Archive for the ‘Foreclosure Homes’ Category

Foreclosures and delinquencies are now attacking prime mortgage borrowers. Across the nation 3.07% of all the prime mortgages had entered the dreaded foreclosure zone or were late by 60 days during the second quarter of 2008. The previous record of 1.97% of 1985 has been broken by leaps and bounds according to Mortgage Bankers Association.

Judy Jones is one of the sufferers who has lost the equity on her house in Murrieta. But life was not too bumpy considering the security of her government job. The mortgage contract of her house was for 30 years and the interest was 5.875%. It did not seem she would be affected like her other neighbours in Inland Empire. But fate decreed otherwise. Corona City, her employer decided to do away with 112 positions including the post of Jones as a code-enforcer. At 61 years Jones joined the ranks of borrowers who were once considered solid but were now facing foreclosure.
Jones was disconsolate and said, “Every week at church, somebody else is out of work. I’ve been a homeowner a long time – the last ten years as a single mother – and I’ve never missed a payment. Now look at me. And it could be you – any middle-class person who goes to work today could be walking out the door of a foreclosed house in a couple of months.”
Jones’ fear is not without cause. Although sub-prime mortgages have been the prime cause of foreclosures, today prime borrowers are tumbling into the soup. These people had good credit records and had properly documented their records when they opted for conventional straightforward mortgages.
In California the unemployment rate is the highest at 8% and the price of property has gone down by a whopping 40% from their peak. It continues to fall. 4.15% of prime loans are seriously at risk from foreclosures. This has far exceeded the previous highest mark of 2.6% reached during the cloudy years of the 80’s and 90’s. Since the second quarter the rush of prime mortgages into the risky foreclosure zone has worsened.
The situation is likely to worsen with more foreclosed and bank repossessed houses entering the general real estate market. It will push the country into a deeper recession and financial crisis. Stephen C. Levy of Center for the Continuing Study of the California Economy said, “We should be really worried.” Previously one could sell the house and get out of a sticky wicket but now that option is no longer there.

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Ruby is just one of the many dogs that has been abandoned because her owners have lost their houses to foreclosure. This corgi mix dog named Ruby is seven years old. She is being taken care of by Operation Kindness. Most of those that had found temporary lodgings under Operation Kindness have been adopted. But Ruby continues to remain in a state of limbo. Foreclosures had a cruel hand in Ruby’s fate – and for no fault of the animal.

In Dallas foreclosure numbers have been rising and so too incidents of abandoned pets. Each day the situation is worsening causing all round concern.

Ruby is a beautiful sleek brown critter that was lucky enough to find a place in The Dallas Morning News. Sherwin Daryani of Operation Kindness that since then many have made inquiries about Ruby. A lady from West Fort Worth showed special interest but nobody has since taken her to their homes.

On an average Operation Kindness accepts about 18 animals at the end of each week. 26 pets have found adopted homes, including some who have been with the shelter for nearly 6 months. Daryani is hopeful that something will materialize for Ruby since more people have been knocking and asking.

Operation Shelter is the address for all pets that are forsaken by their owners. Foreclosure victims who did not have homes of their own to stay in had surrendered about one fourth of those in the shelter. The staff of Operation Kindness notes that since the onset of the foreclosure crisis more pets are being left behind.

Another public shelter for stray animals is Dallas Animal Services. Tyron McGill is its manager. He says that owners reeling under the foreclosure attack leave each day one or two pets to fend for themselves. There are many pets that are not even taken to the shelters but left either chained in empty houses or in the streets. Although the figure of abandoned foreclosure pets has increased the number of those wanting to adopt have gone down. The general economic slump is telling on the capability of people. Officially it remains a question mark whether foreclosures are responsible for the rise in abandoned pets.

The sad story is that if the shelters become overcrowded with lost pets then the authorities will have no other alternative but to resort to mercy killing or euthanasia.

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An employer advocacy group gives a picture in Los Angeles region that presents an irony – on the one side are countless foreclosed empty houses and on the other lack of housing for workers. It is taking out the economic advantage of the area and thus adding to its economic woes.

Recently the Los Angeles Business Council reported that with limited housing choice the region is losing out its economic edge. Public transport on the other hand is insufficient and commuting for long distances is telling on the efficiency of qualified working force.

From 1990 to 2007 there was an increase of 1.4 million in the number of residents. But only 195,000 houses had been built during this time period. The high cost of living is lamentable. It continues even on the heels of increasing foreclosures and tumbling real estate market. This is squeezing out the lower and middle-income group of residents. Those who earned on an average $53,000 could manage to buy less than 11% of the houses that were in the market during the first three months of the current year of 2008.

In 2007 about 49% of the families in Santa Clarita spent about more than 30% of their income on paying mortgage dues, says the study. In Palmdale the figure was about 45%. In Glendale it was slightly lower at 44.5%. This proportion could not be maintained when inflation joined hands with foreclosures. The inevitable happened. For the sake of sheer survival the people began to fail in paying mortgages and surrendered to foreclosures.

The high living costs has been driving the younger people aged between 25 to 34 to leave the region. From 1990 to 2005 that group went down by 19%. There is an urgent need for housing especially in Palmdale. Within 20 years this demand has to be met. Carson and Paramount are places that will generate employment.

There is a suggestion that ½% sales tax should to utilized form executing mass transport projects like sub-way, light rail etc. It is will give relief to the lack of housing in the immediate locality. This however is not the ultimate solution. The best would be for private employers to make capital out of the vacant foreclosed houses and refurbish these to ease the housing problem. If not the exodus of the young and the blight of foreclosed neighbourhoods will deteriorate the quality of life in Los Angeles.

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The two jumbo mortgage bodies Fannie Mae and Freddie Mac are being targets of the foreclosure blame game by many. To save the two units, that hold nearly half the mortgages of USA, the federal government has stepped in.

In the middle of the raging foreclosure crisis the taking over of Fannie and Freddie has placed a lot of responsibility on the new regulator. On the one hand foreclosures have to be contained and on the other hand remedial measures have to be taken to rejuvenate the sick housing market. All this juggling has to be done taking into account that the money belongs to the taxpayers.

The Federal Finance Agency has taken over the reins of these two mortgage companies that guarantee house loans worth about $5 trillion. The agency made its debut last summer. It now has direct control in supervising the activities of the two companies. The board of directors of the companies have been done away with and replaced by this agency.

The FHFA has the right to deflate the financial remuneration of the outgoing executives and fix the salaries of the new entrants. The new incumbents would be getting considerably less pay packets.

Although the government has downed shutters on the powerful lobbying operations of Fannie Mae and Freddie Mac there still is enough influence floating around in this foreclosure weather to bend the agencies actions as regards the role of the duo in the foreclosure market. In all probability the realtors, mortgage brokers and developers will expect rolling back of fees and easing of the lending formalities to make up for the losses suffered due to defaults and foreclosures. JerryHoward of National Association of Home Builders feels “the faster and more energetically (Fannie and Freddie) are in the game, the faster the anticipated bottom of the housing market can be reached.” His argument is that the more they tighten “the more pain is felt through the entire industry.” But reacting to the foreclosure crisis Fannie and Freddie have increased the fees for borrowers who do not have high credit marks and are simultaneously asking for larger down payments. This is going to stifle demand for housing and hold back sale of houses. On the other hand if the agency allows the lending standards to fall too back then there is the risk of another financial crisis. So it is really tight rope walking for FHFA while foreclosure clouds continue to gather force.

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Foreclosures are leaving behind a trail of crime and rot in Minneapolis. Fear is stalking the neighbourhoods. North Minneapolis is particularly affected by these foreclosed units.

Paul Halvorson surveyed localities in north Minneapolis and listed more than 30 abandoned foreclosed houses in a 14-block area. It was during the last three months that numbers suddenly shot up. It doubled in many places. Halverson of Third Way Network is engaged in a non-profit organization that deals with affordable housing. He notes that many of the houses lining the streets are strong and well looked after. But there are dozens where water supply has been cut off and condemnation notice stuck on the main doors. It is mainly foreclosures that have caused the occupants to walk away after locking doors. This has not prevented from vagrants, drug peddlers and prostitutes from breaking in. There are clear signs of a door having been kicked in. The notice saying that occupancy is not permitted has blatantly been ignored.

The increasing foreclosure crisis has become a curse for neighbourhoods. The deserted units attract the vandals and thieves who salvage whatever they can of fittings and fixtures. The social fabric is slowly but surely cracking exposing the law of the jungle. As the neighbourhood conditions fall the crime rate goes up. Drug dealers hang around. Families keep indoors cut off from the wild outside. Crime reaches such proportions that it hinders rehabilitation work. Halvorson says, “The copper gets removed from the plumbing” as vandalism take over. Washers, dryers, refrigerators and stoves are looted openly. It makes it difficult to rent out the house in the near future when legalities have been sorted out.

The foreclosure crisis is causing many lenders to tighten their loan sanctions. This has created another problem of new houses remaining unsold. Lenders are turning away potential qualified buyers. A dozen new houses in north Minneapolis waits for buyers. Perhaps the pendulum is swinging too far from too easy loans to too difficult loans. This bodes ill for the real estate market and the health of the locality.

The foreclosure crisis has at last given a shake to the federal regulators and the politicians. They are putting pressure on the banks to help struggling borrowers by reducing interest, waiving the principal and extending grace periods. In Minnesota a bridge loan is another alternative launched by Minnesota Housing to help foreclosure victims.

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Greater Cincinnati and Northern Kentucky are under siege being overwhelmed with hundreds of foreclosed units. The cities are being forced to bear costs of maintaining or demolishing these foreclosed properties. Banks from outside the state, who are the legal owners, have abandoned the houses.
Cincinnati has boarded up some houses and ordered the demolishing of others. Hundreds of other houses have been notified about violation of building codes. The owners of these foreclosed units are banks. They owe the city about $201,237 pertaining to fees for inspection, barricading and demolishing. Courts summon them for these violations related to the foreclosure actions taken but the banks hardly ever respond. As a result the municipalities are hard pressed to oversee the work of trimming overgrown grasses, winterizing and boarding up deserted houses from vagrants, drug peddlers and prostitutes. Abandoned houses bring down the market prices of property in the entire neighbourhood.
For the police, fire fighters and building inspectors the ordeal of these vacant foreclosed houses has become tiresome and expensive – to say the least.
In Spring Grove Village the police caught 40-year-old Christopher Hunley just has he was breaking into an empty house. Hunley was after the copper pipes and had to be charged for trespassing with a motive to vandalize and steal. The problem arose when the accusers could not find the owner to testify that Hunley did not have a permission to enter the premises. From the Hamilton County records Fannie Mae was the owner. But the latter objected to it saying that this was an error. The prosecutors finally tracked down Washington Mutual as the bonafide owners but the bank could not arrange for any representative to go down to Cincinnati to testify. Finally with time running out and Hunley in jail the prosecutors had no alternative but to accuse of misdemeanor and set him free!
Fannie Mae is among the worst offending lenders who have foreclosed on borrowers, evicted occupants and then let the property stand abandoned and derelict. The others are Deutsche Bank of Frankfurt and the ABN and Amro group of banks from the Netherlands. The banks state that they are doing their best to look after their foreclosed houses. Gabrielle Harrison of Fannie Mae said, “We are not perfect” and it may well happen that it causes them to overlook one property here and another there. Meanwhile indirectly the city pays the price in an indirect way for the blight of foreclosures.

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Foreclosures need not necessarily be inevitable. There are many escape avenues and options before the patient and persevering borrowing who is determined not to give up the house. The important fact is time. The earlier the action the better will be the chances of getting a reprieve, says Darren Hamm of Neighborhood Hosing Services, Greater Cleveland.

Attorney Timothy Kozlowski and Hamm participated in a seminar focusing on foreclosures at Medina District Library. Thomas Russell, of the planner services of Medina County, joined them. Kozlowski explaining the foreclosure procedure to 50 people attending the conference, stressed the importance of taking prompt measures. He handed out a sheet to all with the headlines “A typical mortgage foreclosure lawsuit time line can play out in less than 180 days! Do not wait! Act now to save your home.”

As soon as the borrower fails to make a monthly mortgage payment the best thing is to contact the lender and or the local counseling group like Neighborhood Housing Services. The MERS or Mortgage Electronic Registration System complicates the matter by drawing in more players – the borrower, the mortgage holder, the lender, the guarantors and the insurance firm.

The securitization process is another hurdle. By it many mortgages had been made into packets and sold to distant investors. These had passed through Federal National Mortgage Association of Fannie Mae and Federal Home Loan Mortgage Corporation or Freddie Mac.

When the borrower fails to make payments for 90 days the lender can proceed with foreclosure with the help of the court.

Taking all these into consideration the advice is not to delay. Paperwork should not be ignored. Help must be sought. The best port of call is HUD certified counselor. Talk. The mantra is talk to the banker, talk to the attorney, talk to the mortgage servicer and ask to be linked on to the Loss Mitigation department and specifically not the Loss and Foreclosure Department. After all the aim is to prevent or bring down the loss both parties incur in the case of foreclosures. The lenders will respond. Foreclosures spell loss for them also.

The courts too are lenient towards mediation. Help may be taken of the clause pertaining to Leave to Plead that will allow for 28 days extra grace to thrash out the matter.

The borrower may make a counter allegation of fraud or negligence against the lender. In the foreclosure atmosphere today the dominating mood is that of mediation from all sides.

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Making records 1.2 million houses have been engulfed by a fresh surge of foreclosures during the second quarter of 2008. It accounts for 2.8% of all mortgage loans. It is a spike from 1.4% of the previous year according to Mortgage Bankers Association. Delinquency rates are continuing to soar pointing to grim days ahead. The MBA has been keeping data on foreclosure and delinquency since 1979.

The MBA has in its kitty 45-million house mortgage contracts. Of these 490,000 are new entries into the foreclosure zone. In the previous quarter the number was 448,000 marking an increase of 9% in the recent quarter. It is the 7th running quarter of foreclosure increases.

The delinquency numbers are also high. A mortgage loan becomes delinquent when at least one payment has been missed. It points towards the inevitable foreclosure. During the first six months of this year 2.9 million house owners or 6.4% were lagging behind in their mortgage payments. This is an increase of 25% from the previous year.

The national numbers are affected mainly by the figures rolling in from the hard hit states like California, Florida, Nevada, and Ohio etc. The position is worsening also in Texas, Massachusetts and Maryland as well. California and Florida together were responsible for 39% of all the foreclosures that began during the second quarter. The numbers in Rhode Island and Indiana too were much higher than the national average.

The sub-prime mortgages continue to sink into foreclosure. It accounts of only about 6% of all the mortgages but is responsible for 36% of all the new foreclosures of the second quarter. It meant 6.65 of the sub-prime (ARM) slipped into foreclosure during these months. It is 20 times more than the number of prime mortgages that have tripped.

Statistics show that the foreclosure crisis has “long since stopped being just about sub-prime” said Mike Larson of Weiss Research. Some of the delinquencies from prime mortgages increased to3.9% from 3.7% during the first three months of this year and 2.7% from the previous year during the same months. He said, “This is the highest reading yet.” The fear is that even if the sub-prime stabilizes it will be overtaken by the prime mortgages keeping the general foreclosure picture the same. The problem relates to the general economy and a much broader scenario.

The only ray of hope is that the fall in the price of houses has paused recently.

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