Archive for the ‘General’ Category

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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INTERNET LEAKS INFORMATION

It is reported from Boston that as much as 76% during the first quarter of last quarter fell a victim to foreclosures. Trading in foreclosures mean big gains – buying low and selling high. Foreclosure opportunities are sprouting like mushrooms to the tune of one hundred per day, which often translates into about a thousand each month.

Most of the victims facing foreclosure are behind the 8-ball and are completely at sea. They do not know what to do next. The first stage is that of the beginning of the foreclosure process. In the following stage begins the process of assessing the value of the locality, size of the property and its condition etc. Everything is public on the web. The responses of the owners vary – some are resigned while others are far from happy.

Investors get the word over the Internet and hurry over to make the deal. Sometimes the investors get wind of the matter even before the owners The best time to strike the deal is during the pre-foreclosure period because then the investor can negotiate directly with the owners instead of going via the banks and or waiting for the process of auction to begin.

There are web sites that give training to investors in foreclosure deals. One site claims that they have had 5 million visitors each month! The web sites show in what phase the property up for sale is going through. The question of ethics arises as investors are charged for preying on the vulnerable. But the answer is that this is all part of the game of owning and selling property. It is argued that the investors offer a dignified way out for the owners who are in debt. In fact the investors are giving extra service for all the trouble they take. The harassment of the owners likewise lessens. Nevertheless with the increase of foreclosures and rush of investors one should be careful before losing the roof above your head.

There are two opinions about all information being freely available on the net. On the one hand it gives little protection and privacy but on the other the seller should know into what zone he or she is stepping.

Investing in pre-foreclosures itself is a multi billion-dollar affair per year. Just coaching investors the tricks of the trade is spinning money.

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Monday 21^st May 2007

It is reported that although Sayles Place Homes, South East Washington, is badly in need of repairs. Should this 61-unit complex be sold to a private developer or to a co-operative of the residents? Built in 1970 this complex became a cooperative in 1973 with the purchasers paying a fee of $ 2,500 to buy in although they did not own their units. The rents they pay are $1,000 or less depending on individual incomes. This goes towards repayment of HUD mortgage with a promise that 12 of the units are reserved for the low-income group.

Residents and city officials were shocked to learn that US Department of Housing and Urban Development plans to foreclose and sell it to the highest bidder on Wednesday. Residents are pooling resources to stop foreclosure and buy it themselves.

HUD chips in that the cooperative, which is backed by HUD mortgage, has been negatively assessed by maintenance inspectors and also kept poor records. They have fallen far behind in payments. It is a technical default situation although the mortgage is current.

The Mayor supports the residents and shares their optimism about raising the necessary fund. The Housing Director of the District feels the owners should not be forced out and is trying to press HUD to postpone foreclosure. HUD is said to have offered the District to buy off the property for around $4 million or participate in the scheduled auction.

Sayles Place is one of the many properties caught in a wave of development resurgence running through Washington. It is a bonanza for city funds but on the other it is making many areas, especially regions east of Anacostia River unaffordable to present owners. Rising property prices are affecting the middle and lower income groups forcing 6% blacks to move out.

HUD says that although mortgage payments are current no notable repairs have been done. Six inspections in seven years have been negative. This makes the society technically at default. Purchasers must undertake repairs and keep rent rates at par with current prices. HUD is not keen to throw people out. The ground reality is that new houses close by are selling at $3000, 000 or more.

Legal experts opine that it is bizarre that the government is forcibly uprooting people by going for foreclosure even when they are willing to meet terms.

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Lesley Grimm reports that Brooklyn house owners are facing a foreclosure crisis. New hotline can be established for help.

There are thousands of house owners facing heavy mortgage lapses with foreclosure threats. However sound, unbiased advice is readily available on the phone. The step was most welcome by affected New Yorkers.

A novel Foreclosure Prevention Help line (212-669-4600) has been initiated by the City Comptroller, William Thompson Junior, to the succour of New Yorkers struggling against odds. Addressing a May Day meeting of the Sheepshead Bay/Plumb Beach Civic Association, the Associate Director of the Comptroller, Bruce Solomon, said that the crisis cuts across all factors related to economics, race, colour and creed differences. People have bought million dollar houses believing that they can afford these only to find out quickly that it is well beyond their means to continue to make payments.

The burgeoning popularity of sub-prime lending has forced this situation upon the owners. Records testify that low and middle-income groups have become victims of these non-traditional mortgage schemes. On the one hand it has made it possible for house owners to avail of property they had never dreamed of but on the other the risk from default is greater. Initially the sub-prime loans appear affordable with a low ‘teaser’ interest. But problems surface after two or three years when rates begin to get heavier and heavier. Bruce Solomon did not mince words when he said that these low interest rate dreams have fallen by the wayside.

Figures talk explicitly of the explosive situation. Neighbourhood Economic Development Advocacy Project says that according to statistics the foreclosure figure could cross 15,000 – that is more than double the figure of the total of the last two years. Senator Schumer is of the grave opinion that within the next two years 81,000 of New York house owners may forfeit their homes; of these 6,100 are from Brooklyn. Seen against the backdrop of New York having the lowest house ownerships the scenario is particularly disturbing pointing to things to come in other metropolitan areas. It is high time that the authorities roped in some sort of order in this free-for-all wild zone of mortgages. Schumer has initiated three steps to tackle the menace – firstly a national regulatory system for mortgage brokers, secondly to get rid of false loans (loans mathematically pre-planned to trip the borrower) and finally to set up a foreclosure task force in New York State.

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City attorneys are suing a wolf in sheep’s clothing. Many house-owners in the grip of foreclosure have in desperation sought the help of this land-loan shark, Equity Holding Corporation of California. Equity offered them the rosy red idea about forming a Trust. But the apple was rotten to the core. Owners have found themselves in a worse debt situation without hearth and home. Investigators report that many lawsuits have been brought against Equity Holding Corporation of California. The saving attorneys, Timothy Hegarty and Carolyn Sharp-Hegarty of Woburn were once the victims. Twelve years ago availing of a loan they had bought the house of Carolyn’s mother at a high interest of 13%. Things became bleak when Sharp-Hegarty lost her main job and they fell behind a few months in the mortgage.
Once foreclosure knocks at the door not many options are left. But she fell into the trap of promises put out on the Internet by Equity Holding Corporation, a land trust company. Equity suggested a way out of the dilemma was to form a Trust for the house. This would give the debtor few years time to recoup and recover by arranging for an investor to pay the dues. In good faith the Hegartys sent the monthly cheque directly to Equity to pay the mortgage company. But each month there were extra fees. Once more the debt backlog increased. To their dismay, attempts at refinancing showed that they no longer owned the property! Equity had got them to sign off the property to themselves! Playing upon sentiments Equity had got them to sign documents on good faith without scrutiny.

Other owners teamed up with the Hegartys to sue Equity for violating state and federal consumer protection laws. Kim Breger of Harvard Law School’s legal services observed that Equity had levied an interest of 68% per annum by borrowing against the homeowner’s equity. It cancels the backlog but at an extremely high price. Although the Hegartys got back the deed and a cash settlement, others were not so lucky. Team Five investigators dug up the fact of hundreds of other victims of Equity Holding Corporation from Massachusetts Registry of Deeds. Half the house-owners of Worcester County lost their houses. Equity sold it to third parties.

Equity protests that the homeowners know what they are doing when they sign. It is not their fault that if the party gets further into debt. Their way out of a debt trap is better than putting the house than bankruptcy or putting the house up for sale.

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