Posts Tagged ‘mortage’

More than $3 million has been sanctioned by the Ohio Housing Finance Agency. It will enable counseling agencies to operate with counseling through 18 centres across the state. This $3.06 million grant emanates from the National Foreclosure Mitigation Counseling Program and it is part of $180 million action taken by the Congress in its fiscal 2008 appropriations bill. The programme funding is being activated through NeighborWorks America based in Washington DC dealing with housing matters.

How much each organization will get is not being specified until finalization of contracts. One of the beneficiaries will be Mid-Ohio Regional Planning Commission based in Columbus. In south east Ohio, the Corporation for Ohio Appalachian Development was declared qualified for the federal grant to serve the people of that region. Also on the qualified list was Community Action Commission of Fayette County southwest of Central Ohio. More than half of the agencies selected are concentrated in and around Cleveland. Foreclosures have been the highest making it rank sixth in the foreclosure race amongst all the metropolitan cities in the country.

The country is in the grip of a foreclosure tsunami. Although the primary accused is the sub-prime floating interest rate mortgage there are many other factors at play that have aggravated the situation – a situation that has caused whispers of recession being heard. Since 9/11 the stock market has been wobbly. There have been job losses. Detroit is one of the worst hits with the automobile industry floundering. Population levels have also gone down. Together with this medical bills have gone up and divorces being rampant have caused instability in the social structure. To add fuel to the fire a loan culture came to be aggressively sold via the credit card craze. It was thought that with money being pumped into the market by consumers, it would give the flagging economy a kick. Nothing happened. People kept on taking loans to get out of other loans. Into this mess crept in sub-prime loans meant to cater to those who could not qualify for prime loans because of modest income and shaky credit. The loans were aggressively peddled lured by commission and investment hopes. The general public were made pawns to snap up loans they could not run. The scheme backfired with lenders having taken on more foreclosures than they could digest. Foreclosures now dot the desolate land. No remedy has been found – only short term palliatives are being introduced.

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Considering the big hand of small time lenders fraudulent maneuvers in mortgage loans, New York state has made it a law that all those originating mortgages from here must be checked for criminal backgrounds and their fingerprints taken to prevent a repeat of the foreclosure crisis that is raging.

Many like Elizabeth Giammarino who had been cheated in 2006 by lenders sigh and wish that the law had been effective few years back. Two men had cheated her and those same two have been lately arrested for drug trafficking recently. One of them, Joseph Crapanzano was a criminal record holder related to mortgage scams even before he duped Elizabeth’s mother about preventing foreclosure. The old lady sunk further into debt after she could not manage the interest only mortgage taken in 2006. Several mortgage companies were involved in her complicated case. A widow of 9/11, Roxann Giordano had made a legal loan to Mrs. Giammarino that helped to stop the foreclosure on her house. The argument is that Mrs. Giammarino suffered investment losses that made it impossible for her to carry on with the mortgage. Mrs. Giordano claims that she never met the criminal Crapanzano or the other person LaMassa who are supposed to have brought the parties together for a solution. Shortly after being arrested LaMassa claimed that he was a loan officer representing E-Island mortgage. It is the same company that dealt with the Mrs. Giammarino. The name of Crapanzano still pops up in the E-Island website. Both the men are now out on bail. When Crapanzano had dealings with Elizabeth and her mother he had already served 21 months sentence in a federal prison regarding shady real estate matters in Florida. He had forged income proof to lay hands on loan amounts. It did not deter him from continuing with his criminal habit.

The banking department of New York state is optimistic that by this new law unsavoury elements will be weeded out. Previously such types of people worked under license brokers. It is estimated that 40,000 such applications will be screened and processed by 2010. The names will be made available to 40 states that are participating in the programme. It will automatically apply to Summit Investments Loan Corp. based in California. Their attorney remained non committal. Crapanzano’s criminal lawyer too remained silent. It was just blatant profiteering without a veneer of excuse.

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There are plans to legalize reduction of mortgage balances for borrowers. But lenders are up in arms against it. Two bills are pending before the Congress that would authorize judges to reduce mortgage debts. If it sees the light of day then thousands of borrowers would be saved from foreclosures. But lenders are seeing red. How can judges seize mortgage portfolios? Advocates for the consumers argue that considering the present unique situation such a law is the call of the hour.

The two bills – Emergency Home Ownership and Mortgage Equity Protection Act of 2007 as well as the Foreclosure Prevention Act of 2007 aims to help house owners who are in bankruptcy. To avail of its benefit the borrowers will have to be residing in their houses and holding sub-prime non conventional mortgages like interest only. About 600,000 would then be able to stave off foreclosure in 2008 and 2009. In industry language this policy is known as the cram-down. It will bring down mortgage balances and monthly payments in relation to the decrease of the value of the house.

Governments and consumer groups are frantically persuading lenders to modify loans. They are doing so but the numbers are not sufficient to halt the march of foreclosures. There are more foreclosures than modifications – the ratio being 7:1 respectively. Sub-prime ARM modification ratio is 13:1.

Opponents of the bills argue that these will increase the mortgage borrowing costs for all. Prospective house buyers – that is anyone who applies for a mortgage will be affected. Those who have taken risky loans should now be prepared to face it – one cannot eat the cake and have it too. The borrowers are being indirectly encouraged to continue making bad debts. By forgiving debts the risk is transferred from borrowers to lenders – those who invest in mortgage backed securities. Thus in the long run interest rates will have to go up to attract investors. Everyone’s interest rate will go up by 1 ½% - a $200 month increase on a $2000,000 loan contracted for 30 years at fixed rate. It will drive away investors to other fields as they will fear that this might happen again. The solution is not to forgive debts but to postpone it. The cram-down plan will benefit a very limited few considering the vast numbers at risk. In the country there were 800,000 bankruptcy filings.

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The situation here is far worse than the national foreclosure picture. Carol Thomas is 69 years old. She has just been handed a foreclosure notice and wonders how long she can brew coffee in her own kitchen. She had fallen into a trap laid by a scammer who kept promising that things would work out fine. Today that person is in jail and Carol continues to boil in the hot foreclosure soup without any hope of reprieve. On the other hand she had lost precious time and money trying to work out a deal with a scammer. The con artist is now in Prison but that does not help Carol right now. Her mortgage payments have trebled because of ARM’s. From 6.4% it skyrocketed to 9.4% and there is no surety that it is going to stop there. There are hints that again it will go up in May.

Carol is just one among the many in the Foreclosure soup tureen. According to recent reports Peoria and Tazewell County foreclosure figures are far above the national average. This has led to a phenomenal rise in counseling related to house matters. There are many lagging behind in payments – 30 days to 120 days. President Bush has just given his nod to another fund for counseling services amounting to $180 million.

The fact that many will not be facing foreclosures does not mean that the problem is solved. Foreclosed houses sell at a low price and bring down the general real estate market. This in turn affects the tax kitty. Thus there is very little left for police and fire protection. Yet these last two are the two important pillars of a government.

Senator Dick Durbin says that it has a ‘negative ripple effect’ going down and down. He has come forward with some suggestions People in bankruptcy should also be allowed to refinance loans. So far this has not been allowed. The law does not allow modification of loans on the primary residence but only on vacation houses and farms. Durbin wants to change that law also.
Counselors feel that the best thing is to put a halt on foreclosures and find out ways for refinancing. If this is not done then thousands of houses will have ‘For Sale’ signs pasted on them – all because of foreclosures. It bodes ill for the socio-economic structure of the entire nation.

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Some mortgage lenders – the top six giants – are about to disclose plans to locate the borrowers who are seriously at risk so as to put a brake on foreclosures while the loan will be rescheduled and other alternatives worked out. The lenders will work in tandem under the operation termed Project Lifeline. Those who have crossed the 90 days line of mortgage dues will be identified and foreclosures stalled till matters got resolved.

US Treasury Secretary Henry Paulson will be working with Washington Mutual Inc, Bank of America Corp., Wells Fargo, JP Morgan Chase, Citigroup and Countrywide Financial. The plan fits in with other foreclosure prevention measures that are already in operation. It will give more assurance to the borrowers that they can avoid foreclosures even if lagging behind in payments.
Lenders are not anticipating a bail out but in all probability a reasonable period of forbearance will be offered. Lenders will then be able to assess if the borrower can manage to pull along at all or not. The plan focuses on sub-prime mortgages.

Last December HOPE NOW introduced a rate freeze for those who could continue with present rates but would be unable if the rates increased as per the original loan agreement.
Today the lenders and the authorities are coming forward because the foreclosure drama has roped in all – lenders, borrowers, government and the community. A couple of years ago sub-prime loans were distributed to any and everybody without income checks. Some critics have compared this predatory lending to drug peddling. Gullible borrowers were tempted to unrealistic loans. The agents and investors benefited. There was a false housing boom. This raised prices which have now come down drastically. The result is that for delinquent borrowers there is no scope for refinancing as the value of the house today is less than the loan amount taken yesterday. Families are being evicted. Abandoned houses are attracting criminal activity and health problems. The authorities are not being able to collect taxes or revenue. The lenders are suffering from a cash crunch. Renters too are in a state of limbo as their lease agreement had been with house owners who are owners no more. The banks refuse to take the responsibility of renters. They want vacant houses that the can quickly sell off. Also affected are hundreds of pets left behind by fleeing residents! It is a heart rending scenario triggered by foreclosures.

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Nothing has been resolved as yet and talks are still on between real estate giant Harry Macklowe and his lenders regarding Manhattan office buildings. He had purchased these in the previous year. Technically the inconclusive talks place Macklowe in a default position although according to reports none of the lenders are going on with the process of foreclosure as yet. In the following week there is a chance of resumption of talks. Macklowe’s spokesperson did not comment on the issue.

In February 2007 Macklowe had borrowed $5.8 billion from Deutsche Bank to purchase seven office buildings in Manhattan area – properties that previously belonged to Equity Office Properties. Last week there had been a tentative deal that Macklowe would turn over the units which he had purchased for $7 billion. The bank declined to comment on the report.
It is alleged that Macklowe owes the bank $5.8 billion by way of acquisition financing or non-recourse. This would give Deutsche control of the buildings but not rights over the rest of the empire of Macklowe.

Macklowe, it seems, put in $50 million from his own resources but he is still short of $1.2 billion to repay a bridge equity loan he had taken from Fortress Investment Group. Macklowe purchased the units together with Blackstone Group LP’s acquisition of the Equity Office in 2007.
The crux of the problem for Macklowe is that the ongoing foreclosure crisis has all but wiped out easy debt financing. Lending has become more difficult and very expensive. The commercial mortgage backed securities CMBS, has to all practical purposes dried up. Banks are besieged by the foreclosure crisis in residential sub-prime mortgages. This has left Macklowe in the lurch. With fears of recession looming large the future is bleak for commercial real estate market.
The market cannot be studied in isolation. One leads to another and this snow balling effect of the sub-prime crisis is being felt in all spheres of the economy. There is a strong hue and cry against the lenders although there are indications that even before the 9/11 drama indications of the downtrend were visible for those who could read. There were job losses, divorces and illness. All joined hands with rising interest to create the foreclosure crisis. The government at all levels, communities and politicians are all pitching in to salvage the situation and bring back the country on its rails.

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Although the county is not seeing the same number of foreclosures as elsewhere the rate, when compared to last five years in this region, is high. The panacea seems to be a lower interest rates coupled with foreclosure prevention counseling action. The rates rose when the sub-prime mortgage was introduced and loans on house equity became legalized as well as popular. This is the opinion of some local realtors like Patsy Anderson representing an organization of realtors. However foreclosures in Matagorda County has not reached epidemic proportions. Each month there is anything from 5 to 13 foreclosures. Five years ago there were only 2 or 3. In 1980 the situation had taken a downward turn but now it is worse. Second mortgages on home equity have caused more and more people to lose the roof above their heads.
Home equity loans are being blamed for this rise of foreclosures in this region. It is aggravated when people lose their jobs or are compelled to take lower paying assignments. Some have to commute on foot to distant places to survive. Divorce and bankruptcy are also major causes for foreclosures.
The house owners should sit up as soon as they get warnings that things are not going right. One should not wait for dues to pile up for two or three months. There is hope that the recent cut in interest rates will allow some house owners to modify their present mortgage opines Tommy Savage, a representative of a local bank. The best thing to do is to restructure the loan and turn to those who can help in that matter. Borrowers may be able to benefit from lowers interest rates provided their credit ratings are satisfactory. The mortgage lenders should be directly contacted.
Bay City Home Program has now a section dealing with foreclosure prevention for those who are in a financial fix, assured its director Carol Smylie. There are many who took the low interest loans but cannot manage the spike and this is leading to foreclosures. Together with this are personal reasons that are unavoidable like ill health, unemployment and break up of marriage.
A workshop scheduled for Saturday includes realtors, lenders, house inspectors and representative of the construction industry. Answers will be given to individual questions and information provided so that people can stand up to foreclosures. There is hope in the horizon will all pitching in for succor.

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Desperate times need desperate measures. As the foreclosure crisis intensifies Democrat Congressman from Massachusetts, Stephen F. Lynch has organized a foreclosure prevention workshop on Saturday in Randolph. The venue is the Randolph High School cafeteria where licensed mortgage experts will give confidential advice for free to those living under the hanging sword of Damocles.

Lynch who represents both the low-income neighbourhoods of Boston and Brockton as well as prestigious localities like Westwood and Dedham is anxious about the increasing number of people in need of help. But they do not know where to look for it. It is not just those with modest incomes but people cutting across socio-economic lines all over the stat are losing their houses because of inability to pay. The concentration varies from one locality to another. About half the foreclosed units are from Boston and Brockton. Many more are beginning to feel the pressure, as a new set of mortgages is resetting or ready to do so.

Lynch has lined up 11 government qualified mortgage advisors at the workshop. The Warren Group publisher’s spokesperson, Vincent Valvo, predicts that this meeting will be well attended and hopes that sufficient number of forms will be available. The participants have been notified to telephone the office of Lynch for reservation of seats and also to bring all their relevant mortgage papers.

The foreclosure crisis seems to be unperturbed and rolls on despite measures being taken by the administration at all levels – the local municipality, the state and Washington. The lenders too are facing the music as thousands of houses going into foreclosure spells economic doom for them also. Foreclosure is a costly process. After the end of it the house is auctioned but today there are no takers as the real estate market is down. Abandoned house attract criminal activity and thus brings down the price of houses in the entire locality. Taxes are kept in abeyance waiting for the buyers – who fail to turn up. The real estate slump has led to lay offs in the construction industry that draws into its circles not only suppliers but technicians, engineers, architects, interior decorators and you name it. The sub-prime mortgage industry is being blamed for the grim situation. Its predatory lending practices led to a housing boom – a balloon that has burst. Fears of recession are stalking the minds of everybody.

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