Bank Foreclosures Information

Thus far, federal loan modification schemes and state foreclosure prevention initiatives have largely failed in averting the foreclosure of homes and in helping troubled homeowners.

The following three schemes have been recommended by experts to help solve the foreclosure crisis and revitalize the housing market:

1. Mortgage bond guarantees

   This scheme was proposed by Jack Guttentag, emeritus professor of finance at the University of Pennsylvania Wharton School. Guttentag explained that the goal of his scheme is to persuade owners of mortgage-backed securities to allow loan modifications to prevent further foreclosures. Mortgage-backed securities would be insured by private mortgage insurance firms, which in turn would be backed by the federal government. The government would cover part of insurance losses incurred by private insurers that would ensure bond owners get their payments in cases of defaults.

2. Mortgage interest subsidies

   This strategy was proposed by James Grosfeld, former chief executive officer of Pulte Homes. Grosfeld asks the federal government to subsidize the monthly amortizations of homeowners who took out mortgage loans from 2005 to 2007. Grosfeld said that the loans released during these years were mostly subprime, adjustable-rate mortgages and Alternative-A paper mortgages, which are highly risky types that ultimately led borrowers to defaults and foreclosures. He said that if the government rescued financial institutions which involved themselves in highly risky investments, it should also rescue individual homeowners who took out risky types of loans that they did not fully understand.

3. Policy of allowing home prices to fall to sustainable levels

   This approach was forwarded by Dean Baker, co-chairperson of the Washington, D.C.-based Center for Economic and Policy Research. Baker explained that allowing house prices to drop to sustainable levels will increase demand for houses and reduce the number of foreclosed homes languishing in the market. According to the Standard and Poor Case-Shiller National Index, home prices across the U.S. are still more than 50 percent above their levels in January 2000.

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Chief Economist of the Real Estate Center at Texas A & M University pointed out that there are four things the government that should do to help the housing industry come back to life. Here is his four-part solution against foreclosure:

1.As simple as keeping homeowners in their houses.

2.Slowing down house supply.

The economist pointed out that the market has the constant simple rule of supply and demand. What is the sense of continuing to build new homes when there are few buyers and frenzy against foreclosure?

Median sales rate of existing homes are already 11.3 percent down compared to last year based on the report of the National Association Realtors.

Foreclosure increases home supply, so home repossession must be stopped or if not possible, just slowed. The government has been taking steps in solving the foreclosure crisis, and yet it seems inadequate. Freezing interest rates and bringing principals down for the troubled seems unfair for the on-time payers. Only the fear of foreclosure and bankruptcy limits these on-time payers.

Many have lost hope in the housing industry thereby having less investors. Fannie Mae and Freddie Mac are now having difficulty selling bonds for capital.

3.Raise the demand.

This is possible by stopping the plunge of home values by giving incentives to buyers of vacant homes. Depreciation schedules for these buyers must be lowered to 5 to 7 years. A 0 percent capital gain can also be offered for those who kept these homes for more than 5 years.

4.Guaranteeing mortgage bonds for “Frannie”

Mortgage rates are so high that there is less confidence on the financial reliability of Fannie Mae and Freddie Mac. The noted economist said that he foresees the government contributing to give “Frannie” capital by guaranteeing mortgage bonds. Hopefully this will bring loan rates and let American homeowners refinance their homes and avoid foreclosure.

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It is like living in Jennifer Aniston and Vince Vaughn’s movie — just add bank owned foreclosure in the picture. The man sleeping in the master’s bedroom, while the wife in the guest’s room. Dividing bills between an estranged couple. Silence or a lot of bickering. This is a new lifestyle — living with your ex.

Judges and divorce lawyers have noticed the increase of cases where irreconcilable husbands and wives have share their used-to-be love nest again. Though these couples are in definite bad terms, the economic status forced them to endure living together.

This is a country-wide occurrence but is more rampant in foreclosure-hit areas like Sun Belt.

With the poor housing market, impending foreclosure and threat of bankruptcy, separated couples can not sell their properties and split the supposed sales income. Many are waiting for the recovery of economy while others are waiting for their financial stability.

A couple in Denver got their divorce but are still in their home because they do not have enough money to pay for their own houses. They wanted to sell their $179,000 home for something below $200,000, but it was too pricey that no one wanted to take it off the market. Though it seems awkward and stressful, the possibility of foreclosure, and even bankruptcy, would be more traumatic for them. So they would rather endure this personal hell.

Divorce mediator in Wayzata, Minnesota, Kent Peterson even has a case where a couple withholds their divorce because of the expenses brought about by the process.

Though closure is very difficult with this lifestyle, Linda and John Melville of St. Petersburg, Florida have to live together. Linda was dismissed from her job and can not afford to rent for herself.

Awkwardness is one, a lot of bashing can happen, but foreclosure is definitely more difficult to face this days. It seems that foreclosure is greater than love eh?

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New York foreclosures are starting to be an issue. An example is the housing situation in Broome County, where 173 foreclosures were already filed from July up to September. For every 514 properties in the area, one home was being repossessed.

For 2008, an estimate of more than 50,000 people who own a property in the state of New York filed for foreclosure, specifically in Mid-Hudson Valley and in the western part of the state.

According to Comptroller Thomas DiNapoli, the increase in New York foreclosures can be a threat to state governments as the revenue comes from the 44 percent of tax properties.

DiNapoli indeed made sense because a property tax may increase if foreclosures in the state go higher.

Mayor Matthew T. Ryan said that 39 percent from tax properties will be accountable for Binghamton City’s estimated income for 2009.

New York is 36th in terms of foreclosures, particularly in the Mid-Hudson Valley, some parts of Southern Tier and Finger Lakes a year ago. Binghamton City is planning to increase 14 percent in tax property by 2009, which is 90 percent more than what was allowed by the Constitution. Ryan is hoping that the government will do something about it.

In every 423 properties in Finger Lakes, one home is being filed as foreclosed in 2008. One out of 514 properties in Broome County, and one out of 319 houses in Dutchess County. Orange County ranked as the highest in foreclosures as one home was filed as foreclosed for every 205 properties.

For 2008, majority in foreclosure filings came from six counties in upstate New York because of the number of mortgages considered as sub prime. A decrease of 31 percent in property sales from January to June of last year in New York City was considered very significant. Mid-Hudson ranked second with 28 percent.

Reports said that the properties are reasonably priced in the upstate area and majority are standard homes in place of luxurious homes due to foreclosures.

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Lender Orson Benn left a lot of homes into waste after writing a $349 million loan, along with his partner Argent Mortgage, for 2,000 assets. Nationwide, around 600 of these apartments, suburban ranches and town houses are in foreclosure. Fifty percent of these homes are in West Kendall, ten percent in Miami and five percent in Hialeah and Miami. Hopefully the massive foreclosure cases do not occur escalate further.

It is not yet sure if Benn’s mortgages are untruthful and tricky but the Miami Herald saw several related questionable transactions.

According to records, many houses were dropped even without handing off money and instead used quitclaim deeds. Quitclaims are formal declarations that remove legal liability. That was already a bad sign for the industry for quitclaim deed is considered the best choice for frauds.

Then it was found that 6 percent of the loans went to the hands of industry people. There were some who took on multiple loans, but are now also in foreclosure.

Naïve renters do not know that Argent and Benn are now facing financial difficulties and are not capable of lending money for a home. Like Dayami Reyes who after signing a six-month loan found out that her home is actually in foreclosure.

These foreclosures do not only affect the homeowners, but also the neighborhood. Foreclosure generally brings home prices lower and crime rates higher.

Some renters left their homes trashed and inhabitable. The used to be $300,000 home may be left in a ruin. The eyesores of overgrowing loans and dilapidated houses bring down home values in the neighborhood, leaving others to another foreclosure.

Then, these forsaken properties also attract drug lords, prostitutes and homeless squatters. Poor neighbors troubled by the foreclosure of another.

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The state of Michigan has the third highest foreclosure rate in the country with 2 percent of total families experienced foreclosures in 2007, equivalent to 87,210 households. This figure has doubled from 2006 and has now grown to 3.6 percent during the first half of 2008, which is much higher than the national average of 2.75 percent.

One in every seven Michigan homeowners with subprime loans lost their homes to foreclosures. This is equivalent to 25,000 households who were granted high-risk mortgage loans with adjustable rates. These homeowners should not have qualified for these loans during the housing boom due to deficiencies in their credit and yet they still received these mortgages. Now, they stand to lose their homes due to foreclosures as the rates adjusted and they could not make payments for their mortgages.

Trying to have something in place against foreclosures before the holidays begin, Michigan lawmakers are working double time to pass bills that would help troubled homeowners. Some of these legislative proposals include a moratorium on foreclosures; requirements for advance notices before filing for default; and some leeway for delinquent homeowners to refinance in order to meet monthly payments.

The new bills require lenders to communicate with homeowners 45 days in advance before notices of foreclosures are filed. The lender is also required to report to the state all notices, and allow the state’s banking regulator to make assessments on whether the mortgage should be extended for another 30 days.

The new bills include an improved mediated settlement plan, which the state will oversee. This would give some breathing space for delinquent homeowners with subprime loans to work out a repayment plan with lenders and avoid the foreclosure process. However, lenders contend that their existing support to restructure loans for applicable mortgages is sufficient and will not need a state oversight.

Despite this scramble for new legislation, the existing status of the economy and the housing market makes one thing certain – that Michigan will continue to have high foreclosure rates.

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The nation is currently suffering from an outbreak of foreclosures that are making waves across several states and cities, putting several families in danger of losing their homes. In a bid to avoid being thrown out from their residences, homeowners are seeking every available means to help them prevent foreclosures on their homes.

However, unscrupulous individuals and companies are trying to take advantage of this situation, trying to extract precious dollars from these desperate homeowners who are already hard-pressed by this looming threat of foreclosures on their properties. These criminals, posing as mortgage counselors, would conduct seminars and sessions for these troubled homeowners.

In exchange for their efforts, these so-called counselors charge fees ranging from $2,500 and $10,000, promising homeowners that they will receive bonds worth $1 million dollars as payments for their mortgage balances.

With the issuance of these fake bonds, no actual payments were actually made for mortgages. Lenders, seeing delinquencies in mortgage payments, would send out notices of foreclosures to victimized homeowners.

These fake counselors would give advice to homeowners to disregard these notices, claiming their companies are on top of the situation and are handling their mortgages well. Homeowners would continue to do nothing, banking on what these individuals claim, until everything is too late and they end up losing their homes to foreclosures.

The FBI is already tracking and investigating these companies, who have already extorted $300,000 from hapless Native Hawaiian homeowners. Several victims have already been confirmed by the FBI and are expected to increase as more victims reveal themselves and step forward. If proven guilty, these criminals would be charged with mail and wire fraud by the FBI.

The FBI has already stepped up its campaign in this regard and has alerted local banks regarding this scam and their methods of operations. Experts have alerted communities regarding these scams and advised homeowners in danger of foreclosures to seek help only from government and non-profit mortgage counselors who provide assistance without any fees.

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In a new announcement that left the mortgage market dumbfounded, the Federal Reserve and the National Treasury announced that it will release another $800 billion in funds to new lending programs to get the credit market running once more and to force mortgage rates down in a bid to stop the flow of foreclosures.

This is another federal effort in the making as part of the government’s actions to put the country back on track as it reeled from the market crash brought about by subprime mortgages which triggered a wave of foreclosures across the nation.

The plan involves two major actions: the first part involving loans to address the credit crisis and the second part involving mortgages to address the foreclosures crisis. For the first part, the Treasury Department and the Federal Reserve announced that it will release $200 billion in funds to invest in securities backed by various types of loans. This includes loans for automobiles, credit cards, business loans and student loans.

For the second part of the federal program, the Federal Reserve will try to force down home mortgage rates by purchasing $600 billion in debt backed by loans guaranteed by Freddie Mac (Federal Home Loan Mortgage Corporation), Fannie Mae (Federal National Mortgage Association) and other financing institutions controlled or owned in part by the government.

However, critics and experts said that the program might not be effective in preventing foreclosures. Government Sponsored Enterprises like Fannie Mae did not guarantee high-risk loans and subprime mortgages which were blamed as the primary cause of foreclosures.

Despite what detractors are saying, these new programs exhibit an evolution in the commitment by the Federal Reserve. Usual policies to strengthen the economy are to address short-term rates, but this new federal move sees a long term investment in the mortgage markets and other areas that needs assistance. Sectors are just wishing that the foreclosures issue can also be addressed by these programs.

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According to a report by Forbes, the city of Jacksonville could become the foreclosure capital in America with 1,000 filed foreclosures per month, up from 4,000 foreclosures for the whole of last year.

Forecasts were made based on the number of delinquencies still in the offing and the trend of unemployment in the area. As a response, city councilmen called for a public hearing of city officials and community leaders as well as experts in foreclosures, in a bid to call the attention of businesses, government agencies and nonprofit organizations based in the area.

The crisis on foreclosures have been blamed by some sectors on adjustable rate loans from subprime lending, the same reason that caused the housing boom a few years ago. These allowed debtors to take on the maximum amount that they could get from the loan, without consideration to the possible consequences should the rates adjusted.

Both speculators and homeowners who were in it for the long haul were attracted by these loans. Some people, like elderly couples living off their pensions, fell victim to lenders using predatory tactics in getting these people to sign agreements without explaining the repercussions of adjustable rates. It all came back now to haunt them in the form of foreclosures as the market collapsed.

The City Council has been worried that people are not taking steps to try and reverse the impact of the crisis. According to officials, 99 percent of foreclosures are not being contested by involved homeowners.

Experts are saying that the majority of these cases should not have ended in a formal filing, as homeowners could leverage their legal rights to have a discussion or a negotiation with the lenders before any formal filing or application could commence. It seems that these homeowners have accepted their faith without putting up a fight.

The task of city officials right now would be to educate the community regarding their rights and options that they have to prevent foreclosures, saving not only their homes, but the economy as well.

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