foreclosures Archives - Page 6 of 9

Continued Labor Market Issues Could Mean More Foreclosures

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Labor market issues continue to plague the economy, slowing recovery and prompting a host of issues. One of the concerns is that the continued high unemployment rate could lead to an increase in foreclosures down the road. This is because as people continue to lose their jobs (or fail to find jobs), they are less able to make their housing payments. And this could result in foreclosure.

Real Estate Pro Articles makes a very interesting point about the rather vicious cycle we’re seeing with regard to unemployment and the economy:

A greater amount of consumer and business confidence is an essential factor in any economic recovery; financial recovery hinges on it. We need more than just incentive programs to prop up businesses and consumer spending; we need an increase in confidence in the economy across the board. Only when the public’s confidence is raised will consumers feel comfortable in investing their money in real estate as well as the rest of the economy; unfortunately, the economy will need to look like it is faring better before more consumers show a higher level of confidence in it.

Until the economy improves, employers will be reluctant to hire. However, the economy can’t improve until employers hire more people, boosting their ability to spend and make mortgage payments. It’s rather circular. But it’s the way things are right now. So it will be interesting to see how things proceed from here.

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Considerations when Buying Foreclosures

by Miranda Marquit 1 Comment

: Image by Getty Images via Daylife

While the housing market is slowly improving, the fact of the matter is that foreclosures are still very much on the market, and provide a number of interesting opportunities to buy. However, as you move forward with buying foreclosures, it is a good idea to keep some of these considerations, from Real Estate Pro Articles, in mind:

1. Look for a foreclosure in a good location.

2. Research your foreclosure choice, and learn about its back story. Watch out for liens against the home.

3. Keep within your budget, understanding that sometimes even foreclosures can end up out of your price range.

4. If you decide to buy a foreclosure at an auction, make sure that you understand the rules.

5. Know that an auction is not your only choice. You can look for foreclosure listings elsewhere and buy homes from a number of sources.

It is also possible to look into other distressed homes, such as those in pre-foreclosure, or homes that are being sold short, for less than the owner owes.

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Prime Mortgage Borrowers Slip Into Delinquency

by Miranda Marquit 2 Comments

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Even though things are starting to improve in the overall economy (expectations for November home sales are positive), for individuals things are still a bit difficult. This is especially telling in the fact that many prime borrowers are starting to slip into delinquency. The Wall Street Journal reports on the situation with regard to prim mortgages:

The most troubling finding was that even borrowers considered “prime,” or the least risky, increasingly can’t pay their loans. The report said that 3.6% of prime mortgages were more than two months behind on payments, more than double from a year ago.

Some borrowers might receive relief from foreclosures by the fact that some mortgage lenders and servicers are suspending foreclosures at some point during the holidays. However, things are still difficult for many people in terms of the personal finance situation. Jobs are still scarce, and this makes it difficult for borrowers to make their mortgage payments in a timely manner.

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U.S. Cities With the Most Underwater Mortgages

by Miranda Marquit Leave a Comment

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The news that 25% of mortgages are underwater is not particularly surprising to many people. Indeed, with home values so low, it is to be expected. While an underwater mortgage does not necessarily lead to foreclosure, it is still a problem, since it can prevent some homeowners from getting a refinance or a loan modification. However, as long as you can afford to make your payments, and you plan to stay in your home for a long time, chances are that you will see a measure of recovery.

CNBC offers this list of U.S. cities that have the most underwater mortgages:

* Tampa-St. Petersburg-Clearwater, Florida: 48.2%

* Bredenton-Sarasota-Vencie, Florida: 48.2%

* Lakeland-Winter Haven, Florida: 49.2%

* Bakersfield, California: 50.4%

* Riverside-San Bernardino-Ontario, California: 58.5%

* Cape Coral-Fort Meyers, Florida: 60.5%

* Valleyo-Fairfield, California: 61.1%

* Orlando, Florida: 62.3%

* Reno-Sparks, Nevada: 62.4%

* Port St. Lucie-Fort Pierce, Florida: 62.5%

* Phoenix-Mesa-Scottsdale, Arizona: 63.5%

* Stockton, California: 66.9%

* Modesto, California: 70.4%

* Merced, California: 74.2%

* Las Vegas-Paradise, Nevada: 81.1%

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Obama Administration Pressures Banks on Foreclosure Prevention

by Miranda Marquit 3 Comments

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One of the issues surrounding foreclosure prevention programs offered by the government is the fact that these programs are voluntary for mortgage lenders. Which means many mortgage lenders just aren’t participating — or they’re making things difficult. As a result, the Obama Administration is increasing the pressure on mortgage lenders.

The Administration plans to require loan servicers to report on how they plan to reach a decision on loan modification applications they receive. Communication with borrowers will also be scrutinized. Failure to comply could mean sanctions and/or penalties. Also, the Obama Administration is working to provide more information to borrowers so that they better understand the loan modification process, especially as it relates to permanent modifications. CNN Money reports on complaints from borrowers:

A growing number of borrowers are complaining that they are stuck in trial modifications. Some 650,000 homeowners are currently in this preliminary phase, but only a small fraction have received permanent assistance. …

Borrowers that qualify for long-term modifications can keep making the lower payments for five years. At that point, the interest rate will be set at the rate at the time of the adjustment, currently about 5%.

Loan servicers, however, say they are having trouble getting the necessary documents from borrowers, while homeowners maintain that their financial institutions are repeatedly losing the paperwork.

You can see where things are getting out of hand. But will pressure from the president help streamline the process?

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Home Prices Rise

by Miranda Marquit 1 Comment

: Image by Getty Images via Daylife

For the second quarter in a row, home prices have risen. The Case-Shiller index was released this morning, and showed that home prices rose in the 3rd quarter. This could be good news for those whose homes are underwater, as the improving home prices would help alleviate the issues concerned with negative equity.

However, there is still a ways to go, in spite of the improvement seen. MarketWatch reports on the state of the housing market right now:

“We have seen broad improvement in home prices for most of the past six months,” says David M. Blitzer, chairman of the index committee at Standard & Poor’s, in a statement.

“However, the gains in the most recent month are more modest than during the seasonally strong summer months. Fewer cities saw month to month improvements in September than in August in both seasonally adjusted and unadjusted figures.”

There are hopes that the extended first time home buyer tax credit will help spur more home buying — and help home prices on the road to recovery.

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Can You Skip a Second Mortgage Payment?

by Miranda Marquit 4 Comments

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There many people who believe that skipping a second mortgage payment is acceptable — especially if they are upside down on the first mortgage. This is because if a second mortgage lender decides to foreclose, the first mortgage lender is likely to get everything. Many home owners take this to mean that a second mortgage lender won’t foreclose, even if you skip payments, because it woudn’t do the lender any good. This tack may be faulty, however. Don Taylor points this out on Bankrate.com:

Some homeowners have taken that to mean they can do as they please in terms of making the loan payments on the second mortgage. That’s a risky route to take. Your action could force the lender to take steps you didn’t envision. I can’t be much more specific than that because the lender’s remedies depend on applicable state laws. You should discuss this topic with a real estate attorney before pursuing that route.

Skipping payments will have a negative impact on your credit report and credit score. Working with the lender to obtain relief on the terms of the second mortgage is a preferred alternative.

It is better to see what you can do in terms of loan modification or some sort of special refinance before you decide to start skipping payments. While it may seem tempting, the fact of the matter is that sometimes your decision could have unintended consequences. Try to work through the possible outcomes of different scenarios, and if you want to stay in your home, do what you can to make it work.

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Deed for Lease Program from Fannie Mae

by Miranda Marquit 1 Comment

There are thousands of people that would like to stay in their homes, but can’t because foreclosure is coming and they aren’t eligible for loan modification. In an effort to help these people stay in their homes, Fannie Mae is offering what is known as the Deed for Lease program for some home owners that meet certain requirements. Here is what Fannie Mae mentioned about the program in a press release:

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

These might be an elegant solution for those who are desperate to stay in their homes rather than lose them to foreclosure. However, it is important to note that if you participate in this program, you will no longer own your home. The money you have put into so far is basically gone, and when you pay your lease, it will be like you are renting again. Although, there is a strong possibility that you will avoid the credit stigma that can come with foreclosure.

In the end, you need to weight the pros and cons of your situation, and see what would work best for you: Deed for Lease or a strategic default.

Update, 11-19-09: Chris Thorman offers a great comparison of rental v. mortgage rates in top metro areas, and breaks it down with regard to the program and whether it might make sense to from owning your home to renting it.

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Housing Crisis Continues to Squeeze the Wealthy

by Miranda Marquit Leave a Comment

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Even though the bottom of the housing market is heating up, the luxury end of the market continues to be a problem. Indeed, many wealthy homeowners are concerned that they will have a hard time unloading homes that have become too expensive for them, thanks to changes in financial situation. Reuters reports on the difficulties of being a wealthy homeowner in this economy:

“I think for wealthy homeowners it will get worse before it gets better,” said Dennis Hedlund, founder of iEmergent, a forecaster for mortgage and real estate companies.

“I don’t think home prices have bottomed yet. Many people are stuck at the high end, as there aren’t many buyers out there,” Hedlund said of owners of luxury properties.

The problem for wealthy homeowners is that the best deals are found right now on homes in the lower price to mid price range. The deals aren’t as good on the high end homes, since many homeowners are unwilling to sell for what might be necessary in order to unload a home. However, as the economic situation continues to cause problems, it is likely that luxury home prices will begin to inch down, and there will be some buyers who come looking as foreclosures move into the upper end of the housing market.

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Will the FHA Need a Bailout?

by Miranda Marquit Leave a Comment

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Speculation is swirling right now that the Federal Housing Administration (FHA) may need a bailout. The FHA insures mortgage with low down payments (FHA loans require only a 3.5% down payment) so that more people can enjoy home ownership. However, that doesn’t mean that things are going well for the FHA. Even as the housing market heats up and FHA loans enjoy more popularity than they have in years, there is a budget shortfall.

Right now, the FHA shortfall is projected to be around $54 billion for the fourth quarter. The FHA is having a hard time absorbing those losses, and it may require a bailout from the taxpayers in order to survive the current situation. In order to help alleviate some of the problems, there is talk of increasing the required down payment to 5%. That might help shore things up. But there are concerns that fewer people would be able to buy homes if the down payment requirement were raised.

In the end, there are a lot of concerns surrounding the lending market, as well as concerns about ability to pay. One of the things about FHA loans is that the documentation required is stricter than what other lenders ask for, so it is less likely that borrowers will default. However, with the labor market continuing in weakness, more prime loans — and FHA loans — are moving into delinquency.

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