Posts Tagged ‘mortage’

At the root of foreclosure blues is the unwise mortgage decisions. The borrowers did not think before they leapt. The result is that today thousands of families are paying the price for rash decisions. If the lender does not get his or her dues there is no alternative but to initiate foreclosure proceedings against the offender.

Foreclosures are nothing new in the judicial and financial world. Today what is new is the number of these foreclosures that are running into millions across the nation. So the best and basic way to avoid foreclosures is not to go for something that one cannot afford. There is no point in biting more than what one can digest.
Before opting for a mortgage do some serious research and find out the different kinds of mortgages. Walk into a bank and a new one will be on the notice board each day. Banks are the architects behind these new mortgage products – each having is pros and cons and each claiming to be better than the other. The job of the borrower is to pick the shoe that fits and not the one that pinches. There are fixed rate, adjustable rate, interest only mortgages etc. If you pick the wrong one then you are asking for trouble – inviting foreclosures to knock on your door.
Many potential borrowers do not focus on the ancillary costs associated with foreclosures. All these total up to make the house very expensive. Apart from the very basics of mortgage costs there are closing costs, application fees, insurance charges and above all penalties charged for foreclosing. A mortgage for $1,000 may seem appealing but there are hidden costs that strike with a hiss at the opportune moment. The cost thus rises. So it is better to think before inking. One must be realistic and conventional when dealing with such life and death matters like house mortgage.

Affordability of mortgages is relative to the income and life style of the borrower. One major point is that mortgages carry on for 20 to 30 years and so the question about income and sustainability is not just about today but tomorrow also. One of the best options is the fixed rate mortgage – it is what it says – the rate remains fixed and does not fluctuate. This allows for something very precious in the modern world – tension free peace of mind.

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Since the last twelve months hundreds of house owners have been knocking on the doors of Stephani Rojas – a mortgage counselor. They are desperately seeking help as foreclosures close in on them. The majority comes when they are just about to be evicted. There is a sense of shame for having failed their families and for the same reason they are reluctant to disclose their names, income or expenses. They do not want to say how many instalments they have missed. Some just collapse and shed tears. Stephanie feels that it is akin to talking to disaster victims. The sufferers have no idea about the rules of the game and are just aware that any day the Sheriff’s men will come and throw their belongings out on the road.

It is the same story with counseling agencies right across Lower Hudson Valley. Most of the foreclosure victims are first-time buyers of property with low income and questionable credit who tried to change their lives by taking advantage of the sub-prime ARM’s. Instead they have been gifted with foreclosures when interest rates began to spike.

Veline Acquah is another such foreclosure counselor at Mount Vernon. She underlines the importance of seeking timely help even before receiving the foreclosure notice. Timely intervention is of invaluable importance in these cases. But once the ball starts to roll it is difficult to bring it back. Time is the key.

Sonyma AND FHASecure ae some programmes launched by New York State and Federal Government. These are for those house owners who have taken ARM loans and are not lagging behind more than two months in payments.

Once the counselor has the relevant details from the foreclosure victim – income, expenses and present capability to make payments after granting of concessions, he or she will be able to negotiate with the dealer for a viable amicable solution that will allow the borrower to continue to live in the house that is the home.

The lenders have some options relating to the circumstances of the borrowers – his or her credit ratings, repayment ability and whether the trouble started only when the rates were increased or because of personal reasons like illness or divorce. In other words is the nature of the problem short or long? The answer to all these questions will be matched by the best solution under the circumstances.

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Lloyd Segal, a mortgage broker, in a timely move has authored a book full of punch to motivate borrowers into action against foreclosures. For those caught in the net the situation is not only agonizing but also insulting and traumatizing apart from being a economic catastrophe.

With foreclosures marching on with the highest peak in ten years Wall Street has started to quake and shiver.

The ‘How-To’ book is about how to keep your roof intact, negotiate with the lender and refinance, how to interpret the law to your favour and take recourse to other means like bankruptcy to fend off the wolf from the door. However Segal warns that sometimes nothing delivers and owners have to face up to the harsh reality of being unable to keep the unit. It is at this point that the book is of invaluable help giving advice focusing not on the foreclosure so much as getting rid of the financial burden. The approach is to squeeze out the maximum financial benefit and prevent damage to credit ratings. Nothing affects credit history more than a foreclosure past.

The book is full of hope and tells you to keep your chin up even when the dreaded foreclosure notice arrives. The first thing is to stay calm and fearless. Be determined not to surrender without a fight. It takes few months for foreclosures to become effective and Segal shows how to make the best use of this bonus.

He begins by putting the question – is the property worth keeping? The answer will involve taking into account equity of the unit and credit ratings together with future budget planning of the victim.

Next he says that, more often than not the lender is not an ogre and is willing to negotiate. Foreclosure process is expensive for them and moreover lenders do not want to sit on idle bricks and mortar.

If the first step fails then the other options are refinancing or filing for bankruptcy. Military persons may avail of special protection clause if still in service.

The tone of the book is impressed with the firm belief of the author that it is possible and very much so for the ordinary house owner to take the bull by the horns and subdue it. As a second line of action he suggest consultation with legal and financial experts.

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According to a survey in 2006 Detroit recorded the highest high-cost mortgages in the previous year. A community activist organization, Acorn, has been studying in depth the fall out of mortgages. They have concluded that relatively more Afro-American and Hispanic borrowers have been victims of high-cost mortgage schemes in comparison to the whites. Thus more of the minorities are buckling under the pressure of increased mortgages and losing their houses. The Association of Community Organizations for Reform Now (ACORN) has a website of its own and caters to the needs of low and medium income groups.

The study has been conducted on 172 American cities. Afro-Americans are 2.7 times and Hispanics 2.3 times more susceptible to avail of high cost loans than the whites. These minorities were also more prone to get high-cost refinancing loans – Afro-Americans 1.8 times and Latinos 1.4 times.

68 of the 178 cities had the same story to tell. On an average one out of three loans fell under the high-cost category with the interest being reset at a higher level. The high cost loans clustered around Detroit, Laredo, Texas, Mcallen, Jackson and others.

The president of Acorn, Maude Hurd is of the opinion that it was because the minorities had less chance than their white brothers to avail of prime loans that they had no alternative but to opt for the sub-prime category. The irony is that it is this deprived group that needs the maximum help to live under their own roof.

Foreclosure listings are increasing by the day with more areas falling under its grip. Owners are helpless sandwiched between rising interests and falling property prices, which in turn affects equity. Acorn is keeping regular tabs and releasing regularly its findings. Acorn scrutinized facts detailed in 2006 availing of the Home Mortgage Disclosure Act. According to the latter (HMDA) lenders have to state the race, gender and census tract of their borrowers. From this it can be estimated whether the loan fell under the sub-prime or high-cost category. Information was got about 363 lenders. It represented 68.5% of all mortgages (residential units) that started off in 2006 and 50.5% of the sub-prime category. These facts were the materials for study.

According to Acorn loans having a percentage rate of a minimum of 3% per annum above the rate on US securities fall under the high-cost category.

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Gang and drug parties have become the bane in Manteca. At one time people had thronged to light the fires of their hearths in the Central Valley in search of their dream homes. A curse seems to have brought down the pox of foreclosures – houses with neglected overgrowth and broken boarded windows are inviting the scum and grave diggers of society. The worst affected are the affluent new sections of southern and eastern Manteca. Here most of the 66 foreclosures are concentrated. Most of those who were buying houses for the first time preferred the valley to be more affordable than the Bay area. But they did not qualify for conventional loans.

Manteca and other cities are reeling under this socio-economic malaise which is a result of the foreclosure. There is a rise in gang operations, wild boisterous drug parties and activities of dangerous vagrant squatters. Politicians, law enforces and ordinary citizens are all at their wits end. The very quality of life is at stake.

Pressure is being put on mortgage holders to look after their units. Laws too need to be overhauled to give more teeth to civil authorities.

The sub-prime mortgage sector’s failure is the principal cause for this scenario. It was only when the numbers started rolling in that the concerned authorities woke up to the fact how extensively the net of sub-prime had spread its tentacles. Loans began to go delinquent. Prices of houses fell. There developed a job crunch.

In such a scenario who bothers to clean the backyard? Police complain of an increase in criminal activity. One family survived for few days the tragedy of death living without water or electricity. Units sitting on the limbo stage when it belongs to neither the bank nor the previous owner are the worst affected. It becomes a no-man’s land – a headache for the nearby neighbours. Pressure is being put on the banks and other lenders who now own the property to take proper steps to maintain the properties. Realtors opine that the situation will not improve but slowly slide down for the worse. Foreclosures are on the increase. San Joaquin and Stanislaus are one of the worst affected areas. Arsonists have become active. Lights and taps of abandoned homes are kept running. In desperation the neighbours are pitching in to maintain the the locality.

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