Posts Tagged ‘illinois’

Many experts opine that it is the debt culture that ultimately led to the foreclosure crisis. The banks are being accused of fuelling the debt culture of USA.

It was the Fallon Worldwide advertising firm that coined the catchy slogan “Live Richly” to lure the people into house equity loans. Initially many were wary of it – the genii that would teach the people to live beyond their means. But the slogan won the day. The genii was let loose – the forerunner of the foreclosure crisis.

The advertisement cost something to the tune of $1 billion as it thumped around the heads of people from 2001 to 2006. The people were brain washed to take house equity loans to live richly. One advertisement slyly suggested allowing the idea to sink in –“There’s go to be at least $25,000 hidden in your house. We can help you find it.” This is the beginning of the foreclosure story.

Till the other day these second loans were taken only as a last resort when there were no avenues left open. Today these loans have become the fashion – thanks to the shrewd ubiquitous propaganda operations of the banks.

Falling behind payments at record levels the entire country is enslaved by the genii of foreclosure. None of it would have been possible without the willful involvement of the lenders. They have spent billions in advertising to revise the very language of house loans pushing the American psyche towards debt. Being in debt has become something to be proud of. Today the banks too are paying the price for such chicanery. The genii of foreclosure has not spared them either. The countless numbers of foreclosures are dragging them down into the nightmare of credit crunch. The advertisements actively encouraged Americans to get into debt.

The other dangerous slogans were “Is your mortgage squeezing your wallet? Squeeze back” or “The smartest place to borrow? Your place.” In another advertisement there was a wheelbarrow with the line – “The easiest way to haul money out of your house.” The house was described in one as the “the ticket to whatever your heart desires.” Another one teased –“ You’ve put a lot of work into your home. Isn’t it time for your home to return the favor?” In 2004 a popular advertisement stated that for dreams to happen the best way is to use the home. All this screaming opened the doors to the foreclosure mess of today.

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The story of Dorothy Galbreath and foreclosure scammers is just one of the many dotting the scene – the stuff out of which novels are woven speaking of the times.

Doroth, a bus driver, had been married for long 43 years when death took away her husband. He had built her a house in University Park, Illinois. His death plunged her into financial troubles and she had a trying time keeping the foreclosure wolf from knocking at here door. Desperate she sought the help being offered by a company – Alternative Options. The end of the story is that today she has lost the house that had been her home. Alternative Options, took advantage of her age and vulnerability. She hardly had words to describe her situation. It was like being ‘crushed’ she said.

Legal experts opine that Dorothy became the victim of a typical foreclosure scam. The scammers operate in two ways. In the first kind a smart talking agent appears representing a company that may or may not exist. The person offers to negotiate with the lender to bring down the mortgage payment to an affordable figure. For this a hefty fee is taken after which the scammer vanishes; nothing is done. The second type of scam is even more dangerous. The firm promises to save the house from foreclosure but the borrower has to sign over the title to the rescuer. This is what happened to Dorothy. She was made to believe that Alternative Options would help her refinance but after waiting for a month she found herself falling further behind in payments. By the time she learnt of the fraud or even got suspicious it was already too late. It was not until she sat down across the table with Alternative Options that she came to know that the plan was to write over the title of the house. It was a psychological moment and she was rushed through it. The confidence building had been done previously. She found that she had sold the house at less than the market value. The company then leased it back to her and she was allowed to stay on as a tenant. But the rent was higher than the mortgage she was paying. She had the option of buying back her house but the price was exorbitant - $37,000 more than for what she had sold it for!

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The hunting instinct has not gone out of vogue – is very much there with outward cosmetic changes. Today busloads of hunters are on a foreclosure safari – trying to target sitting ducks. It is a common scene now – also in Prince William County.

Real estate companies chartered a bus carrying 25 prospective buyers to view the thousands of houses afflicted by foreclosures. This was the first tour of its kind in the region. Mortgage attorney Art Grace told the hunters that they have a great chance to snap up a deal. The public here are not even aware of the gold mine they are sitting on. The bus touched on nine foreclosed units in Gainesville and Haymarket within three hours. There were town-houses and stand-alone houses with price tags ranging from $200,000 to $600,000. One house was practically brand new.

The idea of bus tours is catching on across the country with similar buses rolling in California, Nevada, Michigan and Illinois. These states have been worst hit by the foreclosure crisis.
The spokesperson of the tour operator (Long & Foster Realtors) in Prince William, Eileen Durkan said that hearing about similar hunting parties in California she decided to set the wheels rolling here also. California ideas always run eastwards. She decided to pick it up fast. Compared to other areas in the D.C region Prince William has been severely mauled by foreclosures. In Washington, Arlington and Alexandria metro zone there were 28,455 foreclosure postings in 2007 making it rank 41 amongst the top 100 metros of US. The leading cities were Riverside, San Bernardino, California with 102,506 listings. Los Angeles, Long Beach recorded 93,696 foreclosures.

Amongst the hunter tourists were novices, investors and people who were just curious and interested. While on the bus the passengers were given information about foreclosure hunting by a house inspector, house warranty agent and a loan officer. Information brochures were distributed together with water bottles labeled ‘Foreclosure Tour’. One participant commented that the idea was great and would have been greater if it had started earlier.
Experts feel that if somehow the market is made to turn around things will improve. Right now there are too many units and too few buyers. With more foreclosures in the offing more houses are expected to roll in. Buyers are in a fix sans loan facilities. So it is a no go situation.

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The South Side Bank, Shore Bank is a bank with a difference. It lays great stress on community welfare. It has started a new high-interest account on the Internet to attract those savers who are socially committed. Long-term gains are tied to the health of the land and the people who live on it. It is foolish to ignore this fact. The bank is of the opinion that there are many who may be termed as responsible investors in equities.

Joseph Hasten joined the bank as its CEO last spring. He feels that there are many who have kept their investments in market or bank funds but may be persuaded to try out the offers of Shore Bank. Hasten wants to use these deposits to hasten development of community by taking head on the problems of the lending and borrowing. The focus is on 10,000 borrowers in Chicago South and West who are facing foreclosures. Refinancing and debt consolidation schemes are part of the strategy to bail them out.

Within the next year and a half these borrowers will be facing increased high rates of interest. Time is running out. The community needs immediate help. The country is sitting on a socio-economic time bomb kicked off by the sub-prime market that might explode any moment unless properly diffused.

Shore Bank’s new Saving Account, ShoreBank Direct offers an annual interest of 5%. It is more or less at par with other competitors like ING Direct paying 4.5% and EmigrantDirect offering 5.05%. The country’s average for passbook accounts is 0.44%. ShoreBank has provisions for clients to use a pc to route funds from any checking account to that particular Savings Account. Hasten is optimistic about raising $350 million. Since the past few years a number foundations and large corporate bodies have already come forward. Now the focus is on individuals.

The project is drawing attention. Forty nine year old David Farr is a resident of Ravenswood. He is by profession an architect and planner working for environmentally sustainable ventures. The online banking account attracts him for two reasons. He has a penchant for ShoreBank and secondly he is averse to going personally to banks. The idea of leaving his desk is anathema to him. So the basic plan of getting transactions operable through the computer is definitely interesting and likable.

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Hundreds and thousands of Iowans are ruing the day they took sub-prime loans. The situation is so alarming and grim that the state’s attorney general, Miller, has set up a hot line and sketched out a plan of action to help borrowers negotiate with the lenders for new terms.

It is reminiscent of the 1980 farm crisis when lenders honed in on farmers with foreclosures leading to a slump in the agricultural sector. At that time a private non-profit group acted as middlemen and saved many farms from foreclosure. Today also Miller is following the same strategy and working out a plan with house loan companies and the borrowers for alternatives.

Iowa ranks fourth among the highest foreclosure rate at 8.6%. Reliable data releases show that 30,616 sub-prime loans had been served notices and over 2,600 were in the middle of the process. 11.8% had gone into delinquency and 14.5 had crossed the time limit for making up dues.

Miller anticipates worse days ahead and points the accusing finger at the sub-prime market for being the prime suspect. Borrowers are traumatized when overnight monthly payments somersault to more than double. Sub-prime lenders had resorted to predatory tactics by falsely appraising property values and offering financial gratis to tempt borrowers. Many states have now clamped down prohibitory orders on such unethical methods.

The lenders too are in a soup with so many units going into foreclosure. So the best way is to establish links between the two ends of the pole says Thompson the director of Iowa Mediation Service. The best way will be to bring into effect a new agreement by which the lender avoids foreclosure expenses and other allied losses.

Miller has set into motion a task force comprising of 10 personnel to communicate with mortgage servicing companies and other investors so that the loan is modified to feasible levels and put a brake on foreclosures. Meetings will be held this month in Iowa and next month in Chicago.

The steps taken on the national level is a repeat of the Iowa experiment. Behind it is the acknowledgement of the fact that borrowers, lenders, investors as well as the mortgage companies all have their own interests at stake in this matter of foreclosures. The appeal is to the ethical self-interest of all parties concerned. The government too has its own axe to grind.

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Abandoned homes and ‘For Sale’ signs dotting the landscape send shivers down the community. Elected representative are humming and hawing about finding funds to fight the menace but others in the locality are not willing to buckle under without giving a fight.

Mayors in the Chicago region consisting of 272 members recently held a meeting and came up with viable suggestions like opening web sites to connect sufferers with licensed counselors. The local officials were looking at the problem from the angle of police and fire protection. How far that would get at the root of the problem is a moot question.

The problem has now taken on national jumbo proportions with 179,600 reporting of foreclosure filings in July. It is touching not only the dispossessed but also indirectly the entire area. Overgrown lawns, pending property taxes and other ills are penetrating each level of the socio-economic structure. The municipalities should see into the matter for sake of their own interests. The least the federal department concerned with housing and urban development can do is to connect the house owners with certified help agencies and hotlines.

In this matter the village hall has an important role. Psychologically the distressed will find it more comfortable to approach the latter rather than contact an impersonal faceless mortgage broker. According to a survey more than half the suffering house owners are in such a traumatic stage that they try to act like the proverbial ostrich burying their heads, hoping that the problem will disappear.

Help however is trickling through. Some non-profit groups are making use of public buildings to hold their seminars.

All the cases cannot be generalized. Each has a specific story to tell. For instance an individual invested in a number of houses in Lakewood Grove subdivision but already ten to fifteen of them have been abandoned. In other cases house owners let out the units on rent and then hiked up the rate as soon as lenders began to put the pressure. This led to the sudden eviction of many tenants. Houses became empty with piles of garbage on the front porch giving the entire community an off colour appearance.

The first thing is not to ignore the problem but to directly contact the lender. The latte does not want the house – but wants money. Respond to negotiations and be alert about legal pitfalls taking advice from proper quarters.

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In Carpentersville the Parrish family realized their house dreams with just the right touch in everything from the kitchen to the swimming pool. But soon the milk curdled. The man got ill. The woman lost her job. They both lost the house with memories and mementos unable to meet monthly mortgage payments. The foreclosure cancer closed in.

The Parrishes were only one in thousands in the Chicago region and across the country caught in the tentacles of the deadly foreclosure. In Elgin and South Elgin the first half saw a 32% hike since last year. It was the same elsewhere.

The blame is put not merely on unrealistic borrowers but on the general economic slowdown and changes in the lending sector. It is a raging storm. There has been a sharp shift from the traditional 30-year mortgage schemes to others with teasers like interest-only and the like. This has led to chaotic foreclosures.

Borrowers walked into it without giving a second thought to the rise in rate hake after a year or two. Many like the Parrishes complain that they were smart talked into the scheme. It was not just the borrowers but the lenders too faced a crisis. These new loans gave no importance to the equity issue. Without equity there is nothing to lose in a foreclosure. The way is open to bankruptcy. Stay put until the house is forcibly taken away.

The bitter pill for curing this ailment is to pay off the loan by selling the property and move into affordable rented quarters without the hanging sword of debts. But with hectic development work going on all around it gets difficult to sell the house. With stiff competition prices are bound to fall. The headache is not only for the borrower but for real estate agents as well where auctioneers find themselves unable to off load the weight at the end of the session. In fact the house of the Parrishes remains unsold even after a knocking off blow to the asking price.

The foreclosure numbers of 2007 will put to shame those of 2006! The faint ray of hope is that perhaps the crisis has reached its peak. This means that it couldn’t get much worse in some localities. The experience has been a shock to the Parrishes now living in rented accommodation where they continue to dream.

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Foreclosure rates in the county are skyrocketing. Chicago and it neighboring areas are hard hit due to foreclosures. Realty Trac.com reveals that the state of Illinois is one amongst the top ten states with a high foreclosure rate. Reports also reveal that the extent of foreclosure cases in Chicago and its neighboring areas are on a rise. As per the National Training and Information center, Chicago recorded a 36% increase in its foreclosure cases. The number of foreclosure cases in the city increased from 7558 in 2006 to 10,294 in 2007. This increase in its foreclosure cases in the current year is the highest since 1993.

The foreclosure problem in Chicago has also spread to its neighboring areas such as Austin. According to Michelle Rodriguez-Taylor, the city of Austin has witnessed a 65% increase in its foreclosure cases since the year 1993. Commenting on the foreclosure situation, Freddie Mac, one of the nation’s largest mortgage investors said that situation would further worsen due to a rise in the interest rate.

In order to express their concern over the rising foreclosure rate and create awareness regarding the same, several forums have been set up in areas such as Austin, Chicago etc and regular meeting are being held. Our staff reporter covered one such meeting that was held at Austin Senior Wellness Center on Saturday. Several foreclosure victims as well as real estate experts attended the meeting. Many of the experts expressed their views on the current foreclosure position in the area. Sighting reasons for the cause of foreclosure, U.S. Rep. Danny Davis (D-III.) stated that many homeowner sign mortgages contract, without obtaining adequate information about the condition of the loan.

As a result of which, they eventually end up loosing everything. Further adding, expert Rodriguez-Taylor said that several lending companies initially offer low rate of interest, which rises significantly within a short period of time, thus trapping needy borrowers. Michael van Zalinger of the Neighborhood Housing Services of Chicago made a good point in this respect. He highlighted sub prime lending to be the main cause of rising foreclosure rate in the area. This is because sub prime loans with a fixed rate starts rising significantly after a couple of years. The rising rate of interest makes it difficult for borrowers to keep up with payment, there by resulting in foreclosures.

At the end of the meeting National Foreclosure Prevention hot line number, 888-995-4673 was given, where foreclosure victims can seek help

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