With large numbers of homeowners falling behind on their mortgage payments, home loan lender groups across the country are seeking creative ways to keep delinquent customers out of foreclosure.
Few possessions are more valuable than the roof your head. Yet a growing number of people are facing foreclosure on their homes because they cannot keep up with the monthly home loan payments.
Eylonda and Tyrone Wynn of Dallas thought their prayers had been answered when two young women from Resolutions Foreclosure & Home Mortgages knocked on the door in December 2005.
“It was like ‘Yes, we can save our house. We can start over again,’” said Eylonda Wynn, a 37-year-old mother of three.
The number of California mortgage default notices last quarter rose to its highest in nearly 10 years as the state’s home prices stagnated and rates on adjustable home loans pushed higher.
The number of Sun Valley residents who lost their homes to foreclosure has spiked more than tenfold in the past year as more and more homeowners fell behind on their Arizona mortgages.
Countrywide Financial, the largest U.S. home mortgage lender, said on Thursday the share of its mortgage portfolio that faces foreclosure nearly doubled in March from a year earlier in a difficult housing market.
If you thought the housing market was already crumbling amidst a wave of bad credit mortgage foreclosures, things could soon get a whole lot worse.
Most families with high-risk home loans whose terms are questionable should not be kicked out of their homes when they are delinquent on payments.
So stated a coalition of housing activists on Wednesday, as they urged mortgage lenders to adopt a six-month moratorium on foreclosures to provide time to work something out.
“The debt is forcing people to take second jobs, sell family possessions, and rent out a second room,” said Wade Henderson, the president of the Leadership Conference on Civil Rights.
The problem hits the bad credit mortgage market, where people pay more for their home loans because the prime market considers them to be higher risks than other borrowers. Activists told a Wednesday news conference lenders are misleading many borrowers, who are surprised and unable to pay when expensive terms of the loan kick in.
“It is not a surprise that so many homeowners are facing foreclosure when you take a look at the loan terms,” Josh Nassar of the Center for Responsible Lending told reporters. “People are qualified generally just to pay for the initial rate, not the adjusted rate, which includes a payment shock of well over 30 percent.”
When your lender goes bankrupt
His group estimates that about 20 percent of the subprime loans made in the past two years will go into default and result in families losing their houses. Among demographic groups, African-American and Latino homeowners hold a large proportion of the sub-prime mortgages.
They were initially developed for people having trouble qualifying for a home loan, but unscrupulous lenders have teamed with real estate agents to put people beyond their means, according to Janet Murguia, president of the National Council of La Raza.
“In many cases these loans were never a good fit,” she said. “We have been warning that Latinos were getting bad loans. It should not be a revelation, but it has taken families being taken out of their homes to shed light on this issue.”
Members of the coalition, which also includes the NAACP, acknowledged in response to a question that no lenders have committed to a moratorium on foreclosures. But Henderson, with the Leadership Conference on Civil Rights, vowed to pressure the industry to throw out questionable mortgages in favor of repayment terms that homeowners can sustain.
“We have resources to generate pressure,” he said, such as “the use of civil rights law, consumer laws, congressional pressure, and grass-roots advocacy.”
SOURCE: CNN Money
Homeowners in San Diego County are defaulting on their loans and losing their properties to foreclosure at an increasingly rapid pace, the San Diego Union-Tribune reports today.
However, this shattering new trend remains far less extensive here than the mortgage problems arising elsewhere in the nation.
In the first two months of the year, there were four times more default notices issued in the county than in the first two months of last year, while foreclosure rates tripled over the same period.
A default notice, often sent by lenders after three consecutive months of home loan nonpayment, is the first step toward foreclosure.
Much of the hardship is focused on South County communities and involve people carrying subprime California home loan products, in which buyers with blemished credit took out mortgages that reset to higher levels in as little as 1-2 years.
San Diego County placed 17th among the state’s 58 counties, with a default rate of 3.3 per 1,000 homes, compared with 6.9 in top-ranked San Joaquin County. Yet as bad as this California mortgage trend may seem, the problem is nowhere near the crisis levels seen elsewhere in the nation.
Nationally, the county’s default rate placed 203rd out of 332 markets surveyed, according to mortgage tracking company LoanPerformance.
The accelerating San Diego County default and foreclosure numbers also pale by comparison to the number of California mortgage loan transactions and homes sold.
For the first two months of the year, newly filed defaults and completed foreclosures in San Diego County totaled 3,272, while loans originated and sales closed totaled 33,801, DataQuick figures show.
“We couldn’t find anywhere where we detected that the presence of default properties brought price levels down,” said analyst John Karevoll. “We expect that to happen in a few areas this spring and summer, but not by much.”
As bleak as it is for the 2,525 San Diego County homeowners who received default notices and the 747 whose homes were foreclosed on in January and February, the trouble is much worse in the Midwest.
“It’s disconcerting,” said Bob Visini, spokesman for LoanPerformance, a San Francisco-based subsidiary of First American Real Estate Solutions. “Everything seemed to be going well and then six months into 2006, we already saw the warning signs.”
At the end of last year, Visini said, 9.6 percent of all outstanding home mortgage loans in San Diego County were subprime and of those, 11.3 percent of owners were at least 60 days late in making payments.
ARTICLE & GRAPHIC SOURCE: San Diego Union Tribune.
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Immigrants are emerging as among the first victims of a growing wave of home foreclosures in the Washington housing market, as mortgage lending problems multiply locally and across the country.
Nationally, 375,000 high-interest-rate loans were made to Hispanic home buyers in 2005, and nearly 73,000 of them are likely to go into foreclosure, said Aracely Panameno, director of Latino affairs for the Center for Responsible Lending.
About 1.1 million homes in the United States are expected to go into foreclosure in the next six years, and many native-born Americans are likely to be stuck with burdensome home loans. But immigrants are getting hit first in part because their incomes tend to be lower and many have lost construction jobs.
Francisco Santos, his wife, Linda, and their children including Astrid, 5, are losing their Woodbridge home to foreclosure. “It’s difficult,” Francisco Santos says. “My wife, she says, ‘Why? Why?’ ”
Homeownership rates among immigrants surged in the first half of the decade, making their prosperity an economic success story. Now it is becoming apparent that many people managed to buy homes in an inflated real estate market by turning to unusual new mortgages only now receiving scrutiny from regulators and legislators. Many of these loans start with attractive low “teaser” mortgage rates - but feature payments that can suddenly increase.
Unfamiliar with the U.S. mortgage market, unable to speak or read English well and vulnerable to the blandishments of real estate professionals who told them property values always rise, many immigrants are struggling to deal with high home mortgage loan payments as their homes sag in value, making it harder to escape the loans by selling.
Tysons Corner mortgage broker Jose Luis Semidey, who has a popular Spanish-language real estate talk show on Radio Universal, is being deluged with calls from desperate owners who are falling behind on their mortgages. The calls started in late 2005 and have steadily risen; he now receives 40 to 50 calls a day from throughout the area.
“I see more coming,” Semidey said.
Panameno agreed. “I’m being flooded by phone calls from throughout the country from people begging for help,” he said. “The best I can do is refer people to attorneys to get assistance.”
Nahid Azimi, who immigrated to the United States from Afghanistan 22 years ago, recently stood in the upstairs hallway of her home in Loudoun County, silently sobbing as she removed the last of her personal items from the $410,000 townhouse in South Riding she bought with pride last summer. She said she was persuaded to buy the house by an Afghan real estate agent she considered a friend and by an Afghan mortgage broker who promised to get her a good loan.
Instead, Azimi, a cashier at Giant who makes $2,400 a month, found herself strapped into a no-down-payment loan with payments of $3,800 a month.
She knew it would be impossible to make the payments, but the mortgage broker promised to refinance her loan to make it more affordable. Azimi couldn’t qualify for the mortgage refinance, however, so she got a second job to try to cover the costs, borrowed money from her friends and tried unsuccessfully to sell the house. Then one day in November, she collapsed at work, in part because of the stress.
Today, she will call the loan servicing company and offer to give back the keys.
“I can’t do it anymore,” said Azimi, 44, a U.S. citizen. “I cannot afford it, and I don’t want them to come one day and put my stuff on the street.”
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