Posts Tagged ‘mortage’

Foreclosures in Weld County during the first quarter of the current year showed an increase of 26% in comparison to the same quarter of 2007 as per reports released by Colorado Division of Housing. There were 813 foreclosure postings – the second highest in the state. It was a drop of 2.5% from 834 filings that had been listed during the last quarter of 2007. Denver had the highest postings – 2,042. Weld came second with the foreclosure rate being 1:102. Across the state the rate was 1:159.

According to Matt Revitte of ProRealty the figures point to rough days ahead – “there’s still pain to be had” he said. Mortgage lender Angel Fuchs said that the numbers should not be a cause of surprise. It was expected, considering the entry of new set of adjustable mortgage rates being reset.

Across Colorado State there was an increase of 23% in foreclosure activity during the first quarter as compared to that of the previous year of 2007. Foreclosure postings increased by 6% from last quarter of 2007. During the first three months of the current year there were 11,630 foreclosure listings – an increase from 10,995 recorded during 2007, last quarter. In 2007 first quarter there were 9,443 foreclosure listings. During the whole year 39,915 foreclosures had been noted.

It is predicted that foreclosures will spike by 15% in comparison to 2007. It increased by 40% during 2007 and by 30% during 2006.

In Weld County thee were 442 foreclosure sales. Due to change in foreclosure laws it will not be able to collect sales data until the latter half of the year. More time is being now given between sale notice and auction proceedings.

Rivitte says that despite all this, sales have picked up. This is because of the silver lining behind the foreclosure clouds. It is presenting a great opportunity to many. With prices at an all time low one can buy affordable houses. This is the time for renters to check on their credit ratings and qualify for various schemes that are encouraging purchasing of houses.

Foreclosure is a judicial process. When the borrower lags behind in payment the lender seeks the permission of the court to foreclose upon the mortgaged house. . Accordingly a court auction is held. If that fails then the banks repossesses the unit and tries to sell directly. With innumerable foreclosed weighing them down the banks are now offering huge discounts.

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Trying to slow down the alarming pace of the crisis, the California Senate has given the green signal to a foreclosure bill on Monday. For a month the bill had been tossed around between the parties leading to a stalemate.

Now the bill has seen the light of day. According to it, the lender will have to try at least three times to get in touch with the borrower personally or by telephone. This will be within 30 days from sending the default notice. When the communication lines open, the lender will try and find out the financial position of the borrower and seek alternatives to foreclosure.

The President of the Senate Pro Tem Don Perata (D-Oakland) introduced the bill. The last one is similar to the one he had introduced earlier. In the latter the two parties would have had to sit face-to-face but it fell one short of the required majority in January. Except for one, all the Republicans voted against it. The bill has now been amended to allow phone conferences - allowing the mortgage banking party to drop its opposition. This time the bill could go through with 10 opposing. Their concern was that the reeling mortgage industry would get into a worse jam. George Runner (R-Lancaster) said that the worry continued to remain because the bill ‘still has the potential to interrupt liquidity in the market’. However Dustin Hobbs of California Mortgage Bankers Association supported the bill because he said that its primary clause is something that everyone is unanimous about – communication between lenders and borrowers. For final approval the bill now moves on to the Assembly.

The bill will give the borrowers 30 days after talks with the lender, to take the necessary steps for keeping their houses. The law applies only to those mortgages contracted between 1st January 2003 and 31st December 2007. This was the period in which all the difficult loans debuted. The bill also is strict about the maintenance of vacant houses by the repossessing lenders.

Perata stressed that the biggest problem is to ensure that before people are evicted from their houses they get an opportunity to sort out the matter with the lender on a personal level.

The foreclosure figures of California are depressing. In the first quarter of this year the numbers were a record high since the last 15 years.

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With foreclosures running at about 20,000 per week, at least 100,000 more families are likely to lose their homes before Congress passes a relief bill. And even then, the measure may fail to stanch the problem unless Congress comes up with something that is significantly better than proposals currently in either chamber. To produce a worthy relief package, lawmakers will first have to scrap most of the provisions in a bill passed last week by the Senate.
That bill would cost $21 billion over 10 years, with $15 billion of the total going to tax cuts that offer no direct help to at-risk families or hard-hit communities. One set of cuts would subsidize renewable energy; another would let businesses take temporarily larger write-offs for losses. A proposed $7,000 tax credit for buyers of foreclosed homes could backfire, encouraging more foreclosures by allowing banks to charge more for repossessed property. A measure to let non-itemizers deduct property taxes is dubious tax policy and bad foreclosure prevention, since it does not target the neediest.

Lawmakers will also have to ditch an unhelpful item in a bill from the House Ways and Means Committee — a tax break for first-time home buyers. It makes no sense to encourage buyers to jump in when further price declines are likely. Scarce resources should be put toward preventing foreclosures.
There are parts of each of the bills that should be preserved, including money for foreclosure-prevention counseling, for issuing tax-exempt bonds to help refinance subprime mortgages and for local governments to buy up foreclosed properties. But that is only a start.Democratic leaders want a final bill that would have as its centerpiece a bold plan for the Federal Housing Administration to guarantee the restructuring of mortgages for at-risk borrowers. An advantage of the plan, given the scale of the problem, is that loans could be modified en masse.

But the plan also has flaws. One is political: taxpayers could be on the hook if F.H.A. borrowers defaulted. Congress cannot ask taxpayers to step up without doing all it can to solve the problem without shifting the risk to taxpayers. The way to do that is to allow bankruptcy courts to modify mortgages for troubled homeowners.
The Senate dropped a provision from its recent bill that would have done just that. In the House, separate legislation on bankruptcy has stalled. It is up to Democratic leaders of the House and Senate to close ranks in support of the measure. Neither chamber can wait and hope that the other will stand up to the mortgage industry, which must not be allowed to undermine a policy aimed at fixing a problem it helped to create.

The plan for an F.H.A.-backed rescue also would rely on lenders to voluntarily reduce the loan balances to a level where the F.H.A. could take over. Volunteerism is not working. What\’s needed is a stick like the bankruptcy amendment. Lenders will be more likely to modify a loan if they know the alternative is having a judge do it.
Lawmakers know what to do. They just need the political courage to confront the mortgage industry.

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Only half a dozen turned up at the Merced County court to attend a foreclosure auction. The first property that came up on the list was the Pimentel dairy farm. Janice Pimental and her son Nick were also present on this day that was sad for them. The flashy auctioneer in sunglasses and jeans made the announcements and waited for bids. There were none. The dairy farm had been in operation for more than two decades – it being a family concern. It has now become the property of the local lender. Janice accepted the fate stoically.

The Pimental farm is in the luscious Central Valley of California – the famous fruit basket of the country. Today it has the highest number of foreclosure concentrations. Many are situated in rural towns. The foreclosure melt down is changing forever the character of this region.
The focus is on what is happening in the big cities but rural America has not been spared. This is the analysis of Housing Assistance Council, a non-profit organization based in Washington. Executive Director, Moises Loza commented that foreclosures are sparing none – “it is happening all over”. In fact the problem seems to be more widespread in small towns rather than cities. Rural housing includes 15% of the houses being mobile and prefabricated units. Three quarters of the latter were bought from loans taken on personal property and not mortgage. Thus when default occurs the property is taken over without going through the process of foreclosures. Here in rural America there are less banking bodies and so there is not much to choose from. It is easy for the people to fall prey to high interest rates and predatory lending. Accurate statistics of the rural scene is hard to obtain. In metropolitan areas the federal law makes it compulsory to disclose all lending operations. But this is not so with rural financial houses.
Merced County is ranking high on the foreclosure County list – it ranking 4th. San Joaquin County (where Stockton is located) ranks 2nd. Stanislaus County (with Modesto) ranks 3rd while no.1 is Caper Coral-Fort Myers in Florida.

In the three counties in California foreclosures were started on 3,100 units. Of these 1,300 were repossessed. One out of every one hundred units were tainted by foreclosure – the national average being one out of 557 houses. Those counties, like Merced, that witnessed a housing boom are today the worst sufferers.

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During the last two years the situation has been sinking from bad to worse and foreclosures have enveloped Minneapolis. More and more people are losing the houses that have been their homes. The increase has been by 60% during the first two months of 2008 as compared to the same period in the previous year.

To stem the tide the Minnesota Home Ownership Center is hosting the workshops free of charge so that the people can learn about the ins and outs of foreclosures and how to battle it. Over one hundred families participated in the first workshop held in the basement of St. Paul’s church on Tuesday night.

Each one had a story to tells. Anthony Sofie had lost his construction job and consequently could not meet his mortgage commitments. What is worse – the rates are set to go up again. He wants to know what can be done to keep fires of his hearth burning in his home. Ed Nelson representing Minnesota Home Ownership Center said that Sofie had approached them at the right time – the slightest delay would have been fatal. The sooner they come the better the options. So far more than half of those who sought help have benefited. Nelson opines that the foreclosure situation is not without hope.

At the workshop it is explained in detail what missing a payment amounts to. After the first lapse the lender sends a notice. By the fourth month the lawyers come into the picture. The court or Sheriff’s auction takes place by the seventh month. Sofie came to know that the rate of interest would remain unchanged. This might enable him to continue to stay in the house that is his home. He is optimistic that within 5 years he will improve his position. But had he not sought help he would have lost his house and home.

The foreclosure is a legal process that lenders nowadays want to avoid because it takes up time, money and energy. With the phenomenal rise in foreclosures the lenders have eaten more than they can swallow. They want to get rid of these white elephants. As such they are eager for modifications, loan forgiveness or giving permission for short sale. Nobody benefits from foreclosures – lenders, borrowers, administration or communities. As such the climate is just right for viable solutions.

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On Monday 24th March, at Philadelphia, New York Senator Hillary Clinton (Democrat) talked about a new four point plan to tackling the growing national problem of foreclosures She wanted more to be done for loans that are threatening foreclosures as well as the creation of a panel to study the problem from all angles.

She is involved in a tussle with Senator Barrack Obama for the presidential nomination by the Democrat party. She wants ‘aggressive action’ to be immediately taken against foreclosures. Clinton blamed foreclosures to be one of the main causes for the present economic crisis.
Clinton reiterated that her solution is sensible and reasonable for taking into its gambit, the lenders, investors and mortgage companies together with the borrowers. All should share the responsibility for what is happening today. The target is to keep the people in the houses that are their homes and thus stabilize the community as well as the national economy.

Her plans includes expanding the capacity of the federal government to allow for more broad-based mortgage modification for those who could not afford spiked rates This was to be done by private auction of large numbers of mortgages so as to free the credit market constraints by allowing it to be an incentive to the lenders to refinance the troubled loans. More categorically she wants Federal Housing Administration or any other government body to be prepared to buy and modify as well as re-sell the at-risk mortgages if the plan about the private auction does not work.

She wants President Bush to set up an expert panel led by any impartial group of leaders like former Federal Reserve Chairman Alan Greenspan or former Federal Chairman Paul Volcker and or Bob Rubin the former Treasury Secretary, “each of whom supports one of the remaining candidates in the presidential race.” Within three weeks this group should report to the Congress as well as the Bush administration on the best way or ways to resolve the foreclosure crisis.

Clinton wants legislation to be passed that would clarify the legal issues.
She wants to enforce and go ahead with her initial plan for creating $30 billion Emergency Housing Fund to aid state as well as community programmes to help avoidance of foreclosures It would enable groups to buy foreclosed units and put them back to productive use as well as allow groups to work for modification of loans.

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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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In Dallas Fort-Worth the foreclosure postings are 19% higher than what it was in the previous year in the same month. More than 4,100 Fort Worth houses have been listed for the coming month. Dallas county has the largest number of foreclosures waiting in the wings – 1,814 houses. The biggest concentration is in Denton County that saw a jump of 40% in the pending total numbers. The first four months of 2008 saw more than 17,000 units in Dallas – Fort-Worth slipping into the foreclosure zone. It is 21% higher than the fourth quarter of the previous year. Half the numbers are from forced sale of the properties. Sometimes the transaction is delayed when an agreement between the lender and borrower is worked out. In 2007 43,000 Dallas – Fort Worth houses had been listed.

George Roddy of Foreclosure Listing Service comments that it seems that Denton County is on fire, fueled by foreclosures. It is linked with the recent spate of development in the county. Perhaps this is the cause behind the increase of foreclosures in the new subdivisions. Apart from blaming the sub-prime mortgages Roddy also takes the residents to task for over spending. Roddy adds with a note of alarm that the foreclosure crisis is spreading. Even expensive units are now being listed.

Across the nation foreclosures rose by 60% in February. The wave is dangerous. Reacting to it Federal Reserve Chairperson Ben Bernanke promised that he would do all the can to help the foreclosure victims using authority, expertise and available resources. He was speaking at the annual meeting of the National Community Reinvestment Coalition. Many feel that the country is on the verge of recession. Bernanke did not speak on new steps but rather dwelt on the ones that have already been taken. Action is being taken against rogue lenders for their dubious lending operations. Although the worst hit have been those with low credit ratings the latest trend is that foreclosures are spreading to credit worthy borrowers also. The end of 2007 saw about one in five of outstanding mortgages already in delinquency. It calculated to about 3.6 million. It is four times higher than what the numbers were in 2005. Also noteworthy is that in 2007, 45% of the foreclosures stemmed from prime, near-prime and government supported mortgages. Both lenders and borrowers are in a soup with the financial houses suffering multibillion losses. There is a scramble for solutions.

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