Posts Tagged ‘lenders’

Foreclosure rescue companies are duping victims with teasing signboards promising purchase of house with cash or refinancing the loan with the bonus of a 7 day vacation! They take a fee ranging from $1,000 to $2,500 promising the sky.

The line of approach is the same everywhere with variations from one case to another. The scammers promise to open communication lines with the lenders and arbitrate as regards terms. The most dangerous is the deeding of the house to a third party assuring the borrowers that apparently they will get a breather to get back on their feet. Unfortunately in nine cases out of ten the medicines have proved to be more dangerous than the disease itself. On the one hand foreclosures gallop ahead and on the other following its trail are the vultures – the scammers. It has become a thriving business.

Many states have taken the lead in helping the borrowers to be warned of these dangerous elements. So far 18 states have taken legal measures to prevent foreclosure rescue scams by hemming in the practice with regulations. Six states – Idaho, Maine, Nebraska, Oregon, Virginia as well as Washington enacted the law this year. Florida is set to pass a similar law. The National Conference of State Legislators released this information.

The steps taken will allow the house owners few days time to cancel contracts made with these dubious companies without incurring any penalty. If the house is sold then 80% to 82% of the proceeds has to be given to the original owners. All this will require a written contract. Patricia Lantz (D), Washington State Rep, said that the main purpose is to le let the word circulate that these sort of predators picking the bones of hapless foreclosure victims will not be tolerated. She strongly added, “This is a deterrent to the worst of the worst.”

In 2007 Maryland already had a similar law targeting the scammers but this year in the last session a tougher stand has been taken banning any form of transfer of deed altogether. Washington D.C. and Massachusetts have such strict laws. The Bay State put a full stop permanently on foreclosure rescue scams with an eye to profits through an attorney general’s regulation. Most of the above board foreclosure rescue operations come from non-profit groups and do not normally charge fees. The usual procedure is for house owners seeking them out and not the reverse. On the other hand scammers locate the victims by combing through public records and the like.

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The courtrooms in Bakersfield, California are jam-packed leaving standing space only. Auctioneer Sam Marshall says it is big business as the numbers roll in. Banks are desperate to reduce their inventory as they are weighed down with innumerable foreclosures. Foreclosure numbers are now breaking own records in the first quarter of the current year 2008, according Mortgage Bankers Association.

The house owners were initially hit by spiraling interest rates from sub-prim loans but now the menace is falling real estate prices that is making it impossible for either lenders or borrowers to sell the units and wiggle out of the foreclosure mess. For the borrowers there is no point in carrying on with a mortgage wherein the value of the house is less than the loan balance. So the latest tendency is to walk away leaving the keys with the lenders. Now these lenders are turning to auctions to relieve themselves of the load as vacant houses are creating problems and public as well as local government outrage.

The states that saw the highest number of new foreclosures are now seeing the greatest fall in the housing markets. Prices in Nevada, Florida and Arizona and California are down by 27%, 25% and 14% respectively.

The bust in the housing market is affecting many like Rick Boardman. When the housing sector was booming in 2000 Boardman took out his funds from stocks and put it into something real and solid like property. He was confident that this was good investment – something that would upbeat his lifestyle. He and his wife purchased 20 acres of invaluable property in Maryland, waterfront area. He constructed two units – he would sell one and with the profits build his own dream house to reside in. But with the sudden downturn in the market the dream has turned into the nightmare of not being able to pay for mortgage dues.

The real estate tumble down is now spreading its tentacles to the prime loan takers also. It is crossing economic frontiers to threaten fancy gated mansions and million dollar vacation houses. Foreclosures increased by an astronomical 90% from what it were the previous year. Foreclosures include all the stages of the judicial process from default notice to court auction and bank repossession. Some areas continue to be worse off than others. California foreclosure figures have jumped by 350% and it includes traditional loans as well and that too during the spring nest-building season.

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A foreclosure tsunami is raging over the country. The adjustable rate mortgages are spiking, jobs are vanishing, prices are rising and real estate is falling. All have combined to make it impossible for mortgage holders to continue with monthly payments. But they need not despair.
Housing experts and counselors have many suggestions up their sleeves. One can come to an understanding with the lender, credit counselors can be contacted, efforts can be made to sell the house, the bank can be given possession of the house or one can simply walk away without paying the mortgage dues. For a traumatized house owner facing foreclosure and eviction these suggestions are confusing – difficult to cut through the thicket of tips and advices. Some of the advice comes from unreliable dangerous sources. So the best is to keep cool and realize that this is not the end of the world.
The first thing is not to be an ostrich and bury problems below the sand but to face it. Letters and notices from the lender need to be opened promptly. Shutting down communication lines will only worsen matters. If lenders do not get any response from the borrowers then they are left with no alternative but to file foreclosures.
The lender is not the bogey as is usually made out to be. Given the present scenario they are far from keen to pursue the path of foreclosure. It is a time, money and energy consuming judicial process. While it is running the lender does not get any payments. At the end of it the lender is saddled with one of the countless units that are difficult to sell. Thus lenders are willing to negotiate – especially with those who have just started to lag behind in mortgage payments. The lender might lower the rate, extend the span of time of the loan or allow the borrower some time to catch up with the missed payments in installments. Mark Zandi of Moody’s Economy.com strongly urges that the borrower should contact the mortgage servicer without delay. Copies of all the correspondence should be carefully filed and kept.
Sometimes wonders do happen and lenders might be willing to negotiate even with those who are far behind in their payment schedules.
With mortgages mounting nothing can be predicted about what attitude the lenders will take. It is best to approach them with a positive plan and not just state that payments cannot be made.

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In the first quarter of 2008, San Fernando Valley foreclosures skyrocketed to 201% in comparison to the previous year sending warning shivers that worse foreclosure days are ahead. Home prices took another pounding.

During the month of April there were 608 foreclosures as against 2002 in April of the previous year. There were 511 foreclosures in March. This is according to the Economic Research Centre of San Fernando Valley.

Foreclosures are galloping forward to break its own record of 1,854 made during the third quarter of 1996. That was the most recent time when the housing sector was in the doldrums according to Daniel Blake of California State University in Northridge. The signs point to the worsening record-breaking foreclosures.

With a surfeit in house numbers in the market the average price for a single-family unit fell to $505,000 marking 21% loss. However there is a small ray of hope – it is up by $5,000 from last month.

In April 2007 there were 663 default notices. But in this April of 2008 it shot up to 1,560 according to Andrew LaPage of DataQuick Information Systems. In April this year the sale figures were 964 units (new, old as well as condos). It is the lowest since DataQuick started tracking from 1988. From March this year there was a slight increase – the third running month. It was first month-to-month gain (March –April) from 2004. The findings from two other tracking sources show the same trend of increase in monthly sales gains. Perhaps the corner is being turned with more deals being picked up. Lenders having got their house in comparative order are not shutting out borrowers anymore.

As compared to Los Angeles, the valley fared comparatively better. In the county the sales fell by 31% from the previous year. There were 5,016 sale deals according to DataQuick. In all the six counties sales dropped by 19% with 15,615 deals. In the last 8 months this is the highest figure but the lowest ever recorded for April.

But there is a reluctance to be too optimistic. Statistics can be read in many ways. The year-over-year count is nothing to crow about. The financial markets are in turmoil with maxi and mini loans setting no parameters. It needs watching over several months before commenting. Perhaps the various preventive efforts are at last beginning to show results. Or perhaps it is just the River of Economics following its own predestined course.

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The Cleveland foreclosure crisis is worsening from day to day. The neighbourhoods of the city are dotted with vacant houses, owned by lenders or the banks. Financial bodies now possess more than 11,000 properties in Cuyahoga County according to project reports undertaken by Case Western Reserve University. The numbers account for more than half the units in Cleveland. The banks are selling these houses for peanuts to investors who are snatching them up for some hundred dollars!

James Odell Barnes has for 30 years been the first person Wall Street lenders called when they wanted to get rid of foreclosed houses. Currently Barnes is buying 100 houses in a week in Cleveland and Detroit. He is a broker and helps investors buy houses for as low a rate as $250 per house. In turn the investors sell them at a price that is 20 or 30 times higher than what they paid. David Green is a worker in a restaurant. He is seeing hand written signs on houses in the locality offering rent at less than half the price his restaurant is paying. Green has now entered the game and trying to fix a house he had bought for $18,000 in the middle of the town. Like him there had been 100 to 150 buyers who had bought similar houses from one Jeff Ball. Ball explains that he is meticulously matches the houses with the income of the potential buyers to make the transaction viable and affordable. This scheme greatly helps those with bad credit.

But it has not been smooth sailing for all the brokers. Some have become very unpopular. Destiny Ventures of Tulsa has been twice tried in court for violating code. They did not come to court and were unwilling to pay fines. The court seized a bank account to adjust one set of fines.

At this point another danger is brewing following on the footsteps of the foreclosure crisis. It is the investors who are buying up units for a song and then flipping them for neat profits. When local buyers are not available these sellers go online. Five buyers have contacted from Canada to buy houses in Toledo and Cleveland. The local administration is a bit worried about the influx of outsiders who might not be held accountable for the health of the locality, as they are interested only in the flipping.

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Adamaitis of Direct Mortgage Services said that in the long run persistence and perseverance pays when trying to avoid foreclosure. Adamaitis has most of his dealings in foreclosure-riddled Florida. Of all the innumerable cases he handled a particular one has remained etched in his memory. One day a woman from Manchester contacted him saying that the lender who had issued her a sub-prime mortgage had downed shutters. But her interest rate had jumped by 10% - something well beyond her affordability limits. Ultimately she was able to coax it down to 5%. Her monthly payment dropped by $, 1000 but not without a lot of running from pillar to post to make somebody listen to her. For full nine months she made phone calls, sent written pleas to congressmen and penned a formal complaint to the New Hampshire Banking Department before catching the ear of somebody that mattered. If she had not persisted and given up after the failure of the first phone call, her house would have been gobbled by foreclosures. Half the battle is won when somebody starts listening.

Whether one has fallen behind in mortgage payments or is about to do so there are steps that can be taken to avoid foreclosure. Foreclosure is not inevitable. Avoiding it may be difficult but not impossible. The resources available and its application are individual specific. The worst thing to do is not to do anything at all!

The very first thing to do is to contact the lender at the very initial stage when warning lights about impending financial trouble is blinking. It is not advisable to avoid creditors considering the present scenario. Today they are crushed by the sheer weight of foreclosure numbers and are as eager to avoid foreclosure as the borrower. Nothing can be said for sure but in all probability interest rates will be reduced and the mortgage changed to a long term fixed rate. This will make the contract viable and realistic.

Another point to remember that the ‘lender’ to contact is not usually the bank but the loan-servicing agency that collects the mortgages. Admaitis admits that in reality the first, second or even third person contacted turns out to be downright rude. Lenders turn a deaf ear to borrowers who are overdue for 90 days or more. Nevertheless one by one the clerks have to be side stepped to reach the proper person.

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Foreclosures are challenging Congress and as yet seem to be enjoying the last laugh. Democrat Rep. Tim Walz speaks about his own personal experience. The house next to his has been in foreclosure for more than a year and pulled down the value of his own unit by 20%. The story of Walz is being repeated all over Minnesota with the bursting of the housing bubble. Both Democrats and Republicans are harangued with complaints from community leaders about the rot spreading from foreclosed vacant houses. Leaders of both parties are huddled together sitting at the same table desperate to find solutions to tackle the common enemy.

The House and Senate have passed bills and more are in the offing. There are doubts if the Democratic led Congress will be able to come to terms with Bush administration and the President’s veto threat.

The House bill consists of three parts aimed at avoiding foreclosures with the hope of bringing back the mortgage market to its rails. It allotted greater powers to the Federal Housing Agency to be able to insure refinanced mortgages. On their part the lenders would have to reduce the amount of loan in tune with the prevailing market prices. Secondly the bill allows $11 billion as tax credits to buyers and mortgage holders who refrain form itemizing their respective tax deductions. This also includes the granting of $7,500 to new buyers. It allots to the state $10 billion for floating mortgage revenue bonds to help in the refinancing of sub-prime mortgages. Thirdly the bill made changes in the Freddie Mac and Fannie Mae mortgage companies that are federally sponsored.

Democrats together with a large Republican approval supported the bill but the numbers were not strong enough to override the veto threat. The critics said that it was a bail out for buyers by putting the market at jeopardy. Republican Rep. John Kline criticized the bill for doing ‘little to address the current foreclosure problems’. The market should be allowed to find its level. However he did not oppose other forms of assistance. Walz stressed on voluntary moves between lenders and borrowers. He did not want the blame game to sling mud at each other. His contention was that since the forest is already on fire something should be immediately done before arguing about who started it. The problem should be tackled keeping in view the interests of the borrowers, the mortgage industry as well as the market.

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South Bay foreclosure figures are alarming. The question is – how much more can this region take? Statistics show that on each average working day there are 1,038 foreclosure related auctions. In April Santa Clara County recorded 500 postings – this being a 47% hike from the previous month of March 2008 and a 585 jump from April 2007. The county now ranks 40th in March this year among the counties in California a regards foreclosures per capita. Loans worth $292.4 million were foreclosed upon last March.
Foreclosure is a judicial process. Of late it has hit the headlines because of the alarming increase in numbers. When a borrower defaults a notice is sent regarding foreclosure. The county records office is also intimated. If after about four months the borrower is unable to become current in mortgage dues then an auction sale is conducted at the courthouse. For last year or so the houses are not being sold at the public auctions and are reverting back to the bankers. The latter are offering huge discounts but even that is not letting the ball start rolling in the real estate market.
In Santa Clara on an average 15% discount is being offered at the auctions. It means that if the previous owner owed the bank $400,000 the bank isnow willing to settle the matter for $340,000. Increase in default notices point to escalation of the foreclosure crisis. It is definitely not petering off. In April there were 44,101 notices in the state. It was an increase of 14% from January 2008. The lenders are now more often agreeing to short sales for a quick settlement of the matter without going through the whole process of foreclosures. A short sale takes place when the lender allows the borrower to sell the house even though the value of the house is less than the loan amount. However the process of short sale involving approvals from the lenders is painstakingly slow. Invariably the borrowers complain that they have managed to find a buyer in these difficult days but the approval has not come through. So the deal is put off. The lenders complain that they are deluged with such requests and do not have the infrastructure to deal with it swiftly. Each one is a specific case and has to be handled accordingly. The best way is to seek refinancing and modification so that the borrower can continue to stay in the house that is the home.

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