Archive for the ‘Foreclosure Victims’ Category

Jacqueline Scott is one of the many who have benefited from Hope America. This Ypsilanti based agency spells hope for many foreclosure victims. In 2006 Scott came to know that the unit where she was working would soon shut down. She promptly contacted her mortgage lender apprising the lending firm of her dilemma but they said that until she fell back three months in a row they could do nothing. Scott somehow pulled along with her mortgage payments for a year even after loss of her job. However she could not find another job during this time. Slowly she began to lag behind but little help came from the lenders – especially since it was sold to another bigger company. Finally she managed to get a job at less pay. But that did not convince the lenders that she would be able to carry on with the mortgage even with the help of her live-in fiancé. Scott bemoaned, “It’s almost like they set the system up for you to fail.”

The redemption period of Scott was scheduled to expire on 1st May 2008. In the beginning of the year she came to hear about Hope America a non-profit group based in Ypsilanti that lends a helping hand to those in trouble in Washtenaw County. The help covered a wide range – food, financial advice as well as foreclosure prevention. Hitherto Scott had gone through all the routine of filling up forms and processing the appeal on her own but it had come to naught. But when Hope America stepped in, suddenly the lenders were willing to talk.

Hope America debuted in 2005 and relies entirely on donations. It is a small body with two staff members, a Board of Directors and about 80 volunteers according to the Eleanor Walker, the Executive Director. Hope America organizes financial workshops and distributes food and clothing four times a year. Till 2007 in Washtenaw County 5,700 have benefited from their activities.

In December 2007 the foreclosure issue was included in their itinerary. This was in response to a rising number of foreclosures in the area surrounding Michigan. It offers financial advice and foreclosure prevention classes apart from interacting with individuals for specific support. So far about 50 to 75 foreclosure victims have been helped. They have avoided foreclosure by negotiations with lenders conducted by Hope America on their behalf. Few have lost out but that was because they sought help too late.

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Foreclosure rescue companies are duping victims with teasing signboards promising purchase of house with cash or refinancing the loan with the bonus of a 7 day vacation! They take a fee ranging from $1,000 to $2,500 promising the sky.

The line of approach is the same everywhere with variations from one case to another. The scammers promise to open communication lines with the lenders and arbitrate as regards terms. The most dangerous is the deeding of the house to a third party assuring the borrowers that apparently they will get a breather to get back on their feet. Unfortunately in nine cases out of ten the medicines have proved to be more dangerous than the disease itself. On the one hand foreclosures gallop ahead and on the other following its trail are the vultures – the scammers. It has become a thriving business.

Many states have taken the lead in helping the borrowers to be warned of these dangerous elements. So far 18 states have taken legal measures to prevent foreclosure rescue scams by hemming in the practice with regulations. Six states – Idaho, Maine, Nebraska, Oregon, Virginia as well as Washington enacted the law this year. Florida is set to pass a similar law. The National Conference of State Legislators released this information.

The steps taken will allow the house owners few days time to cancel contracts made with these dubious companies without incurring any penalty. If the house is sold then 80% to 82% of the proceeds has to be given to the original owners. All this will require a written contract. Patricia Lantz (D), Washington State Rep, said that the main purpose is to le let the word circulate that these sort of predators picking the bones of hapless foreclosure victims will not be tolerated. She strongly added, “This is a deterrent to the worst of the worst.”

In 2007 Maryland already had a similar law targeting the scammers but this year in the last session a tougher stand has been taken banning any form of transfer of deed altogether. Washington D.C. and Massachusetts have such strict laws. The Bay State put a full stop permanently on foreclosure rescue scams with an eye to profits through an attorney general’s regulation. Most of the above board foreclosure rescue operations come from non-profit groups and do not normally charge fees. The usual procedure is for house owners seeking them out and not the reverse. On the other hand scammers locate the victims by combing through public records and the like.

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Metro bus driver Eduardo Montesiro was one of the many house owners who crowded in to attend the Watsonville housing symposium held to help foreclosure victims last Saturday. It was organized by credit and mortgage specialists. Attendance was free.

Eduardo somehow slipped through the foreclosure net that trapped about 250 house owners in Santa Cruz County last year. In Watsonville he manages two mortgages. It is a balancing trick as he juggles to keep his income feeding rising payments while looking after his spouse and two children. Unfortunately he feels that by the end of the year he will have to surrender. The future looks bleak.

Eduardo was one of the participants at the workshop that was conducted both in Spanish and English. The aim was to help the borrowers to be realistic about their income-expense ratio and face up to the fact about keeping up with their mortgages.

The Latino families have been the worst affected by the foreclosure tornado raging through California. At the root are the sub-prime adjustable rate mortgages that were peddled to vulnerable borrowers. Today it has hit the general economic health of the region. The Hispanics are at the receiving end especially because of language problems, scant knowledge about mortgage implications and adverse changes in income patterns.

Owning a house is part of the Latino culture. Nobody understands it better than Maria Enomoto a consumer credit counselor. She was one of the prime movers of the workshop. A house translates into success. She has worked with many families ranging from professionals to field workers. She notes that the majority spend all their income battling with mortgage payments – there is very little left over for survival essentials like groceries or gas. So they dig into credit cards – something which cannot be sustained. The agency Enomoto works in, will start a new office in Watsonville office at 240 Westgate, Suite 240. She told the foreclosure victims that the first thing they should do is to be realistic and evaluate their income with their expenses.

On an average the first time Latino buyer is 24 years old , while a white buyer will not indulge in a house until the person is 32. The former does not have any idea about the loan implications and complications. The mortgage company should be contacted for loan modifications but this cannot be done unless the party is able to pull along.

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Oakdale Neighbours is a group working in tandem with Macatawa Bank. It has organized a twelve week course for those who are facing foreclosures. The Oakdale area is losing houses and house owners to foreclosures much faster than any other city A recent survey conducted by Community Research Institute of Grand Valley State University show that Oakdale together with two adjacent regions in Grand Rapids had foreclosure rates hovering around 16.2% during the years 2004 to 2007. To tackle the menace the group is joining up with Macatawa Bank to initiate a 12 week course dealing with finance. It has been termed The Money Map. The free sessions scheduled to operate from 20th February will include in its curriculum many facets of personal money matters like budgeting, borrowing, banking, purchasing money to buy a house, dangers of predatory lending and the like. Macatawa Bank is sending out invitations to the participants to open savings account by offering to match savings by 50% - going up to $150. Tom Bulten is the executive director of Oakdale Neighbours. He explains that by joining the course the participants will get first hand knowledge about how to budget income with expenses as well as get to know about the financial system. This will be their armour in times of financial crisis.

One strong view about the causes of the foreclosure crisis is that the borrowers who took the risky sub-prime loans did not know and were not aware of the implications of such deals. The lenders took advantage of this ignorance and peddled the loans to these gullible borrowers. Now that foreclosures are knocking at their door it is ignorance that is again letting them down. They do not know how to face the foreclosure tornado and plug the leaks. Organizations like Oakdale Neighbours are trying to fill the gap and make the people more aware – more financially literate. Statistics say that the foreclosures are most rampant in localities where the residents have modest income and are not fluent in English. Senior citizens and the handicapped too have been easy victims. Foreclosures are vitiating neighbourhoods by spreading crime and disease. Taxes too are falling crippling the power of the state to enforce law and order as well as fight fires. Vagrants are having a field day to the horror of all. The general economy is beginning to creak with ominous pointers towards recession.

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In September 2007 50,000 or more residents of Maryland were lagging behind in mortgage payments. Experts opine that this year the numbers will increase with adjustable mortgage rates ready to reset to higher levels. However there is no point in negative worry. Help is available.
The first thing is to contact the lender. Today lenders are more amenable to a rapprochement than before considering how badly they are themselves affected by the rising tide of foreclosures. Adverse criticism too has played its role in making the lenders softer in their approach. Foreclosures are affecting collection of revenue and taxes. Law and order problems are antagonizing communities facing health problems and criminal activities stemming from abandoned houses. Thus the lenders might freeze for the time being the interest rate or forgive payments for a certain period. So borrowers are advised to contact immediately the loss-mitigation department of the lenders. The best option would be contact a housing counselor belonging to any non-profit organization. They will broker the agreement between the lender and the borrower. In Maryland there are many HUD approved help agencies having their own websites and hot line numbers. HOPE is another port of call. The borrower could suggest short sale. If the loan amount and house value are at par the lender will readily agree to it as both the parties gain by avoiding foreclosures. While going about the work the borrower should be on the alert for foreclosure scam artists who come forward with unsolicited help. They will cause further damage. The basic point is that borrowers must not sit idle simply fretting and worrying. By it nothing will be done. If immediate action is taken there is hope of help.

The government, mortgage giants and the local help agencies are working together to save the country from recession. As yet no positive results can be seen. The number of foreclosures continues to rise. The intensity varies from one locality to another. Many analyze that the modest income groups and the minorities are the worst sufferers. Another view is that places like Florida and California are the worst affected because these places were happy hunting grounds for construction activity during the zooming period of house building. Here speculators made hay. Now they have just walked off. Another view is that the sluggish economy combining with rising medical bills and divorces are responsible for the foreclosure scenario being witnessed today.

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Foreclosures are rising and so are help agencies and workshops. The authorities are desperately looking for a way out of this impasse. Henry Paulson, the Secretary of U.S Treasury hinted that the federal government might add more features to its current programme to help foreclosure victims.

Paulson was addressing New York Society of Securities Analysts. He said that ‘after years of unsustainable price appreciation and lax lending practices’ it was inevitable that the house has to be now set to order. But even after heavy media focus and suggestions being given that ‘subprime’ should be taken as the word of the year, sub-prime loans continue to be active.

It is erroneous to think that sub-prime has vanished – it is till there, says Walton of a non-profit organization (Vallejo Neighbourhood Housing Services). The people still do not fully understand the implications of loans.

In Solano County there are 2,199 units that are delinquent, 889 waiting to be auctioned and 1,887 that have reverted to the bank. The official of Vacaville’s Housing Counseling Program has been individually advising the house owners. Last year 110 victims were helped to find out options during the pre-foreclosure stage. Not all could be helped.

The problem is that many mortgage companies will not talk until at least one payment has been missed. But by that time the situation is already grave. However counseling is available even before that critical point. But people usually seek help when it is too late and foreclosure has been filed.

Many options are placed before the clients – one being a reinstatement plan. By it the entire due amount (including late fees) is paid to the mortgage company to create an atmosphere of good understanding. Secondly there are repayment plans, loan modifications, restructuring, re-financing and forbearance options. These are for those borrowers who are going through a temporary period of personal loss. When even these doors are closed then the agency can help by arranging pre-foreclosure sales, short sales of deed-in-lieu foreclosure. By these the borrower can walk out without the black mark of foreclosure.

The city is proactive in its move to identify the sufferers through its website and by going through public notifications. Letters are sent out to the victims asking them to seek help from them. Initially the help messages were sent out too late but recently they have become more organized and timely help is forthcoming.

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With foreclosures telling on all and bringing down the housing market to its knees lenders are at last awakening to the fact that when a ship sinks all go down. They are responding to strong criticism and promised the Mayors at Detroit last Tuesday that they would finance credit counseling, setting up of hotlines and put up a database to help sort out the tangled web of ownership of foreclosed properties.

At MGM Grand Detroit, mayors, lenders, bank personnel and non-profit community organization representatives went into a closed-door conference regarding foreclosures. On Tuesday the Mortgage Bankers Association promised to donate $100 per each unit of foreclosed property. The number runs into one million approximately. The objective is to set up hotlines for those in trouble. The association also is trying to set up a database to locate and detail all the units that are affected by foreclosures. As yet due to packaging of mortgages the whole thing is in confusion as regards servicers and actual lenders. By their efforts a studio will be set up in Washington, which will be available to mayors so that they can film a public service announcement regarding foreclosures. The mayor of Detroit, Kilpatrick pioneered such a move but it has not been aired as yet.

During the meeting some demonstrators, about ten in number, protested outside the hotel where the meeting was in progress. They were loud in their demands for legal action to put a hold on foreclosures.

A non-profit organization stated that 72% of those in foreclosures have the capacity to continue to stay in their houses if given the right kind of help. The mayor’s stressed on the point that those people in the foreclosure net or about to be caught should immediately seek advice and help. Three quarters of those in the foreclosure soup have not reached the end of the road but it is impossible for them to cope with rising interests – the rise often being more than double.

John Taylor, president and chief executive officer of National Community Reinvestment Coalition opines that what has happened is that an unprecedented number of people have been made to buy a bad product.

The president of the conference of mayors – Douglas Parmer of Trenton said that the problem is not confined to those in foreclosures but is spilling over to cover other areas. Consequently none will be spared.

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In an attempt to parry foreclosure fallout the Governor of New York State, Spitzer said in a press conference last Thursday that he wants the lenders to join hands with the federal government to give a second thought to mortgage-backed securities fund so that the wavering market can get back on its rails. The scheme of a fund of $80 billion is to be akin to a similar pool suggested by Citigroup Inc and some other bands to bail out SIV’s (structured investment vehicles) of billions of dollars of risky mortgage securities. Those who would participate in this fund would be able to negotiate for new mortgage terms. But the drive must come from the private sector together with the federal government. If the owners write down or rewrite the terms of these loans by getting together this fund the entire market will be stabilized for the benefit of all concerned.

Under the direction of USA Treasury the mortgage lenders have already grouped together to step up counseling for the borrowers and increase the number of loans that are being modified. HOPE NOW is a nationwide organization that has been set up to stretch out to troubled foreclosure victims before things get so bad that foreclosures become inevitable.
New York Attorney General Cuomo teamed up with Spitzer to step up action against the rising tide of foreclosure that is affecting all sections of the society and economy. They are seeking grants to fund the counseling programmes struggling to put some teeth into the help schemes.
As a first measure New York Mortgage Agency has introduced a $100 million Keep-the- Dream programme that would make it easy for borrowers to refinance and get out of the high cost sub-prime mortgages. Other states too are likewise working on similar lines with the help of Federal Housing Administration to stem the foreclosure tide.

In a letter Spitzer and Cuomo were appreciative of federal action but did not fail to mention ‘serious concerns’ about legislation elimination protections existing at state levels. It would be a grave mistake that federal regulations could replace state law instead of supplementing it. Cuomo’s department is continuing with its scrutiny of $10 trillion US house mortgage industry. He has plans to take legal action against mortgage giants like Fannie Mae and Freddie Mac for mortgage loans they had purchased from banks like Washington Mutual Inc

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