Archive for December, 2008
FDIC’s Foreclosure Prevention Scheme Falls on Deaf Ears
Wednesday, December 10th, 2008The Federal Insurance Agency (FDIC) guaranteed to share up to 50 percent of losses with mortgage companies which consent to refinance home loans that meet specific requirements. The scheme hopes to prevent an estimated 1.5 million mortgage home foreclosures, and modify about 2.2 million mortgage loans.
FDIC’s proposal would entail a $24.4 billion funding from the Treasury Department’s $700 billion rescue plan called the Troubled Asset Relief Program or TARP.
The move is expected to stabilize housing prices and stem increasing foreclosures by providing incentives for lenders to readjust the loans of troubled homeowners. Under the said program, monthly mortgage payments of those facing foreclosure would be decreased to about 31 percent of the borrowers’ monthly income.
As part of the incentives for the banks, one thousand dollars will be given to servicers to cover their expenses for loan adjustments. Those who have missed at least two monthly loan payments on primary residences will be eligible under the FDIC program.
The Bush administration has not been supportive of the idea however. For the past weeks, FDIC Chairperson Sheila Bair has been lobbying officials for the FDIC foreclosure program to no avail. The proposal came two days after the Treasury dismissed the idea of government underwriting troubled home loans.
The administration’s current foreclosure prevention program recapitalizes money from the TARP on banks. U.S. lawmakers who are looking for more aggressive response to address the housing problem have criticized the program as limited since it only helps clients of Fannie Mae and Freddie Mac.
On the other hand, they and many private lenders have been strongly supportive of the FDIC proposal. However, US Treasury Department Secretary Henry Paulson views the current anti-foreclosure program as an investment to support credit markets as opposed to the FDIC’s plan which he says is a spending or subsidy program.
Deceptive Mortgage Ads Eliminated
Tuesday, December 9th, 2008Mortgage advertisements are to attract property buyers. But what most of the consumers do not know is that there are hidden risks in getting carried away by those ads.
Attorney General John Suthers moves to put an end to the deceptive mortgage ads by foreclosure rescue firms and mortgage brokers to save Colorado homeowners. His specific targets are those who offer adjustable rate mortgage loans or ARMs, without informing the people of the risks attached to such an option.
Three brokers practicing deceptive-advertising have been named by Suthers: 5280 Financial Group, Arbor-Financial Inc., and Mortgage Toolbox. But after some agreements have been signed, these brokers have agreed to disclose real loan terms and only fixed rate or traditional loans, and not the ARM option in their advertisements.
Other actions have been made by Suthers. He has filed civil-consumer protection claims against Home Mortgage Solutions Inc. for its direct mail regarding ARM without including the associated risks. He has settled with Encore Lending LLC, which inflates incomes of borrowers to qualify them for better loans. Another settlement has been agreed with Tri-Point Realty, which sends false letters to Colorado homeowners requesting them to refinance.
Lastly, Suther’s office has entered into an agreement this year with seven companies to protect distressed homeowners facing foreclosure from rescue firms who do not follow the Colorado’s Foreclosure Protection Act.
All the companies Suther have named have agreed to cease operations until they are able to comply with the Foreclosure Protection Act. He has also noted that the Colorado Housing and Finance Authority offers free or low-cost programs regarding mortgage application.
It is good to know that there is an effort like this from a state’s Attorney General. This is very advantageous for Colorado homeowners because this enables them to be more careful in dealing with mortgage brokers and rescue firms.
The revelations of the deceptive-advertising practices have stopped such practice, and have advocated the protection of the borrowers facing foreclosure.
Additional 32 Foreclosures Filed in Pasco County
Monday, December 8th, 2008On November 4, 2008, residents of Pasco County were alarmed that 32 additional foreclosures were filed on that day. This brings the total of Florida foreclosure filings to over a quarter of a million in the first half of 2008. An estimated 4 million properties are in foreclosure around the country.
According to ForeclosureConnections, about 60 percent of homes purchased in the U.S. have filed for foreclosure since 2003. In September 2008, Pasco reported over 1,100 filings and 32 more were added in November.
The ages of those 32 Pasco homeowners who filed range from 20s to 60s, with some of them house painters, realtors and home inspectors. These homeowners paid from $220,000 to $825,000 for their houses that were constructed in neighborhoods of Port Richey, New Port Richey, Holiday, Land O’Lakes, Hudson and Zephyrhills in 1969, 1977, 2004 and 2006.
The same homeowners also failed to make monthly payments since March of this year. One homeowner who filed for foreclosure is a man who used to be a soccer coach. This high school science teacher and his wife owe $3,000 in mortgage more than the amount they paid for their house when they bought it in 2004.
Another homeowner, an older woman in Port Richley, still failed to meet her $430.01 monthly payment for her one-story house despite working as a director in a local church,
One homeowner who is struggling to make his monthly payment is 53-year-old engine repair shop owner, Randy Chiavaroli. His wife received an award for her Boy Scouts volunteer work. His son who has spina bifida is confined in a wheelchair.
When the construction activity in the county slowed down, his business was affected forcing him to reduce the number of his employees from four to one. His plight deteriorated when the price of gas increased.
Bankers Praise Florida Governor’s Proposed Home Foreclosure Moratorium
Thursday, December 4th, 2008Bankers in Lee County praised Governor Charlie Crist’s proposed moratorium on Florida foreclosures.
Bankers Elmer Tabor, Mark Morris and David Hall said that majority of home foreclosure proceedings do not forced families to leave their properties. Tabor added that majority of these properties are investments.
Hall, First Community Bank of Southwest Florida president, described Crist’s moratorium proposal as “a good idea”.
Morris, chief executive officer of Commerce Bank of Southwest Florida, pointed out that bankers have compassion for homeowners who are in danger of losing their homes.
Meanwhile, Tabor believed that Crist’s idea will not affect homeowners with loans originated from Riverside Bank. He adds that his bank has not scheduled foreclosures on owner-occupied homes for the months of November and December.
To justify his proposal, Crist cited government-sponsored enterprises Federal Home Loan Mortgage Corp. or Freddie Mac and Federal National Mortgage Association or Fannie Mae’s plan for a temporary prohibition on evictions and foreclosures during this coming holidays.
Crist’s plan covers mortgage lenders who promised to work with borrowers. The governor and the Florida Bankers Association are expected to announce a plan to come up with repayment options for homeowners who have mortgage arrears
The governor indicated that he wants to coordinate with bankers to ensure that they are not harmed by the moratorium on Florida foreclosures.
Last month, Florida’s foreclosure rating was the third highest in the United States, with an estimated 30,190 filings. Filings in October in Cape Coral-Fort Myers region was the first highest in Florida and the second in the country.
According to ForeclosureConnections.com, a company that monitors the housing market, about 2,352 foreclosures were filed in areas covered by Cape Coral and Fort Myers in October.
Meanwhile, Lee County Circuit Judge John Carlin plans to expedite foreclosure processing by scheduling nearly 6,000 proceedings in December. The average number of cases per month was 2,000.
Foreclosure Activity in Virginia Increased by 25 Percent in October
Tuesday, December 2nd, 2008The ForeclosureConnections.com, an online service that monitors bank repossession activity, reported that the number of default notices for properties in Hampton Roads has increased by 25 percent in October 2008, a rise of 191 percent from 2007 levels. Default notices indicate the start of the foreclosure proceedings.
While homeowners struggled to pay their mortgages, banks foreclosed more houses, according to ForeclosureConnections.com.
The number of Virginia foreclosures is higher than the nationwide rate which in October showed a 5 percent increase, 25 percent higher from the same period in 2007. One out of 516 houses in Virginia was in some kind of foreclosure in October.
A decline in the number of home foreclosures was reported, from 227 in September to 183 in October. However, default notices increased to 608, noticeably in Portsmouth, Hampton and Suffolk which all showed a 400 percent rise in foreclosure activity.
Meanwhile, a quarterly survey showed that among homeowners who acquired homes in the area in 2003, 15.7 percent owe more in mortgages than their property’s market value.
The survey also indicated that 34.5 percent of homeowners who acquired their properties in 2008 owe more in mortgages than the property’s market value.
Economist and Old Dominion University president emeritus James Koch says that foreclosure rate will increase substantially if prices of properties continue to deteriorate.
He predicts that an increasing number of homeowners will choose to abandon their homes rather than pay the mortgage which is higher than the property’s market value.
In September, median prices for both existing and new homes in the area declined. An existing house’s median price was $218,500, 5.4 percent lower from August 2008 and about 2.8 percent down from last year’s September price.
On the other hand, a new home’s median price in September was $284,500, 17 percent lower from the same period in 2007.
Advertising Campaign for the Prevention of Foreclosures Reached Over 100 Million Households
Monday, December 1st, 2008Over 100 million households in the United States have been reached by a foreclosure prevention advertising campaign supported by the mortgage industry. The national public service campaign is led by the partnership of Neighborworks America and Ad Council.
The campaign drive, which includes television, the Internet, radio and outdoor advertising, was launched with financial and material support from the financial and mortgage services industry in June 2007.
Ad Council’s public service advertising focuses on providing information to homeowners facing foreclosure about where to look for help if they are having difficulty meeting their mortgage payments.
The said campaign has also generated about $74 million donated advertising time from lenders and non-profit organizations. It has helped homeowners who were experiencing difficulties meeting their mortgage payments find and contact housing counsellors and received information to protect their properties from foreclosure.
NeighborWorks America Chief Executive Officer Kenneth D. Wade said that the over 100 million Internet, outdoor and broadcast media impressions indicated that the campaign was a huge success. He also said that because of the campaign, many homeowners avoided filing for foreclosure proceedings.
The campaign advises homeowners facing financial difficulties to contact Homeownership Preservation Foundation’s Homeowners Hope Hotline. The foundation has received over 916,000 telephone calls since the start of the campaign.
Meanwhile, on the associated website for the campaign, homeowners are being urge to call their mortgage servicer. NeighborWorks America, a HOPE NOW Alliance member, knows that property owners are responding more to mortgage servicers.
Wade blames the current economic crisis to the poor housing market. He believes that continuous outreach efforts and providing the right information to homeowners on how to avoid foreclosure are critical to reversing the current downtrend in the market.
He adds that the NeighborWorks America’s outreach efforts will continue until 2009. The organization is also working to add more programs to help strengthen and stabilize the housing market and communities.
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