WHAT DO GOVERNMENT FORECLOSURE PROPOSALS MEAN TO THE AVERAGE HOMEOWNER?

America is facing a crisis. The cornerstone of our capitalistic economy is being chiseled away by the current foreclosure crisis.
In Texas, families of five are being ripped out of their homes. In California, homeowners are pawning heirlooms to stem foreclosure. In Massachusetts, widows are being put out on the streets. A foreclosure epidemic has wrapped its chains around the beating heart of the American economy and intends to squeeze out every ounce of dignity from American homeowners.
Who will come to the rescue? Who will be able to loosen the grip of the current financial crisis bringing America to its knees?
Well-meaning politicians, judges, mayors, senators, congressmen, and governors have all offered solutions to the problem. Our President has even offered his own slate of solutions to help bridge the gap between problem and solution.
In fact, many of these proposals have received mass amounts of publicity, and been deemed as immediate solutions to the current foreclosure situation. But, upon further examination, a startling truth is revealed.

For example, Sen. Hilary Clinton's proposals have garnered public attention as being a viable stopgap for homeowners facing foreclosure. But, Sen. Clinton's main proposal is a mass conversion of many adjustable rate mortgages (ARMs) to fixed-rate conventional loans, which only affects homeowners with ARMs (a small percentage of the home-buying populace). Also, it offers little help to the homeowner that is currently three payments behind and facing foreclosure proceedings because the conversion of those loans would take many months.
Also, Sen. Barack Obama has offered his own proposal. Again, his plan has been highly touted as the most relevant solution by major media outlets. His proposal involves giving money back to the consumer to stimulate economic growth. It sounds wonderful but the current proposal to give every worker and Social Security recipient in America $250 would cost the government $45 billion. And, for some reason, Sen. Obama is not focusing on delinquent homeowners but on consumers in general. This doesn't help that family of five in Texas with a $700 monthly mortgage payment.
Lastly, and most importantly, we look at President Bush's plan to stem the foreclosure flood. His plan is to enact a freeze on ARMs to keep the interest rates on those loans from adjusting for "eligible" homeowners. The obvious problem with this plan is that it only affects those homeowners with ARMs and it only affects those homeowners that are "eligible." Unfortunately, the public is not told by what standards they may become "eligible."
One must conclude that the government is fighting a public relations battle and not a battle to affect the lives of thousands of helpless homeowners. The government proposals have failed to get to the root of the problem. Homeowners are not receiving help from their own mortgage companies during this time of crisis. That problem is not going to be overcome by the far-reaching government proposals that dominate the headlines of daily newspapers.
We must urge the government to take action and start at the root of the problem. Homeowners need help and the government is not giving it to them. The average homeowner is in need of assistance in getting their mortgage company to take time with them to work out their problems, not a freeze on adjustable rate mortgages.
If you are a homeowner facing foreclosure, please do not be misled by the publicity of these many public relations campaigns. Do not assume that the government is going to assist you in saving your home. Many homeowners across America are coming to the disquieting realization that the problem lies with the mortgage company and the indifference that they have toward the homeowner.
How many more families of 5 will be put out on the street? How many more widows will be forced out of their homes while major media outlets rave about government proposals? The problem lies with mortgage companies apathy and unwillingness to help the homeowners that they so eagerly take money from. Until mortgage companies, government officials, and homeowners realize that, our country is on a course for economic disaster.

Hey Candidates: It's still about the economy and foreclosure

Monica Davis
Originally published by www.opednews.com on 1/9/08

Dear Hillary, Barak and assorted others:It's still about the mortgage and foreclosure frenzy. It's still about people losing their homes, being thrown out in the street, adding to the nation's homeless problem.
The vultures are rolling in--what are you going to do about it? Ya'll are still senators, aren't you?It’s all over the news, how the mortgage foreclosure fallout is turning parts of American cities into ghost towns. As you bask in the suns of your respective universes, foreclosures are hitting condos in Miami, apartment complexes in Ohio, and closing in on homes and farms from shore to shore.
The market has tanked so rapidly that many renters no longer know where to send their rent checks. On a foreclosure blog, one man brags that he hasn’t paid rent in four months because his rented condo has been flipped more than a pay day hooker at a military base and nobody knows he’s renting the property.
The consequences of cheap condo conversions, greedy investors, criminal conspiracies and con gams, combined with the action, or non-action of look the other way authorities have come home with a vengeance. Home prices are falling like dead birds from the sky, as many of the nation’s cities and states prepare for massive budget shortfalls and layoffs, due to decreased property revenues.
The mortgage fraudsters have made billions through fraudulent appraisals, sales to non-existent buyers, pocketing their often-outrageous fees and profits. Now that the winds of time have finally blown their spit and glue house of cards into oblivion, the nest of snakes in the nation’s real estate investment sector twisting and hissing for the whole world to see. Unfortunately, their poison has spread throughout the world in the form of risky securitized mortgage investments.
Straw buyer purchased condos sit empty and abandoned in hundreds of cities across the country. The hand of real estate fraud continues to wreak havoc around the world as discover that their loan portfolios are full of nearly worthless, or grossly devalued mortgage investments.
The fur is flying so fast that many of the investors have no idea what their investments are truly worth, nor are many of them aware of exactly what they own. The untold thousands of foreclosed rental properties stick in their collective craws like indigestible rock.
Many banks have no intention of becoming landlords and kick out tenants when they foreclose on an apartment property. They’d rather see the property remain vacant, rather than bother with becoming landlords or hiring property managers.
Onetime real estate investment hotspots are cooling fast. A recent sub-headline in a Miami newspaper reads, "South Florida’s many condo buildings began to suffer from hundreds of foreclosures – and it may get worse in 2008." (Miami Herald, 1-09-08)
According to several real estate analysts, the foreclosure crisis is really hitting condo complexes, with those who are left behind and continue to occupy their buildings now having to foot even higher maintenance and home owner association costs. The owner-occupied units have to take up the slack for the now abandoned and foreclosed invester-owned properties.
It’s been said that hot manure doesn’t run uphill and the same is true of bills and fees. When companies get in trouble, they pass their ‘trouble’ on to their customers and clients. The same is true of governments and home owner associations.
Many cities are losing tax revenue because of the massive amounts of abandoned foreclosed properties within their corporate boundaries. Likewise, the remaining condo-owners and property owners who live in neighborhoods or condo complexes with large amounts of abandoned, foreclosed properties wind up taking up the slack in some form or another, through decreased property values and falling tax and homeowner’s association revenues.
Condo associations, which collect fees from residents for maintenance, repairs, management salaries and utilities, have been losing revenue as the numbers of speculator-driven foreclosures rise. It turns out that many condo owners who are struggling to pay their mortgages are also falling behind on association dues. (Business Week, 11-29-07)
Across the country, there are a lot of anxious investors who are waiting for the other shoe to drop. Many hopped into the condo investment business hoping to take the loot and run, but unfortunately, when the bottom dropped out of the market, there were no takers and they were left holding the bag. Thousands of investors were so sure they were going to strike it rich in real estate development that many invested money they could not afford into homes, condos and apartments, only to find that they now are holding the bag on white elephants that nobody wants to buy.

The condo frenzy displaced millions of apartment dwellers, in a time where it was thought that you could make a bundle converting apartments into condos and selling each unit at a hot price. Unfortunately for them the market has not only cooled, but a great part of it is frozen into foreclosure. And now, the shoe has not only dropped, it’s been kicking investors upside the head with a vengeance.
Many investors are caught between a rock and a hard place, saddled with unsaleable properties. Instead of appreciating nicely, with a good profit in store, the value of their real estate investments are instead dropping like rocks, leaving them in a quandary, as was the case with a group of investors in the rental market in San Diego.
The group toyed with a number of possibilities: condo conversion-conversions, condo reversions and even apartment conversions. Pinnegar, executive director of the San Diego County Apartment Association, isn't sure if they ever pinned down a final moniker. But he does know that everyone in the business is asking what's going to happen to all the people who jumped on the condo conversion bandwagon in San Diego, only to find a sinking condo market at the end of the road. ("Condo Conversion-Conversions", Will Carless, staff writer, Voice of Sand Diego, 7-24-06)
The mortgage and foreclosure crisis, which is currently chewing up the nation’s real estate market has uncovered deep faults in the industry. According to an on-line version of Atlantic magazine, there is quite a lot of variety in the types of cities, structures and neighborhoods struck by the foreclosure mess, so much, in fact, that whether foreclosure is a catastrophe or minor crisis depends much on the nature of the mortgages being foreclosed.
Nationally, the variety of communities facing a wave of foreclosures is striking. Many areas of go-go growth—the Southwest, California’s Central Valley, much of Florida, eastern Colorado, Greater Atlanta—have been hard-hit. So too have portions of the Rust Belt, and a narrow east-west strip running from Tennessee into Arkansas. The places encompass run-down neighborhoods as well as areas with at least a veneer of affluence. (On the street pictured below, many of the houses sold for $400,000 or more.) If nothing else, the meltdown forces us to consider how much uncertainty may lurk beneath the surface of apparent prosperity; an ample suburban house could be an asset or a liability, depending on the terms of the mortgage and the direction of the local market. ("There Goes the Neighborhood", the Atlantic.com, January/February, 2008)
Meanwhile, as the lights go out in condos and homes around the nation after a visit from the foreclosure squad, many so-called vulture investors say, don’t blame us, we provide a necessary service. So-called vulture investors say they are a necessary part of the real estate food chain, even going so far as to say there aren’t enough of them to "clean up the market."
Between 2006, the start of the sub prime meltdown, and 2007, over 165 lenders have closed there (sic) doors due to poor business decisions. What happened to all their loans? Larger institutions purchased them at pennies on the dollar. These big banks and others were not looked at as vultures. It was simply accepted as common business practice. Now those institutions have to foreclose on all the nonperforming notes they bought and try to sell the properties at auction. What happens if no one buys them? What if there are no vultures to come and solve the problem? The more money the banks spend on their properties the less money they have to lend. Eventually they will go out of business and possibly send the country in to a recession. The "carcasses" will rot away, and feed no one. That where the Vultures come into balance the food chain. Traditionally Vulture funds were set up to help the rich get richer off the miscalculations of others and you would need a minimum of 1 million dollars to take part - because that’s what the market conditions called for. However, now we are in a new age; the age of the Vulture. The market is saturated with deals. The game calls for more players. (foreclosure blog)
Many who can still afford their homes continue to pay their mortgages, despite living in neighborhoods with far too many vacant, foreclosed properties for their comfort. They know what the real estate agents know: foreclosed properties in their neighborhoods decrease the value of their own property. To heap more coals on this roaring fire, foreclosure is an infection which contaminates whole city blocks, entire neighborhoods.
One of the most dangerous side effects of foreclosure, residential foreclosure in particular, is the effect that abandoned, foreclosed homes/property have on the surrounding neighborhoods. The boarded up, empty, abandoned properties, by their very presence, harms the neighbors of people in foreclosure, even those who aren’t having trouble making loan payments.
According to one academic study, every foreclosure reduces the value of all other houses within an eighth of a mile by about 1 percent, as the sight of vacant property scares off potential buyers. Combine that with a market already in decline, and neighborhoods that begin to have troubles can go off the cliff. On the street pictured, three houses not in foreclosure have been languishing on the market for 72, 97, and 149 days; asking prices along the cul-de-sac vary widely, but average about $40,000 less than the comparable prices in the first two quarters of the year. (Ibid)
From a "vultures" point of view, dive on in, the water's great. Despite the foreclosure glut, there are people, institutional investors, who have billions of dollars in investment capital available. They are on the prowl, looking for good real estate investments, yes, even in this market. And they are searching for a "good deal"—with cash in hand.
(Jack) McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach, Fla., said investment groups with capital "in the multiple billions" are already active in South Florida, searching for fire-sale prices on properties with good long-term prospects. (Washington Post, 10-20-07)
To top it all off, and throw more blood in the water, the fact that the major players keep falling out of the trees like iguanas in a South Florida cold snap makes the game all the more exciting and profitable for those who have the money to buy. As of today, rumors about a potential bankruptcy by a major player in the mortgage industry abound.
The LA Times is reporting of rumors that Countrywide may file for bankruptcy protection.
Countrywide Financial Corp. denied Tuesday that it was considering filing for bankruptcy protection, but its stock price collapsed on widespread rumors, falling to an 11-year low. The Calabasas-based company, which cut more than 11,000 jobs last year, was pummeled by the bankruptcy speculation and Wall Street gossip that its debt would be downgraded by one of the major bond-rating firms. (LA Times, 1-9-08)
The bloodletting in the mortgage industry continues and the vultures are waiting in the wings. As one analyst put it: the problem is not just centered on urban areas, in neighborhoods full of subprime mortgages sold to poor and minority homeowners. There are trillions of dollars worth of risky loans out there, and untold numbers of vulture capitalists waiting to invest in the fallout.

As America's mortgage markets began unraveling, economists initially focused on sub-prime mortgages issued to largely low-income, minority and urban borrowers. Closer analysis reveals risky mortgages in nearly every corner of the USA. Analysis by The Wall Street Journal indicates that from 2004 to 2006, when home prices peaked in many parts of the country, more than 2,500 banks, thrifts, credit unions and mortgage companies made a combined $1.5 trln in high-interest-rate, high risk loans. The potential losses on these loans are unknown. ("This Credit Crunch Has Bite: Part I", Minyanville.com)

Monica Davis is a journalist, public speaker and author of hundreds of articles and several books, including: Land, Legacy and Lynching: Building the Future in Black America. Her articles have been used by home schoolers and students around the world. Author website: http://www.lulu.com/davis4000_2000

Quick response can mitigate foreclosure fallout

Maria Saporta
Originally Published in the Atlanta Constitution Journal on: 12/10/07

Vacant, boarded-up houses destroy communities. They become havens for crime, vandalism and deterioration, pulling down the value of neighboring homes and spreading unease for nearby residents.

Unfortunately, this is a reality that communities throughout the region face with the record number of foreclosures.

Formerly reviving communities are being hit with decline, and many families, once part of healthy neighborhoods, are in disarray and may even become homeless.

It's not a pretty picture.

Our region already faced a shortage of affordable housing. Foreclosures will exacerbate the problem, especially in the near term.

Much needs to happen in a short time.

At the Regional Housing Forum meeting last week, experts offered game plans on how to help attack the problem.

The best solution: Prevent homeowners from having to declare bankruptcy. As soon as a homeowner is 30 to 45 days late with a mortgage payment, help should be available before it's too late.

"The likelihood of stopping foreclosures is much more likely in that time period than after 90 days," says Emory University professor Frank Alexander, who is doing a stint at Harvard University until January.

Several entities, such as the Consumer Credit Counseling Service and the Home Ownership Helpline, can help homeowners restructure their debt and better manage finances. Alexander thinks banks should suggest homeowners get such help at the first sign of trouble.

One critical change that needs to happen is for the state Legislature and the governor to extend the amount of time between a declaration of default and the sale of a foreclosed home.

Currently, Georgia and Texas have the shortest window — 37 days — between default and sale, giving homeowners little time to work on a solution.

Alexander and his counterpart at Georgia Tech, Dan Immergluck, believe a three-month timeframe would be much more reasonable and would help keep people in their homes.

It's too late for hundreds of thousands of metro Atlanta residents who already have suffered foreclosures since 2001.

So what should happen post-foreclosure?

In an ideal world, foreclosed properties could return to the market at reasonable rates for working families.

That's easier said than done.

"These lenders are under pressure from their investors to maximize returns," Immergluck says. "Yet they need to bring down values of the properties that they own so that they're affordable."

It's to the lender's advantage to quickly get new residents into foreclosed homes. The value of their properties will rapidly decline the longer they remain vacant. There are several technical ways to structure deals so that banks can dispose of their property in constructive ways.

They can work with the Atlanta-Fulton County Land Bank Authority, parking the property there tax-free until it is sold at an affordable price. They can work directly with community development corporations or nonprofit builders that can help make repairs and find qualified buyers.

"We are looking at this as an opportunity to try to reverse the impact of having streets and streets of boarded-up houses in neighborhoods," says Andy Schneggenburger, executive director of the Atlanta Housing Association of Neighborhood-based Developers, which has 25 members.

Local governments also can play an important role. Alexander says it's vital that building bureaus pressure lenders and owners to keep properties in good shape. If a lender/owner is not maintaining a home or its yard, a local government can put a lien on the property.Atlanta City Councilwoman Mary Norwood has pushed the city to crack down on slum landlords, investigate mortgage fraud and seek affordable housing solutions.

She calls the current crisis a "foreclosure tsunami," and she is working with other organizations to create a task force to attack the problem.

She also hopes to work with major employers to provide housing grants for down payments and other incentives. It's an advantage to have employees live closer to where they work, which saves them time and money in transportation.

If the state, the region and local governments work together, Norwood sees a "once in a lifetime opportunity to match foreclosures with affordable housing." If not, the consequences will be extreme.

Norwood says half of the city of Atlanta's land area has been affected by foreclosures and fraud.

"The result is abandoned, unoccupied houses," she says. "My real goal is that we not allow our neighborhoods to deteriorate and become depopulated."

The region faces a wave of problems — record draught and water shortages, congestion and limited transit, an embattled Grady Memorial Hospital and escalating foreclosures. Let's hope our leaders are ready to take action in all these areas and that metro Atlanta will be able to survive this challenging era.

rpr by permission

Bankruptcy doesn't have to end in foreclosure, debt group hears.: Source By David Flaum

Helping people who filed wage earner bankruptcy petitions stay with their repayment plan could help one in 10 of the potential dropouts from losing his home to foreclosure. That was the conclusion of Berje Yacoubian, whose firm, Yacoubian Research, studied bankruptcy and foreclosure trends in Shelby County for the Memphis Credit & Bankruptcy Collaborative. Advertisement The collaborative is a loose confederation of credit counselors, bankers, real estate people, consumer advocates, educators and government workers set up to assess and deal with personal financial issues and education. Yacoubian researchers studied 46,000 Chapter 13 bankruptcy petitions filed by Shelby County residents from 1999 to 2002. Chapter 13 is the part of the bankruptcy code that allows someone to keep his home, car and some other assets while he repays his debt on a schedule filed with the court. The process is designed to take three to five years. "The primary purpose of Chapter 13, if you own property, is to save your house," Yacoubian said. Of the 9,721 petitions filed in 1999, only 584 had been discharged by April 2003, meaning the debtor had completed his program, Yacoubian said. Another 2,462 cases were still open and 6,675 had been dismissed, meaning the person filing them had dropped the ball on the repayment plan, he said. Foreclosure is "the ultimate nightmare" for Chapter 13 filers, Yacoubian said. And about 35 percent of the 15,000 foreclosures in Shelby County since 1999 were filed against people who had petitioned for Chapter 13 bankruptcy protection, he said. At the current pace of Chapter 13 bankruptcy filings, we're likely to see 4,700 foreclosures in Shelby County this year, Yacoubian said. "Foreclosure is really the last step in the process," he said. "Not everyone who files for Chapter 13 and is foreclosed on can be saved. Intervention to counsel homeowners at risk could prevent about 10 percent of the foreclosures." Members of the collaborative have to decide where there are opportunities for financial education to accomplish that, said Beth Dixon, president of The RISE Foundation, a nonprofit group that sponsors the collaborative. Saving 10 percent of Chapter 13 filers homes from foreclosure is possible "if you have the resources," said Ron Roudebush, regional manager of the Consumer Credit Counseling Service of Memphis. Based on the number of households, Chapter 13 bankruptcy is far more common in the "center city" - the 14 Zip Code areas mostly west of Highland - than in the suburbs (the remaining Zip Code sections), Yacoubian's research found. About 19 percent of center city households filed for Chapter 13 from 1999 to 2002 compared to 7.4 percent of suburban households, he said. Foreclosures follow a similar pattern, but the gap is closing, Yacoubian said. The number of foreclosures in the center city was 18 percent higher in 2002 than in 1999, but the suburban figures were up 55 percent. "This is no longer just a center city problem," Yacoubian said. - David Flaum: 529-2330 Copyright, The Commercial Appeal, Memphis, TN. Used with permission.

Home Foreclosures Hit Record High - AP

By JEANNINE AVERSA

WASHINGTON (AP) — Home foreclosures shot up to an all-time high in the third quarter, fresh evidence of the problems afflicting distressed homeowners amid the housing meltdown....

The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter. Late payments jumped to a record high of 18.81 in the third quarter, up from 16.95 percent in the second quarter.

The association's survey covers more than 45 million home loans nationwide.

The new figures came as President Bush, accused by Democrats and other critics of not doing enough to help stem the mortgage crisis, was set to unveil a plan Thursday that would allow some homeowners with certain subprime home loans to freeze their interest rate for five years. The plan aims to prevent some distressed borrowers from losing their homes. It also is intended to ease the danger facing the economy from a wave of foreclosures — something that would further aggravate problems in the housing market....

California and Florida — the two largest states in terms of outstanding mortgages — were key drivers in the increase in the national foreclosure rates, the association said. The two states together accounted for 33.7 percent of the subprime adjustable-rate loans that entered the foreclosure process in the third quarter. The two states combined also accounted for 42.4 percent of creditworthy "prime" adjustable-rate mortgages that started the foreclosure process....This article is available in it's entirety here.