Archive for the ‘Foreclosure’ Category

Moratoriums are being imposed on foreclosures by the majority of the mortgage giants and this will keep many unusually busy.

Edmond Ogarro is one of the twelve mediation specialists who has been hired by the legislature. His task will be to open communications between lenders and borrowers in lower Fairfield County. It is hoped that this will help to slow down the rush of foreclosures plaguing the country. Ogarro said that on an average he has been tackling about eight or ten foreclosure related cases per day.
M. Jodi Rell, the Republican Governor has proposed a six-month hold on foreclosures. He wants to take the help of Ogarro for purposes of negotiation. There are suggestions that more mediators should be appointed although budget deficits are causing many governments to cut down on their work schedules.
Rell has put forth her proposal but it is not sure when it will become law with the approval of the General Assembly. According to the current law that has been passed last May and expires in June 2010, the house owners facing foreclosure can ask for mediation from in the judicial districts of the state. Lenders will have to comply with such requests. Rell wants to go a step further and have foreclosures halted for a period of two months to allow for talks. All this will entail an increase in work pressure for Ogarro and his eleven other colleagues.
Robert Palmer is the coordinator of the foreclosure mediation programme. He said of the 5,513 foreclosure cases that are eligible for reconsideration, borrowers of only 1,553 have sought for it. From these till 31st October, 680 cases have been completed resulting in little more than half the occupants continuing to stay in their houses.
Ogarro is a busy person dividing his time between the two superior courts of Stamford and Danbury. His pressure of work is increasing with requests for mediation coming from a quarter of 290 house owners in lower Fairfield County, eligible for mortgage negotiation.
If the proposal of Rell sees the light of day then all the 290 will come forward for help and this will really create a problem. Undoubtedly this will be so because according to the new law the first meeting must be held within ten days from the foreclosure victim requesting for such help. Three or four sessions are usually required for each case. Thus hiring more staff will become absolutely necessary.

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Lori Swanson, the Attorney General of Minnesota wants mediation in foreclosure matters compulsory. She called for the state to make it mandatory for the banks to open talks with house owners before foreclosing on them. Swanson added that her department has been successful to some extent with voluntary mediation in some cases She was applauded by many who said that their houses and homes had been saved only because of the intervention of her office.

Swanson went on to say that the difficulty is with the complexities of modern mortgages. This is making sorting out matters bothersome. Her suggestion is that the state should transfer some of that responsibility to the lenders. She said, “If you’re going to take the home away from people and use the foreclosure process, you gotta show up at the mediation and negotiate in good faith. And that you, the lender, are going to have to figure out what that means. If you truly don’t own it, you’re going to have to get authority from someone, whether it’s the secondary investors or somebody calling the shots.”
Of those who had benefited was Lisa Hemberger a hairstylist residing at Cottage Grove. She said that voluntary mediation had helped her to avoid foreclosure and continue to stay in her home. Life had become difficult for her when her husband lost his job. Without help from the office of the Attorney General she had been unable, on her own, to contact the lender and fell behind in her mortgage dues. Each time she called the lender a different person would respond who did not know anything. They would transfer the call from one to another in an endless meaningless chain. For an ordinary person it is well nigh impossible to break through this impasse.
Swanson said that Minnesota is in urgent need of initiating a negotiating process following the outlines of Farmer-Lender Mediation Act that had assisted about 14,000 farmers during a crisis that broke twenty years ago. She bemoaned that today nearly three times more that number are facing similar money problems with the situation set to worsen in the following year.
Alarmed at the foreclosure related financial crisis the Bush administration as well as local and state governments have been taking many measures since the last year but so far it has not been able to make a dent in the rush of foreclosed houses entering the market and destabilizing the economy.

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Religious leaders and community workers from Bay State are appealing to the federal government to help contain foreclosures. They will be speaking to officials of President-elect Obama’s transitional team, the treasury officials and some members of the Congress to ask for more aggressive modification of loans so as to stem the increasing pace of foreclosures.

The sub-prime mortgage is largely blamed for the setting in of the foreclosure crisis. Loans were given willy-nilly to practically anybody with a pulse without checking on credit history and repayment capacity. This led to the market being flooded with easy mortgage money and there was frenetic housing activity. New areas began to develop as the hunger for housing grew. The price of property began to zoom. Investors and speculators swooped down, greedy for quick profits. Houses were sold even before the ink dried on the first sale. But the economy could not sustain this pressure. The fall began leading to countless foreclosures. This in turn led to a depression in the real estate market that depressed the housing industry. Unemployment became rampant as foreclosures led to a snow balling effect. Socio economic problems cropped up related to vacant foreclosed houses.

At the grass root level leaders and groups began to work out ways and means to check the menace. The talks are part of this movement to persuade the Treasury and its secretary, Henry Paulson, to opt for more loan modification programmes. The FDIC has started on such measures but on a very limited scale, said Lewis Finfer of Massachusetts Communities Action Network or MCAN. Others participating in the talks are Brockton Interfaith Community, United Interfaith Action of Southeastern Massachusetts and Essex County Community Organization.

Finfer said, “There are tens of thousands of homeowners in Massachusetts facing foreclosure now because there has been no solution to this. There are tens of thousands more that will go into foreclosure in the coming year. Something more has to be done in this area.”

As an example that is held up the successful measures taken by FDIC for the foreclosure victims of IndyMac, after the former took over the bank. This step is being cited as a gold standard for solving the foreclosure crisis. By it the mortgage loan has been modified and lowered to be 31% of the monthly income of the borrower. To expand the plan nationwide the cost would be $25 billion. Paulson is reluctant to comply so far keeping in view the losses to be incurred by lenders.

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Well – to understand this clearly, the basics first. Foreclosure is the process involved in home buying with financing by a mortgage loan. Banks and other mortgage lending institutions extend home loans to the barrowers, after scrutinizing the personal particulars of the barrower such as the financial status, income potential, credit history and importantly the repaying capacity of the home loan. A legal contract (mortgage deed) is made out between the mortgage lender and the borrower, before actually handing over the money of the home loan.

It consists of all the terms and conditions of repayment of the home loan. Generally home loans are offered on 15 to 30 years of repayment period, with principal and interest specified to be repaid by monthly repayment installments. The mortgage lender has to get back the home loan with interest thereon in full during this period. So as a safeguard, the lender reserves the right to seize and sell the said housing property, in case of default in repayment of monthly installments. In such an eventuality, the lender forecloses the mortgage loan and initiates action to confiscate the said property and sell off the same by public auction. This procedure is called “Foreclosure” process.

The foreclosure process is governed by the Foreclosure Laws enacted by every State of the U.S. country. Accordingly the foreclosure process varies as Judicial Foreclosure and Non-judicial Foreclosure. In Judicial Foreclosure process, the lender has to file a law suit against the barrower, before a Court of Law and obtain a Court Order to dispose off the property by Foreclosure Auction.

The Foreclosure Law stipulates the procedures for issuing a Notice of Default by the lender to the borrower; giving sufficient time to the borrower to respond to the notice; conducting of a trial before the Court to prove the financial transactions of home loan and the default by the barrower through documentary evidence and finally fixing up a date for public auction of the said property in the Court premises. As can be seen, this is a long drawn process consuming a lot of time.

The Non-judicial foreclosure process is simple and fast in that by inserting a clause in the mortgage deed, the lender can quicken the process of seizing and selling off the property. A third party sale known as “Trustee Sale” of the property is also public auction to sell the property to the highest bidder, but the “Trustee” conducting the sale will be an individual or institution already specified in the mortgage deed. The Notice of default is registered at the County Recorder’s Office of the county, where the property is located.

The entire Foreclosure process takes place in three stages. From the date of Notice of Default to the date of actual foreclosure public auction, the property is said to be lying under pre-foreclosure period. The second stage is the actual foreclosure by public auction of the property, when any one can bid for buying. The third stage is post-foreclosure - if the property is not bid for the minimum price and so taken re-possession by the lender initiating the foreclosure process.

From the buyer’s angle for home buying from foreclosure property listings, they can save sizeable money on the sale price of these distressed properties. Of all the three stages, pre-foreclosure offers an edge for good bargain directly negotiating with the distressed home owner of the said property. Until such time the property is sold off by public auction, the ownership rests with the home owner. Therefore the distressed home owner will be too willing to short-sell the property to the buyer, with a very good discount, as the foreclosure will put a black mark in their credit history and by selling of the property directly, the pain of foreclosure is totally avoided.

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One of the easiest ways to buy Nebraska foreclosures for sale is when the property becomes and REO, this means “Real Estate Owned”. This situation arises when a bank or lender take back a property from a home owner after they have defaulted on the mortgage re-payments. The lender wants to cut its losses a quickly as possible, so it then on-sells the property.

The best thing about purchasing an REO property is the fact that the lender or bank is generally the major lien holder so all other liens on the title are wiped out and the property is “ready to go”. The bank is not in the real estate business, but they do however want to get as much money as they possibly can for the property. Some lenders and banks even want to sell properties for a profit, however it is still possible for the investor to find bargains, even in the REO market.

The reason why REO are the easiest properties to handle is because they have a clear title. This means that all back taxes, liens and judgments have been cleared and the mortgage has been foreclosed. It is also probable that the new owner, being the bank or lender, has repaired the property to acceptable standards, so there is very little work left for the investor to do before re-selling the property. If these repairs have not taken place, it is also possible for the investor to acquire a further discount on the Nebraska foreclosures for sale.

There are some risks involved, as there are with most forms of investment. But generally speaking rewards follow a risk. Even if the rewards are on the low side, it is still a way to make good profits. The average savings might only be between 5 – 15%, but the investor never knows, they could even make as much as 25%. It is certainly of benefit to know their business, and generally speaking in Nebraska foreclosures for sale, the more you know, the more money you can make. Every Nebraska foreclosure for sale opportunity has both risks and rewards, but as long as the investor has done his homework, he can be pretty sure he will make a good profit.

You always hear new investors in the property market saying that they want to purchase Nebraska foreclosures for sale from the bank. No one actually says they want to purchase them from a savings and loan or credit union. But in actual fact, Nebraska foreclosures for sale can be obtained from any of these institutions. They are all lenders who have foreclosure properties on their books. Even the government owns foreclosed properties; it is just a case of finding out who owns the property before trying to invest in it. It is understandable that investors believe it is only banks that own Nebraska foreclosures for sale, as it is the bank that most people generally lend money from.

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The mortgage companies Fannie Mae, Freddie Mac and Citigroup Inc. are planning to halt foreclosures by cutting down on house loan payments. This will benefit thousands of troubled borrowers. Similar moves are being mulled over by other jumbo banks.

Fannie Mae and Freddie Mac will be cutting down both on the principal and interest of some loans. The terms of some others will be extended according to Federal Housing Finance Agency. The latter took over the controls of Fannie Mae and Freddie Mac last September.

The mortgage servicing companies are being pressurized by the Congress to work with the borrowers. The third quarter reports on foreclosures were alarming. Last month Morgan Chase said that it would put on hold foreclosures on few loans while it sorted out the problem of how to make payments easier of mortgages worth $110 billion that were troubling borrowers. Bank of America claimed that it had modified 226,000 loans in this current year.

Joel Naroff of Naroff Economic Advisors Inc. of Holland, Pennsylvania said, “If housing doesn’t get stabilized, it’s really going to continue to bleed the economy.” Naroff has been one of the most accurate forecasters.

Another jumbo bank, Citigroup, will reach out in the next six months to nearly 500,000 house owners having trouble with mortgages worth $20 billion. Citigroup claimed that they had assisted nearly 370,000 foreclosure victims struggling with mortgages worth $35 billion from 2007. The main aim of the bank is to see that people stay in their houses. For six consecutive quarters Citigroup has suffered losses on mortgage holdings. It has modified over 120,000 loans. This includes granting of extension to some in the first six months of 2008. Citigroup is concentrating mainly on borrowers from areas that are “likely to face extreme economic distress.” Citigroup will be targeting those owners who live in their mortgaged houses and have the income to run the new modified mortgages. Those who fulfill these conditions will be allowed a grace period from foreclosures.

The stocks of all three – Fannie Mae, Freddie Mac and Citigroup had fallen sharply in the New York Stock Exchange. According to RealtyTrac there were 765,558 foreclosures this third quarter of 2008 – the highest since 2005. Real estate prices tumbled by 20% in 20 metropolitan areas. The price of previously occupied houses in August was 32% less than the peak it had reached in September 2005.

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Coral Springs has been given a chance by the US Department of Housing and Urban development to deal with foreclosures by entering the housing business. The department has given Coral Springs $3,378,142 to deal with foreclosed homes. There are five ways of using the funds. These include purchase and rehabilitation of the foreclosed homes.

The idea has been applauded by Mayor Scott Brook. Brook feels that if foreclosed homes are purchased selectively, although maintenance will require money, ultimately the market will turn around. “I’m OK with the city being in the housing business,” he said. “I like the idea of selective purchase of abandoned homes. We will have to spend some money to maintain them, but the market will turn around. ”

However, Brook’s colleagues beg to differ. They feel that it is not for the city to enter into the housing and mortgage business. According to city Manager Mike Levinson, buyers will not be found for these foreclosed homes purchased by the City and it will mean extra expenses for the city. “We are not a housing authority; we are not in that business,” said Levinson. “We can acquire and renovate foreclosed homes, but where are the buyers going to come from? There isn’t a market out there. Levinsons’ views are shared by Vice Mayor Vince Boccard. Boccard estimates atleast another two years for the housing market to start turning. Commissioner Roy Gold also feels that it is beyond the scope of the city to enter into the mortgage business and act as landlords. Yet Roy Gold is reluctant to let $3.3 million pass by. He suggests examining all possibilities of getting the money without financially endangering Coral Springs.

The programme will be discussed by the commission at its forthcoming meeting in mid-November. Public input will be sought after all the details are given, according to Erdal Donmez, Assistant City Manager.

The money can also be used to purchase and develop foreclosed homes and properties, demolish structures and redevelop vacant or demolished properties. Another way of using the funds is to establish a land bank. This will be a public authority, which will hold, foreclosed property and manage it.

According to Donmez, despite foreclosures, the city is not acutely affected. The provision for demolition of structures is not applicable for Coral Springs, says Donmez. He says that the city already has rehabilitation and purchase assistance for foreclosure victims.

1st December is the deadline, which has been set for applying the programme.

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This is a good question. The answer is YES, but you are advised against doing so on both ethical and legal grounds.

See the Foreclosure Laws are different from State to State in the US, governing the procedures to be followed by the mortgage lenders, in proceeding with the foreclosure process to retrieve their money. There are two methods of foreclosure process – Judicial and Non-judicial. In the first case it takes a lot of time to finish the foreclosure process as it has to be gone through a Court of Law. Filing a Law suit against the defaulted home owner, issuing legal notice of Lispendens (matter pending in a Court); conducting the trial to prove default; getting a Court order to dispose off the property through public auction in the Court premises and finally selling the property to the highest bidder – all these will undoubtedly prolong the period of foreclosure. At times it can take more than a year to finalize the foreclosure and sell or take re-possession of the property.

In the Non-judicial foreclosure process, the foreclosure period is relatively less. By a clause in the home loan mortgage deed, the lender can hasten the “Trustee Sale” of public auction to the highest bidder or take re-possession of the property. At best this can take only a maximum of 4 to 5 months. (Refer ForeclosureListings.com).

In both the cases, it is mandatory for the mortgage lender to send a Notice of Default to the home owner. From the moment the Notice is served, the foreclosure of the property is deemed to have commenced. So the only difference is in the period of finalizing the sale by foreclosure public auction, in accordance with the Law of the State in which the property is situated. There is no denying the concerned property is under foreclosure process.

That said the right of ownership lies with the home owner, till the property is sold by foreclosure public auction. Also the right of occupancy of the house by the home owner continues for a reasonable period on humanitarian grounds and principles of natural justice. But renting out the said property is totally a different matter.

Having come to understand that the house is under foreclosure and is going to be forfeited once the public auction is completed, the home owner entering into a rental agreement faces two violations – ethical and legal. Although there is no law to regulate the moral character of a landlord or there is no ethical code of conduct stipulated as in the case of doctors, lawyers, brokers or other professionals, still it is not strictly ethical to conceal the fact of foreclosure to the tenants. The tenants will face eviction by the mortgage lenders after foreclosure and the attendant ordeals. So the ethical aspect is left to the landlord’s conscience.

But the legal aspect is surely punishable. Once the landlord knows that a Default Notice has already been served and the house is lying under foreclosure process, it amounts to fraud legally to rent out the property and is therefore punishable.

However there is a breather to this meddle as well. If your house is in a State permitting only Judicial foreclosure and you reasonably expect the final eviction of the tenant will not materialize atleast for a year from now, you can rent your house on month-to-month rental agreement, surely placing every detail about the prospect of foreclosure to the tenants before leasing. This is calculated risk any one can take, if the tenants and landlords so agree.

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