A-Z Group Real Estate News

Service Member in Foreclosure has Rights

2011-11-20T12:33:00.000-08:00

I'm helping 2 families with their Short sales. One of the representative for one of the banks threaten my seller with the possibility of foreclosing. I informed the representative of the Servicemember Relief Acts, she was clueless.

If you are an Active Duty Personnel you have rights. Don't just walk away from your HOME, Don't let the bank foreclose on YOU. Let me help you 760-559-3332 or call me toll free 1-888-559-0691

How Can You Learn More About Relief Available To Active Duty Military Personnel?
Read more information about the Servicemembers Civil Relief Act, sponsored by the Legal Assistance Policy Division, Office of The Judge Advocate General, U.S. Army.

Servicemembers who have questions about the SCRA or the protections that they may be entitled to may contact their unit judge advocate or installation legal assistance officer. Dependents of servicemembers can also contact or visit local military legal assistance offices where they reside. A military legal assistance office locator for each branch of the armed forces is available at http://legalassistance.law.af.mil/content/locator.php

March 2011

2011-03-07T10:04:00.000-08:00

Foreclosures top record in 2009, no end in sight - MarketWatch

2010-01-16T06:22:00.001-08:00

Foreclosures top record in 2009, no end in sight - MarketWatch

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3 reasons home prices are heading lower

2010-01-15T07:47:00.001-08:00

3 reasons home prices are heading lower

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Jeremy Bagott and Michael More: Calif. home prices on the skids in 2010 - LA Daily News

2010-01-05T06:01:00.000-08:00

Jeremy Bagott and Michael More: Calif. home prices on the skids in 2010 - LA Daily News

Home mortgage foreclosures rise in third quarter

2009-12-29T06:44:00.001-08:00

Home mortgage foreclosures rise in third quarter

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first tuesday journal online » first tuesday blogs the news » Homeowners, abandoned by government and lenders alike, must wield their walkaway

2009-12-26T19:00:00.003-08:00

first tuesday journal online » first tuesday blogs the news » Homeowners, abandoned by government and lenders alike, must wield their walkaway

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first tuesday journal online » first tuesday blogs the news » Homeowners, abandoned by government and lenders alike, must wield their walkaway

2009-12-26T19:00:00.001-08:00

first tuesday journal online » first tuesday blogs the news » Homeowners, abandoned by government and lenders alike, must wield their walkaway

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first tuesday journal online » first tuesday blogs the news » The false hope of trial modifications

2009-12-26T18:54:00.001-08:00

first tuesday journal online » first tuesday blogs the news » The false hope of trial modifications

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Developments : One in Seven Homeowners Underwater, According to New Report

2008-11-14T06:48:00.000-08:00

Developments : One in Seven Homeowners Underwater, According to New Report
November 12, 2008, 12:47 pm
One in Seven Homeowners Underwater, According to New Report
Dawn Wotapka reports:
The grim statistics just keep rolling in. The latest batch comes from real estate Web site Zillow.com, best known for letting neighbors monitor the value of each other’s homes.
The Seattle-based firm just released its third-quarter report covering 163 metro areas, information gleaned by tapping public data such as deeds and using proprietary formulas. According to the report, roughly 14% of homeowners — one in seven — have negative equity, or owe more than their house is worth. For those who bought in the past five years, that figure doubles. (For more data on areas with negative equity, click here.)
It’s a tough position to be in, with few options other than grumbling. Selling is out: 30% of homes sold in the last year commanded less than their original purchase price, up from 23.7% at the second quarter’s end. In 17 markets –14 in California — more than half of homes sold in the last year left the seller in the red. (For more on California’s grim market, check Michael Corkery and Jonathan Karp’s fascinating look at Los Banos. “California Home Sales Revive, But Not Without Intense Pain.” The NYTimes today is reporting on another California town in trouble.)
As the residential slump limps into another year, home values continue their multi-quarter slide: They slipped another 9.7% in the third quarter ended Sept. 30 to a median $202,966, according to Zillow. That price tag, down 12.8% from the market peak, hasn’t been this low since the end of 2004.
The biggest declines came from the usual suspects: Stockton, Calif., plunged 35.5% year over year, hitting a level not seen since 2002’s second quarter. Las Vegas saw values shaved by nearly 25% to levels last recorded five years ago. Detroit might have only seen values fall by nearly 10%, but current levels mirror the end of 1999.
The quarter did have some bright spots, with 12 of the 163 markets actually showed annual gains above 1%, assisted by the Carolinas and upstate New York. With a 5.6% increase in median home value, Ithaca, N.Y. was the top gainer. Median values increased more than 3% in the North Carolina cities of Jacksonville and Winston Salem, while Pueblo, Colo., went up 1.6%.
Even so, for those dreaming of the market’s recovery, keep dreaming: “It’s clear we are at a unique point in history; we’ve had seven consecutive quarters of decline, and we expect that to continue until at least the middle of next year,” said Stan Humphries, the site’s vice president of data and analytics.

What if You Don't Qualify? - WSJ.com

2008-11-13T07:20:00.000-08:00

What if You Don't Qualify? - WSJ.comOn Tuesday the Federal Housing Finance Agency -- noting that foreclosures have increased 150% over the last two years -- announced a new streamlined plan to try to staunch the "downward spiral" of foreclosures by modifying loan payments for millions of borrowers. ("Fannie, Freddie Unveil Plan to Modify Loans")
The program, is an extension of the Hope Now alliance, and follows similar efforts by large lenders such as Citigroup Inc., Bank of America Corp., and J.P. Morgan Chase & Co., to stem foreclosures. It will be implemented in mid-December, the agency says.
But not everyone who is feeling the pinch will get help. (See "Who's Eligible") Just because your house may have dropped in value since you bought it, lenders aren't going to give you a break -- the latest terms apply only to those who can't pay due to hardship and are at imminent risk for losing their homes to foreclosure.
But if you're in financial trouble and don't qualify under the rules -- for instance, if you can't pay the mortgage on your vacation home rather than your primary residence -- you still have options.
Who's Eligible for Help?
Getty Images
Under the FHA plan, lenders will modify interest rates or forgive a portion of the principal, to bring the ratio of mortgage payments, including homeowners' association dues, to 38% of income. Among the requirements for borrowers:
Must have a loan on a primary residence that was made before Jan. 1, 2008.
Must contact loan servicers and cooperate on supplying need information.
Must be at least 90 days behind on payments.
Must not have filed for bankruptcy protection.
Must certify that a hardship, such as job loss or illness, has affected their ability to repay, and that they did not purposely default to get a loan modification.
Here are some suggestions:
Contact a reputable credit counseling agency to see what your options are besides foreclosure. The Department of Housing and Urban Development links to free or low-cost counselors. The non-profit National Foundation for Credit Counseling has an online tool for locating members nearest your home.
Call your loan servicer to see who owns your loan; then call the lender to try to work out a deal. FHFA says that borrowers who don't meet the requirements for the new streamlined process can still be considered for loan modifications customized to their personal circumstances.
Sell a family car, take a second job, ask relatives for help or do whatever else you can to raise enough cash to pay the mortgage until the housing market improves. If zoning laws allow it, think about renting out rooms or a finished basement.
Consider a short sale, where a lender agrees to take less than the balance of the loan. You avoid foreclosure, though you may have to pay taxes on the shortfall. While short sales have become common in places where home prices have fallen precipitously, bear in mind that you must find a patient buyer, since many lenders are overwhelmed by short sales and are slow to respond to offers.
If you cannot come to an agreement with your lender, ask about transferring title in return for the cancellation of your debt, known as "deed in lieu of foreclosure." (This may not be possible if your property secures other debts.) Although you'll lose whatever equity you might have in the home, your credit won't be as damaged as it would be if you go into foreclosure.
If all else fails, look into filing for bankruptcy. While it will be a black mark on your credit for as long as a decade, under certain circumstances, you may be able to work out a payment plan that allows you to keep the house. For more information, visit the Department of Justice's Web site.

Housing and Economic Recovery Act of 2008 FAQ - HUD

2008-10-14T14:43:00.000-07:00

Housing and Economic Recovery Act of 2008 FAQ - HUD

Housing and Economic Recovery Act of 2008 FAQ
Information by State Esta página en español Print version

Q: How will the law help struggling homeowners keep their homes?A: Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages. The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property's current value.
Q: When will the program begin?A: The program will begin on October 1, 2008 and sunset on September 30, 2011. Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.
Q: Who is eligible?A: To be eligible to participate in this program, a borrower must:
Have a loan on an owner-occupied principal residence. Investors, speculators, or borrowers who own second homes cannot participate in this program.
Have a monthly mortgage payment greater than at least 31 percent of the borrower's total monthly income, as of March 1, 2008.
Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.
Not have been convicted of fraud.
Q: How can a homeowner access this new program?A: Homeowners or a servicer of an existing eligible loan need to contact an FHA-approved lender. The FHA-approved lender will determine the size of a loan that a borrower can reasonably repay and that meets the requirements of the program. If the current lender or mortgage holder agrees to write-down the amount of the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage. Loans provided under this program must be 30-year fixed rate loans.
Q: Are lenders required to participate in this program?A: No. The program is completely voluntary for lenders, investors, loan servicers, and borrowers.
Q: How does this law help neighborhoods that have been hit by the foreclosure crisis?A: The impact of the current crisis has not been isolated to individual borrowers or investors, but has been felt broadly by neighbors, communities, and governments across the nation. The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties, and stabilize the housing market.
Q: Will this law be a bailout for speculators, homeowners, investors, and lenders?A: No. It is narrowly tailored to keep families in their homes. For example:
Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.
Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum.
In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.
Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.
Q: Will this law reward families who bought homes they could not afford?A: Many homeowners facing foreclosure were misled, were deceived, or were in other ways the victims of unfair lending practices.To prevent future abuses by lenders, this law will establish a nationwide loan originator licensing and registration system to set minimum standards for all residential mortgage brokers and lenders. It also strengthens mortgage disclosure requirements to help ensure that borrowers understand their mortgage loan terms.
Q: How will this law make it more affordable to own a home?A: There are a number of provisions that will make homeownership more affordable:
Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).
Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.
Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500. Because of the high cost of housing in California, a majority of the state's residents were previously shut out from these programs. Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.
Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).
Q: Does the law provide help to those who still cannot afford to own a home?A: Yes. The bill includes a number of provisions to increase the supply of affordable housing, which has been a major problem in California pre-dating the current foreclosure crisis. For example:
The bill creates a new permanent affordable housing trust fund – financed by Fannie Mae and Freddie Mac and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas.
In addition, the legislation provides a temporary increase in the Low-Income Housing Tax Credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives.

New HomeOwner Tax info

2008-10-14T14:42:00.000-07:00

New Homeowner Information
If you have recently purchased a home in San Bernardino County, we would like to congratulate you on your new purchase.We have attempted to give you all of the information you need in one easy to use location.Whether you have recently purchased a home in San Bernardino County, or are considering purchasing a home in San Bernardino County, the information on this website can be a valuable resource for you.
What to expect from your Treasurer - Tax Collector when you buy a new home:
New Assessed Property Value - When a property changes ownership, a new assessed value will be used in determining your property taxes. This will generally be based on the amount you paid for your property. If you have any questions regarding the New Assessed Property Value, please contact the Assessor by clicking here or at (909) 387 - 8307. You may estimate the amount of your new taxes on this website, please click Estimate Your New Tax Bill.
Supplemental Tax Bills - Supplemental tax bill(s) are one-time tax bill(s) which occurs when there is a change of ownership on a property. The amount of the supplemental tax bill(s) is determined by taking the difference between your new assessed property value and the previous assessed property value. Mortgage companies do not usually pay the supplemental tax bill(s). They are the responsibility of the new property owner. You will normally receive your new supplemental tax bill(s) within 6 to 9 months of purchasing the property. The supplemental tax bill(s) will be pro-rated from the date of purchase through July 1st of that year. (Depending on when you purchase your property, and when the property is re-assessed, you may receive 2 supplemental tax bills). For a detailed explanation of supplemental tax bills, please click here.
Homeowners Exemption - Property that is owned and occupied as your principal place of residence as of the lien date (January 1st) may qualify for an exemption of $7,000 of assessed value. The Assessor will send you a Homeowner Exemption form in 2 to 3 months from your purchase date. Should you not receive a Homeowner Exemption form after 4 months please contact the Assessor's office.
Differences between the Treasurer - Tax Collector and the Assessor
There is frequently some confusion about the different roles of the Treasurer-Tax Collector and the Assessor. They are two different elected officials serving the public in different roles.
The Assessor is the elected official who is responsible for the assessment of all property within the County. The assessment of property (or the valuation of property) is one of the components that determine the amount of taxes that are owed. The Assessor may be contacted at 909-387-8307 or their website may be viewed by clicking here.
Some reasons you may want to contact the Assessor are:
You think your property may have been assessed at too high of a value.
To change the mailing address for your tax bills.
To get information on the Homeowner's exemption or other programs that can help to lower your taxes.
The Treasurer-Tax Collector is the elected official who is responsible for the Administration of the County Investment Pool and responsible for the collection of all property tax bills in the County. You may also click here to learn more about your Treasurer - Tax Collector.You may also contact us by clicking here, or by calling us at (909) 387 - 8308.

Check out my website

2008-10-14T13:40:00.000-07:00

http://www.ninaerbst.com/

Loan Modification Forms www.ninaerbst.com

2008-10-14T13:37:00.000-07:00

Just go unto www.ninaerbst.com loss modification and click on loss modification forms, print the forms out, fill it out completely, fax them back to me or call me to set-up an appointment

US foreclosure filings surge 48 percent in May: Financial News - Yahoo! Finance

2008-06-16T14:57:00.000-07:00

US foreclosure filings surge 48 percent in May: Financial News - Yahoo! Finance

5/1/08 Housing Crisis Deepens

2008-05-01T07:43:00.001-07:00

5/1/08

2008-05-01T07:40:00.001-07:00

Market Watch

Fannie warns homeowners who walk away

2008-04-16T07:42:00.000-07:00

Fannie warns homeowners who walk away
Kenneth Harney

Sunday, April 13, 2008

(04-13) 04:00 PDT Washington -- The country's two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing "walkaway" trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain.

On March 31, Fannie Mae sent out new guidelines to lenders intended for walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are "documented extenuating circumstances." In those cases, the mortgage prohibition is for three years.

Even after five years, borrowers with foreclosures in their files will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680.

Freddie Mac, Fannie's rival, counts foreclosures as major credit blots for seven years, and a senior official said the company is now aggressively pursuing some walkaway borrowers "to preserve our deficiency rights" where permitted under state law.

The walkaway trend is particularly noteworthy in former housing boom markets - including California, Florida and Nevada - where many homeowners find themselves upside down on their loans, owing tens of thousands more than the current market value of their houses. If they invested little or nothing in down payments, some owners reason, continuing to make payments - even if they can afford to - may be throwing good money after bad.

A number of Web sites have popped up claiming to cut the hassles of bailing out of a mortgage. One company promises that clients "will be able to live in (the) home for up to eight months with no mortgage payments," after paying $895 for a customized plan. The same site says it will provide clients with "legal credit repair" to "improve your FICO scores."

Another Web site claims that "your credit can be repaired and (you will) be able to purchase a house in as few as two years" - after paying a $495 fee. Still another company says walkaways can expect "up to one year living payment free" as the lender goes about filing for foreclosure. That company charges $995 for its how-to-do-it kit.

Fair Isaac Corp. of Minneapolis, developer of the FICO scores used in most mortgage transactions, is unhappy at any suggestion that a foreclosure could be minimized or wiped away in a short period of time. Its scoring model counts foreclosure as a long-standing and severe event, nearly comparable with bankruptcy, with negative consequences for all forms of credit that walkaways might seek to obtain. That includes credit card applications, auto loans, student loans - and even insurance and employment.

FICO spokesman Craig Watts said that the impact of a foreclosure on an individual's score depends heavily on the payment history, length and number of credit trade lines in a consumer's file, but "it is always significant."

Robin Stout Migala, consumer outreach manager for Freddie Mac, said in an interview that "there are so many bad reasons for walking away" from a home loan. Not only are borrowers' credit standings wrecked - forcing them into excessively high interest rates on any credit they can manage to obtain. But they also face other potential problems, including federal income tax liabilities.

Federal legislation enacted last year allows homeowners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven. Walkaway borrowers, by contrast, have nothing forgiven, and the IRS may demand income taxes on the balance they never paid, according to Migala.

Many borrowers facing foreclosure today have endured serious financial crises, said Migala - loss of employment, loss of an income-earning spouse, medical issues, predatory loan terms - that led to their inability to make their mortgage payments.

When they apply for a loan from either Freddie Mac or Fannie Mae, she said, the standard application form asks whether they have ever experienced a foreclosure or handed over their deed in lieu of foreclosure.

If applicants check "yes," the loan is immediately shifted to manual underwriting. Every piece of information is scrutinized by underwriters, who probe for the facts surrounding the loss of the house.

For borrowers who faced genuine financial hardships leading to foreclosure, underwriters are likely to be more sympathetic a few years down the road. But if you walk away, here's the deal: Don't expect to get a new home loan - certainly not one with favorable terms - for five to seven years.

That's no matter what some promoter promised you online.

E-mail Kenneth Harney at kenharney@earthlink.net.

This article appeared on page K - 11 of the San Francisco Chronicle

U.S. Foreclosure Jump 57% as Homeowners Walk Away

2008-04-16T07:05:00.000-07:00

By Dan Levy

April 15 (Bloomberg) -- U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier as adjustable mortgages increased and more owners lost their homes to lenders.

More than 234,000 properties were in some stage of foreclosure, or one in every 538 U.S. households, Irvine, California-based RealtyTrac Inc., a seller of default data, said today in a statement. Nevada, California and Florida had the highest foreclosure rates. Filings rose 5 percent from February.

About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc. Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are ``simply walking away and deeding their properties back to the foreclosing lender'' rather than letting the home be auctioned, RealtyTrac Chief Executive Officer James Saccacio said in the statement.

``We're not near the bottom of this at all,'' said Kenneth Rosen, chairman of Rosen Real Estate Securities LLC, a hedge fund in Berkeley, California and chairman of the Fisher Center for Real Estate at the University of California at Berkeley. ``The foreclosure process will accelerate throughout the year.''

Rising foreclosures will add more inventory to an already glutted market, keep home prices down through at least next year and thwart efforts by Congress and President George W. Bush to help homeowners avoid default, Rosen said in an interview.

Peak Levels

The percentage of homes currently in foreclosure is similar to that of the early 1980s and early 1990s, Rosen said.

``It's comparable to the peak levels of those periods, but my guess it will be the worst since the 1930s when it's all over,'' he said.

About 2.5 million foreclosed properties will be on the market this year and in 2009, Lehman Brothers Holdings Inc. analysts led by Michelle Meyer said in an April 10 report. U.S. home price declines will probably double to a national average of 20 percent by next year, with lower values most likely in metropolitan areas in California, Florida, Arizona and Nevada, mortgage insurer PMI Group Inc. said last week in a report.

Borrowers who owe more on their mortgages than their homes are worth may be buffeted by increasing job losses in a ``very substantial recession,'' Rosen said. About 8.8 million borrowers had home mortgages that exceeded the value of their property, Moody's Economy.com said last week.

Subprime Defaults

``At least 2 million jobs will be lost because of this recession, so we'll get a cumulative negative spiral,'' Rosen said. ``A normal recession is 10 months. We think this one may be twice as long.''

Bank seizures climbed 129 percent in March from a year earlier to a U.S. total of 51,393, according to RealtyTrac, which has a database of more than 1 million properties and monitors foreclosure filings including defaults notices, auction sale notices and bank repossessions. March was the 27th consecutive month of year-on-year monthly foreclosure increases. In February, foreclosure filings rose 60 percent.

A surge in defaults among subprime borrowers, those with poor or limited credit, spurred the collapse of the U.S. home loan market and has led more than 100 mortgage companies to stop lending, close or sell themselves.

As the value of securities tied to mortgages plummeted, lenders and securities firms have reported writedowns and credit losses of at least $245 billion since the beginning of 2007, according to data compiled by Bloomberg.

Nevada, California

Nevada had the highest U.S. foreclosure rate in March at one for every 139 households, almost four times the national rate, RealtyTrac said. Filings there increased almost 62 percent from a year earlier to 7,659.

California had the second-highest rate at one filing for every 204 households, and the most filings for the 15th consecutive month at 64,711. Foreclosure filings more than doubled from a year earlier and were up about 21 percent from February.

Foreclosure filings in New York rose 37 percent in March from a year ago and fell 3 percent from February. The state ranked 30th with 5,088 filings.

``The continued increase in new foreclosures implies an even larger drag on prices in 2008,'' Goldman Sachs Chief U.S. Economist Jan Hatzius wrote April 8. Home prices fell 8.9 percent in the fourth quarter, the biggest decline in 20 years as measured by the S&P/Case-Shiller home price index.

Some borrowers are ``hanging on at the margins'' in the face of resets, said Mark Goldman, a loan officer at Windsor Capital Mortgage Corp. in San Diego.

Goldman said one of his clients is a self-employed contractor whose adjustable-rate mortgage rose by two percentage points two months ago. His mortgage payment has increased to $7,200 from $4,900.

``I've had people sitting in my office in tears because there are no loans available,'' said Goldman. ``There are no loans for someone who's upside down on their house.''

* Top Five States for Foreclosures State Rate Per Households Total Nevada 139 7,659 California 204 64,711 Florida 282 30,254 Arizona 283 9,199 Colorado 339 6,180 *

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net.

Last Updated: April 15, 2008 14:23 EDT

Daily News-FHA Loans Can Ease Mortgage Dilemmas

2008-04-13T01:52:00.000-07:00

-Daily News-FHA Loans Can Ease Mortgage Dilemmas: "Daily Real Estate News | April 11, 2008
FHA Loans Can Ease Mortgage Dilemmas

Potential home buyers may be hesitant as they start their hunt in today's market, but many quickly discover that their market is full of choices, sellers are becoming more willing to negotiate, and interest rates are still low.

That's not to say there will be no setbacks. The hard part may come when they go shopping for a mortgage. Minnesota Mortgage Association President Tim Bendel said 100 percent financing has all but disappeared. He advises borrowers with good credit scores seeking a conventional loan to come to the table with at least a 5 percent down payment. Borrowers with credit scores below 700 may need a more significant 20 percent down payment.

But there is help on that front. The answer for some buyers is a Federal Housing Administration (FHA) loan. Credit scores count less with FHA loans; the more important factor is whether the potential borrower has paid other bills on time, says Todd Johnson, CEO of Edina Realty Mortgage. FHA's government-backed loans require only 3 percent down and allow cosigners and gifts for down payments.

Source: Star-Tribune, Kara McGuire (08/06/2008)"

Homeowners who just walk away - MSN Money

2008-04-13T00:50:00.000-07:00

Homeowners who just walk away
Thousands of strapped homeowners are simply abandoning their homes before foreclosure even begins. The stories of three families illustrate the personal and financial trauma.

By Judi Hasson
The mortgage industry calls it "jingle mail" -- keys that arrive in envelopes from homeowners who've decided they'd rather walk away than fight to make impossible payments.

"Nobody was mailing in the keys when property values were rising," said Andrew Jakabovics, the associate director of the Economic Mobility Program at the Center for American Progress, a liberal think tank in Washington, D.C. "This kind of behavior is clearly growing."

Linda, 44, is one of those who bailed out.

"I had to take a walk. I tried and tried to make things work," said Linda, who works in the housing industry in Tampa, Fla., and asked that her last name not be used.

"As a mom, I feel like I let my children down," Linda said. "It's a terrible embarrassment, and it's humiliating. You would hope the life lesson learned is that you hold your head high and you keep on moving."

Her situation is not unique. Thousands of people are abandoning their homes even before the bank starts to foreclose, realizing they have bitten off more than they can ever chew. For some, it's payments that are about to reset hundreds, if not thousands, of dollars higher. For others, it's the loss of a second paycheck.

Yet their problems are really just beginning when they shut the door for the last time.

Banks report the loans delinquent, then seize the properties and foreclose on them. Like it or not, there's a terrible black mark on the homeowners’ records that could affect any other credit they have, their car insurance rates, their ability to rent a home or apartment, even their job prospects.

Years of scrimping wasted? Hardly
Federal Reserve Chairman Ben Bernanke recently estimated that about 45% of foreclosures in 2007 were on private, near-prime or government-backed mortgages. And that means plenty of people who thought they were fine are facing catastrophe, never expecting that their homes would be worth less than the purchase price.

The median first-time buyer put down less than 2% to buy a house in 2007, according to the National Association of Realtors. Many put down nothing, even borrowing to cover closing costs.

"If you didn't put anything down, it's much easier to walk away," said John Mechem, a spokesman for the Mortgage Bankers Association.

Businesses are cropping up to speed the process.

In California, YouWalkAway charges homeowners $995 to guide them through the process. ("If you are walking away from more than one property, the second property is half price," the company's Web site says.)

YouWalkAway has sold its advice to about 1,000 customers and has opened operations in 11 other states: Arizona, Colorado, Connecticut, Florida, Illinois, Nevada, New York, Michigan, Ohio, Oregon and Washington.

Co-founder John Maddux sees the crisis as a product of careless lenders and borrowers who saw homes as a quick way to make money. Yet he is sympathetic to those "stuck in this mess."

"They have to decide whether to pay their health insurance. The problem isn't that their finances are in trouble. It's that the mortgage is too high, and it's taking up too much income," Maddux added.

Shalimar Santiago, a real-estate agent and the owner of Common Ground Property Investments in Tampa, counsels homeowners about their options in Florida. Her business is growing, too.

"I always ask, 'Do you want to keep this house?' A lot of times, they just walk away," Santiago said.

Video on MSN Money
Recovering from foreclosure

Foreclosure doesn't mean the end of the world. You can still recover your credit. Here's how.

Homeowners should investigate free services before paying a third party.

"We often pay for services that we can do ourselves. I pay someone to wash my car. I can wash it myself," said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.

The foundation has 2,400 certified counselors available across the country. She urges people who think they have problems brewing to make a call or visit its Homeowner Crisis Resource Center.

"The sooner they come, the more resolution options are open to them," Cunningham said.

The Consumer Federation of America also recommends HopeNow, a coalition of lenders and credit counselors that outlines options for homeowners.

3 families, 3 stories
Linda's family now lives in a rented condo. Their credit is ruined.

It was a far different tale three years ago. The Tampa resident, her husband and two children moved into a $400,000 three-bedroom home. It had a pool and faced the beach. The couple thought they could afford the $2,100 monthly mortgage payment on their $160,000 income. It sounded like a good deal. There was no down payment, and they paid $9,000 for closing costs.

Then life for Linda and her family suddenly turned sour.

The bank notified them that their monthly payment had been miscalculated, that taxes and insurance for two years should have been included. To fix its mistake, the bank increased Linda's monthly payment to $5,000 a month to get what was owed. And the family moved out of the house before the bank began to foreclose. "I left the keys in the door, hanging in the door," Linda said.

In California, Ismael, a Navy officer, went to YouWalkAway for help. He paid the $995 fee to get some advice. The company spelled out his options but did not tell him what to do.

Ismael, 37, still lives in his four-bedroom house in Menifee, Calif., for now. But he is ready to leave.

"The situation I am in is really ugly," said Ismael, who asked that his last name be omitted. "It's better for me to walk away and leave the stress and everything that is involved in this home. I am about 95% sure I am walking away."

The single parent of a 3-year-old, Ismael bought his $370,000 home in 2005 for no money down, qualifying on his mid-$40,000s salary. (That's about triple what he might have qualified for under more traditional lending guidelines used in MSN Money's Housing Affordability Calculator.) He was paying $2,700 a month for an adjustable 8.25% loan.

Yadira Magaña, left, with her children Lizeth Torres, 13, and Conrad Torres III, 10, have lived at her mother's Oxnard, Calif., home since walking away from their previous residence in 2007.
Then he and his girlfriend split up, reducing his household income to a single paycheck at the same time the mortgage was adjusting upward. To add to his struggles, the value of his house dropped by $145,000.

Yadira Magaña, a medical biller in her early 30s in Oxnard, Calif., has a similar story. She walked away from her $585,000 home in June 2007. When she bought it, Magaña thought she had gotten a great deal. She made a $16,000 down payment on the house. But she lived there only eight months before her marriage collapsed.

She couldn't afford to pay the $4,500 monthly interest-only mortgage, plus taxes and insurance separately, on her own $50,000 income. So she and her two children moved into her mother's house.

In Magaña's case, the bank declined to do a short sale (for less than was owed on the mortgage). "I told the bank I was leaving. I couldn't afford the home. The bank was not trying to help me or suggest different options. The only thing to do was let the home go," said Magaña.

Meanwhile, her credit rating drops every month. It's now in the 500s, when an excellent score is 750 to 800. Her decision to walk away will be on her record for years to come.

"I left the keys on the counter. I felt like a failure," she said.

Continued: What happens when you walk away

What happens when you walk away
No walk-away service or counseling is a panacea. Mailing back the keys or leaving them on the counter does nothing to change the foreclosure process or its damage to credit.

"There is some kind of irrationality to people's judgment, thinking they can avoid a penalty, said Allan Fishbein, the director of housing and credit policy for the Consumer Federation of America.

Bruises start to show even before the home enters foreclosure; late payments are noted on credit records at 30, 60 and 90 days -- every time a payment is missed. A single missed mortgage payment, says MSN Money columnist and credit expert Liz Pulliam Weston, knocks 100 points off your credit score. Every missed payment thereafter compounds the damage.

A notice of default typically comes after the third missed payment, delivering a knockout blow to the homeowner's credit. Three months after that notice of default, the lender sends out a notice of sale to the highest bidder.

With that sale, the foreclosure is etched on the homeowner's record, usually for seven years. In many states, the (former) homeowner is still liable for the unpaid balance even after the sale.

Some lenders will agree to take a house back and release the borrower from the mortgage, a process known as deed in lieu of foreclosure. It does have the benefit of being more attractive to the lender than a costly foreclosure, especially if the amount owed isn't drastically more than the house is worth.

Still, its effect on credit scores is the same: a haircut of 200 to 300 points.

A short sale, in which a buyer agrees to sell a house for whatever he can get and the lender agrees not to pursue him for the balance, and which shows up as a "settlement" on credit reports, is no kinder to a credit history because it usually comes long after the loan is in trouble.

The direct effect of any of these outcomes on credit scores is dramatic, and it ripples through every corner of borrowers' financial lives. The former homeowners will be unable to get new credit at reasonable rates, and issuers of their existing credit cards can raise interest rates because they are considered greater risks.

"It will prevent you from buying a house or renting a house. It could prevent you from getting a job," said John Mechem of the Mortgage Bankers Association.

In some states, insurers calculate a risk score from the same data used to figure credit scores. The lower the score, the higher your rates. (See "5 people who check your credit.")

If you want to stand and fight
Buyers in over their heads have only a few options for keeping their homes.

"The first thing I go after is to try to do a loan modification. It makes a big difference what bank it is," said Santiago, the Florida housing counselor.

A modification changes the terms of the original loan, extending a discounted interest rate, for example, or rolling late payments back into the loan.

Video on MSN Money
Recovering from foreclosure

Foreclosure doesn't mean the end of the world. You can still recover your credit. Here's how.

A lender must agree, but the advantages are quickly becoming obvious. "It would still be a better deal for a lender to keep the homeowner in the home at the level they can afford rather than forcing them into foreclosure," said Fishbein, of the Consumer Federation of America.

Another option for drowning homeowners is Chapter 13 bankruptcy, which stops the foreclosure process temporarily and gives the borrower time to work out a repayment plan. (See "Your lender doesn't want your house.")

"That doesn't mean you can never recover," columnist Weston said. The foreclosure or bankruptcy may take seven years to drop from your credit reports, but you can begin to rehabilitate your credit almost immediately.

With responsible credit use and on-time payments, you can boost your scores to near-prime levels in three to four years. Home lenders may shy away from you for a few years after that, although it's difficult to predict future lending conditions or how much of a stigma foreclosure will have once so many people have been through it.

Linda, the housing industry worker from Tampa, agrees. "People need a place to live," she said. "It will pass."

Published April 9, 2008

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2008-04-09T08:06:00.000-07:00

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Angry homeowners wreak Havoc

2008-04-01T14:20:00.001-07:00

In an earlier post, we wrote about how some homeowners facing foreclosure remain in their homes, instead of handing over the keys to the bank.

But some people are taking a far different – and much more destructive – tack. In today’s Journal, Michael M. Phillips reports that in Las Vegas, some homeo

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Real Estate Disposition Corporation

2008-02-01T12:43:00.000-08:00

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Where: Pomona Fairplex 1101 W. McKinley Avenue, Pomona, CA 91768
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2008-01-31T12:22:00.000-08:00

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