Posts Tagged ‘michigan’

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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Foreclosure rescue scams are nothing new – they have always been there. It is just that recently they have reared their ugly heads to catch the limelight. Broadly there are three types of foreclosure rescue frauds.

The foreclosure rescuer charges excessive fees for ordinary phone calls – something that the borrower can easily do but does not do so because of the psychological state that the person is in. Taking advantage of the trauma the rescuer promises hope and succour but actually disappears with money at a time when the money problems are high. By hobnobbing with the scammers further damage is done by way of wasting time and not contacting bonafide counselors.

In the bail out method of fraud the victim of foreclosure is tricked into signing over the title on the good faith that he or she will be able to continue to remain in the house by being a renter and eventually with time will be able to buy back the house. But actually the terms of the agreement are so complicated and dubious that the owner never gets such an opportunity. Ultimately eviction takes place and the scammers walks away with the house.

A third type of foreclosure fraud is the bait and switch kind. The borrower signs papers thinking that the mortgage will become current but actually they are surrendering their title. Until eviction they do not even know the implications of that signature. It is very cleverly done. The fraudsters puts the ownership in a trust in the name of the owner in order to by-pass the clause of ‘due-on-sale’ present in most of the mortgages. Then they transfer ownership to themselves or to a third party they themselves have put up as a front. The house owner meanwhile continues to pay the mortgage on a house which he or she no longer owns.

The question is – why do the foreclosure victims fall prey to these predators? Primarily because they sign the original mortgage without understanding the paper works – in other words financial ignorance. The lenders do not explain it to them in easy language. There are many points that should be understood – time limit and rights of owners. Another reason is that the borrowers shy from talking with the lenders and spelling out their difficulties. There is a sense of shame that prevents them from coming forth. They take the blame on themselves to disastrous consequences making things worse.

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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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It is a three-pronged attack that will pin down house owners as foreclosures march relentlessly on. Taxes will rise, value of houses will fall together in shrinkage in services. These three curses will hibernate but sprout in spring. It is inevitable – the seeds having been sown by foreclosures.

To take few examples – Oakland County will see three consecutive years of decline in property tax amounting to $27.5 million; in Wayne County the fiscal year that ended on 30th September the value of property declined in all the 43 municipalities. Thus more and more communities are apprehending reduced collection of property tax during 2008 because of foreclosures. Michigan State will be lighter by $27.5 million in taxes in the forthcoming year. This reduction will tell upon less of funds for public schools, parks, jails and community colleges.

Oakland community personnel are gearing up to face a barrage of questions from house owners contesting tax assessments and demanding more community services. The only way the government can provide services is to raise taxes somehow. But there will be angry reactions to imposition of increased house taxes. Why should the common man pay more when the real estate price has gone down?

Those who have recently bought houses will not be affected. House owners who are residing for quite a number of years and have taken advantage of the state law that gave protection from rise even during the housing boom are not going to be spared now. The same law will now fix their taxes at par with the actual market value – means a rise from what it was before. Oakland will see tax collection shrink to 0.4% after many years of growth. The State government is fumbling to manage with state aid and skyrocketing health coverage costs for employees. The outcome is that 1,600 police personnel, more than 2,000 in the fire services have lost their jobs since the turn of this century. In each community there are more plans about layoffs.

Some city officials have already started to reschedule their finances. Decision will have to be taken about what to snip off. A revenue loss might be equivalent to funds required to keep streetlights on! In Warren, Detroit’s second largest city, two thirds of the budget rolls in from property taxes. It will be difficult to prune and trim a deficit of 1.5%.

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Mortgage Bankers Association announced that during the third quarter of this year foreclosures have reached an all time record peak since 1986. Economist Campbell speaking with staff writer of Newsday, Wagner, said that this will have a wide impact on the general economy. It will affect all house owners and not just those branded as foreclosures. He is however optimistic that by the following year the real estate market will get back on its rails. Housing market is tossed around by several factors.

The foreclosed house usually ends up in the court auction. The lenders, who are usually the banks, do not want to sit on these units. That is why the banks are not motivated by high price. They are willing to settle for low prices and this tends to push down the general real estate market. There are more houses in the market than ever before – thanks to foreclosures.
The general story in the housing market is that for every buyer there is a seller. When a buyer sells a unit he or she usually does so to buy another house. But in the case of foreclosure an owner in distress is selling the house. A loan is being paid off. This does not leave anything left over for buying another house. Thus too many foreclosures lead to imbalances with the supply being more than the demand. This causes prices to go down and has far reaching implications for the economy starting with the immediate locality.’ For Sale’ signs dotting the region make the neighbourhood looks eerie and abandoned. Criminal activity sets in. Nature hates vacuum. With development pausing, labourers and builders find themselves without work. Suppliers and others connected with house décor suffer. It sets of a chain reaction that touches adversely each corner of the regional society and economy.

However the housing sector will recover opines the esteemed economist. There is a silver lining in the cloud. The sub-prime sector in the mortgage industry might be in the red but the prime category is still alive and kicking. It means that those with reasonable levels of income and can invest in a small down payment can still avail of housing loans. By next year things may stabilize although it is unlikely that there will be a housing boom again. Unless there is a general economic recession the market will become healthy once more.

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One can hear the clink of the sword – it is expected to be brandished any moment. The Bush administration has come to an understanding with jumbo lenders and a freeze will be announced for five years. These are the lines of expectation. No details are as yet available.

The reaction to the news in Detroit even without official confirmation is positive. At least the government is doing something. In Michigan the foreclosure problem is exacerbated with unemployment issues –7.7% unemployed. It is the highest in the nation. This point alone will determine how effective other palliative efforts on foreclosures will be. The problem is jobs. Let the people have jobs and foreclosures will automatically be arrested – is the view of many.
In Lansing the state legislature passed a law lowering fixed rate loans but it is unsure what its fate will be in the Senate. Lately Washington has been showing increasing interest. The Federal Housing Administration has been modernized. It can raise more amounts for lending purposes and stringent laws have been passed to rope in predatory lending. Democrat Debbie Stabenow from Michigan has brought another proposal for waiving taxes on those mortgages that are settled for less the original value of the loan. Stabenow rues the slow pace of action because it is speed that is of vital importance in this matter. The delay is also being questioned. Some want quick fixes while others decry hasty action might lead to more foreclosures. Republican Walberg voted against a law that would curb aggressive lending saying that this would result in less money being available for loans, which would have an adverse effect on the entire market. However he clarified that he was in general for regulating the industry. This is especially required in Michigan that has no controls over agents.

An appropriation bill is most likely to be passed for sanctioning $200 million to non-profit organizations engaged in foreclosure counseling. Counselors play a key role in resolving the delicate issue of bringing together borrowers and lenders to thrash out matters amicably.
Meanwhile everyone is waiting with bated breath for the final announcement by Bush. The President has always harped on the fact that the taxpayer’s money should not be used to bail out those who had made lousy loans. It leaves many questions unanswered – who are going to benefit and how are the lenders going to react?

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For any real estate related problem like foreclosure the FHA can be contacted for genuine help. It is a semi-private agency controlled by the government. The aims are to help those with slim purses to become owners of houses. FHA does not itself advance loans but it negotiates with lenders to make the loan taking process smooth and easy.

The FHA has launched many programmes that have become popular. As per the 203(b) plan a 3% down payment can be made on a mortgage and not the usual 20% for purchasing or refinancing a house in which the owner wishes to reside or is residing respectively. There is however the condition that a mortgage insurance premium of 1.5% of the principal loan has to be added to the loan amount. That apart a monthly insurance premium on the mortgage calculated to be 0.5% of the main loan has to be paid. This will continue until the loan-to value ratio is 78% or equity of 22% has been built up.

Another programme is FHASecure. It is for people who have good credit ratings and have so far timely paid mortgage dues. This plan will help the borrowers to refinance their mortgage. This programme will save about 240,000 families. Here again there is a condition that those who are eligible for this plan will have to pay mortgage insurance premium. This will take care of the risk FHA is taking without burdening the taxpayer as regards insurance funds. The rate will be calculated according to the risk status of the borrowers. Those standing on shaky ground will have to pay more. The pricing schedule will come into effect from 1st January 2008.

To be eligible the borrower must show that there has never been any previous failure in timely repayments until the time of resetting as well as an unbroken history of employment; the present income must make repayment affordable. Thirdly only those will qualify whose mortgage interest rates fall under the anvil of resetting between June 2005 and December 2009. Fourthly the borrower must have at least 3% cash or equity on the property.
FHA schemes are for good borrowers but who were tricked off the course into high cost loans by initial teaser rates and other blatant temptations. Most of the victims are minorities who need a safe anchor to hold on to which will secure their mortgage and prosperity.

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In the Michigan real estate business the top option by many home buyers is to go in for Michigan foreclosed homes. This is based on sound reasoning that the Michigan foreclosure process is caused by many eventualities, namely bankruptcy, financial strain, death of house owner or shifting of residence to another place and the like, thereby the property owners defaults in repayment of the mortgage. The mortgage lenders are initiating the process of foreclosure for retrieval of their loan. Here the point to be noted is that the lender would have already got back a portion of the loan through paid installments and the remaining portion should only be recovered. So the mortgage lenders, private and public sector institutions like HUD, Banks and Insurance Companies, are ready to dispose of the property through foreclosure and are keen on getting back only the amount due to them. Michigan foreclosed homes also have this unique advantage.

Selecting the best location for purchase of a property is of paramount importance. The State of Michigan gets the merit of location ideal for investment as explained below:

The mid-western State of Michigan of the U.S.A. located in the east north central portion of the country, bounded by four great lakes, is blessed with the longest shoreline of freshwater in the world and second best in U.S., next only to Alaska. This is the only bi-peninsular state divided into Upper Peninsula and Lower Peninsula.

The State capital is Lansing and the largest city is the famous Detroit, a world-renowned automobile manufacturing venue. Michigan ranks 8th in the U.S. population-wise and has nearly 10 million people available for the realty market business.

Michigan has a humid continental climate throughout the state, irrespective of the two peninsular divisions, the Upper Peninsula being densely surrounded by green forests. More than 80% of the population is white Americans descended from Europe and the realty business is designed to suit their tastes in housing properties.

Economy wise Michigan State houses for high-tech employment in information technology, life sciences, engineering and heavy manufacturing inclusive of automotives. Apart from automobiles the State holds a pivotal position in manufacturing technology equipments like computers, hardware and software, bio-technology, Research and Development of technologies, aero-space equipments, which are mostly white-color jobs. The state provides ample scope for tourism development with its natural resources of forests in abundance and the related opportunities of employment. The personal per-capita income is assessed to be of 20th rank in the country. The important information for realty business is that Property taxes are assessed on the local level and not State level.

Hence, arising out of the factual advantages of location described above, Michigan also right on timing for realty business, particularly in Michigan foreclosed homes. The fact that increased availability of foreclosed homes due to downward trend in economy and mortgage lending interest rates, as prevalent elsewhere in the country is catching up Michigan also.

There are totally 143,918 foreclosed homes available for sale, listed in the MLS of Michigan at an average price of $169,900 and the Michigan foreclosed homes available are 39,169 Nos. at an average price of $96,999. With the above basic information, you are invited to get all the help, guidance and assistance in locating the exact Michigan foreclosed home of your choice as well as finalizing the deal amicably by visiting www.foreclosurelistings.com

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