Posts Tagged ‘crisis’

The long tentacles of foreclosures in USA are now reaching out to affect the global economy. It is spreading with no signs of retreat according to the International Monetary Fund. Reporting on the global financial situation as in April IMF states that that the international financial markets continued to be brittle with indications of risks being high on the agenda.

It is a year now since the foreclosure crisis has made its presence felt in USA.. The financial institutions have bared their losses but the story has not ended there – the infection is spreading to other types of credit.

The International Monetary Fund is an institution consisting of 185 nations. It stated, “Credit quality across many loan classes has begun to deteriorate with declining house prices and slowing economic growth.”

Till about a year ago the foreclosure crisis was mainly thrashing the borrowers. Slowly foreclosures began to strangle the lenders in the country. They had eaten too much and the huge number of foreclosures led to their suffering from indigestion. But America is a big brother to all countries across the globe. There is a saying that when USA sneezes the others catch a cold. All those who had eaten at the same foreclosure table of woes are now showing symptoms of discomfort and economic ill health. Banks are being pressurized to raise extra capital despite the depletion of huge bank stocks. This has “increased the likelihood of a negative interaction between banking system adjustment and the real economy” according to the latest report from Global Financial Stability.

At a news conference Jaime Caruana of IMF said, “the downside risks outlined in the April GFSR appear to be materializing, leading to a negative feedback loop between the financial system and the broader economy.”

According to IMF calculations the banks and other financial bodies have written off $400 billion in mortgage investments. There is no sign of improvement with innumerable foreclosures waiting to be auctioned and signs that millions more will become delinquent. The call of the hour is to stem the tide of foreclosures in USA. The stumbling of Fannie Mae and Freddie Mac has further eroded confidence.

Banks are tightening credit and selling assets. In the first quarter of this year the private sector borrowing of US dropped by 5.2%. This level has not been recorded since the year of the last recession – 2001.

Search Foreclosure Listings

• California Foreclosure Listings
• Texas Foreclosure Listings
• Florida Foreclosure Listings
• Michigan Foreclosure Listings
• Arizona Foreclosure Listings

Search Images

With the surging waves showing no signs of receding, New Yorkers continue to be hemmed in by foreclosure crisis. It is alleged that fraudulent sub-prime mortgage lending has led to this meltdown. Each single foreclosure has a snowballing effect and affects the surrounding neighbourhood – its environment and property values.

Foreclosures are a costly judicial process. It is more profitable for the lenders, in this critical situation, to keep the borrowers in the houses that are their homes, so that they can continue to pay monthly dues. Abandoned properties become a headache for municipalities as these attract crime and disease.

The State Legislature has come forth with specific plans to help the foreclosure victims in New York. Last year there were about 3,000 foreclosure postings in Erie County. The findings of The Western New York Law Center show that 20% of these postings are related to the sub-prime adjustable rate mortgages. To see that that the laws are finally passed the two parties must be jointly committed rising above petty politics. The governor’s plan has a good framework that should be acceptable to all. It entails the sending of timely foreclosure notice to the borrowers, who are then to contact housing counselors. The latter will be able to guide them through the negotiating process. The new law will make it mandatory for lenders and borrowers to sit across the table in the initial stages of the process.

So far it has often been the case that the proper authority with whom negotiation can be done remains unidentified. But now it becomes compulsory that the appropriate person or authorized persons must do the talking without prevaricating. Lenders have complained that the foreclosure operation is too lengthy and a quicker way out would be welcomes. In Erie County the foreclosure process takes 135 days to run through its full course. The governor’s bill addresses all the issues in detail

A Wall Street Journal reports that by the latter end of 2006, about 61% of the sub-prime loans had gone into foreclosure. But most of the borrowers had enough credit scores to enable them to opt for conventional loans having better terms. It is generally understood that the lender will consider the repayment ability of the borrower after the expiry of the ‘teaser’ rates. It is the duty of the lender to see to the interests of the borrower and not to try to trip him or her anyhow and somehow.

Search Foreclosure Listings

• Georgia Foreclosure Listings
• North Carolina Foreclosure Listings
• New York Foreclosure Listings
• South Dakota Foreclosure Listings
• Texas Foreclosure Listings

Search Images

Across USA about 750,000 houses went into foreclosures. There are gloomy predictions that the number will rise to more than a million in 2008. With so many houses up for foreclosure auctions and sales, the real estate market is tottering with prices plummeting. This is the natural process of demand and supply. Houses not directly affected by foreclosures are also selling off because of criminal activities in abandoned houses.

Ohio is one of the hardest hit pockets. The foreclosure crisis is raging through Ti-state neighbourhoods. Foreclosures are whimsical – not caring about economic or social brackets. A drive through Tri-state neighbourhoods will show up many For Sale signs like pock marks on an otherwise smooth skin. Analysts have no heartening news – it will get worse before it gets better.
Andy Adams is also a familiar figure in the region during these troubled times. The lenders, usually the banks, contact Andy and his team. Their job is to secure the property after the previous owners have vacated it. It is brisk business with orders rolling in without a break. Locks have to be changed. The previous owners are given about a month’s time to collect their personal belongings
There are many ways of looking at the foreclosure problem Dan Hickman representing American Mortgage Company opines that foreclosure is a standard procedure by which the market corrects itself. He admits that the industry may have over reached itself in granting credit but that alone cannot explain the magnitude of this foreclosure fiasco. There are social reasons. Life styles have changed causing rise in illness and divorce – all resulting in decrease of income. Government regulations cannot rectify things overnight. Others from the mortgage sector say that the personal responsibility factor cannot be overlooked. The borrower is obliged to make the monthly payments for a loan that has been advanced to him or her. However all agree that the tsunami proportions of the foreclosure crisis cannot be easily explained away.

It is interesting to note that foreclosures are also touching upper class localities. Andy has worked on over 70 houses during the last two months. Immediately after Christmas he has four more on his list. Andy seems to be omnipresent!

Lawmakers are in a huddle wanting to tighten lending laws and insisting on lenders providing details. The Chief Justice of Ohio is requesting lawyers to be more cooperative with the foreclosure victims.

Search Images

Howling scavengers – the jackals and vultures, inevitably follow the predators. Rescue scammers who pose as helpers have closely followed the foreclosure crisis. The traumatized victims cry on their shoulders only to discover later that whatever was left in their pockets have been neatly picked.

A federal indictment report exposed that six people were accused of falsely acquiring title to dozens of houses. Questionable bank loans had been taken against these houses – the total amounting to more than $20 million. It was all part of a rescue game plan. The scam continued from November 2003 up to April 2005 focusing on house owners in Brooklyn and Bronx – the two boroughs of New York City.

Impending foreclosures had traumatized the owners and the cheats assured them that by deeding them the house trouble would be avoided. The argument was that the good credit of the helpers would enable the latter to get suitable bank loans that would finally stave off foreclosures. Third party ‘straw buyers’ would enjoy the title for about a year, pay off the original dues and make payments on the new mortgage. In reality the offenders paid off the original loans and pocketed the extra cash.

Lax lending practices and rising interests between 2005 and 2006, falling real estate market and shaky borrowers all contributed to the foreclosure meltdown. Thousands with weak credit history availed of sub-prime loans which were not otherwise available to them in the prime category. This led to defaults, delinquency and foreclosure. The chapter usually ended with auction and take over of the house by the banks or lenders.
During the third quarter this year there were 447,000 foreclosures in the country – the figures being inclusive of all categories of mortgages. Last year the figure was half this number – 223,000 amounting to a 34% rise.

The accused were also charged for submitting irregular false documents to various banks to inflate the value of houses so as to obtain sizeable loans for these straw buyers.
Some of the defendants – Maurice McDowall, Andrea Moore, Kerri Clarke, Marina Dubin and Michael Irving were part of rescue companies named Lost and Found Recovery LLC and Homes U us USA LLC. Another defendant, Alexander Lipkin was a mortgage broker for AGA Capital, New York. More than $1.4 million had been netted in through unscrupulous loans.
The defending attorneys remained tight lipped and unavailable for comment.

Search Images