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Friday, November 13th, 2009

October Foreclosures Dip from September, Soar from ‘08

RealtyTrac, a company that follows foreclosure data for the United States, released October numbers on Thursday. It seems foreclosure rates have decreased slightly since last month, but are still significantly higher than they were a year ago.

Foreclosure by the Numbers

Here’s a look at the statistical breakdown of recent foreclosure activity in the country.

  • 332,292 property filings in October: This number includes three specific types of action: notices of bank repossession, auction and borrower default. That means one in every 385 American households is in some phase of the foreclosure process.
  • Percentage changed: The numbers translate to a three percent drop from September of this year, but a 19 percent increase from October of 2008, suggesting that the moderate improvement is only relative.
  • Estimate for the year: Based on information gathered thus far, RealtyTrac is reportedly predicting as many as 3.4 million foreclosures this year, a 48 percent jump from 2008’s total of 2.3 million.

These numbers may seem astoundingly high, and they are – remember that this recession started in the real estate industry, and continues to plague homeowners.

So why are foreclosures still inching up even when the economy is showing signs of recovery? Most likely, sources suggest, the unemployment rate is to blame. Even though consumer spending may be on the rise, millions of Americans are still without jobs – and without serious hope of getting jobs in the near future, which means missed house payments.

Foreclosure Prevention or Just Delays?

The Obama administration has taken some action to try to ease the pain in the housing market. The Home Affordable Mortgage Program, an initiative designed to encourage lenders to offer mortgage loan modifications with cash incentives, apparently helped as many as 20 percent of eligible borrowers last month, up from 16 percent in September.

But those numbers still represent far less than the majority of struggling homeowners – and some other laws may be offering less help than they seem to be.

Nevada, for example, allegedly has a law in place that mandates foreclosure mediation for at-risk borrowers. And, while sources indicate that the state saw a drop in foreclosures this month, it could very well see a jump later on, if and when mediations have been completed and proven unsuccessful.

Additional Resources

Home Affordable Modification Guidelines

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Posted in Mortgage Foreclosure | 4 Comments »

Monday, October 26th, 2009

Foreclosure Auctions Finding Few Bidders in Detroit

A recent auction of foreclosed and abandoned properties in and around Detroit, Michigan, saw only one-in-five properties sold—despite an opening bid of only $500.

Almost 9,000 homes and lots were on the auction block at the Wayne County tax auction, according to Reuters, with a total land area almost the size of Boston. At the end of the four-day auction, less than 1,800 properties were sold.

The auction was held by Wayne County to recoup unpaid property taxes, many for homes that had been abandoned or foreclosed.

With unemployment over 27%, Detroit is by far one of the hardest-hit cities in America. Detroit's population has dwindled from a peak of nearly 2 million in the 1950s to an estimated 800,000 today. Despite efforts by the city to revitalize the downtown, much of the city is turning into a ghost town, according to Reuters.

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Posted in Mortgage Foreclosure | 4 Comments »

Friday, September 25th, 2009

Filing Bankruptcy & Foreclosure in America 2009

Check out this infographic on filing bankruptcy & foreclosure:

Bankruptcy and Foreclosure Rates for The U.S. in 2009

Bankruptcy and Foreclosure Rates for The U.S. in 2009

Check out filing bankruptcy and foreclosure statistics by state.
Startling statistics about filing bankruptcy and foreclosure in America this year:

  • A foreclosure action is taken every 10 seconds. There were 1,528,364 total foreclosure actions taken in the first half of 2009.
  • An individual files bankruptcy every 22 seconds There were 699,104 total personal bankruptcy filings in the first half of 2009.
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Posted in Bankruptcy and the Economy, Mortgage Foreclosure | 16 Comments »

Monday, September 14th, 2009

Home Loan Modification Program Begins to Help

According to a New York Times article, the Obama administration’s Home Affordable Modification Program (HAMP) is on the road to achieving its goal of modifying 500,000 home loans by November.

What Is HAMP?

HAMP is a program designed by the Obama administration to incentivize home loan modifications for lenders. It’s backed by $75 billion and designed to end the foreclosure crisis plaguing American real estate. Here’s how it works:

  • Lenders reach out: For every home loan lenders and borrowers successfully modify, the lender gets $1,000 from the HAMP fund.
  • The payments begin: After three months of successful payments, the loan modification is considered “complete,” and cash incentives are distributed.
  • Maintenance is rewarded: For each year that the borrower (the homeowner) stays current on payments, the lender is given another $1,000.

In other words, HAMP attempts to lure lenders to modifications. Without this program, many lenders are financially incentivized (by the fee structure of the mortgage lending industry) to let mortgage loans slip into delinquency and the homes into foreclosure. In other words, late and delinquent loans earn lenders the most money through fees and penalties.

Who Can HAMP Help?

Borrowers are considered eligible if and when they’re at least 60 days behind on their home loan payments. Various economists have estimated that as many as two million American families can expect their homes to go into foreclosure before the end of the crisis if nothing is done to modify their loans.

Reports indicate that:

  • 19 percent of eligible borrowers have been offered modifications so far, which equals more than 570,000 loans.
  • 12 percent of eligible borrowers (about 360,000) have actually started the loan modification process.
  • Nearly eight percent of all U.S. homeowners are seriously delinquent on their mortgage payments, according to recent reports from the Mortgage Bankers Association.
  • 47 mortgage servicers have so far signed up with the Treasury Department to participate in the HAMP program. These servicers account for approximately 85 percent of all eligible mortgages.

Looking Beyond the Numbers

While the modification totals have been modest so far, these numbers show improvement from Bush administration efforts, when the FDIC announced explicit disapproval of the foreclosure-prevention steps taken at that time.

If more homeowners are able to engage in mortgage modification, the number of Americans filing bankruptcy to prevent foreclosure may start to drop off, a good sign of economic turnaround.

Additional Resources

Home Affordable Modification Program Guidelines (PDF)

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Posted in Mortgage Foreclosure | 11 Comments »

Wednesday, August 12th, 2009

Another ‘Foreclosure Wave’ to Come? Are We Even Off the First Wave?

With conversations swaying toward the July decrease in unemployment numbers and the excitement over the prospect of a teeter toward recovery, there is one major aspect to our current financial plight that's lacking in coverage: foreclosure.

When foreclosure is brought up, it's mostly talked about as though we have rode the first and mightiest of the waves and are settled into a set of less fierce waves of foreclosures, offering conjecture that the mend has begun.

Foreclosures Are Still a Top Issue

However, that might not be all that accurate of an assumption.

In fact, there are still many experts out there who believe we're just riding the first wave of the foreclosure epidemic.

Second Wave to Come?

Of the assumption of a ‘second wave’, Matt Padilla from the O.C. Register has a tone of indignation which might actually surmise the thoughts of most experts in the field: “To say there is a second wave implies the (current) wave has receded.”

Conceding to the same thought is Sam Khater, senior economist, First American CoreLogic, “I don’t see that the wave has receded.”

Some Foreclosure Prevention Measures Have Helped

Although Khater concedes to the fact that federal and state efforts have acted in delaying a relevant amount of foreclosures, he is vehement in asserting that these efforts only “prevented a few”.

More simply, it seems by all the true indicators that our foreclosure situation isn’t in the midst of a second wave but more in the spray of one giant one.

Another trusted economist and famed blogger who is not buying into the “second wave” theory is Barry Ritholtz.

Geographic Foreclosure Stats

In July, Ritholtz’s shows in his blog The Big Picture, a graph of staggering proportion. Wherein he examines the findings and offers that of all 50 states within the U.S, in the month of June, three of them (California, Florida, Nevada) account for nearly half of the country’s foreclosure-related activity.

To that fact, Ritholtz observes that the top 10 states accounted for 75% of all foreclosures for the month of June.

So if you are a resident of California or Florida you may not be so quick to agree with a second wave entering as much as you would the tsunami which has riveted your state.

Of course, those who would argue against these findings would say that the reason why California and Florida are at the top of the list and still climbing are because they are the top two states from the housing boom of the 90’s and early 2000.

While this may be accurate, it still does not negate the fact that foreclosures are in a perpetual rise.

Acquire additional information about bankruptcy and foreclosure.

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Sunday, August 9th, 2009

Why So Few Home Loans Have Been Modified

Since the collapse of the housing market in late 2007, leaders, policymakers and financial experts have been looking for a solution to the nation’s mortgage-based financial woes.

Despite economic incentives from the federal government, though, few mortgage lenders have offered the loan modifications necessary to keep borrowers away from foreclosure.

This New York Times home loan article details why. In brief, here’s what’s going on:

  • As part of recovery efforts, the Obama administration implemented a $75 billion program to reward lenders who modify troublesome home loans. The program essentially distributes $4,000 to lenders for each modified loan over a four-year period.
  • According to a report from the Federal Reserve Bank of Boston, though, only about 3% of seriously delinquent loans have been modified in the foreclosure crisis. The reason? Banks and mortgage lenders can collect fees on delinquent loans. After a home goes into foreclosure and is sold at auction, the mortgage company can collect fees from the proceeds for insurance, legal services, title searches and appraisals.

Interests of Lenders & Borrowers at Odds

Though bank officials and others involved in making mortgage loans have reportedly denied that they would act solely for profits, evidence seems to point toward just such behavior.

While most borrowers – and the housing market in general – would benefit from modified loans, many lenders stand to lose money from stopping foreclosure.

This trouble in home lending is really just the most recent manifestation of the system that allowed the market to get so out of control – and to collapse so heavily – in the first place. Here’s what happens:

  1. A borrower takes out a mortgage loan and agrees to pay a certain amount of interest.
  2. The loan is put into a pool of loans, divided and sold to investors in pieces.
  3. Every time a borrower makes a payment, some of the interest goes to each investor who “owns” part of the debt.
  4. Loan servicers, who act as middlemen in this process, collect service fees every time they have to service the loan in some way (e.g. by assessing late fees).
  5. Servicers acting in their best interest, then, often prefer to limit loan modifications and milk late and delinquent loans for fees.

Additional Resources

Why Don’t Lenders Renegotiate More Mortgages?

American Recovery and Reinvestment Act of 2009

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Sunday, August 2nd, 2009

FTC Announces Plan to Help Distressed Homeowners

Unfortunately, some people have seen the abysmal housing situation in the U.S. as an opportunity to take money from struggling individuals and families.

We’ve written often about the many guises of foreclosure rescue scams and how to protect your home from foreclosure.

In July, the Federal Trade Commission announced Operation Loan Lies, a “coordinated national law enforcement effort to crack down on mortgage modification scams.”

178 Companies Targeted for Scams

Operation Loan Lies includes four separate lawsuits, meaning that the FTC will have started action in 14 separate cases since April.

Typically, a foreclosure rescue scam works like this to separate unsuspecting homeowners from their money:

  • Promise to help: Scammers typically claim to be able to halt, prevent or delay foreclosure or modify the terms of your home loan. Their message attracts those who are having difficulty making payments and are growing desperate to save their homes.
  • Demand for money – or more: Once a scammer has promised to assist his victim, he asks for payment up front or assures the homeowner that he can only help if the deed to the house is in his name.
  • Fail to follow through: Scammers then do little or nothing to help the distressed homeowner. Some leave town with the money; others evict the family once they have the rights to their property.

While such a scheme may seem blatantly suspicious in writing, to those in danger of losing their homes, the promises of these scammers often sound like the only good news they’ve heard in a long time.

Learning from Others’ Mistakes

The FTC’s game plan goes beyond legal action: it has created and posted this foreclosure warning video, which features people who were victimized by foreclosure rescue scams and provides information about how to deal with the threat of foreclosure.

FTC is Following Through

In early April of this year, a number of consumer advocates (including Attorney General Eric Holder, FTC Chairman Jon Leibowitz, Treasury Secretary Timothy Geithner and others) announced that they planned to increase enforcement against people preying on distressed homeowners.

This move seems to be evidence that they’re following through.

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Wednesday, July 29th, 2009

When Lenders Want Home Foreclosure for You

The bank helped you purchase your home, surely they'll help you keep your home? Right?

Sadly, this isn't the case. When it comes to your home and your mortgage, many lenders are hoping for foreclosure, says this new report in the Washington Post:

Policymakers often say it's a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable.

In case you thought banks were concerned about anything other than the bottom line, this story makes it clear. Whomever holds your mortgage has one interest: Getting paid.

(For a full breakdown of how lenders look at you, check out this chart from the post.)

And if they can make more money with your foreclosure then don't expect them to offer any help when it comes to renegotiating  your terms, holding off on fees or stopping foreclosure.

One man shares a story where he went to his bank looking for help to stay in his house. He needed to cut his monthly payment by about $200. They provided $25 a month in relief.

So if you're serious about staying in your home, you'll need to take serious action, and you may need to take legal action.

Your mortgage rates probably won't change quickly, and it may be a while before you have a significant increase in income. Filing bankruptcy, however, could stop all pending foreclosure action through the Automatic Stay.

This is a big step, for sure, but you may need to take big action to prevent foreclosure.

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Tuesday, July 21st, 2009

Faces of Foreclosure: First Person Accounts

Los Angeles may be home to movie stars, but it's also one of the areas hit hardest by the economic downturn.

With home foreclosures in Los Angeles still on the rise this year, the Los Angeles Times provides five first-hand accounts from people facing foreclosure.

It's a simple, captivating and heartbreaking read. Each of the five people profiled offers a distinctively different tale, but they've all faced the same stress: How do we stay in our home?

In reading their stories, I think there are several lessons that we can take away, particularly if you're facing foreclosure or other financial struggles.

  1. You can't take action soon enough. Many of the people in the article waited until it was too late to take action. Time is not on your side if you are facing foreclosure. Don't wait until you receive an eviction notice. If you are getting behind on your payments, then take steps today to improve your situation. The sooner you start, the more options you may have. If you lose your job and notify your bank right away, they may be more willing to work with you. Then again ...
  2. The banks are not on your side. Several of the people in the story mentioned how unwilling their banks were to work with them. Often the banks wouldn't even respond to requests for help. One bank wouldn't lower a man's $500,000 mortgage, but sold his house for a fraction of that! Also, several couples went to the bank seeking help only to have more loans pushed on them with higher interest rates and higher monthly payments.
  3. Know your rights. Some of the people turned to bankruptcy for help, only to report having banks turn up on their doorsteps with foreclosure notices. If you file bankruptcy, all foreclosure efforts must stop until your case is resolved. If you file, and a bank shows up on your doorstep, report this to your lawyer immediately. The bank is in violation of the law in these cases.
  4. Even the prepared can struggle. The people profiled had money in savings and retirement accounts. They owned their business and were often responsible. But still, they faced hardship. Even the best prepared can struggle. Don't let your pride keep you from seeking assistance.
  5. You need long-term help. When hard times hit - like a job loss or injury - it's difficult to say how long the trouble will last. Will you find work soon? Will things recover quickly? You never know. But many people get in trouble by trying short-term fixes that only complicate their problems. If you find yourself slipping into serious debt, you should look into real, lasting solutions right away.
  6. Help is available. Most of all, don't give up hope. You have options. The people in this story turned to free legal aid organizations for help. For many people, filing bankruptcy allows them to stay in their home. Other people need short-term assistance to help with food and child care. The support is there, if you take advantage of it.
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Saturday, July 18th, 2009

The Face of Foreclosure

In Florida, the state Association of Realtors hopes to bring about change in public policy regarding foreclosures by giving a human face to the concept, highlighting the individuals who have lost the homes that are now back on the market at depressed prices.

The agency has started a Web site: Faces of Foreclosure.

The site strives to collect information from those individuals caught up in the personal crisis that is home loss.

Hopes for Advocacy

The group hopes that the information collected on their Web site will “provide the building blocks for strong advocacy and ultimately, good public policy as it relates to the housing market in all its facets,” according to a statement from the agency as reported by the Bradenton Herald.

The site asks foreclosure victims questions that include what type of home they owned, the  size, their experience working with their lenders and what factors contributed to the eventual loss of their homes.

It's the Right Time to Focus on Foreclosure

Foreclosures in the area around Bradenton, Florida are comfortably on their way to smashing the record, set last year, so there are plenty of stories to chronicle.

Mary Aston, a local realtor, believes the idea may help prevent another crisis like the one the area is currently experiencing.

“We still have foreclosures coming in, and I really do think if the data will help fix the system, then it’s never too late,” Aston says.

“Maybe it will prevent similar mistakes from being made in the future or maybe it will help people now who are trying to avoid foreclosure.

Long Overdue

Other Realtors feel the data collection is overdue.

“I feel like we’re way behind,” says Kathy Marlowe. “We should have been collecting data two years ago.”

Marlowe doubts the project will help as much as its planners intend. “How can you help people avoid foreclosure when they owe $300,000 on a mortgage on a home that’s worth only $175,000? Why would they even want to stay in that house?”

A spokeswoman for the Florida Association of Realtors, Marla Martin, says the study will provide more information than standard foreclosure and bankruptcy numbers services provide.

“They don’t tell you a lot about who’s going through it,” she told the paper.

“It seems like it’s better to have all the information you can gather out of the problem itself if you want to find a workable solution or at least some answers.”

Increased Foreclosure Awareness

The project has received a $97,000 grant from the National Association of Realtors to assist with foreclosure prevention and promote foreclosure prevention awareness.

The organization has furthered the initiative by purchasing statewide radio spots to inform the public of their project.

Another area realtor, Greg Owens, feels that the project will have a positive impact if the information obtained is used to lobby legislators.

“I feel that to give this a human face may change public policy in the future in order to avoid this situation again. I believe we could have avoided these massive failures and kept a lot of these people in their homes.

And frankly, that is going to take a lot of changes to avoid this happening in the future.”

Source: Bradenton Herald

Did you know: That Chapter 13 bankruptcy was designed to stop foreclosure? Find out if filing bankruptcy could help you.

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