Archive for the ‘Real Estate’ Category

If President Bush has his way then the residents of Las Vegas victimized by the foreclosure crisis will heave a sigh of relief. The President does not think it is a bail out operation to help lenders and speculators but is meant to help borrowers who are in the soup worried about the roof above their heads blowing away.

Christine Young based in Henderson is just one among the many boiling in the cauldron. Her property unit consisted of a 2,000 square feet four bed roomed house. About a year ago she had refinanced it under the impression that she was moving into a fixed mortgage scheme. But that was not so in reality. Within a year the ARM shot up beyond her means. It is $700 more with the due date of 1st September looming ahead. Christine squarely puts the blame on predatory lenders. They shrewdly trapped her to sign a mortgage that she had tried desperately to avoid. The smart ways of the mortgage agent made her gullible to his sales talk. At that time she thought him to be a nice honest fellow.

There are thousands of Christines across the length and breadth of the country ready to tell the same tale.
Nevada ranks first in the foreclosure race. The filings have gone up by 93% from what it was the previous year.

Last Friday President Bush detailed steps the federal government would take to help the besieged borrowers. He repeatedly assured that his focus was not to save the lenders and speculators who are also in the red. He emphasized that this operation will give Americans with a good credit past, but cannot bear the burden of recent rises, to refinance into FHA mortgages that are insured.

Pam has yet another story to tell. She had put her house on the market shelves many months previously. She was hoping to sell before the house foreclosed. In this way of direct selling she calculated on cutting down her losses. The initial asking price was $389,000 but now she has climbed down to $299,000. It meant her losing $90,000. Even then she would be lucky to sell it off right now without further loss.

The plans of President Bush will not help the Christines or the Pams because even if sanctioned it will not come fast enough to stop more heads from rolling.

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Poku, a 55 year old taxi owner with wife and three children hails from Columbia. He had to move out of his house. Helped by his group members and a new state programme he shifted to rented accommodation. At lease he is not under the open skies!

One of his passengers Neil Carey, kicked off a fund administered by Grassroots Crisis Intervention Center, helped Poku meet his debts, his survival expenses as well as legal costs for fighting the matter out. Poku had been evicted a year ago having failed to legally prove that the original mortgage had been paid off during the refinancing period because of documents and checks had been lost by the jumbo financial body involved in this deal.

Howard County based Congregation Concerned for the Homeless has been operating for the last 17 years. The state on its part has started off the Family Stabilization Program through the county government to help sufferers like Poku. Its scope of activity involves continued support, counseling on budgets,, use of credit, proper parenting and business advice.

The help programmes try to get the business going again. Poku is one of their ideal subjects. Foreclosure had given him a bad name and so it was not easy for him to find a rented home without help. But finally one was found that suited the work compulsions of his wife and himself. The group saw to the waiver of security fees.

Poku insists that the loan had been paid off but the Seattle based mortgage firm denies it. Poku found his house sold off within six weeks of his being issued a notice. As per Maryland law quick foreclosures are the norm and do not require lenders to prove that the borrower had been notified. Many Maryland officials are keen to change the law. Right now these resolutions will not help Poku who had migrated from Ghana and struggled to set up his small business. He had built up his taxi service from scratch after learning everything about repair and maintenance during off work period at night.

Poku’s lawyers failed in May to prove his point in the Court of Special Appeals. Right now two court actions are pending after the matter was again filed. His lawyers are demanding compensation and a share of the proceeds from the sale of the house.

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According to reliable sources foreclosures rose by 93% from July last year to July 2007 across USA. It went up by 9% from June. In July last year the number of foreclosures had been 92,845 but this year during the same month the number read 179,599. In June the foreclosure number was 164,644. The figures have been released by one of the oldest reliable online groups, keeping track of this specific situation. The national foreclosure rate is 1:693.

Five states of California, Florida, Michigan, Ohio and Georgia bore the brunt of more than half the country’s foreclosure burden. In the middle are squeezed in Missouri (18th) and Kansas (32nd). In Missouri the ratio was 1:1,275 and in Kansas it was 1:2,782.The figures are inclusive of default, sale and bank repossession notices. Because of multiple mortgages some of the property units may have been counted more than once. But the tracking group has listed separately individual properties. During the first six months of the current year 573,397 properties showed foreclosure activity in some form or the other. It amounts to 58% rise from the first half of 2006 and 32% rise from the last six months of that year.

In July Nevada, Georgia and Michigan showed the highest numbers. California, Florida and Ohio were the states with the highest foreclosure numbers.

The sub-prime loans and ARM loans have been battering the mortgage market during the last few months. One by one delinquency is being reported and houses are being foreclosed. Falling real estate prices have added woe to misery with owners not being able to sell off units and pay off dues. Sub-prime loans had been given to those with shaky credit history. It started with interest-only repayments but when the grace period was over the cracks began to appear and widen.

But the story did not end there. From the housing credit category it infected the country’s savings and loans. Never had the situation been so bad in the past 14 years. USA Office of Thrift Supervision is nervous and edgy with $14.2 billion in repossessed assets and loans whose dues are more than 90 days old. In other words property is lying around idle with no cash flow coming in. To avoid further decline it is being advised that properties should be sold off quickly without thinking of profit and loss.

According to reliable sources foreclosures rose by 93% from July last year to July 2007 across USA. It went up by 9% from June. In July last year the number of foreclosures had been 92,845 but this year during the same month the number read 179,599. In June the foreclosure number was 164,644. The figures have been released by one of the oldest reliable online groups, keeping track of this specific situation. The national foreclosure rate is 1:693.
Five states of California, Florida, Michigan, Ohio and Georgia bore the brunt of more than half the country’s foreclosure burden. In the middle are squeezed in Missouri (18th) and Kansas (32nd). In Missouri the ratio was 1:1,275 and in Kansas it was 1:2,782.The figures are inclusive of default, sale and bank repossession notices. Because of multiple mortgages some of the property units may have been counted more than once. But the tracking group has listed separately individual properties. During the first six months of the current year 573,397 properties showed foreclosure activity in some form or the other. It amounts to 58% rise from the first half of 2006 and 32% rise from the last six months of that year.
In July Nevada, Georgia and Michigan showed the highest numbers. California, Florida and Ohio were the states with the highest foreclosure numbers.
The sub-prime loans and ARM loans have been battering the mortgage market during the last few months. One by one delinquency is being reported and houses are being foreclosed. Falling real estate prices have added woe to misery with owners not being able to sell off units and pay off dues. Sub-prime loans had been given to those with shaky credit history. It started with interest-only repayments but when the grace period was over the cracks began to appear and widen.
But the story did not end there. From the housing credit category it infected the country’s savings and loans. Never had the situation been so bad in the past 14 years. USA Office of Thrift Supervision is nervous and edgy with $14.2 billion in repossessed assets and loans whose dues are more than 90 days old. In other words property is lying around idle with no cash flow coming in. To avoid further decline it is being advised that properties should be sold off quickly without thinking of profit and loss.

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One out of every 47 houses is popping into the foreclosure oven making it one of the hottest cities in the grips of the reigning real estate crisis. It ranks 8th among the leading 100 cities buzzing with foreclosure activity during the first half of this year. The figures have been released by one of the premier tracking groups online, based in Irvine.

The apprehension is that things are going to get worse. 82 of this group of 100 consisting of the prime metro cities in USA are reporting a year-over-year escalation in the number of foreclosures. The numbers are taking everyone by surprise. Things were bad but nobody thought it was that bad. Kern County stood 8th in the first quarter of this year.

According to reliable figures the foreclosure pot continues to boil in California. Stockton, Sacramento and the combined Riverside and San Bernardino region having the dubious distinction of being including among the top 10 rankers. The tracking group makes use of records given out by the counties. The figures are inclusive of default notices, pending lists, sales by trustees and real estate owners. Stockton ranked first. Here one out of every 27 units came under the foreclosure cloud. Among the prime ten defaulters were Las Vegas, Detroit, Denver, Miami, Memphis, Tenn. and Cleveland. The least foreclosure activity was noticeable in Richmond and Va.

The foreclosure fall out is the result of many factors – mismanagement of sub-prime mortgages combined with general economic ill health of the country leading to unemployment. If the reasons are multifarious the results too are many pronged. With too many houses up for sale the real estate prices are plummeting. This is touching those units that are not directly under the foreclosure hammer. The mortgage industry has tightened its belt with the result that there are not enough buyers for houses. The banks are sitting with idle properties and empty coffers. This is sending alarm signals to brokers in Wall Street. The Wall Street sneeze is making international stock markets catch a cold. Closer home vacant houses are happy hunting grounds for vagrants and addicts leading to law and order problems. A new group of advisers have cropped up trying to help foreclosure victims. Politicians take this as an opportune moment to fish in troubled waters and make loud noises about cooling the heat and switching off the oven.

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Birmingham based Shore Mortgage watched with caution the stirring up of the mud in the sub-prime real estate market. But the young lender at the helm is ever ready to jump in and take a chance again. Brian May an office bearer of the company spoke about having helped a Romanian engineer. The latter had no credit roots in USA, which would enable him to take a loan. May justified their action by underlying the human aspect to the problem.

The company comprises of human beings and not just robotic computers. This is the guiding force motivating the action of the company. May went on to add that his company is mainly concerned with government loans to people who can keep up the mortgage commitment but whose credit ratings may not meet the usual loan standards. Shore Mortgage has always been particular about not entering either the sub-prime or Alt-A loan areas if they are not satisfied with the proof of the income of the lenders. They take into consideration people who can show employment records of about two years and are able to make a down payment of 5% in ready cash. Then they overlook the aspect of the credit history being good or bad. If the clients lack traditional credit cards and previous history of repaying loans Shore takes into account their records relating to payment of bills and rent. That is why till date they have not had any problems about foreclosures.

Shore Mortgage advances about 4,000 loans annually and has been in this business since 1984. However the real estate fiasco has meant a slow down in the business of Shore Mortgage. It has under its umbrella 200 employees in six offices across Michigan. Ohio and Alabama too feature under its zone of operation.

Michigan had the distinction of ranking third in the mortgage delinquency rates, new and old foreclosures during the first quarter of this year according to figures released by Mortgage Bankers Association. The President of Michigan Mortgage Brokers Association Paya Leyrer opines that although sub-prime has been mainly blamed for the foreclosure there are other economic factors like unemployment. In Michigan a good number of people have lost their jobs. A lot of effort is being made to make the borrower aware about what taking a loan involves and how to avoid failure and register success.

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The economic slump is telling on slim purses. Less and less can avail of mortgage loans to buy properties. There are no units for sale than buyers. It is apprehended by National Association of Realtors that real estate market rates will fall to a five-year record low dip.

For the eighth time this year their predictions were revised. Each time the rate kept falling down and down. Home sales were to fall by 6.8% to$ 6.06 million in 2007. Since 2002 this was the lowest mark. Sale of new houses comprise of 15% of the real estate market. The prices of these will drop by 19% to $852,000 – this being an all time low dip in a decade.

Economist Lawrence Yun is hopeful however that trouble in the mortgage industry will affect the market only for a short period. But economist Michael Darda is of the view that an air of uncertainty looming large is causing further turbulence. It will take time for the stress and tension to abate.

The blame is being laid at the door of Wall Street firms for tying up mortgages with specific security clauses. This has led to many failing to keep to their commitments in the sub-prime market. The virus has spread from here to borrowers in the traditional loan zone. The flow of money has dried up to such an extent that American Home Mortgage Investment Corporation has had to seek protection from bankruptcy laws during this week.

Real estate agents are optimistic that during the last three months of 2007 the sale of houses will begin to pick up to $6.08 million per year. This will be a rise from the low count of $5.85 million during the third quarter of this year. Most of the forecasts are sunny about the near future with the lowest point being reached during the second quarter.

But expert Robert Shiller from Yale University is not that hopeful saying that realtors are basing their assumptions on conventional calculations. In all probabilities in this specific instance the uncertainties will continue for a much longer period – may be couple of years, leading to general economic regression.

According to figures released by the Mortgage Banker’s Association the applications to buy or re-finance a loan has jumped by 8.1% in a week. This meant a further anticipatory increase in credit and re-financing demand.

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Cambridge based Real estate consultant Paul Martinez recounts the experience of his client – a novice investor. He built castles in the air around a two-family house in Somerville. The 30-year-old debutante in this field was greatly influenced by shows and advertisements about buying, renovating and converting units into condominiums that could be sold at a higher equity within a month. But 18 months later he had run out of breath after having bought when the tide was high. But now with funds running out the retreating tide in the housing market left him high and dry. The unit remained unsold and overpriced by $60,000. It did not take long for foreclosure clouds to loom large and darken his horizon.

Martinez is skeptical about these house-flip shows on HGTV (Flipping Out, Flip the House, Property Ladder) that highly influence viewers. Novices lack the experience and knowledgeable friends to realize that the numbers are wrong. It is all show talk. Reality and actual income from real estate is quite another thing. Here there is no surety. It is the first timers who are the worst hit. They lose money and peace of mind to foreclosures.

According to figures released by ForeclosuresMass.com, during the first quarter of 2007 foreclosure listings rose in Massachusetts by 75% compared to that of 2006 during the same time. Suffolk County alone stood out with 83%. Simultaneously the number of non-traditional mortgage numbers also rose.

Many green horns had forayed in the real estate field for the first time about a year and a half ago to come out with their fingers burnt. Their units remained unsold either because they could not cope with the spiraling mortgage rates or because they had invested in the wrong locality opines broker Paul Turcotte, owner of Re/Max Destiny, Newbury Street, Cambridge.

Realtors tell the newcomers to follow a ‘golden rule’ – never to buy unless the pocket permits it and do not invest without a ready exit route. The buyer must be there even before the investor buys. Jeremy Shapiro of ForeclosuresMass.com echoes this view and adds that cautious steps should be taken backed by licensed contractors. One should know the law before anything else and also keep in mind that laws are continually changing. There is no doubt that increasing foreclosures have complicated matters making it impossible for individuals without ready resources to own a house.

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The opinion of the Real Estate Institute is that all those who are somehow or the other connected with the real estate business should be brought under the measures being undertaken to give the industry a shakeup and a new look to it. Thus under its purview should come property managers, agents involved in letting and leasing as well as companies which take fees and not only those who takes commission for property sale.

In May the Government came forth with proposals to reform the real estate industry. It planned to set up an independent body, which would have powers to investigate. The underlying idea was to give protection to customers. The Government was forced to take the step after coming in for a dose of strong criticism for not doing anything tough and firm to rope in offenders and protect the hapless victims.

The President of the Real Estate Institute, Murray Cleland released the submission sent to the Government agreeing with most of the proposals including the setting up of a Real Estate Agent’s Authority. It was also in agreement about the authority being made responsible for entertaining complaints and taking disciplinary action, together with extending the remedial measures and available sanctions. The recommendation was to increase the maximum fine to $30,000 in line with payments made to lawyers and to those who made the conveyances, raising the eligibility standards and seeing to it that it remained so. The rules should also extend to issues regarding disclosure of conflicting interests.

Mr. Cleland argued that the reforms would not be effective if anybody was left out of the chain – especially those who were potential risks to the borrowers like property managers, letting and leasing agents and companies who charged fees rather than commission to clinch the deal. Unfortunately the Government has till date kept these elements out of the regulatory zone, including only real estate agents and sales personnel. But the harsh fact is that one out of every five complaints is against these very people. Mr. Cleland added that the institute was concerned about the extra costs that the setting up of new establishment would involve. Therefore the industry should be consulted about levies and other similar fees that may be imposed. Most members opined that the industry continued to focus on setting industry specific educational standards and also provide information to the consumers.

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