To add to the mayhem people battling foreclosure will now have to face high taxes. The economy is baring its fangs like a mad wolf – foreclosures, plummeting house values, unemployment and now higher taxes. It is worse than flash floods – the latter at least goes away after some time. But in this case there is no sign of light at the end of the tunnel.
The officials of the city are ready to mail the increased bills that will reflect the new property rate. The community group leaders apprehend that there will be a lot of fear and anger once the envelopes are torn open. Mary Dionne of Outer Belt Civic Association said, “Foreclosures are a serious conern and people are scared to death.”
The bills for the majority of the house owners will increase in comparison to the previous year. Tax increases have never been welcomed but this time it is a particularly bad spell of time said Earnestine Johnson of Bay Area Neighborhood Council. People are beginning to ask what the authorities do with the taxes.
The bills will be sent by mail to 45,000 landlords said Deputy Tax Collector Peter L. Sygnator. The payments will fall due from 2nd February. The new rate for residences will be $17.89 for each $1,000 in comparison to $16.03 of the previous year. The average property owner will have to dish out $75 to $100 more towards taxes. The recent business tax is $36.98 per $1,000 in comparison to the previous one of $32.04. The other side of the story is that the value of property fell by 8% because of the failing economy.
House owners as well as the business people are both upset. The high tax rate will not attract business to the state. This will cause the economy to further weaken.
The new tax rate has been confirmed by The Springfield Finance Control Board on 18th December 2008. The Board of Assessors suggested it after holding consultations with the Mayor Domenic J. Sarno. The latter commented that it was fair and balanced towards all the property owners.
Dionne said that the people were angry at the move and many wanted to know who was looking over and watching the finances. Many are wondering how the city can impose new taxes when the quality of their services has fallen. In October Springfield had 70 foreclosure filings – it being more than any other city of the state. Worcester followed close behind with 65 foreclosure postings.
Massachusetts Bank Foreclosures by Top Counties
Fannie Mae, Freddie Mac and FHA have always operated following the standards laid down by the feds. It was lenders who did not have legal mandates that sparked off the foreclosure crisis. According to rules the borrower had to make a down payment of 20%. This prevented the borrower from lapsing because already money is tied up in the house. The borrower would make an all out effort to keep the mortgage running. The down payment assured the lender also that in a time of crisis the house could be sold off and loan repaid.
But dubitable lenders entered the race and competed with tempting offers to lure in borrowers with attractive offers. Fellow lenders began to undercut each other, undercut interest rates and undercut standards leading to disastrous consequences – the foreclosure related crisis the nation is facing today. Sub-prime loans were offered to people who just could not sustain the mortgage with their poor credit history and low income. For the first two or three years it was all hunky dory but then when the rates began to increase to more realistic levels the pain began – pain for the individual, for the locality, for the country and finally for the entire globe.
Underwriting standard hit its nadir in 2006. Some lenders did not require any down payment or any proof of income. Some even offered terms that allowed borrowers to chose the amount they would pay each month. The shortages in principal now began to accumulate interest, which very few understood. This is known as ‘negative amortization’ and led to many owing more than the value of the house. In a standard mortgage the debt gradually begins to decrease and shrink.
With money flowing easily borrowers began to bid more for properties causing more loans to be taken with low rates and no documents. House prices rose by as much in 20% in 2004. In places like California and Florida it increased by 25%. By 2005 of all the mortgages on new houses, nearly 22% were from the sub-prime category. In contrast the figure was 8% in 2003. During the second quarter of 2006 the house of property reached its peak.
Professor Todd Sinai of Wharton said that the low interest rates were the main reason for the price hike. People then thought it would run along this way so they began to buy frenetically. This was the housing bubble – the bubble that burst into the foreclosure crisis.
Bank Foreclosures by Top States
Stamford is hoping to get funds to purchase foreclosed houses – this being part of federal programme aimed at containing foreclosures. Early next year it expects to receive over $2.9 million for buying, refurbishing and selling foreclosed units as affordable houses. The federal government has granted $25 million in the first weeks of October – it being an enforcement of the Housing and Economic Recovery Act.
The houses will be offered for sale to those who earn below 120% of the average income of the region. It calculates to $140,000 in lower Fairfield County according to HUD. The Governor M. Jodi Rell said that similar allocations have been proposed for the seven cities of Bridgeport, New Haven, Waterbury, Stamford, Meriden, New Britain and Hartford. He said, “Seven of our urban centers account for more than 25% of Connecticut’s foreclosures and pre-foreclosure actions. These funds will have a lasting positive impact in these communities, as they will ensure up to 400 units of housing will be acquired for rehabilitation and redevelopment rather than sitting empty and idle.” Rell must submit the submission for final approval and allocation by 1st December. This will be preceded by fifteen-day period of allowing for public comments.
The director of Stamford Community Development Office, Tim Beeble said that he had been informed. Since October his office had been going around inspecting 75 houses in the city that were known to be owned by the banks. About the suggested allocation Beeble commented that it was beyond his expectations.
HUD’s prescription was that the grants for the states be divided as per their needs. Stamford is not one of the cities with the highest concentration of foreclosures and as such it could have been that it would not have been granted anything. But the contrary happened. It will receive the fourth highest grant among the seven selected cities. Bridgeport got the lion’s share with $6 million. New Britain came last on the list with $1.8 million.
The state will be holding talks with the banks for the purchase of the foreclosed units. Beeble added that the assistance of local non-profit organizations would be taken because of their experience in this field of buying up and reselling houses as affordable units.
The plan is not without pitfalls because in the present mood of the market when houses are not selling. It might tempt banks to push houses into foreclosure so that these get sold.
Connecticut Bank Foreclosures by Top Counties
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.
Balikatan Housing Finance has agreed to suspend temporarily foreclosures on 50,000 houses, much to the relief of speaker of the House Prospero C. Nograles. The company said that it is open to talks. Foreclosures would be proceeded with, only if all other doors close. It gives a breathing space to 50,000 families who were under the constant threat of eviction. Nograles has been given the assurance by Fedrico Cadiz, the president of Bahay Financial Services. The BFS is a company dealing with assets and loan management that had been engaged by Balikatan. It is a special company that is owned jointly the National Home Mortgage Finance Corporation (NHMFC), a government body and DB Real Estate Global Opportunities for servicing mortgage related operations.
On the initiative of Nograles a panel, headed by Rodolfo Valencia (of the Housing Committee on HUD) is investigating on the en masse foreclosure on low cost properties that had been sold by NHMFC to Balikatan. Valencia reiterated that Balikatan is laying stress on negotiations rather than foreclosures. All options would be taken into consideration so that the loans can be modified.
For quite sometime Nograles, author of Housing Loan Condonation Act of 1998, has been working hard to put a hold on all foreclosures related to delinquent low-cost housing mortgages. Most Filipinos are in critical financial condition because of the worldwide inflation aggravated by falling income and unemployment. He stresses that compassion is the call of the hour at a time when it is a question of basic food and shelter. The foreclosures on low cost socialized housing units will push back thousands of Filipinos to the slums. It will worsen the problem of urban slums.
During the initial hearing sessions of Valencia’s committee, the Alliance of Homeowners alleged that the transfer of the loan accounts from NHMFC to BHFI had been done without previously notifying the members. The latter cannot afford the steep down payments and today foreclosure is the imminent result. Another group of homeowners, Kapithahayan wanted restructuring of the loans to affordable levels. The alternative would for NHMFC to purchase back the accounts.
There are three bills in the offing aiming to restructure loans of delinquent borrowers. The target is to reduce a sizeable portion of the accrued interest, see to it that interest is not charged on the interest that still remains and to fix 6% interest on the principal loan.
Bank Foreclosures by Top States
The foreclosure situation in Utah is grim and worsening. Thousands are stumbling in mortgage payments although the number of loans in trouble is less than the national average. Of 431,570 mortgages in Utah, 3.81% are 30 days lagging behind during the first quarter of 2008. This is an increase from 3.05% during the same period in 2007, according to reports released by Mortgage Bankers Association. The delinquency rate of Utah is much less than what it was in 2003 – 5.3%. It is the country’s 11th lowest rank. Across America the delinquency rate during the first quarter of this year increased from 4.84% in 2007 to 6.35%.
In Utah nearly 16,400 loans are well behind the due date – this is a 32% jump from the figures of last year during the same period when out of 407,362 house mortgage loans 12,424 were lagging behind a month or more. The statistics indicate the pressure of inflation on Utah families. In many instances past loans are just beginning to reset to higher niches. Many in the housing industry have found themselves without jobs or work. Food prices are increasing together with fuel and health care. This combination has caused many to default and once that starts the debts keep piling up.
The Association of Community Organizations for Reform Now is engaged in counseling in Salt Lake City. Most of those contacting the group complain of rising medical costs preventing them from meeting mortgage dues. Jeff Thredold, economist from Utah opines that the economy of Utah is just not strong enough to absorb these shocks. This has led to increase in delinquencies since the previous year. The state continues to create jobs but the pace is relatively slower. The downhill roll is clearly perceptible.
Delinquencies are the first warnings of impending foreclosures. Once foreclosure starts usually the house is lost. Many delinquencies end up in foreclosures but not all. A few years ago there was a strong demand for houses. But today these very regions are dotted with foreclosed units. Because of the tumbling real estate market the borrowers can neither refinance nor sell their units to get back financial stability. The values of houses have fallen so low that often it is less than the loan due. Thus many in Utah faced with foreclosures do not think it is worth the while to struggle for the houses – they are just handing over the keys and walking away.
Utah Bank Foreclosures by Top Cities
