Posts Tagged ‘Foreclosure’

While foreclosures across the nation are skyrocketing, foreclosures in Coweta are towering above the USA average. Going by advertisements inserted in Times-Herald the tendency of staggering increases is noticeable. From 70 in July 2007 it jumped to 136 in July 2008 marking a hike of 94%. During this period the national increase was by 55%. It calculated to a national foreclosure rate of 1:464 in July.

Coweta figures show that since May 2008 the foreclosure rate is 1:332 – far above the national rate. The insertions in the Times-Herald about foreclosed houses have been steadily but surely increasing. From July to August 2007 the numbers shot up from 70 to 112 respectively. It touched a high peak of 156 in January 2008. For August 2008 there have been 137 advertisements as against 112 in August 2007.

Dr. William Joey Smith of West Georgia University said that hitherto the predictions that the housing market would ‘bottom out’ months ago were wrong. None will deny that the banks are in good shape. This has led to rethinking that it might take a much longer time for the foreclosure crisis to stabilize. Contrary to anticipations the situation has worsened in many places than before.

Coweta County is not alone in its suffering. In Troup County the foreclosure rate is 1:915. In Merewether and Fayette it is 1:205 and 1:532 respectively. It is worse in Carroll County where the foreclosure rate is 1:270. In Fulton County it is higher still with the foreclosure rate being 1:156.

Mark Manis of Wheeler’s Building Supply remarks that the housing market is very tough. Recently Wheeler’s Building slipped into bankruptcy earlier in 2008 but since then it has undergone a change and resurfaced keeping the same name. Foreclosures so far have concentrated in certain pockets of metro Atlanta. There are indications that it is spreading to other parts of North Georgia and that is not good news at all. The road ahead is “fraught with peril.”

Realtor Frank Barron of Lindsey’s Inc in Newnan admits that he made a mistake by saying at one stage that the market had “hit the bottom”. He does not think that the bottom has been reached as yet but perhaps the tendency is that the market is slowly edging towards it. The sales figure of July makes him optimistic. It is much better than what it was previously. By late 2009 and 2010 it seems the situation will take a positive turn.

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It is a misconception to think that a short sale is a quick way out of foreclosures – it is not so. Buying a property on short sale involves a lot of complications – the process consumes more time and energy than opting for any other kind of real estate. Southland real estate agents however are co-operating with potential borrowers so that in this foreclosure climate they can make the best bargain.

Andre Hooks a realtor working with Century 21 Masters in Walnut is frank with his customers. Buying a short sale property might take time – anything from two months to a year. It all depends on the attitude of the lender, usually the bank. But if the purchaser has the patience then a deal can be snapped up at bargain price. Foreclosures have made the real estate into a buyer’s market.

A short sale, put very simply, is the option borrowers threatened with foreclosure have. It can be executed when a default notice has been given but foreclosures have not formally kicked off. In the present market mood, buffeted by foreclosures, the value of the house has fallen to less than the loan amount. In such a situation the lender has to permit the short sale so that at least something can be recovered and the bank does not have to go through the time, energy and dollar consuming foreclosure process. The borrower by opting for a short sale avoids the ignominy of a foreclosure that will stain credit records for quite a few years.

Hooks advises that the potential buyer must bear in mind that the bank is ready to suffer a loss just to get the load off its shoulders. He also advises his customers not to spend funds on appraisals and inspections until and unless the bank gives the green signal for the short sale. The purchases should not throw away money but be on the guard. A short sale cannot take place without the written approval of the lender.

Realtors are commuting between those surrendering their houses and those looking for affordable housing. It is the fall out from the foreclosure crisis. The people just cannot keep up with enhanced mortgage payments.

Fontana has recently seen a spate of foreclosure listings. This has led to short sales but the procedure is something quite different from other types of sale. One realtor says, “It’s a different animal!”

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South Florida cities are no longer willing to lie low – they are fighting foreclosures tooth and nail. As foreclosures leave behind a trail of vacant houses it is the taxpayer’s who are feeling the pinch of keeping the neighbourhood safe and clean. Deerfield Beach has sanctioned money for the maintenance of foreclosed units.

The foreclosure numbers are galloping ahead in Florida without any signs of slowing down. The rates spiked in Broward and Miami-Dade counties within one year from 2006 to 2007. Miami-Dade reported 9,814 foreclosures in2006. This increased to 26,931 in 2007. In Broward County the jump was from 516 to 3,616 in 2007. This is having a chain reaction on those who are not foreclosed upon for indirect reasons. Property values of all are plumbing down with neighbourhoods becoming unsafe hemmed in by vacant foreclosed houses.

Dino Lapena is a resident of Deerfield Beach. He complained that the adjacent property has remained derelict since it was foreclosed. This is bringing a bad name to the entire locality that was once a ‘nice neighbourhood’. He said that a nearby house that had been worth $300,000 was sold for $180,000. There are no buyers despite the surge in vacant foreclosed units.

Deerfield Beach Commission approved last week the sanctioning of $50,000 as emergency fund to appoint contractors for mowing lawns, cleaning pools etc. Some of the fetid pools are breeding mosquitoes and disease is spreading. At places the grass is 4’ high reported Michael Mahaney the city manager.

Deerfield Beach noted 81 foreclosures in 2007 but this year it has already crossed 600 in June 2008. A meeting of the Code Enforcement Board was held to decide on the condition of the foreclosed vacant houses. Mahaney wanted as many as 37 houses to be declared unsafe and a threat to the locality. This will not solve the continuing foreclosure problem but it will somewhat address the safety and health related issues of the locality. The money will be realized by placing liens on the properties that will be dealt with. It is uncertain when the money will be realized but what is certain that prevention will be taken so that innocent children do not die from West Nile fever. When the board gives the green signal, clearing and cleaning operations will swing into action from Thursday.

Palmetto Bay leaders are taking similar action.

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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.

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There are many foreclosure victims in Region 8 although the situation here is not so bad as the rest of the country. Recently West Tennessee Legal Services are providing help to Legal Aid for them to reach out to risk house owners of Arkansas. It is foreclosure counseling. Those who are lagging behind few months in mortgage payments may call on them to be advised about it. Their income and expenditure are budgeted to find out what has been the root cause for their falling into foreclosure. Brian Miles of Legal Aid said that in many cases the houses have been saved due to timely action. Usually the foreclosure victims are so traumatized that they do not know what to do when.

There are myriad of reasons for borrowers to lag behind and come under the cloud of foreclosures. Sometimes it is health problems. For the majority it is the hike in interest rates. The ARM’s have gone up to such high niches that it is impossible for them to keep up with it. The aid group finds out how much they can afford and then puts forth the suggestions to the lenders. The goal is to save the houses and stop evictions. Nobody – lender or borrower, state or community wants abandoned empty houses. The Legal Aid group puts forward proposals to the lenders to avoid foreclosures.

In 2008 up till now Legal Aid of Arkansas has tackled 18 foreclosure related cases. Of these only few houses could be saved. At present 16 cases are running in Region 8. By not opening mails from lenders the borrowers make a great mistake. It leads to a point of no return. If they are made aware that help is at hand they would not resort to this ostrich like behaviour and bury their heads in the sand hoping that the problem will blow over.

The programme is specifically directed at Poinsett, Greene and Craighead counties. A survey done by NeighborWorks show that these are one of the worst hit zones. Miles is optimistic that many houses can be saved because the banks are actually reluctant to take them back. It is not a seller’s market right now. All that is required is to give them a reason for them to give the borrower a chance to delay or stop foreclosure. It is not a governmental bail out but a way of showing that the authorities are trying to help.

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Those who are planning to buy a house today should get set to hard digging for diamonds in foreclosure mines. The first requisite is a good credit history. There is much talk going on about the mounting number of foreclosed houses begging to be sold at discounts but before being carried away it is well to consider some basic points – the potentials of the properties and the resources of the buyer. The two must match.

In May the number of foreclosed houses shot up to 9,670 in Illinois according to RealtyTrac. It calculated to a 15% hike from April and a jump of about 42% from April 2007. The figures include the properties in various stage of foreclosure starting from default to court auction notices and ending with bank repossessions.

The list of foreclosure postings is practically unending – there is so much going around that the buyer and easily afford to pick and choose. But Susan Sirles Fidler a realtor working with Re/Max had a word of caution. The stuff seems to be almost free but the condition is such that perhaps the arms and legs of the units have been amputated and have to be put together to make it viable – no mean job. So the buyer has not only to be wary but has also to be smart to be sure that the joints of the house are not falling apart before pitching in.

Among the many first time nest builders is 22-year-old Krystina Pratt of Chicago. She was surprised going through the inventory at the sheer contrast before her. Some houses were in superb condition while many others were covered with mould and leaking water – could hardly stand up straight. The shattered windows and graffiti were clear indications that squatters had played ball with it. Many of the fittings and fixtures had been yanked off. Finally she waited till winter was over to start searching again. This time she decided on an 1878 house in Grand Central Crossing.
Although it had been lying vacant for over a year this one had not been boarded up. There were neither broken windows nor graffiti. The plumbing was missing but the some items like water heater, kitchen cabinets and other woodwork were in shipshape condition. She offered $45,000 against the asking price of $44,900 to be sure that she was not refused. Here experience helped her because previously she had lost on two bids because others made cash offers.

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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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Most of the jumbo lenders have agreed to stipulate certain common guidelines to mitigate problems of foreclosure. The aim will be to highlight options and alternatives before proceeding with the same.

The plan however is voluntary without legal bindings. It was released by the Hope Now alliance – a federally baked group of lenders and mortgage servicers. The framework of action – the first of its kind – outlines what the lenders should do and what borrowers should expect regarding some key points of the foreclosure process. It takes into account the fact that many lenders do not have sufficient employees to handle the surge of complaints pouring in. Some lenders seem to be evasive about loan changes that would put a halt to foreclosures.

One of key headaches of foreclosures will be addressed. The frequent complaint is that the hot lines of lenders are always busy and little help is forthcoming from the employees. Either one has to hold on to the line for a long time otherwise the line is passed on to sometimes as five different extensions. Sarah Fouqart of Greenpath Debt Solutions who gets referrals from Hope Now has similar complaints. But with the new guidelines coming into force the lenders will either positively or negatively respond within 45 days of dispatching papers. Previously it took four to six weeks.

The line of approach will be individual specific. Some may be counseled to cut down on spending habits and go under the scan of an affordability-analysis that will survey all the pending debts. There is no one silver bullet for the myriad housing challenges. But by following set rules of action impact will be maximum and perceptible. This is the opinion of Robert K. Steel Treasury Department’s Under Secretary for domestic finance.

Other options are outlined – temporary halt of payments, reductions of interest rates for some time, as well as granting of federally backed loans to make up 12 months of delinquent installments.

Some were critical about difficult lenders being persuaded to follow guidelines. Attorney Mario Dosso is skeptical about new protection or rights about foreclosure victims. It is generally believed that no miracles will take place. Rather, while the talk goes on so too will foreclosures. This means mounting legal expenses and penalties.

Hope Now however is optimistic that these moves are signs about the sincerity of the mortgage industry to tackle positively the growing foreclosure crisis. Hope Now took off with the blessings of White House last year.

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