So, you have either gone through foreclosure or come very close to it. If you have missed three or more payments on your mortgage, your credit has been severely affected. How do you rebuild your credit score after foreclosure, and why is it so important?
Tune into Foreclosure Exposure Radio tomorrow at 3PM Eastern/12PM Pacific to hear a step-by-step plan of action for boosting your credit score and the steps you must take to ensure it does not dip in the future. Joining me is Terrence Johnson of Blue Point Financial Alliance – this is an episode you don’t want to miss!
Tune in each Wednesday at 3PM Eastern/12PM Pacific on VoiceAmerica’s Business Channel! Missed a show? Listen to the archives at www.foreclosureexposureradio.com!
Showing posts with label Foreclosure Commentary. Show all posts
Showing posts with label Foreclosure Commentary. Show all posts
Tuesday, April 14, 2009
Tuesday, April 7, 2009
Foreclosure Scams: The Straw Buyer
I just recently read an article about a "radio foreclosure specialist" in New York who is being charged with being involved in an $800,000 mortgage scheme involving straw buyers.
Before I get into outlining the scheme, let me take a minute to say how disgusting this is. You put yourself on the radio, give advice, people TRUST you, and you rip them off. Intentionally. That is inexcusable.
Now, back to our regularly scheduled program. What's a Straw Buyer, you ask? Read below...
The Washington Post recently did an article on Joy Jackson and Metropolitan Money Store, Corp - a company in Maryland that allegedly used "straw buyers" to "help" customers in foreclosure save their homes. Why do I put the word "help" in quotations, you ask? Because if the Washington Post is doing an article on you and your company around the foreclosure issue, 8 out of 10 times, it's not to praise your and your efforts.
Yep, it's another scam. HUNDREDS of people lost hundreds of thousands of dollars, EACH. Read the article to find out how these homeowners' hard earned equity went to fund the lavish lifestyle of the owner and her family. It's crazy!
The scam works like this:
If you have a large amount of equity in your home, a company will offer to assist you by having your house "refinanced" with SOMEONE ELSE'S CREDIT. The company will then say that you have the opportunity to buy back the house (or refinance out the straw buyer) after a certain amount of time, and you can live in the house "rent free" until your financial affairs are in order.
Of course, there are several other details that go into the arrangement, but those are the basics. What's wrong with this picture?
This basic fact: if you use someone else's credit to "refinance", their name is on the deed. That means that THEY, not YOU, own the house. That's why the term "straw BUYER" is used... it is another person who comes in and BUYS your home. It is a sophisticated form of the Leaseback scam - but there is a person (straw) between you and the company that offers a solution. That person is paid to use their credit.
How are they paid? OUT OF YOUR EQUITY.
In the case of Joy Jackson/Metropolitan Money Store, it is alleged that after a homeowner signed up under her program and was "saved", she pulled the equity out of the home by borrowing against the home, which increases the resale cost of the property. This price is often way too high for the person who is living in the property, and they cannot purchase the home back from the new owner.
Again I say... if it sounds too good to be true, investigate carefully. This is your HOME you are gambling with, and you should be as informed as possible when it comes to foreclosure scams and fraudulent practices.
Before I get into outlining the scheme, let me take a minute to say how disgusting this is. You put yourself on the radio, give advice, people TRUST you, and you rip them off. Intentionally. That is inexcusable.
Now, back to our regularly scheduled program. What's a Straw Buyer, you ask? Read below...
The Washington Post recently did an article on Joy Jackson and Metropolitan Money Store, Corp - a company in Maryland that allegedly used "straw buyers" to "help" customers in foreclosure save their homes. Why do I put the word "help" in quotations, you ask? Because if the Washington Post is doing an article on you and your company around the foreclosure issue, 8 out of 10 times, it's not to praise your and your efforts.
Yep, it's another scam. HUNDREDS of people lost hundreds of thousands of dollars, EACH. Read the article to find out how these homeowners' hard earned equity went to fund the lavish lifestyle of the owner and her family. It's crazy!
The scam works like this:
If you have a large amount of equity in your home, a company will offer to assist you by having your house "refinanced" with SOMEONE ELSE'S CREDIT. The company will then say that you have the opportunity to buy back the house (or refinance out the straw buyer) after a certain amount of time, and you can live in the house "rent free" until your financial affairs are in order.
Of course, there are several other details that go into the arrangement, but those are the basics. What's wrong with this picture?
This basic fact: if you use someone else's credit to "refinance", their name is on the deed. That means that THEY, not YOU, own the house. That's why the term "straw BUYER" is used... it is another person who comes in and BUYS your home. It is a sophisticated form of the Leaseback scam - but there is a person (straw) between you and the company that offers a solution. That person is paid to use their credit.
How are they paid? OUT OF YOUR EQUITY.
In the case of Joy Jackson/Metropolitan Money Store, it is alleged that after a homeowner signed up under her program and was "saved", she pulled the equity out of the home by borrowing against the home, which increases the resale cost of the property. This price is often way too high for the person who is living in the property, and they cannot purchase the home back from the new owner.
Again I say... if it sounds too good to be true, investigate carefully. This is your HOME you are gambling with, and you should be as informed as possible when it comes to foreclosure scams and fraudulent practices.
Thursday, March 26, 2009
Foreclosure Commentary: Reach Out For Help and Receive Assistance
Every once in a while, I want to throw in some commentary for my wonderful readers. I want you to know that I understand that foreclosure is more than just facts, figues, and a long to-do list. There is a lot of emotion that goes into this process – because no matter what the news says, no matter what Wall Street says, no matter what Congress says… this is your HOME we are talking about. Now, you will often hear me say that you need to step back from the emotions and look at your house as a property so you can make a rational, logical decision about what to do if you are facing foreclosure, but I DO understand the emotion that is automatically attached to this place where you raised your kids, started your business, began your marriage, played with your pets, had birthdays and anniversaries and tragedies… I understand that.
So, my commentary today is in respect for that emotion, and I would strongly suggest to you that you get the support you need during this turbulent time. Foreclosure is a VERY stressful process – not only mentally and emotionally, but physically as well, as our bodies take on the stress of our minds.
This morning, I was meditating… yes, I meditate! I mean, come on now… I deal with this all day every day – you gotta have SOME practice that keeps your mind free, and meditation is mine! So, I was meditating this morning and was reminded about receiving. I give a lot… my mentor says that at times, I over-give, actually. And this morning, my gift was a reminder to receive the love of those around me. As I was reminded of all the love of those who DO love me and show me that every day, I thought about you, an how good you would feel if you were reminded about the love and support that is available for you.
Every day, I talk to someone who says that my information is needed by someone they know. Think about it – right now, someone you know who knows that you are going through a hard financial time is thinking of you and thinking that you deserve a solution and some support. That is such am awesome gift – someone is thinking of your best interest. Someone wants to see you happy. Someone you know wants you to make it through this hardship and not only survive on the other side, but really thrive in your life. That is AMAZING, and I want you to take advantage of that.
Reach out to your friends, family, community, co-workers, and support system. Move through your pride and embarrassment and tell them what you need – if it’s a daily phone call to see that you’re okay, if it’s a reference to a good realtor or attorney or financial planner, if it’s a few dollars to get you through, if it’s a “distraction day” where you go and laugh at a silly movie for 2 hours to lift your spirits. Whatever you need, I want you to reach out to your group and ask for it. And then, sit back and receive. Give people the opportunity to help you. It will be such a joy to them to assist you, just because they love you. And that can be a hard lesson to learn for us “can-do, capable” folks… I am one of those, and this is something that I have to remind myself of every day. But it is especially important when you are going through the hard times…. reach out to those who WANT to help you, and receive their love.
So, my commentary today is in respect for that emotion, and I would strongly suggest to you that you get the support you need during this turbulent time. Foreclosure is a VERY stressful process – not only mentally and emotionally, but physically as well, as our bodies take on the stress of our minds.
This morning, I was meditating… yes, I meditate! I mean, come on now… I deal with this all day every day – you gotta have SOME practice that keeps your mind free, and meditation is mine! So, I was meditating this morning and was reminded about receiving. I give a lot… my mentor says that at times, I over-give, actually. And this morning, my gift was a reminder to receive the love of those around me. As I was reminded of all the love of those who DO love me and show me that every day, I thought about you, an how good you would feel if you were reminded about the love and support that is available for you.
Every day, I talk to someone who says that my information is needed by someone they know. Think about it – right now, someone you know who knows that you are going through a hard financial time is thinking of you and thinking that you deserve a solution and some support. That is such am awesome gift – someone is thinking of your best interest. Someone wants to see you happy. Someone you know wants you to make it through this hardship and not only survive on the other side, but really thrive in your life. That is AMAZING, and I want you to take advantage of that.
Reach out to your friends, family, community, co-workers, and support system. Move through your pride and embarrassment and tell them what you need – if it’s a daily phone call to see that you’re okay, if it’s a reference to a good realtor or attorney or financial planner, if it’s a few dollars to get you through, if it’s a “distraction day” where you go and laugh at a silly movie for 2 hours to lift your spirits. Whatever you need, I want you to reach out to your group and ask for it. And then, sit back and receive. Give people the opportunity to help you. It will be such a joy to them to assist you, just because they love you. And that can be a hard lesson to learn for us “can-do, capable” folks… I am one of those, and this is something that I have to remind myself of every day. But it is especially important when you are going through the hard times…. reach out to those who WANT to help you, and receive their love.
Wednesday, March 11, 2009
Foreclosures Hit New High
Dammit... I hate to say "I told you so". I really do.
MarketWatch announced today that the number of completed U.S. foreclosures in February was 121,756, the highest monthly total since the crisis began, according to data from Foreclosures.com. The figure was a 67% increase from the 72,694 reported in January and was also well above the previous monthly high of 104,243 set last September. The number of pre-foreclosure filings also set a new monthly record, rising 24% to 207,703 in February from 166,860 in January.
Now... WHY DID THIS HAPPEN? Why are we seeing a spike now?
One word, good people... moratoriums.
The spike occurred because the foreclosure moratoriums enacted in late 2008 ended, and we have a sudden rise in foreclosure numbers. Mind you, the Fannie/Freddie/Major Bank moratoriums on foreclosures have not ended yet - if they had, we would see a GREATER spike than what was reported.
Folks, we have GOT to get a handle on this! More shortly...
MarketWatch announced today that the number of completed U.S. foreclosures in February was 121,756, the highest monthly total since the crisis began, according to data from Foreclosures.com. The figure was a 67% increase from the 72,694 reported in January and was also well above the previous monthly high of 104,243 set last September. The number of pre-foreclosure filings also set a new monthly record, rising 24% to 207,703 in February from 166,860 in January.
Now... WHY DID THIS HAPPEN? Why are we seeing a spike now?
One word, good people... moratoriums.
The spike occurred because the foreclosure moratoriums enacted in late 2008 ended, and we have a sudden rise in foreclosure numbers. Mind you, the Fannie/Freddie/Major Bank moratoriums on foreclosures have not ended yet - if they had, we would see a GREATER spike than what was reported.
Folks, we have GOT to get a handle on this! More shortly...
Tuesday, March 10, 2009
Over 9200 FHA Loans in Default After No or Only One Payment
There is something severely wrong with this picture, and I cannot wrap my mind around a solution. I am not usually one to spread panic... it's not in my nature. However, it may take me few days to work through a way to solve (or at least give my two cents) this latest report.
Sunday, the Washington Post's story, "The Next Hit: Quick Defaults: More FHA-Backed Mortgages Go Bad Without a Single Payment" told a grim story about the failure of the Federal Housing Authority's mortgage system.
"... the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency's historic role in backing mortgages is more crucial now than at any time since its founding.
With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency's overall growth in new loans, according to a Washington Post analysis of federal data.
Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.
If a loan "is going into default immediately, it clearly suggests impropriety and fraudulent activity," said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA.
The spike in quick defaults follows the pattern that preceded the collapse of the subprime market as some of the same flawed lending practices that contributed to the mortgage crisis are now eroding one of the main federal agencies charged with addressing it. During the subprime lending boom, many mortgage brokers and small lenders milked the market for commissions and fees by making as many loans as possible with little regard for whether they could be repaid.
Once again, thousands of borrowers are getting loans they do not stand a chance of repaying. Only now, unlike in the subprime meltdown, Congress would have to bail out the lenders if the FHA cannot make good on guarantees from its existing reserves. And those once-robust reserves are showing signs of stress, raising the possibility that taxpayers may have to pick up the tab for the first time since the agency was established in 1934.
More than 9,200 of the loans insured by the FHA in the past two years have gone into default after no or only one payment, according to the Post analysis. The pace of these instant defaults has tripled in one year. By last fall, more than two dozen FHA home loans on average were defaulting this way every day, seven days a week."
That is one of the scariest things I have read in years.
The article goes on to talk about how there is an instant presumption of fraud of loans immediately go into default, but, due to the rise in FHA mortgages, the agency is unable to pursue predatory lenders with haste, if at all. Meanwhile, these lenders or brokers are targeting homeowners with direct mail and phone solicitation, enticing them to refinance over and over again with advertised low rates. The constant refinancing means that a homeowner can take cash out without having to make a payment on the loan.
"The broker makes money on every transaction," said Carr, a former executive at mortgage financier Freddie Mac. "They're not going to turn away an application if they can get it through. There have been situations where people refinance and refinance to avoid making payments and the broker just keeps getting the fees. What do they care?"
This whole thing makes my head hurt.
Sunday, the Washington Post's story, "The Next Hit: Quick Defaults: More FHA-Backed Mortgages Go Bad Without a Single Payment" told a grim story about the failure of the Federal Housing Authority's mortgage system.
"... the subprime mortgage market has crashed and borrowers are flocking back to the FHA, which has become the only option for those who lack hefty down payments or stellar credit. The agency's historic role in backing mortgages is more crucial now than at any time since its founding.
With the surge in new loans, however, comes a new threat. Many borrowers are defaulting as quickly as they take out the loans. In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency's overall growth in new loans, according to a Washington Post analysis of federal data.
Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.
If a loan "is going into default immediately, it clearly suggests impropriety and fraudulent activity," said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA.
The spike in quick defaults follows the pattern that preceded the collapse of the subprime market as some of the same flawed lending practices that contributed to the mortgage crisis are now eroding one of the main federal agencies charged with addressing it. During the subprime lending boom, many mortgage brokers and small lenders milked the market for commissions and fees by making as many loans as possible with little regard for whether they could be repaid.
Once again, thousands of borrowers are getting loans they do not stand a chance of repaying. Only now, unlike in the subprime meltdown, Congress would have to bail out the lenders if the FHA cannot make good on guarantees from its existing reserves. And those once-robust reserves are showing signs of stress, raising the possibility that taxpayers may have to pick up the tab for the first time since the agency was established in 1934.
More than 9,200 of the loans insured by the FHA in the past two years have gone into default after no or only one payment, according to the Post analysis. The pace of these instant defaults has tripled in one year. By last fall, more than two dozen FHA home loans on average were defaulting this way every day, seven days a week."
That is one of the scariest things I have read in years.
The article goes on to talk about how there is an instant presumption of fraud of loans immediately go into default, but, due to the rise in FHA mortgages, the agency is unable to pursue predatory lenders with haste, if at all. Meanwhile, these lenders or brokers are targeting homeowners with direct mail and phone solicitation, enticing them to refinance over and over again with advertised low rates. The constant refinancing means that a homeowner can take cash out without having to make a payment on the loan.
"The broker makes money on every transaction," said Carr, a former executive at mortgage financier Freddie Mac. "They're not going to turn away an application if they can get it through. There have been situations where people refinance and refinance to avoid making payments and the broker just keeps getting the fees. What do they care?"
This whole thing makes my head hurt.
Saturday, March 7, 2009
Jon Stewart: CNBC's Rick Santelli, Angry at "Loser Homeowners"
This is a clip from Comedy Central's The Daily Show with Jon Stewart. BRILLIANT, in my opinion...
I believe that Rick Santelli's comments were not only short-sided but irresponsible. He should be tarred, feathered, and dragged through the streets of Ft. Lauderdale, FL, where those "loser homeowners" are being turned out of their homes by the day.
Amazing how irresponsible the media can be. Take a look at the clip - Jon Stewart nails it on the head!
I believe that Rick Santelli's comments were not only short-sided but irresponsible. He should be tarred, feathered, and dragged through the streets of Ft. Lauderdale, FL, where those "loser homeowners" are being turned out of their homes by the day.
Amazing how irresponsible the media can be. Take a look at the clip - Jon Stewart nails it on the head!
Tuesday, March 3, 2009
Wow. People Are Really, Really Angry...
In my regular due diligence searches for foreclosure information around the net, I am seeing some truly disturbing trends.
People are angry. Really, REALLY angry.
This morning, Citigroup announced a program that would offer some assistance to mortgage holders who have lost their jobs. The comments on the story were negative, to say the least. One poster said, "Another entitlement program probably pushed by Barney Frank and Company for bailout money. Help the poor first... never mind those who can play by the rules." Another poster left this message: "...this is going to drive more poeple to just say screw it and not pay at all, why should I pay when the deadbeat down the street is getting everything subsidized by the governement and lives better then me...All incentive to work hard to get ahead is gone....It's not that different then when I go to the grocery store and use coupons and buy whats on sale and basicly do without to save some money, meanwhile there some deadbeat on welfare with a cart full of steaks and shrimp typicly overwieght paying with foodstamps..."
I don't spell check, folks. I just cut and paste.
This is a SMALL sampling of the postings I see around the net. When the news hit that Rick Santelli, CNBC correspondent, went "crazy" about Obama's housing plan and called the recipients "losers", a rallying cry went up to congratulate him on his tyrade.
What is wrong with people?
First point: this is why I don't watch the news. The negativity that is spread by the media seeps into people's souls. It's like the movie 28 Days Later - the rage is contagious. People are feeling the economic downturn, and now it's time to lash out at everyone and everything. Sure, people have opinions about what's right, what's wrong, and what's going to work or not, but do you have to be so nasty about it?
Second point: understanding that these new plans that are being put out are just that... NEW... let's all take a moment to BREATHE and let these things work! Let's see who they help. Let's see how they take affect. Let's see if they make the situation better. Let's give it a CHANCE before pouncing like rabid dogs on a piece of flesh.
Third point: stop being so damn angry. You'll live longer. Every person... EVERY PERSON in America is feeling the pinch. Every person... EVERY PERSON in America should so what they can to help. Otherwise, every person... EVERY PERSON in America will be affected even more than they are now. I'm not participating in the blame game. Everyone had a hand in this, and it's going to take every person to get us out of the mess.
Think of it like this... you're on a football team. You know it's going to take every person on the team to pull off the win. What kind of team player are you if you're constantly bitching about the quarterback, the offensive lineman, the wide receiver? What does that do for TEAM MORALE? I mean, wouldn't it serve your TEAM the best if you put your head down and fought for the team with all your might, supporting and encouraging the rest of the team as you went along?
I mean, really. Come on people. Let's show a little spirit. Sounds hokey, but I think we could use a little positive action right now.
People are angry. Really, REALLY angry.
This morning, Citigroup announced a program that would offer some assistance to mortgage holders who have lost their jobs. The comments on the story were negative, to say the least. One poster said, "Another entitlement program probably pushed by Barney Frank and Company for bailout money. Help the poor first... never mind those who can play by the rules." Another poster left this message: "...this is going to drive more poeple to just say screw it and not pay at all, why should I pay when the deadbeat down the street is getting everything subsidized by the governement and lives better then me...All incentive to work hard to get ahead is gone....It's not that different then when I go to the grocery store and use coupons and buy whats on sale and basicly do without to save some money, meanwhile there some deadbeat on welfare with a cart full of steaks and shrimp typicly overwieght paying with foodstamps..."
I don't spell check, folks. I just cut and paste.
This is a SMALL sampling of the postings I see around the net. When the news hit that Rick Santelli, CNBC correspondent, went "crazy" about Obama's housing plan and called the recipients "losers", a rallying cry went up to congratulate him on his tyrade.
What is wrong with people?
First point: this is why I don't watch the news. The negativity that is spread by the media seeps into people's souls. It's like the movie 28 Days Later - the rage is contagious. People are feeling the economic downturn, and now it's time to lash out at everyone and everything. Sure, people have opinions about what's right, what's wrong, and what's going to work or not, but do you have to be so nasty about it?
Second point: understanding that these new plans that are being put out are just that... NEW... let's all take a moment to BREATHE and let these things work! Let's see who they help. Let's see how they take affect. Let's see if they make the situation better. Let's give it a CHANCE before pouncing like rabid dogs on a piece of flesh.
Third point: stop being so damn angry. You'll live longer. Every person... EVERY PERSON in America is feeling the pinch. Every person... EVERY PERSON in America should so what they can to help. Otherwise, every person... EVERY PERSON in America will be affected even more than they are now. I'm not participating in the blame game. Everyone had a hand in this, and it's going to take every person to get us out of the mess.
Think of it like this... you're on a football team. You know it's going to take every person on the team to pull off the win. What kind of team player are you if you're constantly bitching about the quarterback, the offensive lineman, the wide receiver? What does that do for TEAM MORALE? I mean, wouldn't it serve your TEAM the best if you put your head down and fought for the team with all your might, supporting and encouraging the rest of the team as you went along?
I mean, really. Come on people. Let's show a little spirit. Sounds hokey, but I think we could use a little positive action right now.
Friday, February 27, 2009
Foreclosure Scams Up: Advice Worth Reposting
ABC News has just posted a new story about the rise in foreclosure scams. Because of the tanking housing market and rise in unemployment, more homeowners are being targeted by and falling victim to foreclosure scam artists, and are losing their homes at an alarming rate.
I had published a series of blogs a few months ago about some common scams and how to protect yourself from them. This week on Foreclosure Exposure Radio, we will go over scams in detail for the entire hour, but in the meantime, I am reposting the following entry:
As soon as news of your foreclosure is made public, the flood of letters and phone calls begin, and the vultures are on the hunt. Some of them are less polished with their approach: you may receive a sloppy letter offering to help out by buying your home. Others may call you on the phone (ignoring the “Do Not Call List” rules and regulations) or even knock on the door and offer their services. These are the amateurs – probably fresh out of a beginning real estate investor class. They can be safely disregarded.
The dangerous ones are the Vultures in Sheep’s Clothing.
These are the slick, polished “professionals” who offer to assist you. They will hand you a savvy business card, listen intently and console you over a cup of coffee or glass of water at your kitchen table, all the while assuring you that they’ll stop your foreclosure regardless of your situation. Heck, they’ll even promise to let you stay in your home! All you have to do is sign on the dotted line...
Does that sound familiar? Unfortunately, this promise, in some instances, is too good to be true. Don’t ignore your inner sense of protection – if it sounds too good to be true, it could be a scam designed to steal your equity.
While some of the solutions presented are valid options in certain instances, some investors have no intention of letting you stay in the property – at least, not for very long. Read the contracts they present – they are heavily weighed in their favor, and the slightest infraction on your part will let them evict you and walk away with your property and your equity (especially in landlord-friendly states!).
Carefully investigate all offers presented to you. Solutions that sound too simple or too good to be true usually are.
If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial situation. Financially or emotionally distressed homeowners often become the unwitting victims of unethical practitioners who seek to exploit the misfortune of others.
There are several precautions you can take to avoid being taken advantage of:
• Don't sign any papers you don't fully understand.
• Make sure you get all "promises" in writing.
• Beware of any loan assumption where you are not formally released from liability for your mortgage debt.
• Check with a lawyer or your mortgage company before entering into any deal involving your home.
• If you are selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Real Estate Commission, or the local District Attorney's Consumer Fraud Unit for this type of information.
Again, read any contracts presented to you. An upstanding investor should not have a problem allowing you take a day or two to review the documentation with a professional. If they are pushing you to sign right now, it could be a scam.
I had published a series of blogs a few months ago about some common scams and how to protect yourself from them. This week on Foreclosure Exposure Radio, we will go over scams in detail for the entire hour, but in the meantime, I am reposting the following entry:
As soon as news of your foreclosure is made public, the flood of letters and phone calls begin, and the vultures are on the hunt. Some of them are less polished with their approach: you may receive a sloppy letter offering to help out by buying your home. Others may call you on the phone (ignoring the “Do Not Call List” rules and regulations) or even knock on the door and offer their services. These are the amateurs – probably fresh out of a beginning real estate investor class. They can be safely disregarded.
The dangerous ones are the Vultures in Sheep’s Clothing.
These are the slick, polished “professionals” who offer to assist you. They will hand you a savvy business card, listen intently and console you over a cup of coffee or glass of water at your kitchen table, all the while assuring you that they’ll stop your foreclosure regardless of your situation. Heck, they’ll even promise to let you stay in your home! All you have to do is sign on the dotted line...
Does that sound familiar? Unfortunately, this promise, in some instances, is too good to be true. Don’t ignore your inner sense of protection – if it sounds too good to be true, it could be a scam designed to steal your equity.
While some of the solutions presented are valid options in certain instances, some investors have no intention of letting you stay in the property – at least, not for very long. Read the contracts they present – they are heavily weighed in their favor, and the slightest infraction on your part will let them evict you and walk away with your property and your equity (especially in landlord-friendly states!).
Carefully investigate all offers presented to you. Solutions that sound too simple or too good to be true usually are.
If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial situation. Financially or emotionally distressed homeowners often become the unwitting victims of unethical practitioners who seek to exploit the misfortune of others.
There are several precautions you can take to avoid being taken advantage of:
• Don't sign any papers you don't fully understand.
• Make sure you get all "promises" in writing.
• Beware of any loan assumption where you are not formally released from liability for your mortgage debt.
• Check with a lawyer or your mortgage company before entering into any deal involving your home.
• If you are selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Real Estate Commission, or the local District Attorney's Consumer Fraud Unit for this type of information.
Again, read any contracts presented to you. An upstanding investor should not have a problem allowing you take a day or two to review the documentation with a professional. If they are pushing you to sign right now, it could be a scam.
Thursday, February 26, 2009
Flack and Feedback on Obama's New Housing Plan
Last week, I was being interviewed on the Leslie Marshall Show (great woman, by the way!), specifically discussing the new Homeowner Affordability and Stability Plan. The objective, of course, was to provide listeners with information about the meat of the plan, requirements, who does and does not qualify, etc. I ended up in an all out verbal fight with a caller from Buffalo who was IRATE over the proposed plan, and wouldn't even let me - or the host! - get a word in edgewise.
The new plan is drawing some heat, to say the least. On another show this week, The Daily Drum on WHUR in Washington, DC, I was being interviewed (by my good friend, Harold Fisher), and a caller from Maryland called in to say that he thought the plan was a bad idea. He said he had been responsible with his mortgage... why should he have to pay for someone who wasn't?
Let me clarify some very important points:
1. The Homeowner Affordability and Stability Plan is designed to assist BOTH homeowners who are behind on their payments as well as those who have been responsible, but cannot refinance because they have seen the value of their house plummet in this current market.
2. The new plan does NOT reward speculators - investment properties are not eligible under this plan, and neither are mortgages that are not classified Fannie/Freddie-backed mortgages (a lot of the "no documentation/no money down/no income verification loans do not fall under this category).
3. There are a MULTITUDE of reasons that people fall into foreclosure. For someone to lump everyone who is losing their property into the "deadbeat" category is short-sided and irresponsible. People experience a wide variety of hardships - death, divorce, job loss, incarceration, medical issues to name a few. These factors and more can lead to major financial upheaval. There are those who have been irresponsible, yes, but it's not everyone's story.
This plan helps communities in ways that are fundamental to our survival through this crisis - it keeps people in their homes. Now, why should homeowners who currently feel slighted care about that? Because think of how slighted you will feel when the person who lives next to you abandons their home because they don't see any other option, and a meth lab moves in to the vacant property. A prostitution ring set up shop there. A group of squatters see that property as their new abode. YOUR property taxes increase because there is no one to pay the property taxes on the abandoned house and the county feels the need to spread the cost throughout the neighborhood.
Think of how upset you'll feel then.
The new plan is drawing some heat, to say the least. On another show this week, The Daily Drum on WHUR in Washington, DC, I was being interviewed (by my good friend, Harold Fisher), and a caller from Maryland called in to say that he thought the plan was a bad idea. He said he had been responsible with his mortgage... why should he have to pay for someone who wasn't?
Let me clarify some very important points:
1. The Homeowner Affordability and Stability Plan is designed to assist BOTH homeowners who are behind on their payments as well as those who have been responsible, but cannot refinance because they have seen the value of their house plummet in this current market.
2. The new plan does NOT reward speculators - investment properties are not eligible under this plan, and neither are mortgages that are not classified Fannie/Freddie-backed mortgages (a lot of the "no documentation/no money down/no income verification loans do not fall under this category).
3. There are a MULTITUDE of reasons that people fall into foreclosure. For someone to lump everyone who is losing their property into the "deadbeat" category is short-sided and irresponsible. People experience a wide variety of hardships - death, divorce, job loss, incarceration, medical issues to name a few. These factors and more can lead to major financial upheaval. There are those who have been irresponsible, yes, but it's not everyone's story.
This plan helps communities in ways that are fundamental to our survival through this crisis - it keeps people in their homes. Now, why should homeowners who currently feel slighted care about that? Because think of how slighted you will feel when the person who lives next to you abandons their home because they don't see any other option, and a meth lab moves in to the vacant property. A prostitution ring set up shop there. A group of squatters see that property as their new abode. YOUR property taxes increase because there is no one to pay the property taxes on the abandoned house and the county feels the need to spread the cost throughout the neighborhood.
Think of how upset you'll feel then.
Monday, February 23, 2009
Swarm in Ft. Lauderdale Gets Rowdy... is Government Underestimating the Housing Crisis?
As I was picking up a bottle of water and a Fast Company magazine at the San Francisco airport this morning, I hear the news streaming the story about the housing "riot" in Ft. Lauderdale over the weekend. I couldn't pay fast enough... I wanted to find out more about the story!
According to the Sun Sentinel, approximately 4500 people showed up at the Housing Authority of Ft. Lauderdale when they announced that new Section 8 housing had become available. However, the agency completely underestimated the demand and only had 3000 applications ready. The application process shut down early and the police were called when the crowd "grew unruly".
Points to remember: 4500 people showed up BEFORE EIGHT IN THE MORNING to receive assistance. In actuality, people were lining up on Friday night in front of the building - the police had to cordon off the street and set up barricades due to the high demand. The Housing Authority had 3000 applications. They are quoted as saying that "it was a much larger crowd than anticipated...." and are unsure of how many applications actually got distributed. So... what happens now?
People got angry, to say the least. Ft. Lauderdale has been one of the cities that has been the hardest hit by the housing crisis (8th highest foreclosure rate in Florida - one out of every 182 homes in some state of foreclosure, according to RealtyTrac), and many of the people that are applying for assistance have been displaced by foreclosure. The Housing Authority distributed flyers and ran ads promoting this assistance, and then shut it down when they received a deluge of response. What is their plan of action to attend to the obvious need?
The need is great, and even that feels like a massive understatement. Based on this one example, is it possible that the government agencies - federal, state, and local alike - are underestimating the housing crisis, and the affect on all aspects of American homeownership?
According to the Sun Sentinel, approximately 4500 people showed up at the Housing Authority of Ft. Lauderdale when they announced that new Section 8 housing had become available. However, the agency completely underestimated the demand and only had 3000 applications ready. The application process shut down early and the police were called when the crowd "grew unruly".
Points to remember: 4500 people showed up BEFORE EIGHT IN THE MORNING to receive assistance. In actuality, people were lining up on Friday night in front of the building - the police had to cordon off the street and set up barricades due to the high demand. The Housing Authority had 3000 applications. They are quoted as saying that "it was a much larger crowd than anticipated...." and are unsure of how many applications actually got distributed. So... what happens now?
People got angry, to say the least. Ft. Lauderdale has been one of the cities that has been the hardest hit by the housing crisis (8th highest foreclosure rate in Florida - one out of every 182 homes in some state of foreclosure, according to RealtyTrac), and many of the people that are applying for assistance have been displaced by foreclosure. The Housing Authority distributed flyers and ran ads promoting this assistance, and then shut it down when they received a deluge of response. What is their plan of action to attend to the obvious need?
The need is great, and even that feels like a massive understatement. Based on this one example, is it possible that the government agencies - federal, state, and local alike - are underestimating the housing crisis, and the affect on all aspects of American homeownership?
Thursday, February 19, 2009
Single Mother of 14 Faces Foreclosure
Okay...
This morning, I am on a radio interview for a Richmond, VA morning talk show. Now, I have been on the show before, and the host and I always have really good banter about foreclosure issues. He asked me on this morning to talk about President Obama's new foreclosure prevention plan, and I go in thinking I'm going to be giving details about the benefits of the Homeowner Affordability and Stability Plan and an outline of the requirements.
But, no.
He starts by asking me if people like Angela Suleman are going to benefit from the plan - "irresponsible" people who do not deserve a bailout from the government.
Now, to be honest, as much as I follow foreclosure updates, I don't follow much else in regards to news. Too negative for me. I had heard some talk in the ether about this woman who just gave birth to octuplets when she already had 6 kids at home and no income to support all of these people, but I didn't pay much attention to it.
Now, I'm paying attention.
Apparently, the home in which she planned to raise this tribe of folks is in foreclosure - about $23,000 and 10 months behind on mortgage payments. The home is owned by her mother, and Angela has been residing there before and after the pregnancy. I have no idea what their financial situation is, or what arrangement she has with her mother to assist with the mortgage payments, but...
Is she kidding? Is she TRULY serious?
When I step up to defend the American homeowner, I sometimes get this kind of behavior thrown in my face by folks who see the homeowner as the base of the problem. Now, I'm not going to step DOWN from defending and supporting people who truly were misled and got in over their heads, but this is ridiculous. I'm too baffled to even be angry... and it truly isn't my job to judge. But I am trying to understand what, to me, looks like the textbook definition of irresponsibility - you have six children. Six YOUNG children. Instead of paying the mortgage on the place you are staying, you spend who knows how much money on fertility treatments, have EIGHT MORE CHILDREN, and now have to find a way to house an support all of these people that you brought into the world.
IS SHE SERIOUS? I mean... come on.
This morning, I am on a radio interview for a Richmond, VA morning talk show. Now, I have been on the show before, and the host and I always have really good banter about foreclosure issues. He asked me on this morning to talk about President Obama's new foreclosure prevention plan, and I go in thinking I'm going to be giving details about the benefits of the Homeowner Affordability and Stability Plan and an outline of the requirements.
But, no.
He starts by asking me if people like Angela Suleman are going to benefit from the plan - "irresponsible" people who do not deserve a bailout from the government.
Now, to be honest, as much as I follow foreclosure updates, I don't follow much else in regards to news. Too negative for me. I had heard some talk in the ether about this woman who just gave birth to octuplets when she already had 6 kids at home and no income to support all of these people, but I didn't pay much attention to it.
Now, I'm paying attention.
Apparently, the home in which she planned to raise this tribe of folks is in foreclosure - about $23,000 and 10 months behind on mortgage payments. The home is owned by her mother, and Angela has been residing there before and after the pregnancy. I have no idea what their financial situation is, or what arrangement she has with her mother to assist with the mortgage payments, but...
Is she kidding? Is she TRULY serious?
When I step up to defend the American homeowner, I sometimes get this kind of behavior thrown in my face by folks who see the homeowner as the base of the problem. Now, I'm not going to step DOWN from defending and supporting people who truly were misled and got in over their heads, but this is ridiculous. I'm too baffled to even be angry... and it truly isn't my job to judge. But I am trying to understand what, to me, looks like the textbook definition of irresponsibility - you have six children. Six YOUNG children. Instead of paying the mortgage on the place you are staying, you spend who knows how much money on fertility treatments, have EIGHT MORE CHILDREN, and now have to find a way to house an support all of these people that you brought into the world.
IS SHE SERIOUS? I mean... come on.
Tuesday, February 17, 2009
How to Stall Foreclosure: Ask the Bank to Produce the Note!
A few months ago, I wrote a post about how to stall foreclosure by asking the bank to produce the ORIGINAL mortgage note to prove the validity of their ownership. Now, the Associated Press has done a story on how homeowners across the country are using this tactic to save their homes.
See the story here: http://www.google.com/hostednews/ap/article/ALeqM5hLOuvy9fguykC2NydTDrkqqyybvQD96DHN5G0
The AP reports, "...homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess. During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage."
Some mortgage companies have electronic versions of documentation, and judges are accepting this as proof of the bank's ownership. But for those homeowners whose lenders do not have the original paperwork (which happens more than is realized), you can use this to force the bank to renegotiate your mortgage!
Read the article and see if this can work for you.
See the story here: http://www.google.com/hostednews/ap/article/ALeqM5hLOuvy9fguykC2NydTDrkqqyybvQD96DHN5G0
The AP reports, "...homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess. During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage."
Some mortgage companies have electronic versions of documentation, and judges are accepting this as proof of the bank's ownership. But for those homeowners whose lenders do not have the original paperwork (which happens more than is realized), you can use this to force the bank to renegotiate your mortgage!
Read the article and see if this can work for you.
Tuesday, February 10, 2009
Foreclosure Exposure Radio: Find Archives of Past Shows!
Thanks to the commentor who asked about the archives of past episodes of Foreclosure Exposure Radio!
I will update my blog shortly to link to the show page. Until then, the show can be heard every Wednesday at 3PM Eastern/12PM Pacific at http://www.foreclosureexposureradio.net. Archives of past shows ARE available on that page - just click the show title to hear and/or download an MP3!
This is great content to review - all about foreclosure basics and ten tips for saving your home.
More about Foreclosure Exposure Radio soon!
I will update my blog shortly to link to the show page. Until then, the show can be heard every Wednesday at 3PM Eastern/12PM Pacific at http://www.foreclosureexposureradio.net. Archives of past shows ARE available on that page - just click the show title to hear and/or download an MP3!
This is great content to review - all about foreclosure basics and ten tips for saving your home.
More about Foreclosure Exposure Radio soon!
Wednesday, February 4, 2009
Foreclosure Crisis: The Role of Illegal Aliens and Sub-Prime Loans
I do research daily on the foreclosure crisis to report back via this blog and my radio show on Voice America Business. Yesterday, as I was reading various blog comments, I came across this SHOCKING interview done with an industry insider about the role illegal aliens have played in the foreclosure/sub-prime crisis.
Read the article here: http://americandaily.com/index.php/article/431
This is a crime, on both the parts of the people who participated and the mortgage giants who allowed it to happen. Now, I have said before that I'm not big on pointing fingers - I am much more interested in creating solutions - but consider the finger pointed on this issue.
This also prompts me to do a series of discussions on how identity theft and foreclosure are linked. Stay tuned!
Read the article here: http://americandaily.com/index.php/article/431
This is a crime, on both the parts of the people who participated and the mortgage giants who allowed it to happen. Now, I have said before that I'm not big on pointing fingers - I am much more interested in creating solutions - but consider the finger pointed on this issue.
This also prompts me to do a series of discussions on how identity theft and foreclosure are linked. Stay tuned!
Wednesday, January 28, 2009
The Launch of Foreclosure Exposure Radio on Voice America Business!
Do you know the do’s and don’ts when it comes to solving their personal foreclosure crisis in this current economy? With over 2,700 foreclosures occurring daily, what can homeowners do to ensure the housing crisis doesn’t hit home?
Tune into Foreclosure Exposure Radio on the Voice America Business Chanel!
Carla Douglin, national foreclosure prevention expert and author, will define several confusing foreclosure terms, break down the multi-faceted foreclosure process, and explore step-by-step solutions that homeowners can implement IMMEDIATELY to save their home or credit. Listen in to discover and demystify the latest foreclosure news and events, and understand what it means to you, the homeowner.
That’s right… this show is for YOU. Everything we discuss is designed to help you not only face foreclosure issues, but CONQUER them! We will delve deep into all aspects of foreclosure – not just the financials, but the emotional as well! – and provide solutions and advice rarely heard.
Tune in to Foreclosure Exposure Radio each Wednesday at 3PM Eastern/12PM Pacific and get the facts!
Tune into Foreclosure Exposure Radio on the Voice America Business Chanel!
Carla Douglin, national foreclosure prevention expert and author, will define several confusing foreclosure terms, break down the multi-faceted foreclosure process, and explore step-by-step solutions that homeowners can implement IMMEDIATELY to save their home or credit. Listen in to discover and demystify the latest foreclosure news and events, and understand what it means to you, the homeowner.
That’s right… this show is for YOU. Everything we discuss is designed to help you not only face foreclosure issues, but CONQUER them! We will delve deep into all aspects of foreclosure – not just the financials, but the emotional as well! – and provide solutions and advice rarely heard.
Tune in to Foreclosure Exposure Radio each Wednesday at 3PM Eastern/12PM Pacific and get the facts!
Tuesday, January 27, 2009
Moving In with Family or Friends After Foreclosure
The livelihood of Americans has been affected dramatically by the housing crisis. After families have been displaced by foreclosure, many people have no other choice but to move in with family or friends. This will change the family dynamic drastically over the next few years, and has the possibility of both positive and negative affects over the long term.
On the negative side: No matter how much we love our friends and family, there can be deep emotional regret after foreclosure that can taint the household mood. Not only did you just lose the house that you loved, but you are moving into someone else's house, living by their rules and according to their schedule, and feeling that you could be a burden, no matter how sincere their offer to let you stay. This is the time to watch your own mood to ensure you do not slip into a depression or anything that looks like a "poor me" mode - instead, use this as an opportunity to reset and rebuild.
On the positive side: This gives family and friends a great opportunity to change the family dynamic. Homeowners who have had to deal with foreclosure often feel isolated - this is an opportunity to pull together to share responsibilities, feelings, and obligations. People coming together in a time of need is what community is all about, and financial education can be a tool that can further the position of not only the affected person, but everyone in the new household. Get together to create a new financial blueprint for the new household, and you will see how everyone involved can prosper.
This is a time where American communities must pull together to make it through this catastrophe. Do not be ashamed to reach out for help, and, if someone reaches out to you, lend a hand any way you can. If you need to move in with a parent, brother, friend or relative during the crisis, take advantage of the situation by making a concrete plan, including a timeline, to get you and yours back on your feet. Examine your finances, pull your latest credit report, make a spreadsheet of your debts, and put a plan into action.
Most of all, thank the person who took you in. Acknowledge the blessing, and be thankful for those who are there to help.
On the negative side: No matter how much we love our friends and family, there can be deep emotional regret after foreclosure that can taint the household mood. Not only did you just lose the house that you loved, but you are moving into someone else's house, living by their rules and according to their schedule, and feeling that you could be a burden, no matter how sincere their offer to let you stay. This is the time to watch your own mood to ensure you do not slip into a depression or anything that looks like a "poor me" mode - instead, use this as an opportunity to reset and rebuild.
On the positive side: This gives family and friends a great opportunity to change the family dynamic. Homeowners who have had to deal with foreclosure often feel isolated - this is an opportunity to pull together to share responsibilities, feelings, and obligations. People coming together in a time of need is what community is all about, and financial education can be a tool that can further the position of not only the affected person, but everyone in the new household. Get together to create a new financial blueprint for the new household, and you will see how everyone involved can prosper.
This is a time where American communities must pull together to make it through this catastrophe. Do not be ashamed to reach out for help, and, if someone reaches out to you, lend a hand any way you can. If you need to move in with a parent, brother, friend or relative during the crisis, take advantage of the situation by making a concrete plan, including a timeline, to get you and yours back on your feet. Examine your finances, pull your latest credit report, make a spreadsheet of your debts, and put a plan into action.
Most of all, thank the person who took you in. Acknowledge the blessing, and be thankful for those who are there to help.
Monday, January 26, 2009
3.1 MILLION Foreclosure Filings in 2008!
Hello, dear Reader!
Been on travel for a while and have neglected my blog, but now we're back... and oh, how the news has packed a wallop!
First and foremost, the inauguration of our new President was one of the most exciting events in history! You could FEEL the energy of change in the air, and the way America celebrated was truly heartwarming and inspiring. The most important thing to remember, however, is that actual change takes time, planning, and commitment, so not everything is going to turn around TOMORROW. Let's watch and see how the new Administration handles the crisis. I believe that we will see positive changes in the housing market over the coming period, but that period may take years, and we should all be prepared for that.
As Obama's team initiates new legislation regarding the housing market, I will report it here and accept your comments!
Now, onto the big news.... 3.1 MILLION foreclosure filings in 2008!!! WHAT?
Now, I think we all knew it would be big, but that is an 81% increase from 2007, and a 227% increase from 2006! This is very telling - and even MORE telling is the fact that the 3.1M filings were on 2.3M homes. That means that several hundred thousand homes received MORE THAN ONE foreclosure filing... families faced the foreclosure block more than once.
This, however, doesn't even come close to the number of homes who JUST pulled it out in time - the number of families who came close to the foreclosure filing but were able to scrape the necessary funds together at the last moment. Those numbers are harder to track - the households that are living paycheck to paycheck and have more month at the end of the money.
This is a heartbreaking phenomenon!
Several states have initiated foreclosure moratoriums to slow the tidal wave, which affected last year's numbers. Fannie Mae and Freddie Mac have extended the holiday moratorium through the end of January, and one of Obama's talking points has been to institute a nationwide 90-day moratorium to assist homeowners in distress. You have read earlier posts from me discussing the importance of education throughout the stay, so I would urge homeowners to be prepared for that. If you are in a state that has enacted a moratorium, or if you have a Fannie/Freddie-backed loan, don't take this as a time of rest - this is really the time to be MORE diligent and rectify the financial situation that has caused the missed housing payments.
Remember - education is the key!
Been on travel for a while and have neglected my blog, but now we're back... and oh, how the news has packed a wallop!
First and foremost, the inauguration of our new President was one of the most exciting events in history! You could FEEL the energy of change in the air, and the way America celebrated was truly heartwarming and inspiring. The most important thing to remember, however, is that actual change takes time, planning, and commitment, so not everything is going to turn around TOMORROW. Let's watch and see how the new Administration handles the crisis. I believe that we will see positive changes in the housing market over the coming period, but that period may take years, and we should all be prepared for that.
As Obama's team initiates new legislation regarding the housing market, I will report it here and accept your comments!
Now, onto the big news.... 3.1 MILLION foreclosure filings in 2008!!! WHAT?
Now, I think we all knew it would be big, but that is an 81% increase from 2007, and a 227% increase from 2006! This is very telling - and even MORE telling is the fact that the 3.1M filings were on 2.3M homes. That means that several hundred thousand homes received MORE THAN ONE foreclosure filing... families faced the foreclosure block more than once.
This, however, doesn't even come close to the number of homes who JUST pulled it out in time - the number of families who came close to the foreclosure filing but were able to scrape the necessary funds together at the last moment. Those numbers are harder to track - the households that are living paycheck to paycheck and have more month at the end of the money.
This is a heartbreaking phenomenon!
Several states have initiated foreclosure moratoriums to slow the tidal wave, which affected last year's numbers. Fannie Mae and Freddie Mac have extended the holiday moratorium through the end of January, and one of Obama's talking points has been to institute a nationwide 90-day moratorium to assist homeowners in distress. You have read earlier posts from me discussing the importance of education throughout the stay, so I would urge homeowners to be prepared for that. If you are in a state that has enacted a moratorium, or if you have a Fannie/Freddie-backed loan, don't take this as a time of rest - this is really the time to be MORE diligent and rectify the financial situation that has caused the missed housing payments.
Remember - education is the key!
Tuesday, December 16, 2008
Do You Know What Sub-Prime Means?
According to the Center for Economic and Entrepreneurial Literacy, many people do not understand what the term "sub-prime" means. It's a term that is frequently heard in the media and read in the newspapers, and is often sighted as the cause for the economic crisis.
But do you understand what it means?
The report shows that:
Econ4u.com states, "...although there is no standardized definition, in the U.S. subprime loans are usually classified as those where the borrower has a credit score below a particular level, e.g. a FICO score below 660." This definition does vary per lender, so subprime qualifications can change. This is just one definition that needs to be understood. Terms like "short sale", "modification", "variable rate", and "prepayment penalty" should also be explored, especially if you have a mortgage where these terms apply.
It is crucial and critical that financial education is not only established in American households, but is made a staple. If we don't take the necessary steps to understand more about the crisis and ways to avoid it, the next wave of foreclosures could severely affect your everyday life.
But do you understand what it means?
The report shows that:
- 54% of respondents could not identify what a subprime mortgage was.
- 56% of respondents could not identify FICO score as the most important factor in getting a loan.
- 65% of respondents could not identify what would remain if you subtracted 25% from 8. One in three respondents could not identify what 1% of 50,000 was.
- 75% did not know that when in need of short-term emergency cash, bouncing a check costs more than wire transfers, credit card advances, and short-term payday loans.
- Half of respondents have overdrafted their checking account at one time, while a third of respondents have paid a bill late
- in the past year.
- 35% of respondents admitted to not having a family or personal budget that would allow them to conceivably eliminate their credit card debt by the end of 2009.
Econ4u.com states, "...although there is no standardized definition, in the U.S. subprime loans are usually classified as those where the borrower has a credit score below a particular level, e.g. a FICO score below 660." This definition does vary per lender, so subprime qualifications can change. This is just one definition that needs to be understood. Terms like "short sale", "modification", "variable rate", and "prepayment penalty" should also be explored, especially if you have a mortgage where these terms apply.
It is crucial and critical that financial education is not only established in American households, but is made a staple. If we don't take the necessary steps to understand more about the crisis and ways to avoid it, the next wave of foreclosures could severely affect your everyday life.
Friday, December 12, 2008
Homeowners In Trouble: Hold On Until Obama Administration
Yes, I voted for Obama, and am very proud of that choice. However, whether you voted for him our not, the reality is that his economic team is working to create a solution to the mortgage crisis, when the current administration is treading water until they get out of office.
In a recent New York Times article, a White House contact was quoted as saying, “We’re done in two months. The next administration can try to find a way out of that maze.”
Even though we have all recognized this as a statement of the true feelings of the current Administration, it makes me sick to see it in black and white. Homeowners are struggling - not just those who made poor loan decisions, either. EVERYONE has been affected by this housing market crash, and for the Administration to wipe its hands and say, "oh well! Too bad!" is a slap in the face to all American homeowners.
Okay. I'm off the soapbox for now.
Homeowners... HOLD ON. It's time to go back to the tried-and-true mindset of "buy-and-hold". There are rocky times ahead, and we will see the landscape worsen before it gets better. But do ALL that you can to stay in your homes. The values will increase in a few years, so holding on is the best plan of action.
Get CREATIVE. Think outside the box about how to keep your property and make your mortgage payments. Can you rent out a room in your home? For people in DC, Maryland, and Virginia... can you rent out your property for the Inauguration to earn cash to put either towards your arrears or savings cushion? How can you save money and beef up your income? Have you considered a home-based internet business?
I do not know what the next Administration's concrete plans are for homeownership preservation. However, I do know that it's time for homeowners to start taking action for themselves. The new Administration's plan may not save your home. What can YOU do to save your home and your credit?
In a recent New York Times article, a White House contact was quoted as saying, “We’re done in two months. The next administration can try to find a way out of that maze.”
Even though we have all recognized this as a statement of the true feelings of the current Administration, it makes me sick to see it in black and white. Homeowners are struggling - not just those who made poor loan decisions, either. EVERYONE has been affected by this housing market crash, and for the Administration to wipe its hands and say, "oh well! Too bad!" is a slap in the face to all American homeowners.
Okay. I'm off the soapbox for now.
Homeowners... HOLD ON. It's time to go back to the tried-and-true mindset of "buy-and-hold". There are rocky times ahead, and we will see the landscape worsen before it gets better. But do ALL that you can to stay in your homes. The values will increase in a few years, so holding on is the best plan of action.
Get CREATIVE. Think outside the box about how to keep your property and make your mortgage payments. Can you rent out a room in your home? For people in DC, Maryland, and Virginia... can you rent out your property for the Inauguration to earn cash to put either towards your arrears or savings cushion? How can you save money and beef up your income? Have you considered a home-based internet business?
I do not know what the next Administration's concrete plans are for homeownership preservation. However, I do know that it's time for homeowners to start taking action for themselves. The new Administration's plan may not save your home. What can YOU do to save your home and your credit?
Thursday, December 11, 2008
If I Was the "Mortgage Czar"...
Yesterday, I was interviewed on Financial Lifeline Radio. It was a great segment - 20 minutes worth of questions about the current market conditions, foreclosure advice, and helpful hints. In the middle of the interview, however, one of the hosts asked me a completely unexpected question... "If you were appointed 'Mortgage Czar' and had to oversee this foreclosure problem, what would you do?"
Wow! What an unexpected, fantastic question! Thankfully, they went to commercial break, and I had 60 seconds to think about what I would do. No pressure - just give an intelligent, fully-formed answer to a complex national issue to a syndicated audience. No pressure at all!
The answer came easier to me than expected, however, and I didn't flub on national radio. If I were USA's Mortgage Czar, here's what I would do:
I would institute a foreclosure moratorium. Yes, I know I have been very vocal about moratoriums on this blog in the past, but I believe that a 6-month moratorium would allow all involved to implement an actual solution. Before the moratorium, however, I would pull together lenders, servicers, community action groups, and housing counseling agencies to create an outreach plan unlike any before it. I would have inbound call centers turned into outbound call centers, and their sole focus would be to contact every homeowner and review their situation and options. The housing counseling agencies would be focused on developing courses, educational materials, and internet forums for homeowners to get educated about what to do. Homeowners would be on the hook, too - if your mortgage was late before the moratorium, you would be required to go to foreclosure prevention training, then work with a counselor and your servicer during the stay in order to have your mortgage modified.
And every single household would get a copy of The Foreclosure DVD and Workbook.
That's what came to me during the commercial break. There's much more that can be fleshed out, but that's a good start. My next couple of posts will review this in detail. I'm having fun with my imaginary Mortgage Czar position!
If I can come up with this, just think of what our government can do if they put their minds to it...
Wow! What an unexpected, fantastic question! Thankfully, they went to commercial break, and I had 60 seconds to think about what I would do. No pressure - just give an intelligent, fully-formed answer to a complex national issue to a syndicated audience. No pressure at all!
The answer came easier to me than expected, however, and I didn't flub on national radio. If I were USA's Mortgage Czar, here's what I would do:
I would institute a foreclosure moratorium. Yes, I know I have been very vocal about moratoriums on this blog in the past, but I believe that a 6-month moratorium would allow all involved to implement an actual solution. Before the moratorium, however, I would pull together lenders, servicers, community action groups, and housing counseling agencies to create an outreach plan unlike any before it. I would have inbound call centers turned into outbound call centers, and their sole focus would be to contact every homeowner and review their situation and options. The housing counseling agencies would be focused on developing courses, educational materials, and internet forums for homeowners to get educated about what to do. Homeowners would be on the hook, too - if your mortgage was late before the moratorium, you would be required to go to foreclosure prevention training, then work with a counselor and your servicer during the stay in order to have your mortgage modified.
And every single household would get a copy of The Foreclosure DVD and Workbook.
That's what came to me during the commercial break. There's much more that can be fleshed out, but that's a good start. My next couple of posts will review this in detail. I'm having fun with my imaginary Mortgage Czar position!
If I can come up with this, just think of what our government can do if they put their minds to it...
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