Foreclosure1 Blog

The ripple effect of foreclosures is telling all around. The city revenues have dropped, crime has increased and so too has homelessness. There are vacant properties everywhere according to a survey conducted by the local elected officials. Two thirds of the latter reported to the National League of Cities that since the previous year all the cities recorded sharp increases in foreclosures. The survey was conducted in the form a questionnaire online via e-mail. Drop in revenues and the problem of urban vacant units was reported by a third of the officials. More than a fifth of the respondents stressed on the rising number of homeless people who are in dire need for temporary shelters on an emergency basis. Their numbers have sharply increased since the previous year.

The drop in local government revenue collection comes at a time when more services are required bemoans Cynthia McCollum of the National League of Cities. She is also councilperson from Madison. She elucidated that people are stealing and criminal activity is increasing because of these foreclosures. But the city authorities do not have sufficient funds to put more cops on the roads and streets.

The members of the League are meeting congress lawmakers in Washington DC to discuss federal funding for local measures. Dominating the talks will the problems of foreclosures. James Mitchell, councilperson from Charlotte said that the great American dream of owning a house has become a nightmare of foreclosures for the cities and towns. Mitchell is also the head of the National Black Caucus of local elected officials. Vacant foreclosed houses attract crime and health problems. In the neighbourhood of Peachtree Hills as many as 115 of 123 houses are in foreclosure, said Mitchell. There are only 12 families left behind but they cannot sell their houses because the value of their houses has dipped to absurd low levels. “It’s starting to be a symbol of what we don’t to happen to Charlotte.”

Most of those who were lured into the pit of sub-prime mortgages were Afro-Americans, people coming from the lower and middle-income group, single parents, senior citizens and other minority groups.

One of the worst hit areas is Riverside in California. It is the heart of the Inland Empire. During the boom people rushed here to buy houses. Now the flow is reverse. Most of the boom was in the east where foreclosures are now dominating the scene.

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There was an anti-foreclosure demonstration by a group comprising of about 40 persons. They marched through East Liberty on Friday morning going past five blocks. They were hoping to draw attention to the foreclosure menace that is evicting people out of the houses that are their homes.

The Allegheny County branch of ACORN or the Association of Community Organizations for Reform Now organized the protest. They focused on the instance of a local family to highlight the foreclosure situation that is spelling tragedy to many like this one.

The protestors made themselves distinctive with T-shirts and signs as they marched from ACORN headquarters on Penn Avenue to the branch of National City Bank situated on North Highland Avenue. For about 10 minutes they successfully stalled business with their whistling and chanting. They shouted ‘Criminal offenders! Predatory lenders!” When the law arrived the demonstrators dispersed without trouble. The police arrested none.

Jennifer England of ACORN said that National City Bank is being blamed for steel worker Shawn Abbott having to lose his house in Ambridge because he cannot meet up with the increased mortgage payments. He had contracted the loan three years previously. It was sub-prime ARM. Shawn had been warned that the interest would increase but also told there was the possibility that it might decrease. In any case the borrower was under the impression that that the change would be minimal in terms of percentage count. The original loan was made with First Franklin Bank that at that time had owned National City. Initially the Abbotts had to pay $340 each month. In three years time the installment shot up to $1,200 per month – exclusive of taxes and charges. Shawn’s monthly income is roughly $2,000.

England argued that since National City at that time owned First Franklin they have a moral obligation to help the troubled borrowers. The aim should be to see that they are awarded fair loans and are not compelled to walk out of their houses.

The bank was reluctant to comment on the demonstration. Although in concrete terms the protest did not produce any results England termed it a success because it spread public awareness about the injustice going on. It is not just one family but many families are going through this trauma. She reiterated, “These are working people”. It is the bank that has put them in this slippery condition by behaving without any ethics.

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Adding insult to injury the evicted foreclosure victims are finding it hard to get rented accommodation. The foreclosure taint does not seem to easily wash away – it leaves a negative mark on credit history.

More tragic stories are coming in as the foreclosure drama unfolds itself. One couple from Virginia ended up by putting up in a hotel. But the question is – for how long will finances permit? It is costing them $3,000 per month. Their credit counselor Trish Lynch from ClearPoint Financial Solutions asked them to try out private owners who would be more lenient on credit matters but in return would expect higher rents to cover the risk.

With the surging tide of foreclosures lashing the country more people are getting evicted and turning to rented accommodation for shelters. They are now flooding the market penetrating the investor owned houses and condos that make up more than half the rental units. The apartment industry does not keep track of these. Some foreclosed victims are opting for the traditional rental market but there are innumerable hurdles.

Landlords are afraid of keeping them on as tenants for many reasons. The landlords came out with their fears to the President of Illinois Rental Property Owners Association (consisting of 500 members) that they are uneasy about these tenants not being able to regularly pay their rent. Even those who are in the process of negotiating a short sale are not welcome as tenants.

The apartment industry has been trying to categorize the people into good and bad renters and accordingly making additions and alterations. Mark Fogelman of Memphis owns and manages 18,000 rental units across the city. He says that the matter is too subjective and risky. Many applicants have been rejected because of their history of defaulting in mortgages. What surety is there that they will not similarly default in rents?

About 5% to 7% of the applicants come from those who are past 90 days in their mortgage dues. Only two thirds of those who apply finally are permitted to board in as tenants. Those with foreclosures tagging behind them have four times less chance to qualify. The credit story does not end with foreclosure. The person still has to continue with commitments in meeting credit cards and other debt obligations. This will further jeopardize their financial status.

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The see saw of foreclosure sales is causing it to rise in Battle Creek by 13% while on the national scene it goes down to an increase of only 2% in May 2008.
However the increase in sales is not without a price. Most of these are as a result of agreements reached between lenders and [...]

Continue reading: The See Saw Of Foreclosure Sales In May

Foreclosures are reaching out beyond the lower income bracket to throw out the middle class on to the streets. The middle class has now joined the desultory group of hapless people who live in their cars and mobile units. This is happening right across the country. The situation is worsening with [...]

Continue reading: Foreclosures Throw Out The Middle Class On To The Streets

According to reports coming in from surveys, it is the minorities who are worst hit by foreclosures. Today many of the sub-prime mortgage lenders have downed shutters. But this was their own doing – they dug their own graves by targeting the minority communities to make them rise to the bait of the dubious loans. [...]

Continue reading: Minorities Worst Hit By Foreclosures

A medley of foreclosure woes is now grabbing the headlines.
Hope Now is an alliance of mortgage houses. It has come up with a set of uniform lender guidelines with the sole objective of helping foreclosure victims to stay in the houses that are their homes. It opens up communication lines between the two parties and [...]

Continue reading: A Medley Of Foreclosure Woes

Foreclosures are causing the sharpest decline in real estate markets in California. – a record in 20 years. This is attracting new buyers who were waiting in the sidelines for the opportune moment. In May the average price dropped by 30% - the sharpest fall since 1988 as per records of DataQuick [...]

Continue reading: Foreclosures Causing Sharpest Decline In California Real Estate Market

So far foreclosures have predated on the lower and middle income but now its insatiable appetite is making it break economic ladders and reaching for the top rungs – the rich and fancy group. Stories about foreclosures becoming fashionable and in vogue in higher income regions are becoming quite common. Exotic [...]

Continue reading: Foreclosures Breaking Economic Ladders And Reaching The Top Rungs

McCain outlined his plans for battling foreclosures in the Inland region while attending a fund raising programme at Riverside Convention Center.
McCain is the Republican nominee for the presidential elections. His plans would allow besieged house owners to exchange their unwieldy loans for more manageable ones that would be in tune with the current market value [...]

Continue reading: Mccain Outlines Plan For Battling Foreclosures