders working under FHA are expected to disclose past sanctions and not to employ personnel with criminal history.

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Foreclosures victims feel that a two-year halt on foreclosures can help them. Lawmakers echo same sentiments and are proposing a moratorium on house foreclosures.

Sandra Applleberry of Grand Blanc is 53 years and is a pastor of a church in Flint. She is one of the thousands who are threatened by impending foreclosures as they are behind in their mortgage payments. This tense situation has caused the three senators of the state to support a bill that will put a hold on mortgage as well as tax foreclosures in Michigan.

The legislation would permit foreclosure victims a respite for two years according to court orders. The time could be worked out to reduce the amount of monthly payment. During the first quarter of 2008 there were 1,734 foreclosure postings in Genesee County according to the findings of RealtyTrac. It is the same as the last quarter of 2007 and an increase of 47% from the first quarter of the previous year, 2007. Michigan as well as Genesee County has been attacked simultaneously by foreclosures and high unemployment rates. Senator John Gleason (D-Flushing) sees this problem as exasperating. “It’s not ending. It’s getting worse.”

The situation began to get problematic for Appleberry from the fall of 2007 when her mortgage monthly amount suddenly zoomed to $1,700. Just at that time she had lost the allowance she got from housing. Her husband, Leslie is disabled and received payments from social security.

The ACORN branch of Flint mediated to stop an auction of the house of the Appleberry’s some month’s ago and is now pursuing the matter with the lender to bring down the interest rate to 9.5%. Sandra is optimistic that some sort of agreement will be reached – something that they can afford. Hitherto a proposal by the lender had been well beyond their means.

The legislation will also permit the owners of houses to ask for a freeze on property tax for two years. The plan allows Michigan State Housing Development Authority to issue bonds that would ensure mortgage guarantee during the time of the freeze. The money from the bonds would be utilized to help foreclosure victims about to lose their houses.
In the past a tax postponement plans had helped many out of tax foreclosures. In six years 1,700 families have benefited. ACORN hopes to utilize a $7.8 million grant to help more families threatened with foreclosures.

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The country is in the grip of foreclosure crisis – the worst in 16 years. The Federal Reserve and other allied banking regulators have taken the unprecedented step of appealing to the mortgage lenders not to rush on with proceedings. The man in the street has been surprised by the move – the likes of which they have never heard of hitherto. The authorities can only make appeals as the securitization transactions are contractual and anything contradictory to it cannot be enforced. It is not a good sign as it exposes the hard fact that except for appealing nothing can be done to rein in financial bodies playing havoc with loans. The government is giving priority to helping citizens keep their home fires burning in their own houses. Those who have provide services of securitized mortgages are asked to reach out compassionately to distressed house owners.

The strident appeal has come straight from President Bush and also from Federal Reserve chairperson, Ben Bernanke. They assured of standing beside those who had been trapped into teaser loans. Bush spoke of a plan to permit government housing administration to try to help besieged borrowers keep home fires burning. It is not just a mere coincidence that the joint statement is made a day ahead of a hearing of sub-prime collapse before US House Financial Services Committee.

Foreclosure figures are alarming. These point to worse days ahead. Nearly 1.3 million sub-prime mortgages is about to reset to higher rates this year. In the following year another 1.2 million will follow suit. It is the combination of high interest rate and low property value that has caught house owners unawares. Late payments and or debts rose to more than 14% during the first quarter of 2007 – making it the highest in four years. In July this year the number of foreclosures across the country doubled from what it was last July.

Sub-prime mortgage agents themselves are in trouble and many have been forced to down shutters as credit supply from investors has begun to dry up. Many jumbo lenders are desperately trying to contact borrowers for their own interests. For the lender foreclosure procedures are time and money consuming. Idle property is dead weight. They want money to trickle in. Generous options about refinancing and modifying rates are being made with Wall Street averse to real estate business.

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The story of one family is the same as that of thousands of others across the country. The Greenes tired of being tenants grew confident that their joint income would enable them to become house owners by paying $1,000 per month towards mortgage. But their hopes turned to dust when spiralling living costs combined with mortgage increases left them stranded. Twice they have applied for bankruptcy in about ten months to keep home fires burning in their own house. This is just one instance of what is happening to many other families across Floyd County as well as nation wide.

According to reliable sources there has been 175 foreclosure notices at some stage or the other since May in the County. The different stages are default notices followed by auction and bank repossessions. In Georgia the situation is grim – 1:299. It is double that of the national average.
The culprit is the sub-prime market where interests shoot up after a honeymoon period of grace. Those with weak credit creditability had benefited from these loans during the last ten years. Through this route they had been able to own a house. Little or no down payment was required initially but later rates soared.

The crisis peaked this month when numerous lenders including jumbo ones like Homebanc Mortgage Corporation of Atlanta said quits to the mortgage business. It set off international tremors in the stock market. Investors withdrew cash from the markets causing available credit to dry up. The Federal Reserve had to quickly intervene to allow stocks to rebound on 17th August.

Locally Floyd County continues to stagger with the weight of foreclosed units. About four years ago the housing picture was rosy in this region. Low interest rates with high appreciation value of properties tempted investors and buyers to hope for high profits. Swayed by publicity they took the risk. Even longtime house owners fell for the trap and refinanced. Then came the shock! Suddenly interest rates began to skyrocket. It meant additional monthly payments. For others the prices of essentials began to soar; so too did medical expenses and coverage. Unemployment and shutdowns added to the woes. The net result was that people found it difficult to sell their properties and save themselves. The tightening of the mortgage industry has made it more difficult to avail of house loans. The circle is viscous.

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The crisis in the sub-prime market is being held responsible for world wide heart palpitations. Figures and statistics are rolling in and experts are struggling to analyze and pin point the issue. Generally the accusing finger points to lax mortgage practices. On the other hand if ordinary folks were not able to avail of easy loans how would the great American dream of becoming a house owner be realized? Unfortunately both the borrowers and the lenders overstretched themselves creating a situation in which a snow balling effect is being felt in all spheres of life. There has been a socio-economic fall out.

The detailed picture is not the same everywhere. According to experts a tendency to be noticed is that 90% of the owners with loans of $250,000 or less are worst affected. As yet the giant loans are sitting pretty. This is the picture in North Texas. Foreclosure listing sleuths are tracking details of more than a dozen Texan Counties came to this conclusion. This has been the tendency during the last three or four years. It is not that the low priced houses are more in number. During the first nine months of this year nearly 31,000 units valued around $4.5 billion are up for sale by the lenders. It reads a 12% rise in numbers and 19% in value during the same time period in the previous year – 2006. This year the loans that are being foreclosed started its loan history in 2003.

In Dallas Forth Worth the house loans were in the kitty of the nation’s giant mortgage firms – Fannie Mae and Freddie Mac. Less than 2,000 of the foreclosed units (6% of the total) came from house owners defaulting on the equity loans of their properties. Specialists opine that the effect on real estate is not that bad as anticipated. These still represent a fraction of the market.

Of the foreclosure units only about 1% during the first nine months of 2007 were for properties worth more than $500,000. But soon the picture might change for the worse with lenders asking for more interest. It might very well cause the number of the big loans sliding into foreclosures to rise. There is much talk and speculation about these jumbo loans. Builders are putting their heads together and trying to find out which way the wind is blowing.

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The manufacturing industry is in the doldrums. Unemployment is high forcing people into the foreclosure process. The number slipping into its grip is rising by the day. Munster ranks among the highest foreclosed regions. Indiana, Ohio and Michigan have been reeling under shutdowns and vanishing jobs. This triad accounts for 20% of the foreclosures countrywide. Most of the foreclosure victims are also victims of unemployment. They are losing their homes and the fires of their hearth are soon going to snuff out.

Indiana Bankers Association sends out the advices that if there is some equity left on the property then fall back on it. It will steer you through. Realtor’s associations in Indiana have been doing a lot of digging. Their opinion is that what we are seeing today is the outcome of years of sub-prime mismanagement that is now affecting the locality as well as the nation. Experts apprehend that more than 2 million adjustable rate mortgages (ARM) will push in for higher rates all across the country within a few years. Indiana has a high rate of house ownership – as high as 75%. On the negative side it ranks second with the largest number of foreclosure listings. Indiana comes 44th in the recent counting of one-year price growth done by a federal body dealing with the relevant subject.

It is the thinking of the borrowers that went awry. They bought houses that they could not afford. They never gave a serious thought to the fact that after the honeymoon period of low rates the latter would swell and balloon up. During the first years an adjustable rate is low – being known as teaser rates. These tempted buyers to opt for the non-conventional loans. The borrower kept hoping that things would look up on their economic front within few years. But in reality this never happens. There is logic behind everything. The main causes were low appreciation rates of properties, affordable housing and high loan-to-value loan rations.

Operations are underway to assist people. One of them involves more down payment assistance that does away or lessens cash down fees. Those who plan to buy property must first become financially literate and understand all the legal and other implications. Secondly a minimum amount of foresight is a must. The most important issue is creating jobs. Without jobs there cannot be home fires burning.

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The foreclosure crisis marches on and following its trail are hungry predators who are making a living out of people’s woes. Better Business Bureau of Central and Northern Arizona have sent out a loud warning.

It is apprehended that nearly 1.7 million houses will soon be tainted with foreclosure. The affected will be desperate trying to save their home and hearth. In the melee they will catch on to anything – even a straw. Here lies the danger. The wolf will knock wearing grandmother’s clothes. Beware!

The bureaus are flooded with complaints from foreclosure victims who reached out to questionable foreclosure rescue companies. The whole thing is another scam. In the last three years there have been 111 complaints.

The usual mode of approach is that these crooks first make contact over phone or mail. Sometimes they make themselves available on the web where they make tall claims about refinancing loans and stopping foreclosure procedures. The bait is that they promise to return fees if the services are not properly delivered. Desperate sufferers had paid as much as $1,300 only to come up against a blank wall – no redress and no refund.

Better Business Bureau gives the following tips to foreclosure victims. They should immediately contact BBB over phone or through Internet and ask for a Reliability Report, which is free. Without this report no payment should be made to anyone plying a lifeboat.

The other option is to check the rescuers credentials with the office of the Attorney General. In general one should be cautious about the personal approach like a handwritten note popping out of the mailbox or under the front door. The language will be gushing and flowery about help being at your doorstep. The tone is that only your interest is on their minds!

The best thing is to directly approach the lender. Negotiate with the mortgage company.

A legal document should never be signed under duress. Especially be cautious about trusting smart talkers and signing away your property rights. Before putting your name on the dotted line consult a family member/friend, lawyer or financial expert. Give them time to scrutinize the paper.

If the feeling persists that the ‘rescue’ team has duped the victim, do not hesitate or delay but immediately contact BBB or any recognized government body. The authorities are alert about these roving wolves baring fangs underneath granny’s bonnet.

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