Posts Tagged ‘sub-prime loans’

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.

Search Foreclosure Listings

• Ohio Foreclosure Listings
• Texas Foreclosure Listings
• Florida Foreclosure Listings
• Michigan Foreclosure Listings
• Arizona Foreclosure Listings

Search Images

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

Hundreds and thousands of Iowans are ruing the day they took sub-prime loans. The situation is so alarming and grim that the state’s attorney general, Miller, has set up a hot line and sketched out a plan of action to help borrowers negotiate with the lenders for new terms.

It is reminiscent of the 1980 farm crisis when lenders honed in on farmers with foreclosures leading to a slump in the agricultural sector. At that time a private non-profit group acted as middlemen and saved many farms from foreclosure. Today also Miller is following the same strategy and working out a plan with house loan companies and the borrowers for alternatives.

Iowa ranks fourth among the highest foreclosure rate at 8.6%. Reliable data releases show that 30,616 sub-prime loans had been served notices and over 2,600 were in the middle of the process. 11.8% had gone into delinquency and 14.5 had crossed the time limit for making up dues.

Miller anticipates worse days ahead and points the accusing finger at the sub-prime market for being the prime suspect. Borrowers are traumatized when overnight monthly payments somersault to more than double. Sub-prime lenders had resorted to predatory tactics by falsely appraising property values and offering financial gratis to tempt borrowers. Many states have now clamped down prohibitory orders on such unethical methods.

The lenders too are in a soup with so many units going into foreclosure. So the best way is to establish links between the two ends of the pole says Thompson the director of Iowa Mediation Service. The best way will be to bring into effect a new agreement by which the lender avoids foreclosure expenses and other allied losses.

Miller has set into motion a task force comprising of 10 personnel to communicate with mortgage servicing companies and other investors so that the loan is modified to feasible levels and put a brake on foreclosures. Meetings will be held this month in Iowa and next month in Chicago.

The steps taken on the national level is a repeat of the Iowa experiment. Behind it is the acknowledgement of the fact that borrowers, lenders, investors as well as the mortgage companies all have their own interests at stake in this matter of foreclosures. The appeal is to the ethical self-interest of all parties concerned. The government too has its own axe to grind.

Search Images

Countrywide is raging the tornado of foreclosures. El Paso County is no exception.

At the root of the problem are sub-prime loans, being made out by unscrupulous lenders. Chasing a mirage of home-sweet-home these dreamers have lost their way in the desert and do not know how to get out of the mess. The bait that hooked the fish was catchwords like, no down payment, interest-only payments and negative amortization. The gullible culprits were not qualified by ordinary standards to get loans because of bad credit history or low incomes. They never understood the terms of the mortgages; never made to understand.

Usually the initial rate of sub-prime loans shoots up after two years by as much as 5% resulting in a 40% increase of monthly installments. Sub-prime rates are higher by 2% as compensation for the risk factor and float up and down with other interest rates. Penalty clause prevents owners from refinancing through another mortgage route.

The game plan was to make people who had previously made little mistakes to make greater blunders to benefit sharks and vultures. The move had started a decade ago with the objective of trapping people to buy houses and thus fund mortgages to get exorbitant returns. But the players while taking into account the risk factor did not gamble for a situation in which the situation would spin out of control and properties fall down like ninepins.

The midpoint is the time between the start of the mortgage and foreclosure. This was less than 2 ½ years – a time period that went down during only one of the five years is being analyzed – 2002-2006. From 2001 and mid 2006 rates on foreclosed loans in El Paso County is averaged 1.6% above than current market rate.

The original idea of sub-prime loans was to serve as a bridge to connect those who could not initially avail of prime loans. They would be given a chance to re-establish their credit worthiness. But the opposite happened. The terms were so vexing that borrowers were never given a chance from the very beginning. They were purposefully kept in the dark. No avenues of refinancing were left open to them.

Once the market started cooling the situation became more exposed. Wall Street stopped funding new loans and raised credit card standards. The situation is getting worse. Senators are stepping in to frame laws to prevent further debacle.

source

Search Images

June is the month for celebrating National Home Ownership. The purpose is to inculcate into the people the value of putting down roots – lighting the home fires under a roof of one’s own. It is a common American dream, which has suddenly become a nightmare.

Property prices are tumbling, foreclosures are rising and the citizens are faced with the harsh reality of losing their real possessions – the land and the roof above it. Mortgages in April are higher by 62% compared to last year. The numbers in Ohio are especially disconcerting. If the national average for foreclosures is 1.19%, in this state it is 3.38%. Adding insult to injury the federal tax code has declared that any ‘loan forgiveness’ will be regarded as income.

At this critical juncture action is imperative to forestall a national emergency. Motivated by this catastrophe some Democrat Senators like Debbie Stabenow are working on the Mortgage Relief Act which would get rid of this tax penalty clause and encourage owners to work with lenders to come to an amicable settlement. In that case the government would waive the clause on ‘loan forgiveness’ as income.

Since the last 13 years the first abnormal jump came in 2006. In Ohio this meant an increase of 24% over 2005 –there were 79,000 properties ready for slaughter. There are no signs of improvement. The gloomy prediction is that over the following two years the rate will further rise as mortgage rates will be re-set at a higher notch.

The origins of this calamity may be traced back to the giving out of sub-prime loans to those who would have found it difficult to obtain a loan as per regular means. But now they are tasting the bitter fruit. Statistics show that these sub-prime loans account for less than 20% of outstanding mortgages. COHHIO has highlighted that these loans represent 63% of foreclosures in Ohio in the years 2004/2005.

Many are angry that mortgage lenders are being held responsible by the Congress for these irresponsible lending deals. The law is not tuned to use the government as an instrument to forgive debts. Many borrowers and lenders are trying to amicably come to a workable settlement. Already bent the owners should not be burdened with a further tax on ‘loan forgiveness’. It is unfair to tax an income which does not exist, says a legal expert.

Search Images