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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, June 27th, 2009

Michael Jackson, Neverland Ranch and Foreclosure

When ambulances were called to Michael Jackson's home last Thursday, they went to the Beverly Hills mansion he had been renting.

Jackson's most famous residence, the lavish, one-of-a-kind, amusement park-like Neverland Ranch, hadn't been his home for many years.

Amazing pictures of Neverland Ranch.

Jackson purchased the property in 1987 for almost $20 million. At the time, it was a working ranch, but under Jackson's care it would become a shrine to the childhood Jackson never had. From nineMSN:

The singer spent $35 million improving the property, which featured two railway lines, two helicopter pads, its own fire department, a zoo and a plethora of amusement part-style rides. The property cost an estimated $10 million a year to maintain.

Jackson lived at the ranch for many years, and underprivledged and sick children from California and across the country came to visit his theme-park.

But all the while Jackson was very private about the property. Visitors weren't allowed to take pictures inside, and they were required to sign confidentiality agreements upon arrival.

Perhaps the most intimate view of the property came from a lengthy 20/20 report that highlighted some of the property's extraordinary features.

Foreclosure on Neverland Ranch?

But the joy of Neverland Ranch, named after the magical land in "Peter Pan" were children never grew up, wouldn't last.

Jackson had an almost $25 million loan out on the house. In 2007, he was $23 million delinquent on the loan and foreclosure proceedings began.

In California, after you miss three mortgage payments in a row you have 90 days to make a payment. Jackson, who hadn't released an album since 2001, was unable to make a payment.

For most people, this would have been the end of the line. For most people facing imminent foreclosure, filing bankruptcy is the best option for protecting their home. Of Course, Michael Jackson isn't most people.

Jackson's celebrity helped stop foreclosure. His debt was transferred to another loan company, and the property stayed with him.

However, Jackson continued to have money problems. The zoo and many of the amusement park rides were auctioned off. With money problems and child molestation charges - stemming from a child's visit to the ranch - Jackson said he could no longer feel at home there.

And then the man who had already spent so many nights in hotels across the world while on tour, began living elsewhere.

At the time of his death Neverland Ranch was still in Jackson's possession. Today, the property is valued somewhere between $90-120 million. With his death, the property may be worth even more.

But with Jackson's debts rumored to be near $500 million, the property could be auctioned off to pay his creditors. Others, however, say that the property may become a museum similar to Elvis Presley's Graceland.

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Wednesday, April 29th, 2009

Helping Families Save their Homes in Bankruptcy Act Up For Vote

We wrote about Illinois Senator Dick Durbin's bill when it was first being considered.

Now, the measure that would potentially stop foreclosure for millions of Americans by allowing bankruptcy judges to change the terms of a mortgage - including interest rate and principal owed - is up for a vote.

However, the vote is going to be very close.

If you want to stand up and help keep people in their homes and protect Americans going through difficult financial times, contact your Senators and Congress people today.

You can visit http://www.congressweb.com/cweb4/index.cfm?orgcode=nacba&hotissue=1 to find a simple form that will allow you to contact the Senator in your home state.

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Friday, June 8th, 2007

Lost Track of Who Owns Your Mortgage? Chances are You’re Not Alone

In the confusing sea of paperwork transferring mortgage notes from lender to holder to securitized pool, many consumers aren't at all sure exactly which entity owns their mortgage notes, or how one entity is related to another.  The surprising news that's working to the advantage of many homeowners facing foreclosure is that the mortgage lenders and note holders may not know, either.

Florida attorney April Charney, Forbes magazine tells us, noticed that a lot of the mortgage foreclosure cases she saw involved affidavits of lost notes. An affidavit of lost note is essentially a sworn statement that says, "we own this debt, but we can't find any paperwork to prove it, so please just take our word for it".  A bit of investigation revealed that in many cases, the paperwork didn't exist, or originated at the wrong time, or conflicting interests had been recorded.  In some cases, notes had been illegally purchased by pools after they were already in default.

These flaws can bring a mortgage foreclosure action screeching to a halt; Forbes reported on one such homeowner who is still in residence five years after foreclosure actions were commenced.

If you're facing foreclosure, don't assume the worst. Get the professional help you need to untangle the paper trail and find out whether you have valid defenses in a forecosure action.

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Posted in Bankruptcy and the Economy, Mortgage Foreclosure | 6 Comments »

Wednesday, June 6th, 2007

Subprime Mortgage Crash Hurts More than Just Borrowers

While controversy rages about whether the subprime mortgage foreclosure crisis sweeping the country is the result of unethical practices in the mortgage industry or poor judgment on the part of borrowers, one clear reality can't be ignored:  a lot of people are getting hurt by the mortgage foreclosure crisis who never took out a high-rate, adjustable loan in their lives.

Those people include home sellers, investors who are taking losses on properties as homes sit unsold for months due to the glut in the market, and economies impacted by the virtual collapse of the subprime mortgage industry.

In April, GE's WMC Mortgage unit laid off 771 employees--half of it's remaining staff.  WMC's staff had already been cut by 460 employees in March.

These layoffs are just one recent example of the drastic cuts in the mortgage industry over the past year.  In May, subprime mortgage lender New Century Financial Corp. announced the elimination of 2,000 positions.  The company had already announced 3,200 terminations when it filed for bankruptcy protection two months earlier.

Other recent notable mortgage industry layoffs include a loss of approximately 3,000 jobs from ACC Capitol Holdings and the elimination of an undisclosed number of the 2,400 positions at Freemont Investment & Loan.

Each of these layoffs not only impacts hundreds or thousands of families, but raises local unemployment rates, aggravating economic difficulties for entire areas.

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Tuesday, May 15th, 2007

NPR Addresses Subprime Abuses

NPR recently interviewed past employees of subprime mortgage broker Ameriquest, and even with all of the information that's come during the current mortgage foreclosure crisis, some of the stories are shocking.

Former employees describe the company not just failing to mention payment increases and upward adjustments in mortgage rates, but directly telling consumers that their mortgage rates would not increase, and in some cases even concealing adjustable rate mortgage documents in a stack of paperwork with fixed rate terms described on the first page.

Listen to the interview on NPR's website.

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Monday, April 16th, 2007

Senate Democrat Drafting Foreclosure Assistance Legislation

Reuters is reporting that U.S. Senate Banking Committee member Jack Reed (D) is drafting legislation to assist homeowners facing foreclosure.  Reed is reportedly seeking input from several consumer groups that have studied the current foreclosure crisis and pushed for governmental intervention.

Proposed legislation is also reportedly forthcoming from Senator Charles Schumer said he would propose bail-out legislation, and Barney Frank, Chairman of hte U.S. House of Representatives Financial Services Committee will hold hearings on Tuesday seeking solutions to the mortgage foreclosure crisis.

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Wednesday, April 4th, 2007

Another Subprime Mortgage Lender Falls

California-based subprime mortgage lender New Century has filed for bankruptcy protection, and announced plans to immediately terminate 3,200 employees.  If the bankruptcy court gives its approval, New Century will sell its loan servicing business to Carrington Capital Management.

More than two dozen subprime lenders across the country have shut down in the past several months, and New Century will likely not be the last.

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Wednesday, March 7th, 2007

National Urban League President Unveils Plan to Increase Home Ownership

National Urban League President Marc Morial tied homeownership to personal wealth, greater economic empowerment, and closing the gap between blacks and whites in the United States when he described six major policy recommendations designed to minimize obstacles standing in the way of many Americans owning their own homes.

The obstacles the National Urban League Homebuyer's Bill of Rights seeks to overcome are:

  • Lack of net savings for downpayments and closing costs
  • Lack of information on how to shop for homes and apply for loans
  • Lack of quality affordable units in livable locations; and
  • Lack of consumer protection

In recognition of skyrocketing mortgage foreclosure rates across the country, particularly in economically depressed areas where homebuyers are more likely to have been saddled with unfavorable non-traditional mortgage terms, Morial said, "It is not enough to put more Americans into their own homes if we fail to arm them with the tools needed to sustain homeownership."

The National Urban League Homebuyer's Bill of Rights makes six policy recommendations designed to overcome these obstacles:

  1. The Right to Save for Homeownership Tax-Free
  2. The Right to High-Quality Homeownership Education
  3. The Right to Turth and Transparency in Credit Reporting
  4. The Right to Production of Affordable Housing for Working Families
  5. The Right to be Free from Predatory Lending; and
  6. The Right to Aggressive Enforcement of Fair Housing Laws

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