Archive for the 'Foreclosures' Category

The housing recession for the past two years has increased foreclosures to record levels as more and more families are struggling to make payments on properties that are decreasing in value. Despite these hard times, there is still something to be optimistic about.

According to a Credit Suisse report last Monday, the plan to let bankruptcy judges lower a loan amount or erase some mortgage debt can help decrease foreclosures by as much as 20 percent and even alleviate the distressed housing market.

Moreover, a “cram-down” or lowered loan amount will provide an incentive for mortgage companies to curb more failing loans on their own. Supporters of the mortgage cram-down contend that bankruptcy judges are exclusively able to slash through mortgage contracts and rewrite loan terms.

The new bankruptcy reform is expected to boost loan mods, specifically in principal reduction mods, since it will most likely to both pressure and provide justification to servicers to more effectively engage in principal reduction mods. Democratic leaders who manage the White House and Capitol Hill will advocate the cram-down bill early this year.

In addition, the report states that the cram-down bill can help a significant percentage of delinquent borrowers and provide a 20 percent drop in foreclosures.

However, a separate report from Friedman, Billings, Ramsey & Co state that although the cram-down bill can reduce foreclosures, it cautions that modifying the bankruptcy rules through increased mortgage rates and reduced affordability will probably create long-term problems for the housing market by further destabilizing home values and causing mayhem on second-lien and consumer lenders. Bankruptcy judges would most likely wipe out second-lien holders, also hurting lenders that specialize in those loans.

Most distressed consumers and those on the verge of foreclosure will be persuaded by the opportunity of getting assistance through the courts. An increase in bankruptcy filings will signify more write-offs across the sector and cause a surge in credit card losses, since lenders are obliged to charge off the account upon receiving the bankruptcy notice.

The building of affordable housing for people with low income in San Diego County are affected by the increase in California foreclosures and lack of tax credit investments.

A long list of low-income families, including owners of foreclosed homes, has been waiting for subsidized housing. In San Diego County, an estimated 26 proposed affordable housing projects representing over 2,000 houses have been postponed.

Meanwhile, construction of nearly 32,000 units in California have stalled because of the lack of investments and increased in the number of distressed properties.

Besides foreclosures, another issue that threatens the affordable housing market is federal tax credit. This investor-funded credit has been providing affordable-housing financing to low-income housing developers. An estimated 11,000 affordable houses backed by federal tax credits have been constructed in San Diego County alone.

These tax credits are allocated on competitive basis to developers. Developers who gave tax credits must then find investors who are willing to buy them. Private investors who want to invest in affordable housing projects are provided with credits in their tax liability.

However, because of the financial hardships being experienced by companies, most developers find it difficult to entice investors to fund their affordable housing projects.

Currently, San Diego County has 26 affordable housing projects that have about $350 million funding. However, according to San Diego Housing Federation, an organization of housing advocates and affordable developers, in order for the market to move forward, another $150 million is needed which in the past could be met by tax-credit equity.

Tax credit declined to 4.5 billion in 2008 from $9 billion in 2007.

If plans will push through, an estimated 32,000 low-income houses could be constructed in 2009 which could create about 37,000 in California.

The possible loss of affordable housing in California is an example of the effect of the weakening economy in the country and the increased in foreclosures. And as long as the issue of foreclosure will not be resolved, the housing market will continue to be besieged with problems which will further delay economic recovery.

Bill Hills, director of Housing and Neighborhood Services, introduced the $2,267,290 HUD Community Development Block Grant budgeted federal program that will be directed in purchasing foreclosed homes, refurbish them and have it occupied.

The federal program is divided into two. The first program is a procurement aid for possible buyers and a $20,000 grant that may be used for the renovation, and full payment of the foreclosed house. It can help up to 51 mid-income families in 4 years.

Qualification or requirements for the grant application are:

• Average citizens with an HUD income qualification of 120 percent of the area’s median income
  (For instance, a family of 4 in Dallas has an income of $79,000 which is 120% of the median income cap of $33,000)
• The applicant must enroll in a homebuyers course
• A letter of credit from a mortgage firm

The second program has the same qualification but targets government or district school employees. Cops, firemen, teachers, and other public servants who work in or will be relocating to Grand Prairie would be fit for the grant. The city will buy, renovate and sell foreclosed houses to the public servants with only 20% down payment or closing cost component.

The project can acquire 8 homes costing $60,000-$165,000 per foreclosed house. Proceeds will solely be used for this program. The rest of the government money will be used for managerial and rehabilitation expenses. The budget must be acquired in two years and spent within a 4-year period.

This bothered Councilor Tony Shotwell. He said the program seems to favor public employees over civilians. But Hills explained that the second program was patterned from old government programs and featured the broadened scope.

Other Councilmen reacted, but saw the bright side of the program. Councilmen Swafford and Sala thought that this program can invite public servants like firemen and teachers to transfer to Grand Prairie.

Governor Arnold Schwarzenegger was venerated by the lot when he was on with the Assembly Democrats in the pursuit in cutting down foreclosure by going against mortgage related bills in the Legislative regular session. But this did not actually alarm the legislators, not because the problem is not urgent but because the problem is not [...]

When lenders are faced with bad loans during foreclosure crisis, they reach homeowners and express how there may be some ways to be done to be saved from their loan troubles. However, when a third party is involved, things may prove to be a lot more difficult to handle, especially if the homeowner is no longer aware of who is the rightful owner of their loans.

All eyes are on North Carolina’s exiting Gov. Mike Easley as he will have an opportunity to strengthen his influence before he leaves office, as he put stress on his accomplishments particularly about reducing mortgage foreclosures.

According to Mortgage Bankers Association, default payments and foreclosure rates have risen in 3rd quarter of this year and it threatens to soar while the downturn also increased the number of unemployed people.

Some people just know how to make the best out of any situation. This is just what Rich Sammons of Monroe County is doing about increasing Washington foreclosures.

Troubled homeowners who took out home loans from Freddie Mac and Fannie Mae have been given an early holiday gift. The two housing institutions have announced a six-week moratorium on foreclosures. This moratorium is expected to give homeowners time to negotiate with Fannie Mae and Freddie Mac. For distressed homeowners who took out home loans from other mortgage banks, they might also be given reprieves in a week or two as more mortgage banks have been considering moratoriums.

The Lao Family Community Development Inc refugee center was established 28 years ago by grateful families who escaped the wars in Southeast Asia and would like to give back to the community after this seeming miracle that they experienced in their lives.