Posts Tagged ‘minneapolis’

The foreclosure virus is spreading. ACORN is a national organization scrutinizing its effect on low and middle-income communities. ACORN is working to empower communities to fight for social justice. Its report is very exposing and revealing. In April this year 535 families of St. Paul and Minneapolis were served foreclosure notices. In St. Paul the number was 24 times greater than in the same month the previous year. There were 5995 foreclosures, which meant 167% increases from 2005. It records the second largest percentage increase in US. . Minneapolis and St. Paul Bloomington have the 83rd highest foreclosure figures in US. Northern Minneapolis is the worst affected with seven of the top ten units being located here. It is apprehended that the situation is going to get the worse as the year advances. Interest rates of sub-prime loans are rising steadily. With more borrowers being unable to bear it foreclosures are inevitable. Initially floating interest rates had seemed attractive because there was the possibility of rates going down. Moreover the interest rates were lower than the conventional loans. But in reality the reverse has happened. Rates have begun to more than double in the jump. The situation is untenable for borrowers.

Sixty five year old Al Ynigues is a music instructor who has known his loan broker for five long years. A feeling of trust and confidence had been established. He now feels let down by this predatory lending. Ynigues is already two months behind in payments but he is still hopeful that the lender will negotiate for new terms.
ACORN has taken an aggressive stand for the sufferers and trying to enforce negotiation. Lenders use violence and abuse to threaten families. They are now being called upon to modify loans to make it viable. There is the option of a temporary foreclosure freeze. ACORN has given out a clarion call to all the jumbo sub-prime mortgage firms to suspend foreclosures for three months and to utilize this time to work out a schedule beneficial to both parties in the long term. The prime focus is on people continuing to live under their own roofs.
The ball is now in the court of the brokers. Ynigues says from his experience that lenders will never bend. Nevertheless with organizations coming forward aggressively he too is starting to nurse hopes.

Search Images

Bankers are watching and waiting with uncertainty the snowballing effect of the sub-prime tsunami crisis.

Even though April provided a breather by a dip of 1% in foreclosure listing, it was still up by 62% compared to last year. Even then it will be far above the average of last year. Statistics pouring in show a worsening of the situation. No one knows the actual number of active sub-prime mortgages, its source of origin or refinancing procedures in Northeast Minnesota and Northwest Wisconsin.

Risky loans had triggered off this crisis. Some of the biggest sub-prime lenders like Ameriquest and New Century Financial are toppling down.

Some regions of the country have remained untouched by this virus – Wyoming, Vermont, North and South Dakota, Mississippi, Delaware and Washington D.C. Topping the list are 10 cities of which six are in California. These six ranks first among the group of notorious 10. Las Vegas comes first. Others claiming this dubious distinction are Nevada, Colorado, Connecticut, Florida, Arizona, Illinois, Michigan, Ohio and Georgia. As a result of this fall out Michigan, Minneapolis and Ohio are reeling under massive layoffs.

Big national financial services are practically non-existent in some important regions. Yet sub-prime activity has been typical with apprehended results. Real estate businesses having taken a U turn, lenders are tightening loan conditions thus putting marginal borrowers in a soup. Their rates of mortgage interest are rising while the value of their property continues to plummet.

The situation is so alarming that Lutheran Social Services have come forward to provide pre-bankruptcy counseling in Minnesota and Douglas County. The sub-prime lending has hit not only the borrowers but also local banks and communities. A ‘teaser’ rate tempts the borrower to fall into the net. Later the net closes in on the catch with disastrous consequences to all but the lender-agent nexus. Sub-prime lending essentially steals business from smaller entities.

Authorities have come forward and tightening the belt of the law – a grim reminder that playing around with lending will attract felony charges coupled with compensation and damages. However it applies only to current frauds and does not extend backwards. Thus primarily the focus is on prevention.

Wisconsin is the only state that has no limits on interest rates. Pay-day lending has been rampant which many regard as an unhealthy drain on the economy. The heat is on to find a solution and save the people.

Via

Search Images