Archive for the ‘General’ Category

Bankers are watching and waiting with uncertainty the snowballing effect of the sub-prime tsunami crisis.

Even though April provided a breather by a dip of 1% in foreclosure listing, it was still up by 62% compared to last year. Even then it will be far above the average of last year. Statistics pouring in show a worsening of the situation. No one knows the actual number of active sub-prime mortgages, its source of origin or refinancing procedures in Northeast Minnesota and Northwest Wisconsin.

Risky loans had triggered off this crisis. Some of the biggest sub-prime lenders like Ameriquest and New Century Financial are toppling down.

Some regions of the country have remained untouched by this virus – Wyoming, Vermont, North and South Dakota, Mississippi, Delaware and Washington D.C. Topping the list are 10 cities of which six are in California. These six ranks first among the group of notorious 10. Las Vegas comes first. Others claiming this dubious distinction are Nevada, Colorado, Connecticut, Florida, Arizona, Illinois, Michigan, Ohio and Georgia. As a result of this fall out Michigan, Minneapolis and Ohio are reeling under massive layoffs.

Big national financial services are practically non-existent in some important regions. Yet sub-prime activity has been typical with apprehended results. Real estate businesses having taken a U turn, lenders are tightening loan conditions thus putting marginal borrowers in a soup. Their rates of mortgage interest are rising while the value of their property continues to plummet.

The situation is so alarming that Lutheran Social Services have come forward to provide pre-bankruptcy counseling in Minnesota and Douglas County. The sub-prime lending has hit not only the borrowers but also local banks and communities. A ‘teaser’ rate tempts the borrower to fall into the net. Later the net closes in on the catch with disastrous consequences to all but the lender-agent nexus. Sub-prime lending essentially steals business from smaller entities.

Authorities have come forward and tightening the belt of the law – a grim reminder that playing around with lending will attract felony charges coupled with compensation and damages. However it applies only to current frauds and does not extend backwards. Thus primarily the focus is on prevention.

Wisconsin is the only state that has no limits on interest rates. Pay-day lending has been rampant which many regard as an unhealthy drain on the economy. The heat is on to find a solution and save the people.

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Investigators have stumbled upon a racket known as inflated-sale-and-crash schemes in which countless have fallen victims. The buyer in collusion with shady real estate dealers buy a home at more than the current market price, receives cash at the closing of escrow and then intentionally allows the property to fall into a foreclosure. 400 such cases have already been traced. In a couple of months the dealers have pocketed more than a million dollars.

Lackner, an appraiser since 1989, while investigating a property in San Diego suddenly noticed that one had been sold at $70,000 more than the listed price. He quickly did some spot-checking and found that the property was rundown and vacant. He immediately smelt a rat and began checking on the agent who had represented the purchaser. It showed that the man had been implicated in the buying of 17 other properties over a period of few months. All the deals looked suspicious. Out of these 10 were subsequently foreclosed.

Lackner set to work and turned over the documents to federal and state investigators. In an email to North County Times, an FBI official, without being specific, said that mortgage frauds have become a regular problem requiring the FBI to team up with other law enforcement agencies to brook the culprits. It is the main priority area of the FBI because it has an overall impact on the economy of the entire nation. Within two years from 2004 the number of reported cases has doubled from 17,127 to 35,617. It points to losses over $1 billion for the owners. The crimes are netting in far more than what an average bank robber pockets - $5,000! It amounts to robbing 10 to 20 banks per day. Appraisers and agents are hand in glove in this crime. The ill-gotten gains are then split between the two crooks. The game plan is that the buyer stops paying mortgages after a couple of months. The bank declares default and takes steps for foreclosure and dispossession of the owners.

The real sore point is that neighboring property values rise. But foreclosed homes are sold at less than the current price causing an opposite effect of real estate values in the area. California is credited with having more than one third of the nation’s suspicious loan activity. Most frauds surfaced during the middle of 2006.

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No less a person than the Attorney General of Massachusetts, Coakley, came down heavily against pretentious rescue teams that tempt house owners facing foreclosures to sign over their ownership to temporary buyers nursing a false hope that in the long run they will not lose the roof above their heads.
The recent surge in foreclosures compelled the office of the Attorney General to take emergency measures against clever tricks that are impoverishing many. The borrowers income is often falsely inflated to make matters simple. As many as four lawsuits have been filed against firms that tempted owners to hand over property deeds to ‘straw purchasers’. Reviews show that recently there have been several cases of similar firms that never keep their promises. The Consumer Protection Division of the Attorney Generals’ office is of the opinion that in fact there has been no single instance of them coming forward with a genuine helping hand. These firms are riddled with fraud and abuse. About a dozen of these so-called rescuers operated in Massachusetts.

Coakley’s is however in the dark about similar steps being taken in other states.
The ban would spell civil penalties only for those firms that worked for profit. It will not hamper the activities of genuine non-profit housing groups. Temporary ownership is taken to allow the victims time to solve the problem. A way out is to allow property transfers to extended family groups.
The regulation did not come in the way of legitimate bailouts wherein the lenders relax terms of repayment and offer new mortgages, which does not involve surrender of ownership.
Massachusetts Mortgage Bankers Association welcomed the move of the Attorney General and had no reservations about it curbing legitimate operations.
Coakley said that she had to use emergency powers to impose immediate bans on foreclosure takeovers because of an alarming growth of such scams. There was a jump of 70% from last year in the state. Massachusetts had always had a low rating but this high brought it at par with the national ratings. After ninety days the ban could be made into a law by state legislators following public hearings.
Coakley’s office is also engaging voluntary attorneys to help foreclosure sufferers.

The Attorney General, Secretary of State and other lawmakers have suggested a string of legislations to check foreclosures and its snowballing effect on real estate prices and sub-prime facilities for helping needy borrowers.

No less a person than the Attorney General of Massachusetts, Coakley, came down heavily against pretentious rescue teams that tempt house owners facing foreclosures to sign over their ownership to temporary buyers nursing a false hope that in the long run they will not lose the roof above their heads.
The recent surge in foreclosures compelled the office of the Attorney General to take emergency measures against clever tricks that are impoverishing many. The borrowers income is often falsely inflated to make matters simple. As many as four lawsuits have been filed against firms that tempted owners to hand over property deeds to ‘straw purchasers’. Reviews show that recently there have been several cases of similar firms that never keep their promises. The Consumer Protection Division of the Attorney Generals’ office is of the opinion that in fact there has been no single instance of them coming forward with a genuine helping hand. These firms are riddled with fraud and abuse. About a dozen of these so-called rescuers operated in Massachusetts.

Coakley’s is however in the dark about similar steps being taken in other states.
The ban would spell civil penalties only for those firms that worked for profit. It will not hamper the activities of genuine non-profit housing groups. Temporary ownership is taken to allow the victims time to solve the problem. A way out is to allow property transfers to extended family groups.
The regulation did not come in the way of legitimate bailouts wherein the lenders relax terms of repayment and offer new mortgages, which does not involve surrender of ownership.
Massachusetts Mortgage Bankers Association welcomed the move of the Attorney General and had no reservations about it curbing legitimate operations.
Coakley said that she had to use emergency powers to impose immediate bans on foreclosure takeovers because of an alarming growth of such scams. There was a jump of 70% from last year in the state. Massachusetts had always had a low rating but this high brought it at par with the national ratings. After ninety days the ban could be made into a law by state legislators following public hearings.
Coakley’s office is also engaging voluntary attorneys to help foreclosure sufferers.

The Attorney General, Secretary of State and other lawmakers have suggested a string of legislations to check foreclosures and its snowballing effect on real estate prices and sub-prime facilities for helping needy borrowers.

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Five bills, introduced last year, are intended to stop the landslide loss of homes in Colorado.

Governor Bill Ritter is expected to sign a package of mortgage related bills. The aim is to protect consumers from the rising tsunami of foreclosures. Brother’s Redevelopment Inc. in Denver is in charge of the state’s hotline dealing with foreclosures. The line was set up last year responding to a deluge of calls from Colorado, which topped the country in foreclosure listings.

Ritter said that the step has been in the right direction. Now it was time to see to its execution keeping in mind the interests of the mortgage industry also.

The aim of Senate Bill 203 is to convert the state’s mortgage brokerage system from a registration to a licensing system. Hitherto only two states, Alaska and Colorado, did not require mortgage brokers to procure a licence.

However a warning has been given that this bill will not help those Colorado residents whose houses have already been included in foreclosure listings. It is aimed at preventing future such incidents by bringing to book questionable mortgage dealers mainly responsible for this foreclosure crisis. Many are of the same opinion.

Senator Peter Groff is optimistic that this bill will halt the foreclosure process and bring stability to the housing market. Unscrupulous brokers will be reined in. Groff had cosponsored another bill – House Bill 1322. It requires mortgage dealers to ‘act with good faith and fair dealing.’

The bills address some of the issues that had already been raised by The Denver Post last year. The series dug into the root cause for the state’s foreclosure pandemic.

The Colorado Mortgage Lenders Association supported most of the regulatory overhauling with some reservations. With the imposition of heavy regulation in the mortgage industry there was the possibility that consumers will face the difficulty of getting loans. It was to be noted that HB 1322 expected mortgage lenders to disclose their commissions. In keeping with this logic employees of private companies might also be compelled to disclose information of their wages and salary. Concerned with these points the Association is asking for clarification from the Director of Colorado Division of Real Estate.

Statistics for the first quarter of this year is alarming. The foreclosures in Colorado are 30% higher than the previous year which was in turn 31 % higher than 2005.

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Mortgage defaults sweeping across the entire country for the last six months has not spared northeast Baltimore County.

There are many local realtors who differ on this point as to the severity of the problem of foreclosures in the northeast region stretching from Baltimore city lines to Harford County.

Êone, the head of major real estate organization says that the local foreclosure listings are far less than the national average. It has risen about 12%, she admitted. Nevertheless, she admits that more and more people are opting to sell their homes because they can no longer afford to repay installment dues. Two other professionals echoed her sentiments saying that the region had only a slight fall in numbers as compared to national figures. It was nothing much to crow about.

Goodman representing a reporting service says that Circuit Court in Towson for the last year shows a foreclosure listing of 1,987 – that is a 12% increase during the time period of a year.

Mortgage lenders can legally sell a house once the payments fall behind four months. Why is this happening?

Many young people below the age of thirty-five are living beyond their means. Another group is of the opinion that divorce rates are rising making it impossible for one person to manage the financial responsibilities. Put the other way – are foreclosures leading to divorces? It is a vicious circle where the roof above the head is at stake. A rise in delinquency is the obvious outcome. Broken marriages, loss of jobs and major illnesses are the prime causes for foreclosures.

Homebuyers should avoid loans with high rates of interest. During four years starting from 2002 there was a boom in the real estate market with rising prices. During that time the owners of property could easily meet their commitments and have something left over by selling their houses. But a boom cannot last forever. It is the natural law. The bubble has now burst.

During March there was slight rise of 3% in sale prices for both Baltimore and Harford counties. But this is applicable to only some houses. Many are finding that their houses are worth less than the amount, which they have to pay to the lenders on the mortgage. This situation is termed ‘negative equity’. The house owner does not have any escape route. The only alternative is foreclosure.

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It is mostly the Afro-Americans who are turned down when they apply for a house loan because of their tarnished credit history. But the feeling in them as in all others to own a hearth and home is very strong. This leads them to fall prey to sub-prime real estate dealers who let them have their dream house with a nightmare tagged to it. The rates of interest are much higher than the usual ones. It is inevitable that a rainy day or two in their lives compel them to fall back on their loans repayments. This is when the vultures move in for the kill.

Nearly two million Americans are caught up in this ‘sub-prime tsunami’! The Centre for Responsible Lending has released a report, in which it is predicted that 2.2 million sub-prime loans will land up in foreclosures. It will have a snow balling effect in the housing market that will be flooded by houses. House owners who received mortgages will lose $164 billion in home equity during the period 1998 to 2006. On the other hand the lenders will see a fantastic boom in their profits from $35 billion to $665 since 1994.

Officially all races can take the mortgages but Afro-Americans bear the brunt. A report of ACORN says that more than half of all mortgages were granted to Afro-Americans. Therefore they will suffer the most. Of the sub-prime loans expected to run into default, 10% were granted to Afro-Americans, 8% to Hispanics and 4% to whites.

Griffin, the President of Home-Free USA claims helplessness in the face of this tidal wave of foreclosures. She vehemently denies that they are taking advantage but the fact is that they are helpless. She says that the main reason for this situation is because the borrower is tempted to walk into the trap without directly knowing the clauses that are often couched in difficult terms. It is not open and clear. In many cases the sub-prime loans the annual mortgage rate, ARM, increases after a specified number of years. Many borrowers under the ARM scheme are not even aware that they are under it, until it is too late. So the main thing is to start an awareness campaign. It is the victims themselves that must be armed against these recurring dangers.

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Empty creaking houses are of late a common site in large metro areas. As a result of the lending standards of mortgage companies, there was a boom in the real estate market. It snowballed into increase of foreclosure rates.

The effect of foreclosures is being felt outside the zone of real estate markets and residents of upscale sub divisions outside Atlanta are seeing cracks in their social fabric.

Investors, in some areas are drawn by foreclosures to buy them and then to rent them out to balance costs. This has resulted in the residents frequently hopping in and out leading to an increase in crime rates. The atmosphere of the entire neighbourhood together with the schools consequently takes a nosedive.

Fortunately till now these effects have not touched Camden County, down south. This is largely because the mortgage companies of Camden are good at their job. They look into the interests of potential buyers and accordingly give them the offer that they can afford. It must be taken note of however that Camden has a relatively smaller population who come under the sub-prime market group. Also those who have a bad record do not qualify for alternative financing like interest-only loans or adjustable rate mortgages (ARM).

But winds freely move about and to some degree Camden too has been affected. It can be put this way – the local real estate has been slow in keeping pace with national trends. Sales have slowed down and more ‘for sale’ signs are coming up throughout the county. Currently there are 498 houses up for sale.

Taking an overall view it may be opined that till now the county has been fortunate. The absence of a large sub-prime markets point to the fact that most of the residents are able to afford their property, even at the present prime rate. The latter falls between six and seven. However it is continuing to push upwards.

The population too is expected to grow quickly in the next two decades. Developers, anticipating good days, are already ready with plans. Some are already digging and building large complexes with homes for the higher ups.

Time alone will tell what impact this increase of expensive homes will have on the real estate market. Mortgage companies will be wise to be tight fisted about lending standards to avoid problems with foreclosures in the near future.

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Foreclosure investors are paying $19.95 to hear Alexis McGee give a 90-minute talk on ethics and foreclosures. Foreclosure grabbers have been labeled as preying vultures. But McGee takes another stand. One can go about the business in a straight way without downright cheating. It is not necessary to grab the deal by hook or by crook sacrificing eternal values. McGee makes a shrewd assessment. The people in trouble facing foreclosures should be helped so that will come to you again.
Ridiculous? But statistics says otherwise. Two decades, when she was twenty-three, she earned $180,000 in her first real estate venture. Today she is consulted by all and sundry during these troubles times when Foreclosures is dominating the scene.
McGee is a familiar face on popular television channels as well as renowned journals. Her $9,500 investor seminars for June have all been booked. People pay for her telephone talks as well as for browsing through her online foreclosure listings. This autumn her book on foreclosures and ethics is predicted to hit the sales.
At the core of her work is her website which she operates with husband Tim. It is perhaps the oldest site on foreclosures. Those owners who have failed at least two mortgage payments are listed. Then the houses facing auction and repossession by the banks are checked to make sure that equity is still there.
The procedure is to purchase the property at a price so that some profit is made from reselling it. The logic is that the house owner will have something left over after repaying debts. Otherwise usually the owners find themselves totally in the red with their pockets completely cleaned out.
McGee claims that about 254,000 new households in the country fell behind in mortgage during the first quarter of this year. McGee trained investors come forward to help with tangible solutions. The aim is to find out what investment possibilities are there as well as to help victims avoid foreclosures. This is irrespective of the fact whether the McGee group gets a slice of the cake or not. The idea is to help people, whose house is on fire find the exit route fast, quick and with dignity.
Critics question McGee’s sincerity who is after all selling low and buying high doling out low to the owners. But banks are happy that foreclosures are being thus avoided.

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