When is Foreclosure

Ways to Work a Foreclosure Rental

2008-08-07T19:47:00.000-07:00

With nationwide foreclosures on the rise, many investors are looking to pick up properties for less than market value. A recent NuWire poll showed investors consider foreclosed properties a greater opportunity than any other type of alternative investment. This can mean steady income for you when turning New York bank foreclosures into rental properties. Kellman attributed that trend to significant appreciation in the housing market this decade, where homeowners bought second or third or fifth properties with hopes of renting them out.

Most often the properties are in disrepair, dirty and littered with unwanted household items. The bank has to clean, repair and then discount the home to put it on the market. I've heard anecdotal evidence that former homeowners have trouble qualifying for rental properties if a foreclosure appears on their credit reports. But if I were a lessor, I'd consider the (typically) lower rent vs. Sadly, many landlords have failed to maintain property that they know they'll soon lose; and increasingly, banks and even new, institutional owners have let foreclosed properties lapse into disrepair (bankers and offshore trusts make poor landlords). You, of course, can't guarantee how the new owner will treat the property, but you can make sure that your tenants have no legitimate reason to withhold rent now by continuing to maintain the property.

A renter may not have any warning that the property they are living in is going through foreclosure until they receive notice of eviction. The new property owner (typically the mortgage lender) can evict the occupants with as short as 3 days notice in some states. When a house is foreclosed, the renter becomes a tenant-at-will and has a right to due process for evictions. The lender has to go through the eviction process either in a housing court or district court. Your good example can help change public perception of dog-owning renters and may help prevent other families from losing their pets to foreclosure.

No renter should end up having 3 days to move out of their home because their landlord (while still collecting the rent) lost the house to foreclosure. Not to mention that if a renter gets evicted due to the house being foreclosed, the eviction can end up on the renter's credit report, making the renter look like a deadbeat, even though they got evicted through no fault of their own.

Owners of rental property are wary of an individual that has just defaulted on a mortgage - and getting credit approval for a rental home is often a challenge itself; with so many homes vacant and are unable to be placed on the rental market, homes for rent are becoming harder to find, and are often priced higher than what the individual was paying on their mortgage - and it’s very often for far less of a home and some that were once rented out to the poorest of Americans that now command prices that are equal to or higher than that of a comparable home just two or three years ago.

More on How to Rent a Foreclosure

2008-05-30T06:58:00.000-07:00

New owners evict existing tenants because they believe that vacant properties are easier to sell. Common sense suggests otherwise. Moreover a great many of these defaulted loans were not made to home owners, but to investors looking to flip properties in get-rich-quick schemes. Why should they be given protection when they probably lied about their income in the first place?

And the need for more rental properties can energize urban development, because higher commuting costs have translated into growing demand for rentals that are near urban employment centers rather than in outlying suburbs. Lenders, in many instances, can accomplish this by controlling the rental income stream on commercial properties. By far the best mechanism to control the rental income is through the use of a court-appointed rent receiver.

All they need to cash flow the properties is about $1,000 a month. And what they're doing is planning on holding for a few years, then selling when the market improves. Many properties around Eastern Michigan University are rental with certain neighborhoods of mixed single family and multi-unit. Sadly, many landlords have failed to maintain property that they know they'll soon lose; and increasingly, banks and even new, institutional owners have let foreclosed properties lapse into disrepair (bankers and offshore trusts make poor landlords). You, of course, can't guarantee how the new owner will treat the property, but you can make sure that your tenants have no legitimate reason to withhold rent now by continuing to maintain the property.

Make sure you understand the landlord tenant laws in your state and have your rental/lease agreements prepared by or reviewed by a good real estate attorney. If there has been a foreclosure, don’t pay rent to the old landlord. Rather, try to find out who now owns the building. I did talk to the landlord. He said the foreclosure proceedings were all news to him, that he hasn't been served with any papers.

If the tenant doesn't move within the 30 days, the landlord may file an unlawful detainer to legally oust the tenant. That is the eviction that will show up on the tenant's credit record. The landlord is only required to do whatever your lease states--so read it carefully, and keep in contact with your landlord to be kept abreast of the latest news. The offer of more money is a very powerful incentive for landlords, as they will be able to use the extra resources for current projects and investments. Extra cash in the form of a security deposit or extra rent will usually help the landlord see things from the foreclosure victims' perspective.

Housing Starts Post Unexpected Increase

2008-05-16T05:51:00.000-07:00

Lately, there have been great signs in the news about a slow turn around in the home market. The latest out this morning that home construction increased unexpectedly in April and showed surprising vigor - something we have not seen in the past two years. It's the biggest increase in home construction - a great indicator.

Building permits rose as well and signals optimism for the anything related to housing. Exact figures show that housing starts increased 8.2% to a seasonally adjusted 1.032 million annual rate.

But we find that these figures are from a higher by a surge in apartment building construction, the Commerce Department said. If so, maybe this is the whiplash effect from so many foreclosures. People have to live somewhere and apartment construction is going to accommodate them.

Starts plunged by a revised 13.8% in March to 954,000. Economists expected April starts to drop by 1.4% to a 934,000-unit annual rate - but they didn't and we are happy for any news of this sort.

Government Help with Foreclosures

2008-05-12T15:30:00.001-07:00

We all know foreclosures are devastating and costly both to property owners and lenders. And I believe that's why government should do all it can to encourage voluntary loan adjustments. Some local governments want to ensure that lending rules are broadly enforced, so they are engaging in a program with other federal and state agencies to conduct consumer compliance reviews of nondepository lenders and mortgage brokers. Now, these reviews are targeting underwriting standards, risk-management strategies, and compliance with consumer protection laws and regulations. Lenders have an obligation to ensure that their standards accurately measure whether borrowers can afford their mortgage. But read on.

The steep rise in foreclosures and subprime lenders filing for bankruptcy has had a negative impact on the once popular subprime loan. As the subprime loans are disappearing, the old FHA loan is now making a comeback. But dishonest or "predatory" lenders do exist and engage in lending practices that increase the chances that a borrower will lose a home to foreclosure. Beware especially of those who make high risk second mortgages. The savings you earn, whether you're buying bank foreclosures or lender REO homes, also represent a larger margin for profit if you're a foreclosure investor! Therefore buying a bank foreclosure means not only great initial savings, but bigger chances for profit on sales in the future!

Ben Bernanke has suggested for lenders to give a break to distressed borrowers by lowering of some portion of the loan amount. A lower remaining principal will permit more manageable monthly mortgage payments for borrowers. Under Zandi's plan, lenders would compete at auction to sell their mortgages to the government at a discount. HUD often agrees to back loans given by private lenders. When the borrowers default on these loans, the difference is paid by the government and these houses become government foreclosures.

The federal government [will] be repaid on the zero-interest, nonrecourse loans. Loans for homeownership properties would need to be repaid within two years, while loans used to create rental housing would have a maximum loan period of five years. Contributing factors such as temporary job loss, medical illness or injury, marital difficulties, forces of nature, unforeseen repairs, or even a death in the family can cause unfortunate financial hardship. Fortunately, there is help available for you to avoid foreclosure and to save your home. Lawmakers in Michigan, for example, set up two loan funds and a statewide education campaign. Maryland lawmakers extended the foreclosure process from 15 to 150 days, giving homeowners more time to work through their financial difficulties.

April foreclosures rose sharply in Denton County than any of the other 10 North Texas counties. Interesting, how the middle class (and as we have learned recently, lower class people that live with their middle class parents) complain about how the lower class get services to help them out. Keep in mind that many people (despite how much they make, black, white, Asian, etc) are one paycheck away from being on welfare. The growing market for foreclosed homes is creating some incredible deals, even if you've never considered buying foreclosed home before. Locate houses from the convenience of your own home computer with a nation-wide database of foreclosed homes and listings complete with addresses, prices, full contact information and photos.

But work with a real estate agent, broker or servicing representative to submit an offer or bid. People will lose their homes, homelessness will increase and a drag on social services will ensue. We as a society have become reckless beyond comprehension.

Getting Someone to Take over Payments on Foreclosure

2008-05-12T15:04:00.000-07:00

The Notice of Default usually details what you need to do in order to bring your loan current the amount of principal and interest and late fees you will now owe. As usual, people are a day late and dollar short. Late charges, fees, and penalties are tacked on to the monthly payment already past due. During this phase a lawyer or official trustee will take over the case and should contact the homeowner to resolve the problem and get the payments caught up and back on track.

The subprime mortgage crisis has been on the tip of everyone's tongue lately, and the housing market has cooled. Rather than being discouraged by this, smart investors realize that this is the time for deals to be had. Some lenders will allow you to keep your original loan if you can make up the missing payments plus any late fees and legal charges. Others will insist you refinance with another lender. If you do find that you are late in making your mortgage payments then you need to be able to stand up for your rights when it comes to dealing with your mortgage company. In many situations a foreclosure could have been avoiding but the person on the receiving end decided to go into hiding, not pick up the phone, ignore the letters coming in and so on.

If a borrower is later than 16 days with the mortgage payment from the day it is due, the lender is required to send the borrower a notice in writing. The notice must be mailed by the 20th day and clearly state how much the borrower owes (to include late fees). Under no circumstances should you attempt collection on a late payment yourself. Compliance with all state and federal laws while attempting to collect a delinquent loan is not trivial. Once you are in trouble, however, it is probably too late to invoke this solution.

If you ever want to buy the home back, the opportunist will only sell it back at an inflated price. Many times we have had homeowners call days before the auction saying their financing did not go through, and then it's too late! Otherwise, there is a very real possibility that they might move out too soon or find out about the eviction too late. If they move out too soon, they will lose valuable time to save money for an emergency fund and repair your credit.

Foreclosure and Multi-family Homes

2008-04-04T19:08:00.000-07:00

Many people have created great long-term wealth and cash flow today by investing in multifamily properties. Are you thinking big apartment complexes? There are so many foreclosed properties that you are sure to get the right tools to start your investing. Most people think that buying foreclosed properties will leave you disappointed. Featuring really fantastic homes sold at very affordable prices, it is said Illinois foreclosure homes will exceed all your expectations.

All in all, buyers stand to gain considerable profit from these properties whether they purchase them for personal or investment purposes. With positive home appreciation values and low interest rates, buyers will never lose. Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

The largest listing of Illinois foreclosures can be found at NewForeclosureListings.com, as well as the most accurate information on the subject. Whether you are an investor, a first time buyer, in search of a cheap retirement home or any other type of buyer, you can find the Illinois foreclosures to make this goal a reality at NewForeclosureListings.com. An excellent Omaha foreclosure listings service provider can be found at www.foreclosureconnection.com. Here you will find current inventory with detailed property descriptions and full contact information. The remaining estimated 7.3 percent of foreclosure activity was comprised of commercial; land, mobile home, multi-family and miscellaneous listings.

Illinois, California, North Dakota and Colorado each reduced the number of foreclosure filings by more than 20 percent overall in April 2007. Hawaii topped the list at 29.2%, followed by Florida at 13.9% and California at 10.4%. Rounding off the top five were Massachusetts (10.2%) and Alaska (7.8%). Browse from 285 real estate listings to view residential and commercial foreclosure properties in Chico, California.

Foreclosure and Renting

2008-04-03T20:42:00.000-07:00

Can you rent out your home when it is in foreclosure? A ten to twenty percent gain on that over a few months, then resell is a better investment right now. Some live off and depend on our profits, it is our livelihood. They convince you to sign a quitclaim deed by telling you that they'll let you pay a reduced monthly "rent" payment. This seems like a perfect solution because it supposedly frees up more funds for your other bills. Not only do these folks have to move out, if they paid first and last month's rent, plus a security fee, they likely won't get that money back.

One of those responsibilities is to pay your monthly maintenance expenses, real estate taxes and other fees associated with the timeshare. Homes in Detroit's "better neighborhoods" garner $850 a month, she writes. Many hope to later sell the homes and are betting that the local market will improve within the next five to 10 years. Thus, in this case, the thirty day notice starts to run from the 10th of the month. A private landlord is not required to give a reason for refusing to renew a lease unless the lease so requires.

Because the courts are not involved in foreclosures it is relatively easy to go through the whole process in a few months. Since the Lessee does not actually own title to the property it is not very difficult for the Lessor (owner) to continue to collect payments from the tenant while not making mortgage payments at the same time. Right now, payment "caps" are keeping payments in check each month, but this will change when these loans fully reset. Either way, the situation is not what some wanted, since they just moved a few months ago, and weren't expecting to go through another move so soon.

Which is fine. A party bought two properties in the past 3 months and are renting them out. The folks walking away in Foreclosure need a place to live and they have jobs and income they just need lower payments and they had their rentals. In the first six months of 2007, San Diego County had a record 2,896 foreclosures, compared to 445 during the first half of 2006, representing an increase of 551 percent. Unfortunately, San Diego is not the only county experiencing a high rate of mortgage foreclosures. These include a monthly cost less than a mortgage. You can usually move more easily should you decide to or need to change locations.

Upside Down in an Upside Down Market

2008-03-31T12:46:00.001-07:00

You see the statistics for real estate delinquencies and foreclosures are growing on a weekly/monthly basis. Most communities, counties, and states now find themselves having more of both than at any time since the Great Depression of the 1930s. Foreclosures are high and could still beat last year's numbers. Harris County, for example, racked up 2,219 foreclosures during the first two months of the year.

Organizers with the Michigan campaign for a moratorium on foreclosures, evictions and utility shut-offs demonstrated on March 20 at the McNamara Federal Building in downtown Detroit. Jennifer Granholm to declare a state of economic emergency and impose a moratorium on home foreclosures. Grassroots people’s struggles against the mortgage lenders, bankers and bosses, such as those being waged by organizations like MECAWI in Detroit, can and must be replicated in cities and towns across the country. The capitalist bankers and bosses are pushing us from our homes.

Whether it's because homeowners were stuck in a negative equity situation, or took out a bad loan, there are plenty of luxury homes on the market ripe for the picking. Listings were gathered from RealtyTrac and REOTrans, two firms specializing in foreclosure and real estate owned properties. Also many homeowners continually tapped into their equity and overextended themselves into not being able to pay their mortgage, coupled with an interest only 1st and 2nd - but they have 2 nice BMWs in the driveway. It is a personal option to live within means, but to live beyond a reasonable budget is grossly ignorant and I have no empathy. Both support more counseling services for at-risk homeowners and stronger truth-in-lending rules.

Not to mention that declining property values are wiping out any equity, often even leaving homeowners of many years suddenly owing more than their property is worth.

BlackRock, Highfields, and PennyMac - Hope

2008-03-24T17:49:00.000-07:00

It's funny, but BlackRock Inc and hedge fund Highfields Capital Management and putting some muscle behind a company named Private National Mortgage Acceptance Company - call it PennyMac.

These plan to get money from private investors. I just wonder who? Who right now believes that buying distressed mortgages, which is what they plan to do, is a good thing?

Why this is good for you?

PennyMac, worth following, will also help borrowers restructure their loans so that they can avoid foreclosure. What is of interest is that PennyMac is coming together at a time when mortgage default rates - say foreclosures - are at an all-time high.

Also interesting is that the credit problems citizens are facing in America are affecting other markets in the world. I still am not calling it a recession, yet.

Hang in there. These moves are going to make it better... for you.

How Far Have Home Sales Fallen?

2008-01-24T07:33:00.000-08:00

Existing-home sales fell 2.2% to a 4.89 million annual rate in December, according to the National Association of Realtors. The median home price also declined to $208,400 in December, down 6% from $221,600 in December 2006. Inventories of homes fell 7.4% at the end of last month to 3.91 million available for sale, which represented a 9.6-month supply at the current sales pace. Sales of single-family existing homes fell by 13% in 2007, the biggest drop in 25 years.

Earlier Thursday, the Labor Department said the number of U.S. workers filing new claims for unemployment benefits fell last week for a fourth-straight week, suggesting that a resilient labor market at the start of the year might keep the economy from sliding into recession.

From the Wall Street Journal

Bush Plans to Freeze Subprimes

2007-12-05T13:29:00.000-08:00

Have you been praying for relief? Finally, the Bush administration should announce Thursday an arrangement of sorts with the mortgage industry.

The plan is to freeze interest rates for some subprime mortgages for 5 years. The plan includes a provision to fast track some borrowers toward refinanced loans.

The Bush agreement also will allow state and local governments to use more tax-exempt bond programs in order to assist with funding re-financings.

Many have been praying and it appears there is some relief in site. Tomorrow's plan comes amid concerns about rising home-foreclosure rates.

Is Fannie Mae Going Broke?

2007-12-04T20:17:00.000-08:00

We've reported on the stance of Fannie Mae before and how the slippery slope of the credit market really is. And to know someone cares out there, about your Fannie Mae mortgage - well, that's downright nice.

Now, if you're an investor in Fannie Mae; you won't like this post.

But if you're like the majority, this comes are great news. Fannie Mae today announced that they are going to raise capital so that they will have more money to remain solvent.

They are also going to cut dividends. That hurts their shareholders, but these are desperate times, no?

Chief Executive Daniel H. Mudd said that selling off stock to raise some $6 billion is a step in the right direction.

Is the end in sight?

Freddie Mac Takes a Dent from Mortgage Credit Woes

2007-11-20T05:39:00.000-08:00

Just announced, Freddie Mac's net loss for the 3rd quarter more than doubled to $2.03 billion, this based on higher credit-loss provisions and the marking to market of securities. Why? The housing-market weakness and the deterioration of mortgage credit is to blame. The Freddie Mac said the fair market value of its net assets dropped by $8.1 billion in the quarter.

And now, Freddie Mac hired an adviser to study its capital-raising options. They say they are considering cutting its dividend by half. Accordingly, shares fell 6% in premarket trading.

When Will the Subprime Foreclosure Housing Recession End?

2007-10-25T20:03:00.000-07:00

Did you know they would plunge so far? The home sales numbers for September, that is. And October home sales are going to be worse. There are a few home sales, but nothing like the fury before the subprime mortgage collapse. The home sales for September 2007 were the lowest since the National Association of Realtors started keeping track back in 1999. And giant Re/Max International tells us that it will indeed get worse.

When is the Housing Market Supposed to Get Better?

It's called a housing recession. But Re/Max says it will get worse before it gets better. Wednesday they released figures that show October 2007 home sales are down sharply from where they were last year - at least in cities it monitored - Seattle and Baltimore. Re/Max International claims they're down 44 percent from 2006.

What Areas Are Hardest Hit by the Subprime Foreclosure Recession?

September showed to be the worst month in eight years and off by 19 percent from 2006. According to the NAR, they haven't seen anything this bad but know that it won't get better anytime soon. Areas hit worst are California, Florida, and the Carolinas. Foreclosures are happening to everyone, but classified ad sections show announcement of foreclosures by mainly Spanish surnames, followed by anglo saxon.

Where is the Best Place to Get Foreclosure Information?

Scott Anderson of Wells Fargo says since states such as California and Florida had such booms, it is natural to see the reverse happen now that the market has basically imploded. He claims we will have price declines similar to the Great Depression - through 2008. Some say the Feds will cut the prime rate next week when they meet. Another Fed rate cut is expected in December.

The best place for foreclosure information is the Internet, followed by classified ads in local papers. Court houses carry foreclosure lists as well, but you may have to wait in line to see them as many are finding ways to make money on foreclosures.

How Much Did Mozilo Know? Countrywide SEC Investigation

2007-10-17T14:21:00.000-07:00

Countrywide Mortgage, you know, the ones on TV that have those commercials in nice fall colors that sometimes play twice with the same old guy making you feel all cozy - well they're in trouble. We reported on Greenpoint Mortgage going under back in August. Now Countrywide doesn't appear to be biting the bullet, but the CEO is in deep water because he traded some stock with insider knowledge.

The Securities and Exchange Commission opened an informal investigation this afternoon because Mr. Angelo Mozilo, the Chief Executive Officer sold at least $130.6 million in stock during the first half of the year. What do you suppose he knew?

A deputy director of the SEC, Walter Ricciardi, wouldn't comment on Countrywide, but said the agency will be looking deep into practices there. The SEC has already formed a "Subprime Working Group" back in January - so the word on the street is that Mozilo knew that the stock would tank and sold with that information.

Will the Foreclosures Affect Even Me?

2007-10-16T10:26:00.000-07:00

This credit market crisis we've been talking about here is serious, and you will probably be affected by it in very real ways - maybe from the local economy to possibly losing your job. Did you know that 20,000 jobs were lost in the mortgage industry in August 2007? The most significant impact we feel you will experience will be to your home - probably your most valuable possession.

How Will the Foreclosure Market Affect Me?

So how will the mortgage meltdown trickle down to affect you? Follow along - The base of the problem is that many, many homeowners have huge mortgages that they just really can't afford - these are mortgages they shouldn't have received in the first place - and they are being foreclosed on because of the now higher interest rates. It's true; foreclosures doubled in September when compared to last year.

Do They Still Offer ARM's?

Many people who took out mortgages in 2004 and 2005 got those adjustable-rate mortgages, or ARM loans, with the super low teaser rates. And now, with interest rates adjusting, the big mortgage payments are just too much for most. Some increases have been as much as 30 percent! Yes, that is a major deal that most can't handle. Many will lost the home because they can't keep up.

So what may happen that will affect you? If your neighbor has one of those "ARMs" and he can't refinance, he may go through foreclosure. That is bad for you because your home with so many homes in the area up for sale. These properties aren't selling because many people can't qualify for a mortgage. Lenders have dropped off the map, going out of business. And with tougher credit standards, it really does affect homes on the market.

Buying Homes as an Investment, Now Foreclosed

A neighbor here tells the story of how many investor types bought homes with the purpose of renting them out or quickly reselling them, but as the market slowed, they had no choice but to jump ship. What they do is simply stop communicating with the lender and move out of state. But this is bad for you because this causes additional homes to flood the already full market. With new homes on the market, your home will likely drop in value.

The market will affect you. If you are looking to buy a home, then timing could not be better for you. But whatever you do we recommend getting a fixed rate mortgage. If you do have an ARM and you plan to be in your home from 5 to 7 years, switch to a fixed rate as soon as possible. The adjustable part is why all this mess is happening and you don't want part of that.

If you own your own home, now might be a good time to get a home equity line of credit because as home prices drop, you want the credit line based on the value NOW, not when it may be worth less. If you don't use it - it won't cost you anything.

If I Foreclose, Can I Rent?

2007-10-12T05:24:00.001-07:00

If you think you can let your house foreclose, then look for a rental unit, you may be in for a surprise, according to Janet Merrill who is an attorney with the Massachusetts Justice Project. The mortgage mess is creating a new ripple in the rental market. And it only makes sense - people who own homes and rent them out are falling behind on mortgage payments.

These properties then go into foreclosure and foreclosure attorneys are telling us that many times the renters of these properties are being forced out. A letter from the bank holding the mortgage to the renters is often the first indication that something is wrong. The renters did nothing wrong - it's the owner of the property who can't pay the mortgage with the rental receipts because the mortgage has adjusted.

In Massachusetts alone, Janet Merrill says they get four or five calls each day of renters who have to leave their rental because the property is being foreclosed. Sick and tired of moving, some renters don't know where to turn.

But it's not just in Massachusetts. Judith Liben is a housing attorney at the Massachusetts Law Reform Institute. She thought she could get a better perspective on the situation because she had been told about the evictions in her state - so she called other lawyers across the country in the housing industry. What Judith Liben was told shocked her. From California, Nevada, New York and other areas - the same thing was happening.

Is there a way to rent my foreclosed house or property?

How did this mess happen? Well, we already know about the subprime mortgages and how when they adjust the holders simply can't get refinanced at a lower rate, or sell. Homes and apartments entering foreclosure were purchased by people as investments. And they were offered what is called a "teaser" low-rate mortgage designed to hold the properties a couple of years so the investor can then sell at a profit - before their "teaser rates" went up.

Of course, that never happened. The housing market is still depressed and investors can't sell. They can't afford the new adjusted mortgage payments, either. So the loans go into default.

What happens in many states - when the mortgage goes into foreclosure - the lease or rental agreement becomes void. Banks don't want renters in the property. It complicates matters for them. So they get between 3 and 30 days notice to get out. Few states have laws protecting renters in this situation - but it is few.

So what happens? Traditionally, banks have tried to evict renters. Then they try to sell the property as quickly as possible. But, as you know, nothing is selling. As a result, there are hundreds of homes and multifamily buildings in depressed areas sitting on the market - which are magnets for criminal activity. Abandoned homes - undesirables move right in a set up a place to sell drugs, etc. Not good.

With these homes now off the "rental" market, people have less inventory to choose from. There will be more renters than homes to rent so people begin to apply for subsidized housing. But those waiting lists are long and not likely soon. And then, even if you find a home to rent and move in - how will you know that won't be foreclose and you evicted, too?

When Will the Housing Market Get Better?

2007-09-22T13:23:00.000-07:00

Some economists have been predicting the housing market bubble bursting for a long time. They said the residential real estate downturn would happen. That's negative juju - and at the same time sort of asking for trouble. But there are facts to back up their thinking, and those facts now show that the problem in the housing market could get much, much worse.

Yale University economist Robert Shiller now says that the subprime, mortgage, credit, foreclosure mess could spiral into "the most severe recession since the Great Depression". That said, I'm searching Google to find what businesses did well during the depression, and I'm going to investigate. Might as well be prepared.

The Federal Reserve slashed the federal funds rate by half a point to 4.75 percent in response to the credit market mess. Shiller says that the loss of a boom mentality among you and I may bring a drop in consumer confidence. That's what I mean by bad juju. You and I have to keep the blinders on and keep believing. Instead, you end up on websites like this and begin to "spiral" into every story about the market being negative.

Shiller said that the loss of confidence poses a "significant risk" of a recession within the next year. How nice. But not everyone thinks doom and gloom. Peter Orszag, who directs the Congressional Budget Office said that things won't get that bad. So who do we believe? This is all a story of belief. Here's what we know:

A 20 percent drop in home prices over two years would reduce the U.S. economic growth by a half of a percentage point - well, annually to 1 and a half percentage points annually after three years - so Orszag calculates. The risk is elevated for sure, but don't go jumping off bridges just yet. Seems that there continues to be some economic growth nonetheless. Where is that Google search?

Shiller's report came Wednesday, just when the feds announced they would raise the portfolio caps for Fannie Mae and Freddie Mac as I reported yesterday. This is supposed to pump cash into the mortgage market. It should. But here's the current government thinking:

Those subprime mortages with the wild ARM's are concentrated among homes that didn't cost that much to begin with - say they. Low income people will be hit really hard by this correction. Shiller is calling for some sort of Consumer Product Safety Commission for lender institutions - to make sure those guys are on the straight and narrow. Will that happen? Not soon.

When will the glorious rebound to the housing market happen? Not soon. Wednesday the Commerce Department announced that new home construction fell 2.6 percent in August - THE SLOWEST PACE in 12 YEARS. The National Association of Home Builders said that their builder confidence fell in September - how they know this before the month is even over is beyond me; must be really significant - they say it's the lowest level on record.

And finally, foreclosure filings in August doubled nationwide from 2006 jumping 36 percent from July - this from RealtyTrac - who when it's all said in done might not have much to do.

Can I Rent My Home in Foreclosure?

2007-09-21T17:37:00.000-07:00

Often we are asked what is the best way to work out a foreclosure? The answer most want to hear is where the lender negotiates with the homeowner to take possession of the home and then rent it back to them at market rates.

This way the buyer does lose the house, but at least they stay where they are and can live there renting until - and that's the part that gets messy. Most foreclosure attorneys will tell you that in the case of renting back, you may be forced out of your home in the short term.

Naturally, no one wants to move out of there house if they don't have to. Foreclosure lawyers also advise that you should do everything you can to not be put into that situation. Here's what we advise:

First, look back over the past 90 days. Do you see a trend that you are steadily losing ground with your payments on credit cards or your mortgage? Can you see that you've sold things to get extra cash? What we are looking for here are signs that you need more cash to stay current.

Next, find out what extra time you have and get into emergency mode. Want to know how to stop from losing your home to foreclosure? Prevent from losing your home by getting another job in the time you are off from the main job. This may mean working odd hours at the local Starbucks, or fast food place. Pizza delivery persons make great tips if they are courteous. You can too.

Finally, if you think you should let your house foreclose, you're probably in a depressed state. A foreclosure lawyer can help and for free until you win your case and can pay them. Foreclosure attorneys are in the phone book or here online.

Government Help with My Mortgage

2007-09-20T19:16:00.000-07:00

Our government Wednesday did something that may help you with your mortgage payments. They raised the investment caps for home-loan finance companies Freddie Mac and Fanny Mae in order to alleviate the pressure in the mortgage market.

The democrats have been pushing for something like this for awhile. This new cap allows Fannie Mae and Freddie Mac to take on about 2 percent more of debt. But democrats hoped for more.

What is called the Office of Federal Housing Enterprise Oversight, which overlooks Fannie Mae and the government brother Freddie Mac, said no last month to a 10 percent lift on the cap, which sits at $727 billion. Sen. Charles Schumer, D-NY, had been one of the most vocal proponents said this new increase is simply too small.

But how will all this help you and I?

These changes, the 2 percent raise, will make it easier for managing the companies Freddie and Fannie. The OFHEO imposed caps last year because of accounting practices at Freddie Mac and Fannie Mae. Now the new limit will give them flexibility. The trickle down effect to you is that it should be slightly easier to get refinancing or new loans.

Still, lawmakers are calling for 10 percent. Will that happen? Not likely. There has been too much corruption in the agencies for that to happen now. Too many deficiencies.

So, the Government can help you with your mortgage. There is 2 percent more money to be loaned.

Retiring with Mortgage

2007-09-19T12:36:00.000-07:00

There isn't really one answer as to why there are some of us who are at retirement age but still have quite a mortgage left on the house. Before the problem with subprime loans, the statistics looked bad. For example, for homes with someone age 65 to 74, more than 32 percent had a mortgage on the primary residence. In 1992 it was only 19 percent. Just a picture of things to come.

But there is hope. Here's what you should do. Do everything you can to pay off that mortgage so you can live without it in retirement. That will free up a ton of cash, no? If you have a big savings account, simply pay off that mortgage. Many of us have cash in a money-market fund in a regular taxable account. Sounds bad, but maybe using that money to pay down your mortgage is a good move. Yes, your mortgage might only cost you 6 percent and the interest is probably tax deductible. But your money-market is probably only around 5 percent. And you have to pay tax on that income.

If you're dealing with IRA's and 401k's, a study by the AARP found that many employees leaving their jobs cash out their 401k's using the money to pay off some of their debt. But that is just crazy. A big 401k withdrawal means paying big income tax - so you're better slowly withdrawing to make mortgage payments. That way, you can use the mortgage tax deduction against the withdrawal and it works out.

If your mortgage right now is so large that paying it off will put you in a bind, you can refinance. Yes, getting that payment down is what is important. Better still, trade down, if you can. You can even refinance later in retirement further shrinking those payments. Banks regularly loan to retirees. Turns out they are a good risk.

How Can I Stop Foreclosure?

2007-09-09T10:45:00.000-07:00

Yesterday, I reported on how the wave of foreclosures to hit the market won't really happen until 2008. That was shocking to some who thought that the peak of foreclosures on mortgages was right now. Unfortunately, that is not the case. Subprime mortgage foreclosures are first, because of the way they work, and the housing price slump, and the same people not being able to get more credit to dig their way out - then regular mortgages are next. And it will hit.

But there is hope and you can possibly stop foreclosure. If you've come here to find out how you can stop the foreclosure process, if someone can take over payments, if an attorney will help - let me just say that I'd like you to take 5 minutes and check out something that may help you. You use the Internet to find deals, to find answers, and maybe 5 minutes checking this out will help you. Maybe not - and if not, you only spent 5 minutes here.

First, let me tell you that I am not a foreclosure attorney, but I study the system on a regular basis to bring you what I find here on "When is Foreclosure". And I've run across something that should interest you if you are behind on your mortgage payments and have possibly already received a default notice on your mortgage from your lender.

So what do you do when that happens? Money has probably been real tight for a few months and you're trying to get everyone that you've ever loaned money to, to please see if they can pay something back. It's frustrating and a little humiliating, but nonetheless, you got to go through it. If it's any consolation, thousands are in your same boat. And if you can't afford a foreclosure attorney, a lawyer that will hold your hand through the process - then maybe this is the best way to go.

The website is called Foreclosed Dreams, and I found it presented a game plan for going through foreclosure when you don't have a foreclosure lawyer to be there. It is well written, and you're probably already over at the site. Go through the many links and read up and put this knowledge to go use. Foreclosed Dreams is written by Ralph Thompson. In my opinion, this is the path I would take if I had to. It's worth a 5 minute check, like I mentioned, and hope you find it useful.

How Far Behind Before Foreclosure?

2007-09-08T20:09:00.000-07:00

Foreclosures are at an all-time high. People who own homes are having trouble dealing with the great increase in their adjustable mortgage payments and are now receiving more foreclosure notices than ever. It's a crisis in the subprime mortgage market. How far do you have to be behind before you get a foreclosure notice is up to the mortgage lender. But normally it is three months or 90 days past due.

The place where foreclosures are hitting most is in the Midwest, and two states that recently had big housing booms: California and Florida. Each day it is projected to get worse as more loans get further behind in payments. Two million adjustable rate mortgages are scheduled to increase their interest rate much higher any day now.

Subprime mortgages; these are the ones to people who really couldn't put the 10 to 20 percent down and instead were offered next to nothing down, and just interest payments or a little more for the first two to five years - these mortgages were hit right away when the credit crunch began. But now the Mortgage Bankers Association says that now some people with normal mortgages are having problems coming up with payments - and are in trouble.

The subprime defaults have spilled over into the global financial markets. Stock prices are all over the map because of uncertainty. Remember that most of the big banks and securities companies have a good share of the subprime loans wrapped into their offerings. Wall Street watches for the other shoe to drop.

Bush foreclosure statement; Bush's mortage housing proposal, was an attempt to calm the market - announcing changes in the FHA, or Federal Home Administration insured loan program. Democrats had been demanding that something be done to help - to ease the market.

But even now, Democrats are saying the Bush Foreclosure relief statement wasn't enough. They say that Bush should put an end to the predatory lending from mortgage lenders who were only interested in making a buck for themselves and not caring whether the borrowers could afford the loan.

And the deadly combination now is the high mortgage payments, low home prices now, and a weak job market - lenders are now more cautious - so trying to qualify for something lower just doesn't work for people with subprime mortgages.

The wave of foreclosures will not peak until next year. Mark Zandi of Moody's Economy says that the resets on subprime mortgages will add another $250 to $300 on current payments.

Bush Proposal For Mortgage Relief

2007-08-31T06:14:00.000-07:00

"The Bush news on initiatives to help out people with troubled mortgages is giving a boost to the market," one trader said. While not seen as a cure all, bond analysts took the move as a sign the Bush administration was at least offering a bit of a pain killer to the recent crisis, and bond prices plunged. "It is all about the Bush administration proposal, people are saying this is about administration bailout potential," said David Ader, head of government bond strategy at RBS Greenwich Capital.

President George Bush will announce measures to ease the mortgage crisis here. Bush's statement later this morning that is expected to outline new initiatives to provide relief to consumers holding risky mortgage loans, traders said. Bush will propose reforms aimed at helping homeowners with subprime mortgages avoid default, his first public step to address a crisis that has created turmoil in financial markets around the world, a senior administration official said.

Treasury debt prices fell Friday hours before the the expected unveiling of a White House mortgage proposal. The weakened allure of bonds as a safe haven from the credit crisis was spawned by subprime home loans. Converting the mortgage interest deduction to a tax credit equal to 15 percent of interest paid on mortgages up to the cap. President Bush today said a tad more about his position on the current turmoil in the housing and credit markets, reiterating his position that he does not support a government-financed "bail-out" of homeowners facing foreclosure. So President Bush will direct the FHA “stone age mentality” to ease up on homeowners with “spotty credit records”.

News of the Bush proposal, which came late Thursday, overwhelmed the focus on a speech from Federal Reserve Chairman Ben Bernanke today in which he is scheduled to talk about housing and monetary policy. Under its plan, the Federal Housing Administration mortgage insurance program will be changed to allow more people to refinance with FHA insurance if they fall behind on mortgages, according to the reports. The housing market and foreclosure doom on the horizon has turned political quite quickly. Offering federal help for strapped mortgage holders, President Bush is proposing to aid hundreds of thousands of borrowers hard hit by the housing slump. Bush would call for the Federal Housing Administration to raise the ceilings on what it can charge for federal mortgage insurance, a move that they said would enable an additional 80,000 homeowners with spotty credit records to take advantage of the program, beyond the 160,000 likely to use it this year and next.

Foreclosures in Colorado

2007-08-31T04:41:00.000-07:00

Foreclosure filings in Colorado are higher over the past month and year. Foreclosure filings are the first step lenders must take on the path to removing a borrower from a home for missing mortgage payments. In recent interviews, local real estate, mortgage, and housing experts said the increasing foreclosure filings are the result of a confluence of factors, from a boom in risky, subprime loans issued over the past few years to the recently slumping housing market and increased utility prices.

Foreclosure Market Report, which shows a total of 925,986 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 573,397 properties nationwide during the first six months of the year, up more than 30 percent from the previous six-month period and up more than 55 percent from the first six months of 2006. Foreclosure filings do not always result in a person losing a house at auction. Foreclosures rose sharply in the first quarter of the year as housing prices stalled and homeowners had an increasingly difficult time making their mortgage payments.

The argument against mortgage brokers is that they intentionally steered borrowers towards loans they couldn't afford. Mortgage lenders sent 2,148 notices of default to property owners in the first quarter, up from 1,607 in the fourth quarter, and 1,307 in the first quarter of 2005, according to DataQuick. Many foreclosures are related to homeowners with adjustable-rate mortgages who are beginning to realize what hit them, he said. Owners can stop foreclosures in several ways, including selling their houses to pay off the mortgage, refinancing, filing for bankruptcy or trying to make back payments.

Homeowners often sell or come up with money to save their houses, sometimes at the last minute. Homeowners are being put in a squeeze and will have greater difficulty selling their way out of trouble through conventional channels. Homeowners who find themselves in danger of missing a payment should contact their lender to let them know and work out a plan, if possible. The Fair Housing Center's response to this challenge has been to start a predatory lending remediation program, Restoring the Dream, to help homeowners retain their homes and reduce their mortgage payments. Consistent with the growing number of mortgage defaults nationwide, a mix of rising interest rates and a softening housing market, along with the collapse of the subprime mortgage market, have forced many more homeowners into foreclosure.

Subprime lenders tend to be less regulated than their prime counterparts. Subprime and other “exotic” loans, as they are commonly called, are often attractive because they require little money down and can help people purchase a house for which they might not otherwise qualify. Subprime mortgage providers are also tightening their standards, eliminating refinancing options for troubled homeowners. Subprime loans are made to people with less-than-attractive credit. Another problem is subprime loans, those that require little money down but can come with high interest rates.

Foreclosure filings are up 35 percent nationwide since a year ago, according to RealtyTrac. RealtyTrac, an online marketplace for foreclosure properties, says that nationwide foreclosure filings are up 42 percent from 2005, with the highest rates posted by Colorado, Georgia and Nevada.