Posts Tagged ‘sub-prime mortgage’

The New Year began on a bitter note: foreclosures jumped by over 100% in comparison to what it was in January 2007. Localized credit counseling agencies are becoming more active.
Consumer Credit Counseling Service is a non-profit organization that is reaching out to those in need of help in six counties of California including Ventura. It will hold sessions for free both in English and Spanish to establish contact with all communities affected by the debacle. The first morning session in English will be followed by another in Spanish in the premises of Camarillo offices, on Wood Road near Camarillo airport. Another similar group is Cabrillo Economic Development Corporation. It held similar sessions that had drawn over 100 participants. Both groups are planning to continue with more workshops and seminars.

Cabrillo has received $167,462 for its NeighborWorks Home Ownership Center, from a federal source that has been of late approved by the Congress. Demands for their services are going up and they are gearing themselves to meet it. Their spokesperson comments that the good work is beginning to show and changing the lives of the local people who want to continue to stay in the houses that are their homes.

Counseling is just one of the many measures taken up to stem foreclosures that are sucking dry not only the real estate market and telling on the economy. The sub-prime mortgage with adjustable rate mortgages was introduced to help those who could not avail of prime mortgages because of modest income and low credit ratings. The laudable purpose of the scheme was to make real the great American dream of owning a house fore everybody. Unfortunately the plan went awry. Hunting for quick returns and high commissions, speculators and agents jumped in flush with funds. All one needed was a pulse to get a loan sanctioned. This led to a frenzy of building causing spikes in the real estate. Unfortunately what goes up comes down. The people could not manage with the mortgages once the rates became realistic and began to rise. Like nine pins the houses rolled into foreclosures. The business concerns seeing the fall simply ran away from a bad deal leaving more abandoned houses. Divorce and illness too coupled with localized economic problems too had their say in the matter. A tsunami of foreclosures took over the country dragging down in its wake the entire nation.

Search Foreclosure Listings

• Camarillo Foreclosure Listings
• Ventura Foreclosure Listings
• Bakersfield Foreclosure Listings
• Fresno Foreclosure Listings
• California Foreclosure Listings

Search Images

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.

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

Michigan ranked 6th in the country with 15,565 foreclosure in some stage of foreclosure or the other. It showed an 11% rise above July figures and a 126% high jump from the month of August in the previous year. The numbers tagged to Michigan are inclusive of 3,534 units that went into delinquency, 6,572 that received notices for trustee sale and 5,459 that had already been taken over by the bank.

In Wayne County the foreclosure versus household ratio is 1:87. It ranks 4th in the country. The highest is in Modesto, California with 1:79 during August. The five top rankers are Nevada, California, Florida, Georgia and Ohio.

What is causing grave anxiety is that these figures are just the tip of the iceberg. In the near future more foreclosure activity is expected when a sizable number of sub-prime mortgage loans will reset the interest rates.

The sub-prime debacle is a clear case of a dream that has turned into the reality of a nightmare. The scheme was launched to help those with weak credit to be able to avail of house loans and live under their own roof. But predatory lending on the part of lenders and greed on that of the borrowers made things go awry. After the honeymoon period of low monthly repayment plans when the rates began to adjust to higher figures the borrowers found it impossible to make ends meet. It most of the cases the rise was more than double. One by one the houses fell into foreclosure.
There are many factors behind the inability to pay increased rates. Firstly many had invested in housing units being sure that property prices could never fall.

Thus they expected a neat profit. But the opposite happened and there was not enough equity left to clear dues leave alone profits. Secondly initially the value of the houses had been inflated to expedite the process of a handsome loan. But with time the balloon burst and the real price showed up. Thirdly the income of the borrowers was not always correct and this led to the inevitable. Added to these was the usual cycle of death, disease and calamity of unemployment that might well overtake any family anytime. All these factors contributed to the landslide that is showing no signs of slowing down despite help from Washington.

Search Images