Posts Tagged ‘new jersey’

As foreclosure numbers increase so do instances of abandonment of pets. The four-legged friends of Man are the latest casualties in this foreclosure crisis.

Nobody knows this better than Shih Tzus of Associated Humane Societies branch in Newark. He said that in the last six months he has had to give shelter to dozens of dogs and cats that were surrendered by owners who had no homes of their own at that point of time; neither did they have the means to feed extra mouths. The owners giving up their pets come in crying and upset.

Across the state all the shelters are reporting a rise of minimum 10% to a maximum of 25% in the number of animals seeking protection. The director of Public Policy at the American Humane Association apprehends that as many 1 million pets could be affected nationally. This is inferred from the fact that foreclosures will hit as many as 4 million families.

The regional director of the Humane Society of the United States, Nina Austenberg analyzed that when the economy is bad everything suffers. A pet then becomes just another mouth to feed. The old animals need medical attention. Previously the owners did not count the expenses. But now the reality is different – people are without jobs and at threat from foreclosures.

One of the acute problems being faced by pet owners displaced by foreclosures is that many apartment complexes have adopted a no-pets policy. Apart from that under the duress of foreclosures, the pets are no longer uppermost on the minds of the family members. It has been calculated by The American Society for the Prevention of Cruelty to Animals that the average cost of caring for a dog is anything between $580 to $875 per annum. Cats cost around $670 annually. Many people do not fully realize that they have to give up a pet until the talk out details of the budget with the housing counselor. At the last minute there is very little time to hunt out a proper shelter or arrange for a friend or relative to take charge of the pet. Caught in the pincers many just abandon the animal to fend for itself and vanish. The pets are left confined within the four walls of the foreclosed abandoned jail. The police in Newark, Irvington and South Orange are flooded with reports of pets left cruelly deserted in confined environment. It is a trend that is causing alarm for all animal lovers.

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The foreclosure crisis worsens but the victims are fighting it and struggling to continue to stay in the houses that are their homes. The Government together with the mortgage industry is going all out to address the problem that has gone beyond the boundaries of the playing fields of the lenders and borrowers. All are adversely affected. Recently two initiatives have been taken that will help the foreclosure victims.

A plan was launched in Detroit by the HUD (Housing and Urban Development) meant for borrowers with loans that have been insured with FHA (Federal Housing Administration). It is meant for those who have bought a house for the first time. It will permit the lender to submit an insurance claim on the mortgage when it arrears, but before it starts to fail. HUD has the task of overseeing the work of FHA. It now transfers the mortgage to be serviced by another company. The borrower then comes into the picture and the loan is restructured to affordable levels.

Steven Preston of HUD said that the plan would serve a double purpose of helping the borrower as well as the neighbourhood. One foreclosure alone has the power to depress the entire locality by bringing down the value of the houses not in foreclosure. Buyers are attracted to the foreclosed houses as theseare sold at a heavy discount. Moreover empty houses attract crime and disease causing damage to the law and order of the area.

In New Jersey another kind of step is being taken with the lead being given by the Federal Home Loan Bank of New York. It lends money to about 300 local banks in places like New York, New Jersey, United States Virgin Islands and Puerto Rico for the purpose of financing mortgages. This programme is termed Housing Assistance and Recovery Programme (HARP). The Magyar Bank of New Brunswick (New Jersey) was lent $6 million. Magyar Bank works in tandem with the First Baptist Church of Lincoln Gardens in Somerset, New Jersey. The latter has a network of counseling services and locates the house owners who are at risk from foreclosures. Then negotiations start with the lender to pull off foreclosures in place of a viable affordable solution. The lender is asked to buy out the loan. Magyar bank pumps in 70% on the assumption that the lender will write off the remaining 30%.

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The foreclosure crisis has been slipping from bad to worse. It started off with the laudable aims of helping those who wanted to own a house but could not qualify for the prime loans. The sub-prime mortgage was tailor made for them. Unfortunately the scheme went awry with predatory lending and reckless borrowing. The borrowers were unaware of what they were walking into.

Only when interest rates began to rise that they woke up with a shudder to succumb to foreclosures. The sheer number of foreclosures raging across the country has made sociologists, economists, legal fraternities and even the politicians sit up. All were affected. Bush made an announcement on Thursday regarding help for foreclosure victims.

On an average day the number of calls was 1,500. But since the foreclosure crisis the number has shot up to 5,800 said Tracy Morgan, vice president of communications and business development for the Homeownership Preservation Foundation. This is the story ever since Bush announced plans to soften the foreclosure crisis. Borrowers were asked to call 888-995-HOPE. The calls on Thursday were three to five times higher than those received on Monday. There was a sense of high alert following the President’s declaration.

The Homeownership Preservation Foundation works in tandem wit six other credit counseling bodies across the country. One in Greater Atlanta, Consumer Credit Counseling Service took 920 calls within four hours. The average is 75 to 80. The pressure is compelling them to engage extra personnel to attend to the calls. Many are working overtime. Whatever the odds they have been able to manage the workload. Calls are kept on hold to talk to counselors.

In New Jersey Novadebt handles hotlines. They received 1,600 calls on Thursday. Through the year the number of calls have been steadily rising corresponding to the rise in foreclosures. It is also due to the publicity these hotlines are being given. The calls have increased by 100% from the first to the second quarter and 94% from the second to the third quarter.

Homeownership Preservation Foundation has increased its strength of counselors receiving the hotline calls. By the end of the year 70 more will be added to their team bringing the total to 250. It is a non-profit organization funded by the US Department of Housing and Urban Development in partnership with mortgage lenders and servicers as well as charitable bodies.

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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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Now well fare institutions like hospitals are coming under the cloud of foreclosures. St. Joseph Hospital on Fort Worth, near the south side, has been shut down. The New Jersey based owner says that more than $9000,000 as tax backlog, fines and interest will be paid before the property goes up for auction in the following month.

The Vice President of Diversified Capital, in Lakewood, New Jersey dealing with business development, said that although they are not happy and are grumbling, they would pay all the dues. But one thing for sure was that they were not going to surrender the property to foreclosure.

In May 2007, the ruling of the District Court judge was that SJG Partners, limited partners of Diversified Capital, is liable for the payment of taxes that have accrued since 2000. SJG Partners had purchased the property on South Main Street and Allen Avenue. It was a property under the hammer of the foreclosure. At that point of time, August 2005, the previous owners had failed to pay taxes to the tune of $695,000. As per the Sales Order issued by the office of the District Court the tax bill had shot up to $917,319. The date fixed for the auction is 7th August.

Diversified was sued by both Fort Worth, Tarrant County and Fort Worth School District in January last year (2006). Diversified answered that they did not owe taxes because they were not owners of the said property during the years the taxes had been accounted.

The property in dispute was the first hospital in Tarrant County. It was founded in 1885. It is a 12 storey structure made from red brick was added to the original structure and came to be called St. Joseph. It came to be owned by HCA/Columbia Healthcare Corporation when in 1995 it had to be closed.

Heritage Geriatric Housing Development of California bought the unit and redid the lower floors into Alzheimer’ Centre, St. Joseph’s Garden. It had to be closed in 2000.

Stern gave the information that Diversified has further ambitious plans. It is moving ahead to develop further the property with shops, offices and residential quarters that would be worth more than $50 million. He also added that recently there plans had been afoot to sell the property to a local oil and gas concern but the deal fell through.

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Foreclosures in the subprime market have nose-dived. The news media are choking with information. The sub-prime was set up to help the low-income group or those with bad credit history. But it is this group’s dream houses are crumbling like sand castles. But mortgage representatives as well as the Federal Reserve Bank have rushed in with the assurance that these are merely teething troubles.

Center for Responsible Lending opines that what is happening is just the tip of the iceberg. 2.2 million borrowers in the sub-prime group have either lost or will lose their houses within few years. It comes down to the harsh statistics of one out of every five sub-prime borrower in 2006-06 being affected. The figures remain unmatched in the history of modern mortgage.

Till yesterday Philadelphia and South Jersey had seen appreciation in the real estate market with a climb of about 70% to 80% in the last five years. For sub-prime owners this was a boon because if they defaulted in their installments they could sell their property. It would not only clear their dues but also leave something extra for the future. But the reverse is taking place. Foreclosures are increasing and property rates are falling.

In Philadelphia appreciation of property is at 5% against 14% in 2004 and 2005. This will lead to about 17% house owners to forfeit their property through foreclosures. Similar is the pattern in Camden region where the appreciation rate has plummeted from 16% to 6%.

Till now the comfortable appreciation rate had made the regions an oasis safe from the depredations of foreclosure. People without funds just could not get an entry. But the sub-prime strategy played upon the feelings of those who coveted rich houses. They fell for the trap with disastrous consequences.

The mortgage rates are temptingly low at first but begin to climb after two years. It is as high as a 45% increase. To add insult to injury, sub-prime borrowers who improved their credit and wanted to move onto loans with better terms had to pay thousands in penalties. Never has such fraud taken place in the prime mortgage market.

Some players in the mortgage field are optimistic that the market will automatically correct itself. But words will not fill empty hopes. Strong legal action based on common sense is the need of the hour.

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New Jersey realtors are now more accessible to clients – thanks to their turning more than never before to the Internet and like devices. This is on the basis of a survey started by National Association of Realtors, on behalf of New Jersey Association of Realtors (NJAR). The Survey reveals the activities and demographic leanings of the realtor group.

As elsewhere, the real estate industry too is constantly changing. Change means a shift in needs and expectations of clients. Realtors are swiftly adapting to the change by turning to the Internet and mobile phones. Users of web sites increased from 49% in 2005 to 84% in 2006. The use of the website of NAR, REALTOR.com has shot up from 52% in 2005 to 89% in 2006. 91% use e-mail showing an increase of 81% from 2005.
Cell phone usage has also increased and is up by 10%.
Realtors are going for advertising in newspapers in a big way. The numbers rose from 9% in 2005 to 28% in 2006.

About 93% of real estate firms (56% in New Jersey) have their own web sites. Most of them use the sites to host hot news on the community, its demographics, reports on schools, mortgages, and financial weather – making it a virtual tour. Most of the sites have links to state and local governments, lenders, mortgage and other real estate service providers.

New Jersey realtors work for about 40 hours per week and earn $41,200 on an average. This can be compared with the national number of $47,700. The typical New Jersey realtor has been at his job for nine years – this being two more than the national average. Most (about 95%) are confident that they will hold on with vigour for another two years.
According to the survey the realtors are very well educated. The NAR and its sister institutions award professional designation. To earn it the realtors are expected to complete courses, which will groom them to serve clients in a particular field of the real estate business in an improved manner.

These findings are on the base of a questionnaire, which NAR circulated via the mail on January 2007 to 70,000 realtors, picking at random. The same set was distributed to another 70,000 through the Internet. 10, 774 replies were received of which 147 were rejected. Thus the response rate was 4.9%.

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Mortgage defaulters who are facing foreclosures are waiting for help from Washington. The authorities however have taken a wait and watch stand to the fallout resulting in years of lending practice without being backed by sufficient credibility.

The market is showing signs of self-recovery and the overall economy seems to remain untouched. At this point overreaction is uncalled for. Also encouraging are the indices showing solid consumer spending and low unemployment rates. The stocks too have hit records buoyed by corporate profits.

The Chairman of Federal Reserve opines that while on the one hand the authorities are obligated to end fraudulent lending, they have to be cautious about suppressing responsible lending

On the other hand the advocates for the affected consumers point out that this has come has a rare chance for the law to strengthen its lending rules. To substantiate their argument they point to foreclosure statistics.

The National Association of Realtors expects sales of present houses to fall by 4.6%. The home price median is anticipated to drop by 1.3%. The foreclosure rate is rising at a double rate annually all over the country.

The President of the National Community Reinvestment Coalition, John Taylor, representing the interests low-income people and minority groups, is skeptical of the outcome if the government fails to intervene.

The Mortgage Bankers Association however predicts that foreclosures among risky borrowers will amount to 0.25% of the country’s mortgages.

Democrat Senator Dodd is spearheading a movement to assist affected homeowners, with the help of big lenders – big names in the financial world like HSBC Holdings, Citigroup etc. They suggested modification of loan terms before hiking interest rates. Analyst Adeson, citing Dodd’s endeavours, warns that the housing market will suffer more if over enthusiastic banks arrange for loan workouts. He commented that lending money is not about being nice but it is all about business. He has cited the instance of Hedge Funds to prove his point.

Lawmakers are trying to work out a balancing trick between relief to borrowers and reining in of bad lending practices. Nobody wants to choke to death the sub-prime market. Senator Miller, a North Carolina Democrat has long been fighting predatory lending. He is confident of passing quickly a Bill in the House modeled after consumer protection laws in states like North Carolina and New Jersey, where reforms has not led to end of credit.

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