The Deputy Sheriff in San Bernardino has the onerous task of distributing eviction notices. He goes armed with a Glock and rolls of scotch tape to post the volumes of orders. Previously he went on his rounds in the downtown area but now forays forth into fancy neighbourhoods with lawns and pools.
The Deputy shows up after a house has been auctioned off and the previous occupants refuse to leave either stubbornly or because of false hopes. Many run away at the eleventh hour but others have to be forcibly evicted. There are many pitfalls. Strickland is cautious about entering because of a nasty past experience. Once when the deputy showed up a man shot himself in despair. In another instance the borrower was trying to desperately sell off his unit in a last minute attempt to save himself. When he saw the deputy coming he ran and drove away leaving a bewildered customer!
More often than not the new owners are the banks. Their representatives cannot be cautiously slow. They have so many houses to deal with that they just do not have the time to wait for the occasional maniac to show up. The deputy however is not willing to take chances and proceeds cautiously. The scenes are pathetic with teddy bears lying around and eggs rolling on the counter next to a bottle of ale. Bank officials hasten to secure an insecure gate to fence off entry of vagabonds.
Eviction is painful but one of the worst of the kind is when the sheriff puts on the lock. California law stipulates that the deputy sheriff is deputized to do the job between 6.30 am and mid afternoon four days in a week. Strickland has to deal with a dozen each day apart from issuing warning to those waiting in line. It keeps him on his toes.
During the first quarter San Bernardino listed 909 foreclosures which was double that of last year during the same time. Foreclosures are time consuming and complex. After evaluation ‘trash-out’ firms secure and spruce up the units. But nothing can be done unless the house is vacant. Lenders follow a carrot and stick policy. Some occupants are bribed to leave. It is known as the cash-for-keys policy and prevents evictees from vandalizing the properties. When that fails the stick of the court is the only option.
The Austin metropolitan area is noting a decrease in residential property foreclosures but analysts are giving out warning notes. It does not point to the end of the road because of market fluctuations and effects from the massive mortgage crisis raging through the country.
As yet the number of foreclosure listings in this region with four counties is 5,870. This is inclusive of those included in the October auctions. It shows a 7% decrease when compared to the first 10 months of the previous year. A reliable online data collection group has released the numbers. In Texas the Austin region is the only important place where the postings are actually going down. However it is well to remember that these figures are above the lowest total reached in 2001.
It is being predicted by George Roddy, president of the online firm that in Austin Metro for the third consecutive year foreclosure numbers will go down in the two counties of Travis and Williamson. He foresees about 3,400 postings in Travis County and 2,100 in Williamson County for this year. He does not want to be a damp squib and is not behind to say that all this is good news. But one should not forget that this has not changed the general flow of things – the way it has been going for the past few years. In October those houses went into the red, which had taken the loan in 2003. This is an average reading. In this equation without counting the sub-prime factor a lot of financing and refinancing had taken place during the last four years. This itself points to the fact that the problem will continue to harass for at least another three or four years. It might even continue further on.
Predatory lenders and greedy borrowers are being blamed for the debacle which has sent shivers down Wall Street – shivers that sent rumbles across the world stock exchanges. Borrowers were lured in by teaser rates of interest and little or no down payments. But when the balloon punctured with one by one borrowers being unable to redeem their dues the houses fell into foreclosure. Money stopped rolling in for the banks. The lenders were straddled with managing innumerable expensive foreclosure operations. It was an unhappy situation for all - the citizen, the locality as well as to the government.
Florida’s advocates are besieged with victims of foreclosure scams. The legal fraternity is turning to the Advocate General Bill McCollum for succour. An organization dealing with legal aid in Broward County is asking for emergency measures to be taken. Legal Aid Service has suggested that plans should be set afoot following the line of approach taken by Massachusetts’s Attorney General, Martha Coakley in June this year. According to the Massachusetts plan, foreclosure for the sake of profit has been declared illegal. Foreclosed victims find themselves flooded with help messages from dubious persons and organizations after the bank notifies foreclosure following which their details are published in court papers.
Coakley had taken the authority firmly in her hands within the framework of the existing laws and clamped down on scams. The Boward lawyers want similar swift action. McCollum has the right to do so under the provisions of Deceptive and Unfair Trade Practices Law of Florida. The governor through an executive order can implement it. Simultaneously the organization expects changes to be brought about by Florida legislators.
George Castrataro an attorney of the aforesaid group says that they have always relied on the Attorney General to save them at critical times with temporary emergency measure until proper laws are set into motion. The strong hope is that the Attorney General will positively respond to the SOS. But on Wednesday the spokesperson of the AG was vague and said that the matter was being taken into serious consideration.
Currently the AG office is scrutinizing two such instances of scam in South Florida – National Foreclosure Management and American Home Rescue.
The fraud consists of stripping the equity by making false promises to the traumatized borrowers and charging exorbitant fees. The house owners are in such a psychological state that they are in no condition to understand the bitter-coated sweet pill they have swallowed until it is too late. The scam is of special significance now because the real estate boom had led to a build up on the equity but now the balloon has been pricked with the lenders nearly doubling their asking rates.
The National Consumer Law Center in Washington is coaxing McCollum to go ahead with the assurance that the federal government will soon follow suit. Scammers must be totally banned and not merely allowed to change their colours like a chameleon.
via
Senators have sanctioned $200 million worth of aid on Wednesday to be given to non-profit organizations that deal in real estate counseling and help besieged house owners to surface from the foreclosure crisis. This step was part of a $106 billion Transportation and Housing Bill that White House wants to veto.
The relief project has been due to the initiatives taken by Democrat Senators Charles Schumer (NY),Sherrod Brown (Ohio) and Robert Casey (Pa). They jointly put in their efforts to get $100 grants for non-profit bodies helping harassed borrowers that are resetting at higher rates. Democrat Senator Christoper Dodd (Conn) and Republican Senator Christopher Bond (Mo) also teamed up separately to make available another $100 million.
The main aim is to give protection to those borrowers who have to face aggressive intimidation from agents to mortgage companies. There are some non-profit groups like ACORN and NeighborWorks America who are doing commendable service. They act as go-betweens and link the borrowers with the lenders to negotiate mutually acceptable terms.
One of the largest mortgage companies is Fannie Mae. It has lent a helping hand to about 33,000 sinking house owners who are trying to refinance $6 billion mortgages since April this year. A high number of mortgages – 2.5 million had been made to persons whose credit rating was far from satisfactory. These are now just sitting ready to be increased and reset to new high rates from what it had been during the first one or two years since the taking of the loan. This will very likely cost borrowers their home and peace.
The government is trying to borrowers. Some criticize that actually the help targets big mortgage houses that are closing shop. Idle properties do not bring in money. With mortgage belts tightening loans are not easy and this limits number of buyers. With fewer buyers and more foreclosures the real estate market takes on a sickly pallor. The houses as securities bolstered bonds and were disbursed in bits and pieces so that now it is difficult to locate the lenders. The link with bonds and securities has sent shivers down international stock markets. So far easy availability of loans to the weaker section had been a plus point in vote campaigns but that very fact has now turned sour. With huge discontent brewing the issue is now centered on the presidential chair.
via
The jump in August 2007 has been as high as 27% in Wisconsin foreclosure figures. This report has been released on Monday by a reliable online agency monitoring the health of local economy and industry. Escalating interest rates and plummeting real estate markets have triggered off foreclosures. The sub-prime market is melting down rapidly.
Statistics has a language of its own. The latest data by the online groups shows that from January to August 2007 there have been 12,955 foreclosure listings in Wisconsin. It is 27% higher than the figures during the same period in the previous year In August alone there have been 2,064 foreclosures – a record peaking since the last five years from when data collection has started.
In Milwaukee County the situation is no better. The foreclosure steam is on and remaining approximately 50% higher than the first 8 months of 2006. It is an alarming figure – being double that of the national average increase.
The president of the online data-collecting agency opines that ARM’s is compounding increasing interest rates and it is this that translates into huge increases in monthly payments. Unable to meet these impossible demands the owners are being forced to foreclose. To add to the woes and also perhaps because of it the housing market is drooping. This is making it difficult for borrowers to sell off the units and pay off. With mortgage lenders tightening their belts it is difficult to get loans. Without loans where are the buyers? Thus the option of refinancing is also drying up for harassed borrowers.
The accusing finger points to the sub-prime market. The reason for creating this mortgage zone was laudable. Through this channel those lenders would get a chance to build houses of their own who otherwise would have been disqualified. The great American dream soon became a nightmare due to a combination of factors. There were predatory lenders, greedy borrowers and a stumbling economy dotted with unemployment. As soon as the honeymoon period of low monthly payments expired and reality began to bare it fangs borrowers began to buckle under. The number of foreclosures has run into millions. The government and lawmakers are sitting up as the economy as a whole is suffering. The problem is not just a game between borrowers and lenders but a grim socio-economic scenario sending shivers down the spine of the nation.
via
House owners are besieged. President Bush and the Federal Reserve have come forward with platitudes. But another lot of adjustable rate loans is about to be increased. Unless the Congress takes quick and fast action more trouble will come out of Pandora’s Box from April next year. The tax bogey is just waiting to catch unfortunate victims.
The tax laws have become anachronistic. They were written at a time when it was taken for granted that property sale always spelt profit. It did not take into consideration the loss factor but rather imposes a penalty clause. Houses may also be sold if the owner changes place of work etc. If the market rate is down then inevitably a forced sale leads to a loss.
In the case of stocks, investment property or residential properties the gains can be offset against capital losses. But if the employer reimburses losses then that amount is calculated to be taxable. However a rented property can be sold as an invested unit. The actual renting out must be done to escape the tax dragnet but the deduction can be made only after the date of giving it out on rent and not before.
People are unaware of the tax ogre. If the unit is sold at a price less than the mortgaged amount then the difference is taken as an income for the borrower. What is forgiven by the lender is not forgotten by the tax body.
In such a situation a negotiation between the lender and the borrower is of vital importance. The payment can be lowered or stretched without showing a foreclosure to avoid the tax pinch.
It will take time for the President’s tax waiver to become effective. Thus when planning to sell a residential property immediately take legal advice. Refinancing into a new mortgage scheme does not come under the tax glare
A new Federal Housing Administration programme is helping delinquent borrowers but to qualify certain requirements are necessary like providing correct details about on-time payments during the period of teaser rates. The interest re-set has to be from June 2005 to December 2008. Thirdly there must be 3% cash or equity. Lastly the borrower should show an unbroken record of employment and an affordable income.
The veil of the foreclosure has been brutally torn apart. That of the tax savagery is soon to be exposed.
Via
For many in Indianapolis it is not all foreclosure blues because the real estate market is bustling with activity. Mark Davis deals in foreclosed houses. The exterior belies the interior of some of these houses that may be cleaned out lock stock and barrel without even running water connections. Others may not be quite so bad with the windows being still intact. Today there are about 15 others like Mark making a living out of distressed properties. A decade ago there were only a few.
Foreclosed units have to be bought on an as-is-where-is basis. In Indianapolis one out of every house for sale has the foreclosure stamp. In some pockets there are large concentrations.
For the city in general, foreclosures are harbingers of doom. Family life is disrupted and nearby property values also tumble. Banks are shedding tears. But there is another side to the coin. It is daylight for a whole group of business concerns dealing in brokerage, property management, property developers and legal professionals. This year 10,000 foreclosures are waiting in line. It means harvest time for this group.
Scott of Southport has bought three foreclosed houses. Davis is marketing 300 such units and is busy after doubling the number of his employees to keep pace with the activity. After renovation he will list it on MLS. It all translates into profit. Indy is raking in commissions. Colvin is a broker working with a team of five. Last year he sold 207 houses. A third of the purchasers came from outside the state attracted by the low slump in property prices in Indianapolis. Buyers are on the look out for new residential complexes that can be easily rented out. Brokers have plenty to pick and choose from as they browse through the web. Deals are often finalized through online bidding processes. Popular television shows prop up the issue.
It is not always easy sailing all the way. For instance Short bought a house for $48,000 in a successful bid. After fixing it up he expects to rake in $74,900 from it. Nevertheless it is well short of the $95,000 – the price that it fetched only three years ago. There is always a risk.
The legal fraternity is not left behind in this merry haymaking. The piles of paper work are fetching $1,500 to $2,500 per deal.
via
Non-white and low-income groups seem to have been the favoured targets of the sub-prime loans with high interest rates. As such they are now the most susceptible group to feel the sting of foreclosures. This is according to a detailed study report about racial and income disparities in mortgage lending practices in 172 cities undertaken by ACORN. The survey is based on the data detailed under the Home Mortgage Disclosure Act.
The survey showed that in Kansas City there has been a high rate of sub-prime loans. Out of every 5 loans one belonged to the sub-prime category. Borrowers belonging to all races had availed of it. Nevertheless the trend showed that Afro-Americans were 2.9 times and Latinos 1.5 times more likely to opt for high-cost loans in comparison to their white peers. About one out of three amongst this non-white group were prone to go for refinancing. In other cities the picture was more or less the same with the non-whites being more exposed to high-cost borrowing. Kansas City seemed to be leading in this matter of disparities. 31.2% of the total number of loans made in Kansas City was in the sub-prime group and thus veritable sitting ducks when the countdown begins.
ACORN’s findings point to a 16% rise in sub-prime loans from 2005 – the time from which they started detailing their study. Its president Maude Hurd said these disadvantaged groups are the ones that most need the protection of ownership houses. Yet because of their weakness they have not been allowed to enter prime mortgage zone where the rates are relatively low and steady. As such they had no alternative but to opt for sub-prime to realize their ownership dreams. But the whole scheme has gone awry.
Economist Eaton from University of Missouri (Director of the Center for Economic Information) Kansas City said that he could not confirm these findings until he thoroughly scrutinized the matter. Nevertheless he admitted that Kansas City seems to be one of the worst hit pockets attacked by the sub-prime crisis and apprehended that worse days seemed to be ahead. Kansas City is one of the top ranking cities as regards foreclosure games.
The situation is so grave that Bush and his administration are sitting up and trying to find remedies anticipating further dark days ahead for consumers. Interest rates are all set to jump again.
Via
The second quarter saw the entire country breaking an all time record in foreclosures. Both the good and bad credit holders were affected.
Statistics has a language of its own. 5.12% mortgages are in the red with pending dues. 0.65% units are so far gone that foreclosure proceedings have been initiated against them. The net result is that home fires are snuffed out. Three consecutive quarters are shaking the market. There seems to be no hope till the latter part of 2008.
Federal Reserve cuts might ease the tension but the weak economy will trigger of unemployment and cause a housing recession with more people losing their houses.
The picture in Illinois is akin to the national scene with 5.09% having gone into delinquency and 0.63% into foreclosures. Michigan and Ohio in the Midwest is caught in a snarl of unemployment and foreclosures. In California, Florida, Arizona and Nevada the weather is also grim. As a result of past frenetic speculation the prices of real estate have dropped by 10%.
Mortgage lenders without money trickling in from their lending, are now without funds and this will further cause foreclosures to increase. From where will the loan to buy houses come? The worst affected are those seeking jumbo loans and those with shaky credit history. Panicky investors have shied off from mortgage related securities causing the lifeline of the mortgage industry to be cut off.
Many had gone into the mortgage agreement without thinking ahead regarding their ability to meet commitments. Now they cannot refinance the loans and added to this they are having difficulty about selling because new buyers cannot avail of loans. Those within the ARM (adjustable rate mortgages) are worst hit because all on a sudden they are finding monthly dues have more than doubled. Without being able to satisfactorily sell their properties all are affected – both those with good and bad credit histories.
Those with weak credit history have mostly availed of sub-prime loans. Of them 14.82 have gone into delinquency. 2.72% are just beginning to taste the foreclosure process. In Illinois the figures are 2.62% and 15.26% respectively. Some borrowers with good credit past had also availed for sub-prime loans. They too are in deep waters. Countrywide 0.27% units are just in the first stages of foreclosure while 2.73 have gone into delinquencies.
Via
In July, foreclosure figures were grim right across the nation. It was an all time high of 93% as against the same month in 2006. The numbers thrown out of their hearth and homes runs into tens of thousands. The borrowers not only had their roof but together with it their equity and credit rating blown away.
The government has come out forcefully to stem the tide. But many are criticizing the move. The market has done its work. Lenders have been justly punished for being predatory. The latter too behaved greedily and grabbed houses well beyond their means. President Bush is not wrong when he said that a bail out programme would open the gates for a recurrence of the same happenings.
The problem is not confined to the borrower-lender zone. The government administration, the Congress and the Federal Reserve together with other governmental bodies are equally to be blamed. Taxes and credit policies had been tilted in favour of lenders. It is this that led to the housing boom. The number of house owners rose to an all time record in America. The minority house owners crossed the 50% mark for the first time in history. Bush took this credit for himself in his 2004 speeches. But now it is the same policy that is puncturing the bloated balloon. Minorities are worst affected.
Prominent planners and economists can see the writing on the wall – entire localities will take on an off-colour look. Research shows that crime and violence are increasing in those areas where foreclosures are at its highest. A yearly increase of 2.8 foreclosures per 100 homes leads to 6.7% crimes of violence. The boarded houses have a psychological impact on the locals.
Another angle of study shows that one foreclosure brings down the price of other houses in the area within a radius of 1/8th of a mile of the infected unit. This is a conservative estimate. In reality it is worse and could further escalate with foreclosures increasing. What is going to happen will make the past pale into insignificance.
In the forthcoming presidential elections perhaps this is going to be prime bone of contention. A strong opinion is that the government instead of focusing on the specific issue should give its attention to the greater economy and reform defective policies.
via
