By Nick in News and Economy on January 19 2010
One of the biggest unavoidable concerns for homeowners today is the seemingly ever-increasing number of foreclosures throughout the nation. 2008 was a horrible year. Foreclosure activity was up 90% nationwide from 2007. Some localized areas were far worse, such as California which saw an increase of 150% between January and February of 2008. These statistics are a little outdated, however, since as of September 2009, country-wide foreclosure statistics have seen a slight improvement. The best news is localized, however, as many of the current statistics are mixed on a nationwide level.
The main areas that real estate investors and owners look at when considering nationwide foreclosure statistics are the number of foreclosure filings in a certain area and the price of homes in those same areas. The current numbers suggest that there may finally be light at the end of the tunnel in terms of thehousing market. Five of the top markets have seen a decreased number of filings. Michigan’s figures have decreased by just over 4%, California is down by almost 5%, the number of filings in Texas has decreased by more than 7%, Florida is down by 8.5% and Arizona has 9% less filings currently than in 2008. Colorado has the most impressive improvement, seeing foreclosure rates drop an impressive 13%. Unfortunately, these promising statistics are not true nationwide. West Virginia, for example, actually had an expansion in foreclosures in excess of 17%.
Cities in the states that saw improved numbers of foreclosures are showing great improvement with a smaller number of exceptions to that fact. Phoenix showed that the number of foreclosures decreased by more than 8%. Foreclosure rates in Memphis dropped by almost 12% and Miami showed the most improvement with a 14% decline in filings. Several other cities also saw decreases in their numbers, but these are the most impressive foreclosure statistics nationwide.
The prices in the housing market are also important in evaluating the health of the country’s real estate. Four out of the top five markets in the country have seen an increase in prices. This is great news for homeowners who are looking to sell, although similarly bad news for those hoping to purchase homes at the lowest prices possible. In both states of California and Florida, the percentage of price rises is under 1%, but that amount can make a difference. Michigan, another definitive real estate market, saw home prices go up by 1.4%. Texas was the most impressive with an jump of 4.8% seen in housing prices.
To sum it up, nationwide foreclosure statistics are improving overall, but not everywhere. This rise in prices and decreases in foreclosure filings may have a lot to do with federal government intervention in the housing market. Hundreds of billions of direct aid and subsidies to homeowners and owners have directed huge resources from the rest of the economy back to the housing industry. Numerous foreclosure help programs have also been created to keep property values artificially high and foreclosure rates down. The big question is how much longer the government will be able to prop up home prices, and if there will be an even larger decline if the programs and subsidies stop.
By Nick in Eviction, Tenancy and Foreclosure on January 19 2010
In this time of economic difficulty, many new laws are being enforced} to help people get out of debt and prevent foreclosure. Such laws are coming into play in the national landscape as well being localized on state levels. What the current federal foreclosure law states is that residents of properties that have been foreclosed have 90 days tovacate the premises without the necessity to make mortgage payments during that time. These rules became a federal law in May 2009 when President Obama signed the legislation named “Protecting Tenants at Foreclosure Act of 2009” into practice. This new law is more important for lenders and homeowners facing foreclosure to comprehend.
This law applies to any mortgage loan that is federally related or is a loan on a residential property. Once a purchase has been made on a foreclosed home, the original borrower has 90 days to vacate. Every state is affected by this new law, so residents from California to New York now have an extended time to adjust their lives and make different living arrangements before being forced from their homes. This helps prevent families from being thrown into the streets without a roof over their heads, which is the reason behind the introduction of the law.
Different exceptions to the rule exist when contracts of a lease come into play. If there is a lease on the house, a bona fide tenant can remain in possession of the house for the remainder of the term. However, if the lease states that it is “terminable at will” according to state law, the tenant must still vacate within the 90 days. This is also the case if the new owner of the property from an auction will use the premises as their primary place of residence. It is important to understand that these new foreclosure laws and provisions only have an effect on tenant-occupied homes, not mortgagor-occupied properties.
The differences in laws on a state level have been lowered significantly, now that this new statute has come into existence and preempted older state and local statutes. The new foreclosure laws have a timeframe in which they will be effective. Since the country is facing an economic hardship that is expected to dissipate, the law will go out of effect at the end of 2012, allowing 2013 to begin as a new year returning to the old law. If the economy is not where it is expected to be at that point, the law may be revised and extended.
When there are tenants renting a home from a landlord who has lost the house to foreclosure, the situation always becomes more entangled, and it is likely that the occupants will fall through the cracks somewhere. This is much too often the case, as the family or occupants leasing the house or apartment may not even be aware of the foreclosure until a sheriff has posted an eviction notice on the property. Due to this new federal law, however, this type of scenario may become slightly easier for the occupants, if they are given notice of the foreclosure and have a chance to plan for their future.
By Nick in Loan Modification on January 18 2010
During a time when national foreclosure rates are through the roof, you may be looking for ways to halt foreclosure so you can keep that roof over your head. Usually, the process of foreclosure does not begin until you have incurred three periods of nonpayment on your mortgage. If you see this becoming a reality in your current financial state, now is the time to act.
Remaining in denial about your inability to make payments, assuring yourself next month will be better, is not the way to stop foreclosure before it occurs. Too many homeowners begin in this type of wishful thinking, only to be rewarded with a hardship longer than expected and further threats from lenders.Calculating your future monthly expenses and discerning whether you will likely be able to make payments is the first step.
Immediately after you establish that you will likely have trouble making your next two months’ premium payments on your loan, set up a meeting with your lender. Lack of communication never helped anyone solve their financial problems. Set your pride aside and arrange a meeting with the intent of discussing possible modifications that may be made to the terms of your loan, also known as a mortgage modification.
Banks\Lenders are usually not out to harm you and do not want to you to lose your home. What they would prefer is to initiate a loan modification to make your payments possible, or help you in saving your home through some other option such as a short sale. Your lender should be willing to work with you to stop foreclosure before more time elapses, and the sooner you speak with them, the more time they will give you.
When it comes to talking with your lender, you need to be able to negotiate to reach conditions both parties can be satisfied with. It is necessary to keep in mind that the lender also wants to protect its financial position and take as little loss on the mortgage as possible. This process can be improved on your end if you can hire someone to manage you and provide aid in your case.
Financial experts and lawyers are great people to turn to for help and advice. These informed and practiced individuals know what lenders are looking for, so they can help you put together the proper documentation to help you get an approval on a loan modification or other agreement to help avoid foreclosure. Even if you know what you want and can negotiate for it, it may still make sense to pay a professional to help you get through the lines and phone calls necessary to work with the lender.
You can always choose to go through the process on your own, but having an expert who has saved hundreds of homes belonging to other financially troubled people is a great boost for your confidence. The last thing you want when facing foreclosure is another thing to stress out about. Work with someone who will contact your lender immediately, not badger you over the phone or sit on their time until it is too late.
By Nick in News and Economy on January 13 2010
The United States government is aware of the increasing number of foreclosures in these worrisome economic times. Bailout plans have been put in place and it has been said that between 8 and 9 million homeowners have the possibility of qualifying for help to avoid the foreclosure of their home. However, what it boils down to is the question of whether these government bailout plans are working or not. This question will be explored here.
There have been numerous complaints in regards to lack of precise enough information for homeowners to be able to make use of the government bailout plans. They seek help from their lenders, but they have no specifics to give. Others claim a complete lack of help is available at all. Settling on the reasons for the alleged failure of the government bailout plans is difficult to accomplish as people are not willing to have their mistakes publicized or even admit they have asked for help and subsequently been declined assistance.
There are no numbers to accompany the amount of people who have applied for help versus who have been denied or whether any loans were renegotiated. This lack of records and accountability has been one of the chief complaints of homeowner advocates. Obviously, the concern here is that the legislation behind these government bailout plans needs to be improved if the number of people who can find assistance with said programs are to be successful.
One of the main sections of government mortgage bailout plans is for the assistance of people who are stuck living in a home that will sell for less than the principal balance of the mortgage they still owe on it. This is similar to owning a totaled car, except there is no way out of being under water in your home ownership without losing a huge amount of money. Borrowers in this situation have been turning more and more often to strategic default, simply walking away from their homes even if they can make the payments.
The assistance that government bailout plans offer is limited to those whose mortgages do not exceed 5% of the appraised value. This eliminates help to a large amount of people who need it the most. Investors and those not living in their homes are also disadvantaged by the plans, as they do not qualify for assistance under most of them. But without addressing the rampant speculation and homeowners who bought multiple homes during the boom, the only option for these borrowers is default.
The other important sector of government bailout plans is loan modification. These are possible for borrowers who have become delinquent in their payments for a month or more, but are not yet faced with foreclosure actions. The possible modifications are based on the lender’s discretion and can include anything from temporary suspension of payments, lowered interest rates or other creative changes. The success of this section of government bailout plans is dependent upon the individual lenders and mortgage situations.
By Nick in General Foreclosure Help on January 12 2010
A smart home owner can use a slightly obscure fact to their advantage to try to prevent foreclosure by their bank. Did you know that it is less expensive for loan servicers to keep you in your home than actually go through with a foreclosure?
On average, it costs the lender between $60,000 and $80,000 to foreclose on a property. In the long term, it would cost less for them to work with the home owner to negotiate a solution to the problem than remove them from their property. Often, the debtor has to be the one to raise this issue to the mortgage company. It can be a very useful negotiating strategy.
Why does it cost so much to foreclose? To begin with, there are the expenses of going through the court process of eviction. The banks have to hire local law firms that specialize in evicting people. Then, there are charges associated with filing the paperwork and eviction proceedings.
If the home owners fight back, then the bank’s legal fees begin to increase faster and faster. Once a foreclosure or eviction hearing is final, then the mortgage company has to pay the costs of evicting borrowers if they refuse to leave the dwelling voluntarily. A lender with any intelligence be willing to negotiate with a home owner to avoid foreclosure.
After securing the property from the foreclosed home owner, the lender is then left to deal with the aftermath. Often, if a home owner doesn’t have the funds to keep up their mortgage payments, they also did not have the resources to maintain the property. And a number of foreclosure victims, in frustration over what was going on, do damage to the property before they are forced to leave. All of this now falls on the mortgage company to clean up.
Whether the property was destroyed due to neglect or revenge, the mortgage company will usually not do anything about it. This causes the value of the property to decline and the longer it is neglected, the further the value falls. In the end, the lender will accept far less for the property than what they would have if they had negotiated with the owners to prevent foreclosure before it began.
Even if the bank does nothing to keep up the property, they still have to deal with the other expenses in owning that home. Any property taxes that are due on the parcel have to be paid to the county. And, some level of home owner’s insurance will need to be purchased for the residence to protect the lender from covered damages to the house. Further, when they try to unload the property, the mortgage lender will need to use local real estate agents.
That means they will have to pay commission fees to them when the property is finally sold. It simply makes little financial sense for a mortgage lender to incur those expenses when it would be more efficient for them to negotiate with the current borrowers. This is just one piece of information that can help you to save your property from foreclosure.
By Nick in General Foreclosure Help on January 11 2010
If you are facing the loss of your home now or far enough delinquent in your bills to worry about it, getting foreclosure relief needs to be your first priority. The worst thing you can do is avoid dealing with your financial hardship. One of the most common mistakes people make is refusing to speak with their banks when they call.
It will be difficult to face up to the possibility that you are in financial distress. But, if you don’t face the problem, then the bank will foreclose all that much faster. Facing the problem may be difficult, but you will have more options to deal with it if you face it now instead of later.
Find assistance. The federal government (as well as many state governments) has counseling options available for borrowers who are facing foreclosure. These counselors can help you find government lending options that may be right for your situation. They can also provide you with details on what laws are in place about the foreclosure process. Each state has unique processes and timeframes on how the process is supposed to run.
Review your mortgage paperwork as well. There is usually a section in those documents that list what your rights are as a homeowner. You may believe that the lender holds all of the cards, but that may not be all of the truth. Knowing where you stand legally is the first step in solving a foreclosure.
Take an honest look at your finances. Are there any assets you can sell that will help you catch your bills up? A second car or whole life insurance policies are a couple of options to look at. Keeping a roof over your head needs to be a priority in your life at this point. Prioritize what you spend your income on. The mortgage payment should be one of the first items on your list of bills. Credit card payments and other personal loans can be put off for awhile, but mortgages should not be.
Can you find a second job for a while in order to catch your mortgage payments up? Cut out all non-essential spending. Cable TV and high speed internet are easy bills to reduce. All of these options need to be explored. Knowing where you stand financially is the second step in getting a plan together to stop foreclosure for the long term.
Avoid scams. There are numerous foreclosure scams out there. One common type is the scammer that presents himself to be an official representative for government programs that help homeowners in distress. Another tactic scammers use is to act as a paid negotiator between you and your lender. They will say they will negotiate to lower your interest rates or amount to be paid. In exchange, though, you will need to make your payments to them instead of the lender.
Other scams involve telling you to file Chapter 7 or 13 bankruptcy to stop the sheriff sale or to sign over your title to the scammers and they will make the payments for you if you pay them rent. Knowing what is legitimate and what is a scam is a large step in getting foreclosure help.
By ljspahr in Credit on December 29 2009
Mortgaging your house might sound a bit scary and frustrating, but it might be the answer to your debt problems. Mortgages are probably the best secured loans, as real estate values are generally increasing and lenders still consider it as strong collateral. Real estate is usually one of the most expensive items a family will purchase and because it’s somebody’s home, making the payment is a high priority. As houses are immovable, serving for decades as a place to live, the maturity of the mortgage, which is usually a long time (20 to 30 years), is not a problem. Therefore, if you own your home outright or have equity in your home, and need a considerable amount of money, you might consider a mortgage loan.
When you need to get a mortgage, many aspects of your personal and financial situation are evaluated to determine the exact terms of the loan. The final agreement is preceded by several phases. Most lenders offer what is called a “pre-approval”, which is when they take a quick look at your credit and income and give you an estimate of how much money you can borrow. Once you know for sure that you want to borrow this amount, you will complete the actual mortgage application. The lender will then need to approve your application.
According to your credit report or the lender’s guidelines, you might or might not be eligible for the loan. This is why many people opt for credit repair before applying for a mortgage. If you have only a few inaccuracies on your credit report, it could strongly influence the decision of the creditor on your trustworthiness. The better your credit score, the lower your interest rate will be. In fact, the difference could be drastic. Someone with a good score could qualify for a 4% mortgage, where a poor credit score may only get a 8% or 9% approval. This could double your monthly payment!
Once you have the best possible credit score and your application has been accepted, the home appraisal or valuation is the next step. Before the appraiser comes, you could visit a home valuation site and look up a few recently sold houses in order to compare them with yours and even get a free home estimate. This will give you a better idea of what to expect and help you be prepared to contest anything that might seem suspect. You should know that proximity to a school, a shopping center or any kind of amenity increases the value of your home.
A licensed appraiser will perform the final appraisal, which should take into account the overall condition of the property, age, the area and the selling price of a similar properties in the neighborhood. After the appraisal, you will also receive a copy of the report, which should contain their impression of the property as well as at least three comparable Properties that were used to determine the final value. Most appraisals cost around $400 and only take a few days to complete. You may spend more or less, depending on the value of your home. This step is required for almost any mortgage and the home owner is generally responsible for the cost.
After the lender has reviewed the appraisal, your income, and your credit, they will offer you a loan amount for less than the appraised value. Loan amounts are generally less than 90% of the appraised value and the payment should be less than 30% of your monthly income. Once your monthly payment is calculated on the principal & interest (actual amount of the loan + interest), the lender may also include taxes, home insurance, association fees (if any), and PMI (private mortgage insurance). Closing costs and broker fees may also be calculated in the monthly payment.
After all these fees are added in, it’s important to make sure the final payment is affordable before signing the final agreement. Missing a payment will result in foreclosure and losing your home and equity. By managing your money intelligently and keeping your payments on time, you can enjoy a long and happy life in your home.
By Nick in General Foreclosure Help on December 21 2009
When attempting to get information from a lender or servicing company, homeowners can take advantage of their legal opportunities under the Real Estate Settlement Procedures Act to send a Qualified Written Request (QWR). A QWR is meant to help borrowers raise disputes with their mortgage servicer and have those issues resolved in a timely manner.
Homeowners, however, may not know what questions to ask of the lender, or why they are requesting certain documents or records relating to the loan and its servicing. Most questions revolve around various disputes that borrowers may have with a creditor, including amounts owed, dates when payments were made, and the nature of the relationship between the company collecting payments and the true owner of the loan.
For instance, borrowers may wish to request a complete payment history including the dates that payments were made, as well as the amount the lender claims it receives. Also requested could be a breakdown of how the payment was applied, whether to principal, interest, taxes, property insurance, late fees, suspense accounts, or any other charges.
For homeowners facing foreclosure, a breakdown of all charges and fees on the account could be disputed, for which a QWR may be appropriate. Borrowers could request that all of the arrears and charges relating to the foreclosure be itemized and justified by the servicing company. This can be an especially difficult request for the bank to fulfill, as many often just make numbers up for delinquent accounts.
Any change in the monthly payment should also be carefully scrutinized and disputed if the homeowners did not specifically agree to it. Even if they did, if the amount does not look correct, it may be worth disputing and having the servicer check into the account. Homeowners can request the mortgage company to explain how the new amount due was calculated and why it was increased.
When an account is delinquent, servicers may often receive payments from homeowners but not credit them to the payoff. Instead, they are placed in a separate suspense account that simply holds funds that may eventually be credited to the loan, but which are not helping the borrowers get current with the loan. Homeowners can request an itemization of the expense account in order to discover the current balance and why funds were placed into it.
As with any foreclosure situation, there will be a whole range of issues that are specific just to that particular case. Thus, the issues described above should not be taken as an exhaustive list of QWR questions at all. Homeowners will inevitably run into their own issues when attempting to stop foreclosure, and they will be able to craft their own Qualified Written Request letter to the servicing company in order to attempt to resolve any disputes.
By Nick in Foreclosure Legal Process on December 18 2009
As mentioned in a previous article, it can be very difficult for homeowners facing foreclosure to raise certain claims in court when the bank holding their loan has failed and been taken over by the Federal Deposit Insurance Corporation. Case law and federal statute give the FDIC broad immunity against a number of claims that could be raised by borrowers in regards to loans held by the failed institution.
However, there are also a number of exemptions to the broad immunity the FDIC enjoys. Four of them are significant and worth examining here, as homeowners in foreclosure may be able to use them to bring claims against the FDIC or successor financial institutions.
The first is called fraud in the factum, and refers to any case when one party to a transaction reasonably relies on a misrepresentation by another party. The misrepresentation will be as to the character or essential terms of the contract. Examples include alteration of a document or forgery. The FDIC nor its successor institutions are immune to claims of fraud in the factum, so homeowners may be able to bring these issues into court.
Second, Truth in Lending rescission claims are still allowed despite the FDIC’s immunity protection. In fact, the Truth in Lending Act states that a borrower’s rescission rights continue regardless of assignment of the loan or to whom the loan is assigned. This means that, even if the lender fails and the note is taken over by the government, rescission may still be an option if the other requirements under the statute are met. FDIC receivership of the bank’s assets will not affect the claim.
Also, the FDIC does not have immunity protection from any transaction that is void. The federal statute granting FDIC immunity is intended to protect the government’s interests in assets is acquires from the failed banks. A void transaction, though, does not create an interest in an asset, and the immunity protection can not be extended to assets in which the FDIC has no valid interest. In cases such as fraud in the factum, the transaction may be declared void, for instance.
Finally, there is a rule called the FTC Holder Rule that was designed to protect credit consumers from holder-in-due-course immunity, such as the FDIC has been granted. For this rule to apply, though, an FTC Holder Notice must be included in the consumer credit contract. It will be included in many transactions relating to a sales transaction. This might be a home improvement contract or other similar agreement. If the notice is included in the contract, the FDIC’s immunity may not apply.
While the above defenses to broad FDIC immunity have survived most course, other claims have survived in a smaller number of cases. These include such issues as breach of contract, failure of consideration, challenges to the validity of a lien, homestead issues, unreasonable foreclosure sale, and state statutes regarding Unfair and Deceptive Acts and Practices. Homeowners should do their own legal research to determine if their claims may survive, or consult with a competent foreclosure attorney.
When homeowners find that they have become a mortgage customer of the government, falling into foreclosure can become extremely complicated. While the FDIC has taken some steps to assist borrowers in stopping foreclosure, the agency is granted broad immunity from many claims that may have been used to defend against the loss of the home in the first place. Thus, borrowers should educate themselves in regard to the issues surrounding the FDIC’s administration of mortgage loans and foreclosure.
By Nick in Stop Foreclosure Help on December 17 2009
With the significant increase in bank failures due to the financial collapse of 2008, more loans are being taken over by the Federal Deposit Insurance Commission. While the government stepping in may make the transition of loans from failed banks to solvent banks a little easier, in cases of default and foreclosure the situation can become more complicated.
In 1942, the Supreme Court decided that any secret or implied agreements would be precluded that had the effect of reducing or diminishing the FDIC’s interests. This has come to be known as the D’Oench, Duhme doctrine, and has been further codified into the federal statutes.
In many cases, if a bank transfers its assets to another financial institution or corporation, homeowners will be able to bring claims against the original lender or the assignee of the mortgage and note. But when a bank fails, it is taken over by the FDIC, a government agency which is granted immunity in many cases.
Federal regulations give the FDIC immunity from a number of claims. Homeowners may be unable to bring any claims against the FDIC for assets of the failed bank unless the agreement is in writing and meets a number of other requirements. These requirements are the following:
No agreement which tends to diminish or defeat the interest of the Corporation in any asset acquired by it under this section or section 11, either as security for a loan or by purchase or as receiver of any insured depository institution, shall be valid against the Corporation unless such agreement–
(A) is in writing,
(B) was executed by the depository institution and any person claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the depository institution,
(C) was approved by the board of directors of the depository institution or its loan committee, which approval shall be reflected in the minutes of said board or committee, and
(D) has been, continuously, from the time of its execution, an official record of the depository institution.
There are also a number of additional common law doctrines that smaller courts have relied upon when granting the FDIC immunity from homeowner or debtor lawsuits. These are termed “super holder-in-due-course” or “federal holder-in-due-course” doctrines, and allow the FDIC to claim holder-in-due-course status even if it does not meet the requirements for such status under the Uniform Commercial Code.
This immunity also typically extends to any future financial institution that purchases the assets of the failed bank from the FDIC. In most cases, the government only temporarily takes over the bank, makes sure it can keep operating for the short term, and then sells the remaining assets to other banks. Companies that purchase mortgage loans or other debts will be given immunity from claims that the FDIC would be immune to, making it even more difficult for borrowers to hold anyone accountable for actions taken before the bank failed.
Thus, homeowners may have a very difficult time bringing claims against the FDIC for the actions of the failed bank. However, there are a number of exceptions to the broad grant of immunity. Although they may only apply in a small number of cases of foreclosure, it is worth the effort for homeowners to look into these exemptions and find out if their claims against the original lender or failed bank may survive the FDIC receiving the bank.
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