Foreclosures and Debt

In spite of all the good intentions that the Banks and the Obama Administration had in mind when they initiated the Making Home Affordable loan modification program to stop foreclosure for home borrowers that were facing foreclosures, there were many borrowers unable to qualify for the program. Due to the inability of the “Making Home Affordable” program to help stop foreclosure for a large number of ineligible, willing applicants, foreclosures continued to spiral out of control. Many families despite their efforts to keep their homes, were unqualified for  foreclosure avoidance programs offered and had to give up their American Dream of home ownership that they worked so hard for.

Not so fast! Fannie Mae have come up with another option for slowing foreclosures, “Deed for Lease™ Program”. The Deed for Lease program announced by Fannie Mae in November, is a program designed to offer up another option for borrowers facing foreclosure who do not qualify for other stop foreclosure programs like loan modifications. The way it works is that qualifying homeowners facing foreclosure may be able to stay in their homes if they sign a lease and at the same time, voluntarily transfer the deed of the property back to the lender, also called “deed in lieu of foreclosure”. The primary aim of the Deed for Lease program is to help alleviate the problems associated with foreclosure, such as uprooting families, decaying neighborhoods and other harddships caused by foreclosures. According to the Vice President of Fannie Mae, Jay Ryan, Deed for Lease is another option for troubled borrowers facing foreclosures; [Read more →]

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Foreclosure found this interesting article Ralph Roberts is a Realtor who has written many books about the real estate market and flipping homes, such as Foreclosure Investing for Dummies. U.S. News talked with Roberts about some of the first things a potential investor should know before getting into the foreclosure market. Read More Here.

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One of the many curiosities to accompany the mortgage crisis is the growing number of struggling borrowers who have elected to simply walk away from their homes instead of launching an all-out effort to prevent foreclosure. The sharp drop in home prices—which has put millions of Americans "underwater," meaning they owe more on their mortgages than their homes are worth—is one factor behind the trend. Meanwhile, since most mortgages are packaged and sold to investors, rather than held by a local banker, it may be easier for homeowners to justify walking away and sending their house keys to the lender—so-called jingle mail. In addition, a number of companies have emerged on the Web that present foreclosure as an attractive alternative for cash-strapped borrowers. Read More Here

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With all the talk about how the housing crisis has hit large urban areas—Los Angeles, Las Vegas, Miami—it's easy to overlook its effect on rural America. But according to the Charlotte Observer, the housing slowdown could be hurting rural communities just as much—if not more—than cities.

"The foreclosure problems in small-town America may be even more widespread than in cities. Mobile and prefab homes make up at least 15 percent of the nation's rural housing, and three-quarters of them were financed with installment or personal property loans rather than mortgage loans," the Observer reports. "When the owners default, it leads to repossession rather than foreclosure, and these defaults are not included in the foreclosure data."

Read Morehere.

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Religious leaders and community activists and others gathered in Washington D.C. to meet with Federal officials, Congress and members of the Barack Obama transition team for a solution, such as more loan modifications and the like, to slow down the ever-growing foreclosure crisis that is affecting millions of homeowners. The religious leaders and prayerful were also there in Washington, D.C. to pray for some relief to homeowners facing foreclosure and eviction. Their prayers may have been answered, somewhat.

Fannie Mae and Freddie Mac, two of the largest home loan lenders in the U.S.,  have agreed to stop foreclosure and evictions for about six weeks beginning Nov 26, 2008 through January 9, 2009, just in time for the holidays. The suspension of foreclosures and evictions during this time period is designed to allow time for loan servicers to put in a place an efficient loan modification program to assist struggling homeowners.

According to Fannie Chief Executive Officer Herb Allison,

we felt it was in the best interest of both borrowers and Fannie Mae to take this extra step to ensure that homeowners with the desire and ability to prevent foreclosure have an opportunity to stay in their homes.

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In a bold move to try and slow down the foreclosure melt downs, JP Morgan Chase has put a stop to placing delinquent home loans into foreclosure for 90 days to try to help homeowners keep their homes. The Chase foreclosure plan will cease putting delinquent loans into the foreclosure process for 90 days as it puts a loan modification team together and implement their mortgage rescue plan. Their foreclosure prevention plan is intended to assist home loan borrowers at risk of foreclosure receive mortgage modifications. Loan modifications have been pretty hard to get in this mortgage crisis since many homeowners owe more on their home loans than their home is worth. A loan modification is the process by which the homeowner tries to get the terms of their loan modified to accommodate affordabilty. JP Morgan Chase plans to prevent unnecessary foreclosures with an independent review process to assist homeowners who may not need to be placed in foreclosure, and hire and train more staff for the caseload of loans.

Despite the fact that JP Morgan Chase is one of the largest banks affected by the foreclosure crisis, holding 1.5 Trillion dollars in mortgage loans, will be implement their plan on loans held by the bank which is only about 20% and the other 80% of loans are held by investors whose loans they service and are currently not figured into this plan, yet. According to Charlie Scharf, CEO of Retail Financial Services at Chase,

While Chase has helped many families already, we feel it is our responsibility to provide additional help to homeowners during these challenging times. We will work with families who want to save their homes but are struggling to make their payments.

One of the program’s first priorities, is to eliminate the negative amortization loans it services, most of which they inherited when they took over Washington Mutual Bank and EMC. This is a significant addition to its current foreclosure prevention program. [Read more →]

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There has been another shattering record number of foreclosures in the last quarter of 2007! In the last three months of 2007, home foreclosures hit an all-time high and an increase in the number of borrowers defaulting on their home mortgage loans.

Not only are the value of homes falling as a result of large home mortgage foreclosures, but also borrowers who are stuck with home mortgages that cost more than their house is worth, are simply walking away. There are still many home mortgages in the coming months that are due to “reset” or as I call it rise in mortgage payment.

The rate of failing home loans should climb through much of the year as national home values sink, said MBA chief economist Doug Duncan.

“You should expect to see, as long as house prices are declining, an increase in delinquencies and foreclosures,” he added.

Lower home values make it difficult for struggling homeowners to refinance and can create an incentive for them to simply walk away from their home and mortgage.

“We don’t expect to see the peak in delinquencies or foreclosures until mid to late 2008,” Duncan said.

Subprime mortgage borrowers were taking all of the heat for this mortgage mess, but all across the spectrum of borrowers, mortgage payments are falling behind. In the last three months of 2007, there were about 1 out of 20 delinquent payments from home loan borrowers, and about 1 out of 6 delinquent subprime borrowers.

As far as subprime mortgages go, many people think that this subprime lending business just started in the last year or so. Not true, there have been over ten years of subprime lending practices going on, but mostly targeting minorities. The mass appeal of the money that was made from over-charging home loan borrowers with subprime mortgages was to great of a payday for Wall Street and other investors. The end result of these fraudulent loan practices is what we are seeing today in the record breaking number of foreclosures. To stop foreclosure has become almost impossible. [Read more →]

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In an attempt to resolve the home mortgage foreclosure crisis, six major home loan lenders are offering to freeze foreclosures for thirty days. Project Lifeline is the latest response to ever-growing foreclosure rates by “Hope Now”, a government program formed to get a handle on the worst housing debacle in decades. Hope Now consists of a coalition of lenders, investors and non-profit groups that was created in October 2007, to work with the Bush Administration to try and get handle on the sky-rocketing rates of default filings and foreclosures.

Project Lifeline, announced today February 12, 2008, would temporarily stop foreclosure proceedings on homeowners who have fallen seriously behind in their house payments. [Read more →]

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Will the Federal Reserve’s rate cut revive the housing market and stem foreclosures?

Don’t count on it.

The Fed’s interest rate cut is largely symbolic. It makes more funds available to depository institutions — old-fashioned banks — but old-fashioned banks aren’t where the crisis is centered. The Fed’s move will do little for what ails the U.S. economy: Falling home prices, tighter lending standards, rising foreclosures and the ever-growing number of unsold houses on the market.

Nor will President George W. Bush’s $150 billion economic stimulus plan prevent Americans from losing their dream of homeownership to foreclosure. The Fed’s move will spark an avalanche of refinancing for homeowners with good credit. But that won’t necessarily translate into lower mortgage costs for some 2 million Americans with risky subprime home loans with rates that are scheduled to adjust sharply higher over the next year. Many subprime borrowers have mortgages larger than what the properties are worth, ruling out the possibility of refinancing from an adjustable rate loan into a fixed mortgage rate.

For the economy to rebound, home values have to return to historic norms. Slowly, home prices are beginning to fall back to more reasonable levels. Over the last year, home prices in the U.S. have fallen by about 6 percent on average, according to the Standard & Poor’s/Case-Shiller index of housing prices, which measures the value of homes in 20 cities.

So, expect a rising tide of foreclosures to continue to add inventory to an already over-saturated housing market. A growing inventory of unsold houses, in turn, will pull down home values, dragging more homeowners into foreclosures as prices drop. Spooked buyers, waiting for the housing market to bottom out, will nervously wait on the sidelines — further depressing prices.

For foreclosure investors and homebuyers this year could be a great opportunity to buy at bargain prices.

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Arguably the most influential television news magazine, 60 Minutes, last night spent more than 15 minutes — an eternity in television — focusing on the so-called Subprime Meltdown. The town they chose to use as a backdrop not surprisingly was Stockton, Calif., which ranked No. 1 in terms of nationwide metro foreclosure rates in both the third quarter and November, according to RealtyTrac….(read more)

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