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Friday, September 3rd, 2010

Mortgage Foreclosures & Delinquencies

In light of some mixed news about housing and foreclosure for the second quarter of this year, the outlook isn’t too rosy for the short-term future of the nation’s real estate market, a recent New York Times article notes.

Here’s a look at some of the numbers released recently by the Mortgage Bankers Association and various government organizations and what they might mean for the housing market:

  • According to the MBA, the number of homes currently in some stage of foreclosure fell in the second quarter of 2010, marking the first such decline since 2006.
  • Sources note that foreclosures on subprime loans may have already peaked and are likely now dropping off; however, it seems that prime loans are now in danger of default, partly because of continued high unemployment.
  • Mortgages that are 90 days past due (considered to be in “serious default”) accounted for 9.11 percent of all loans in the second quarter, a drop from 9.54 percent in the first quarter of this year.
  • Sources note that existing home sales in July 2010 were 26 percent lower than they were in July 2009.
  • Sales of new homes, it seems, were down 32 percent in July 2010, compared to a year earlier, apparently making the month the slowest on record (with stats going back to 1963).
  • As many as seven million households were behind on mortgage payments in July, according to sources (down from the high of eight million, reached about eight months ago).
  • Numbers suggest that banks and lenders are starting to clear the foreclosure logjam: in July, 279,685 foreclosures were started, an increase from 225,700 in June.

Clearly, these numbers don’t exactly point at recovery in the housing market—and some analysts have reportedly predicted that as many as four million American families could lose their homes to foreclosure before the crisis eases.

And such a high rate of foreclosures could have a seriously detrimental effect on the overall economy:

  • Less money, less spending: Consumers who are struggling to make mortgage payments are likely to spend less in other areas, meaning that consumer-supported economic growth may be weak.
  • More foreclosures, more houses: As banks start foreclosing on homes, more vacant properties will flood an already saturated market.
  • More houses, lower prices: This inundation of homes will mean that supply is far higher than demand, and could lead to further drops in housing prices.
  • Lower prices, more underwater mortgages: As home values continue to decrease, more borrowers will likely find that they owe more on their homes than those properties are currently worth.

There is no clear end in sight for this cycle of foreclosure.

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Posted in Economic News: How Are We Doing? | No Comments »

Saturday, July 17th, 2010

Foreclosures Likely to Top One Million This Year

A recent report from NPR notes that mortgage foreclosures are likely to reach the one million mark in 2010. To put this figure in context, consider these statistics, pulled from the real estate tracking site RealtyTrac.com:

  • In a typical year, the United States sees about 100,000 homes enter foreclosure—a mere tenth of the number expected this year.
  • In 2009, considered a big year for foreclosures, 900,000 homes were foreclosed on by banks.
  • In the first five months of 2010 alone, 528,000 homes have entered foreclosure—already more than five times the yearly average.
  • A whopping 1.7 million U.S. homeowners got some kind of foreclosure-related notice between January and June of this year (some of those houses have already gone into foreclosure). This translates to one in 78 homes in the country.

Understanding the Foreclosure Process

So what causes a bank to foreclose on a home? It can take as long as 15 months for a bank to repossess a home once a borrower is 30 days overdue on payments, according to sources. Here’s an idea of what might happen:

  • Missed payments

    • : If a mortgage payment is thirty days or more late, the homeowner is said to be delinquent on payments. At this point, the lending bank may send a notice of foreclosure. This is kind of the first warning of foreclosure a homeowner can get. At this point, it’s a good idea to contact your lender if you’re having financial difficulties. You may also want to consider consulting with a bankruptcy lawyer about whether Chapter 13 bankruptcy is a viable option to stop your home’s foreclosure.

  • Bank notifications: If a borrower continues to miss payments or stops making payments altogether, the bank will likely send notice that foreclosure proceedings have begun. While procedures and laws differ from state to state, homeowners can generally expect various types of notification in the mail and/or via telephone.
  • Eviction: Once the bank has processed various paperwork, it can evict the residents of the house and reclaim the property as its own. Because of the unprecedented number of foreclosure cases currently active in the U.S., banks may (but won’t necessarily) take longer than usual to actually evict tenants.
  • Foreclosure auction or sale: The bank now owns the home and may choose to sell it at a foreclosure auction or via short sale. Often, as sources note, any proceeds the bank makes from such a sale might be used to cover legal costs for the foreclosure process or the unpaid portion of the mortgage.

Clearly, the news of massive foreclosure action isn’t good for individuals and families who are losing their homes, but it’s also a bad sign for the larger economy. As more and more properties glut the real estate market, prices fall and the chances of a swift recovery in that area diminish.

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Posted in Home Foreclosure | No Comments »

Friday, July 2nd, 2010

A New Unexpected Cause of Foreclosure Examined

A recent report from NPR describes a shocking and troubling occurrence happening in certain neighborhoods in the United States. Apparently, some homeowners are finding their houses foreclosed on—but not because they fell behind on mortgage payments.

It seems that failure to pay homeowners association (HOA) dues constitutes legal ground for the HOA to foreclose on and resell a property.

A Devastating Oversight

The case detailed in the NPR story involves a deployed Captain serving in Iraq and his wife: they had, according to reports, paid for their home in full but missed two HOA payments—and their house was foreclosed on, sold for the amount of the overdue dues plus legal costs, and sold again for a profit.

Here’s what you need to know in order to protect yourself and your family from facing such an unfortunate fate:

  • In the U.S., 33 states have laws that permit HOAs to place liens on homes for which dues are not paid and collect on those liens (i.e. foreclose on the home) without putting the case before a judge.
  • In some states, processing a foreclosure takes less than a month—meaning that families have little time to take action to protect their property.
  • Because of the tough economy, it seems more families than ever are missing payments and don’t believe it when they’re told they could lose their home for failure to pay a couple hundred dollars’ worth of fees or dues.

The truth of the matter, though, is that you can lose your home in many states simply for missing payments to your HOA. If you’re pressed for cash and worried about making such payments, contact your HOA and explain the situation.

The most important thing to do is to attack the problem head on rather than waiting until it’s too late—if you can’t afford the dues now, you definitely can’t afford to make alternate housing arrangements, but that could be the position you’re in if you miss too many checks.

And, while it may be the least appealing thing you can think of if you’re falling behind on various financial obligations, be sure to open mail as soon as you receive it, as it could contain important and time-sensitive information about some of all of your debts. Remember: avoiding debt doesn’t make it go away, and in this economy it’s important to take any and all warning signs of personal economic turmoil seriously.

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Posted in Home Foreclosure | No Comments »

Sunday, June 20th, 2010

Complex Issues Often Arise in Personal Bankruptcy

Bankruptcies come in all shapes and sizes. Some are relatively simple, while others pose particularly troublesome issues. While legal counsel can be beneficial for any type of bankruptcy, many people find experienced attorneys especially helpful during complex filings.

In response to a growing trend of bankruptcy in the Phoenix metropolitan area, which is on pace for around 30,000 filings this year, The Arizona Republic recently listed a few of the most vexing bankruptcy issues:

Divorces

During divorce proceedings, spouses will sometimes agree to shield each other from certain debts, which often include debts incurred during marriage. However, if one spouse later files for bankruptcy, creditors could go after the other spouse for payments on specific debts, despite the previous agreement between the divorced couple.

So, by shielding a spouse from debts during a divorce proceeding, an individual could prevent that debt from being dischargeable during bankruptcy. As a result, couples going through a divorce should tread carefully if one party expects to file for bankruptcy afterward. There may be options to protect both parties and discharge the debt, but these are sometimes best determined by experienced attorneys.

Homeowners Association Fees

Some filers for bankruptcy have recently learned that homeowners associations can still collect unpaid fees, even after those filers have given up their homes. While this scenario may sound implausible, The Arizona Republic offered a fairly common example.

If a homeowner buys a home using a mortgage and fails to make payments on time, that individual may simply leave the home while the lender begins foreclosure proceedings. During this lag, a homeowners association may continue to charge the former homeowner membership fees.

These fees may continue to be charged until the bank completes a foreclosure, which may take several months. If you are facing a foreclosure or a bankruptcy and fear a similar problem, you may wish to contact a bankruptcy attorney.

Faulty Deeds that Leave Loopholes for Trustees

Another complex issue can arise when a homeowner files for bankruptcy. Even if the homeowner makes his or her mortgage payments on time, court-appointed trustees may look for flaws in the mortgage paperwork in order to push their claim in front of a creditor’s.

While this scenario may seem far-fetched, it has occurred, and title companies that complete mortgage paperwork do make mistakes. If such a mistake occurs, and the mortgage lender can’t prove its claim, the trustee could simply sell the home. Again, this is not a terribly common problem, but seeking legal counsel can help avoid such a financial nightmare.

Additional Resources

To read in-depth analysis of further complex issues posed by personal bankruptcy, check out the American Bar Association.

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Posted in Filing Requirements | No Comments »

Sunday, June 6th, 2010

Underwater Mortgages in the U.S. by City

For most of us, the story of how the Great Recession started is a familiar tune: the stock market soared because of speculation on the real estate market, which meant real estate prices soared as well. And when the bubble burst, millions of Americans lost serious money and bankruptcy and foreclosure rates climbed steadily.

And the latest news, according to real estate information source Zillow.com, still reflects a seriously distressed housing market in many parts of the country.

Underwater Homes

One of the biggest problems homeowners face today is negative equity: when you owe more on a home loan than the property is currently worth, you’re said to have negative equity, or be “underwater” on your mortgage loan.

According to sources, a whopping 23.3 percent of U.S. homes are currently underwater, slightly more than the 23 percent reported in the last quarter of 2009. Here’s a look at the U.S. cities currently suffering from the highest negative home equity rates:

  • #15: Jacksonville, Florida. Here, 127,807 homes, or 49.1 percent of residences, are currently underwater.
  • #14: Riverside, California. This city has a 51.2 percent underwater rate, with 347,778 individual homes.
  • #13: Tampa, Florida. 286,303 underwater homes give this city a 53.1 percent rate.
  • #12: Vallejo, California. With 41,436 homes underwater, this city has a 54.7 percent rate.
  • #11: El Centro, California. A 54.9 percent rate means 12,103 houses in this city are underwater.
  • #10: Port St. Lucie, Florida. With 54,190 homes underwater, this city has a 56.2 percent rate.
  • #9: Stockton, California. Once the foreclosure capital of the country, this city now has the dubious distinction of a 57.7 percent underwater rate, with 64,614 homes underwater.
  • #8: Fort Meyers, Florida. Here, 58.2 percent of homes (83,533) have negative equity.
  • #7: Lakeland, Florida. With 62,423 homes underwater, this city has a 58.5 percent rate.
  • #6: Merced, California. 24,076 underwater homes, for a rate of 58.8 percent.
  • #5: Modesto, California. A 60.7 percent rate with 54,417 homes underwater.
  • #4: Reno, Nevada. 45,107 homes underwater gives Reno a 64.4 percent rate.
  • #3: Phoenix, Arizona. Here, 64.4 percent of homes (totaling 479,692) have negative equity.
  • #2: Orlando, Florida. With 289,209 homes underwater, Orlando has a 74.8 percent rate.
  • #1: Las Vegas, Nevada. A whopping 80.6 percent of homes (254,880) have negative equity.

Negative equity is no small matter for affected homeowners, considering that mortgage modifications have been difficult to process and foreclosure is generally a trying process.

For some people facing foreclosure of their homes, a Chapter 13 bankruptcy filing may help, but it may not help the problem of owing more on a house than it's worth.

If you have negative equity in your home, consider speaking with a personal bankruptcy lawyer about your options.

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Posted in Home Foreclosure | No Comments »

Thursday, January 21st, 2010

Stricter Mortgage Lending Regulations Implemented

As many people now know, the current recession was touched off by the collapse of the real estate market, which ballooned out of control in the mid-2000s.

Now, according to CBS News, mortgage lenders have learned a tough lesson and are changing the way they do business. Here’s a look at some notable changes and why they’re cropping up.

Big-Time Losses

During the subprime lending boom, many lenders (including big players like Fannie Mae and Freddie Mac) offered high- or variable-interest loans, no-down-payment loans, and other types of loans that people were unlikely to pay off easily.

Now, many of those loans have gone bad, meaning that the borrowers were unable to make payments and the houses in question have gone into foreclosure. Lenders are thus writing off (that is, accepting as lost) billions of dollars in bad debts – and they have to do something about it.

  • Credit score requirement: In the era of subprime lending, people with low credit scores were often specifically targeted for high-interest loans. Now, according to sources, Fannie Mae will not issue loans to anyone whose FICO credit score is below 620.
  • Equity requirement: If you’re looking to refinance your current home loan, lenders now require you to have some equity (that is, some amount of the principal paid off) in your original loan.
  • Down payment a must: In the olden days, buying a house without a down payment was unheard of; the subprime lending "innovations," though, introduced loans with no down payment required. Major lenders, it seems, are returning to the traditional wisdom that you must pay a significant amount of money up front.
  • Debt-to-income ratio consideration: Fannie Mae has also reportedly announced that it will not lend to anyone whose debt-to-income ratio rises beyond 45 percent – that is, in order to get a loan, you must not pay more than 45 percent of your monthly income on all debt payments (including car, credit card, student loan, etc.) combined.

So what does this mean for people thinking about buying a home? Basically, it means you need to be at the top of your game financially. You should be checking your credit report regularly and making sure you’re an attractive candidate to home lenders – and if you aren’t right now, it’s time to take steps to become one. Foreclosure can often lead to bankruptcy, leaving two black marks on your credit report for up to 10 years.

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Posted in Home Foreclosure | 2 Comments »

Thursday, December 10th, 2009

Call Your Representative and Demand Mortgage Modification in Bankruptcy

An amendment being debated in the House of Representatives could provide powerful protections for homeowners going through bankruptcy. This legislation would allow bankruptcy judges to modify mortgages in Chapter 13 cases, providing a huge benefit for everyday hardworking Americans who are facing home foreclosure. The House may start voting on this amendment as soon as today!

Please take the steps below then share with your family and friends via email, Facebook, or any way you can get the word out!

  1. Phone toll free at: 877.354.4958
  2. Put in your zip code
  3. When you reach the receptionist:
    • State your name
    • Say that you are a constituent
    • Ask the Representative to vote FOR the Conyers-Turner-Lofgren amendment (#201) to the Financial Services Reform bill.

The amendment is being fiercely opposed by the business and financial services communities. By calling your representative in support of this amendment, you can fight corporate greed and help your fellow Americans. This amendment will cost taxpayers NOTHING and will save millions of homes from foreclosure! Take action today!

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Tuesday, November 24th, 2009

One in Four Mortgages Underwater

Nearly one in four home mortgages are burdening borrowers with negative equity, an article by the Wall Street Journal reports.

Underwater mortgages find homeowners with declining home values to the point that they owe more on their mortgages than the home is worth.

The situation has hit new homeowners in the past few years, especially those who were paying interest-only mortgages as their home values declined.

However, this is no longer the case, as a whopping 23% of all home mortgages—10.7 million households— are underwater, according to real estate information company First American CoreLogic.

5.3 million of those homes are tied to mortgages worth least 20% more than the home's value.

The hardest hit states include Florida, Arizona and Nevada, where 65% of mortgages have negative equity—nearly three times the national average.

Negative equity can become a financial disaster for homeowners, especially if it means turning down a promotion or job transfer because they cannot sell their home, or if it leads to bankruptcy to eliminate the debt.

The underwater crisis is intimately tied to foreclosures (a category also led by Nevada), as rising foreclosure rates can cause neighboring homes to lose value, and as some homeowners choose to simply stop paying on underwater mortgages, known as strategic default.

An estimated 588,000 borrowers defaulted on mortgages last year even though they could afford to pay, double the amount from 2007.

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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. Not surprisingly, Nevada also has one of the nation's highest bankruptcy rates. 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.

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Posted in Home Foreclosure | 1 Comment »

Friday, October 30th, 2009

Stalemate in Real Estate Sector has Increased Bankruptcy Filings

Guest Author: Peter Gomes

The real estate sector received a jolt when the sub-prime mortgage crisis eroded the US economy. The mortgage market was in doldrums and the upheaval so great that the government had to intervene with its series of mortgage bailout programs.

Consumers bankruptcy filings increased, and so did the number of foreclosures. Many Americans considering bankruptcy filing received >more information on bankruptcy by connecting with a bankruptcy attorney.

The Obama Administration introduced a series of mortgage bailout programs to assist homeowners facing foreclosure. The program, known as the Making Home Affordable Plan, was expected to help as many as 7 million to 9 million homeowners. However, due to few limitations, the program has yet to help as many homeowners as anticipated.

There is a vicious cycle of debt that has led to the recession, which has affected consumer spending as well as investor sentiment.

In the easy-credit boom, people started using their credit cards even for making payments for grocery shopping and for utility bills. As employers went on a cost cutting and job cutting spree, it became difficult for consumers to make ends meet.

For consumers considering filing bankruptcy, it can be Chapter 7 bankruptcy or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, a court-appointed trustee will liquidate your non-exempt assets so that the proceeds can help in paying off creditors. As per the new federal bankruptcy laws, certain changes have been introduced. The prominent ones are Means test and credit counseling.

If you are planning to file Chapter 7 bankruptcy, you have to find out if you qualify for the same by taking the Means test. Consumers also must take a credit counseling session prior to filing bankruptcy.

In case of Chapter 13 bankruptcy, you are given a repayment schedule according to which you are expected to make payments to your creditors.

In either bankruptcy chapter, there is one advantage of filing: an Automatic Stay or Order for Relief that prevents creditors from coming after you for their dues.

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Posted in Economic News: How Are We Doing? | No Comments »

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