Your Questions About Foreclosures |

Your Questions About Foreclosures

Your Questions About Foreclosures

Mandy asks…

since the “community reinvestment act” is blamed for the housing crisis, how come the foreclosures are here?

many conservatives blame the community reinvestment act for the housing crisis. the claims by some are downright racist. Neil Cavuto of Fox news was even quoted as saying “Loaning to Minorities and other risky borrowers is a disaster”.

the fact is only 5% of housing loans that have foreclosed have used the community reinvestment act (see first link)

second, it has just been reported that the states with the highest rates of foreclose sure are states that have low populations of minority home owners. the reason given for the foreclosures was “flipping of properties” by real estate speculators. (see link)

So, your thoughts, and a big “so sorry” from the conservatives that want to blame all of the financial problems on minorities. (shows rates of foreclosure using CRA);_ylt=At880ms8MlXSddfm8BeLmCnZn414 (shows the top 26 cities with the highest foreclosure rates)
but seldon, I was a cub scout, we always tell the truth, LOL
I see curtis 1911 is the type that enjoys somebody pissing in his face, and telling him it is raining
thank you jani, i think that is a major part of the problem also.

Your Questions About Foreclosures

The Expert answers:

The CRA doesn’t do near what right-wingers claim it does.
It doesn’t force anyone to give bad loans or loans to people who can’t prove their ability to pay it back.

The housing crisis was caused by $64 billion being dumped into oil futures at the start of the Iraq war, coupled with a huge increase in revolving credit accounts after Americans were already in debt.

A person who wanted to intentionally destroy the American economy could not have planned it any better than the actions of the Bush admin coupled with the actions of Phil Gramm.

The problem that caused banks failures was the Gramm-Leach-bliley act that allowed banks to consolidate al asset management services into one business, and then another allowed them to write unregulated credit default swaps on the loans they were issuing.
They were colecting their fees off loans they dumped on Fannie Mae and Freddie Mac, and then sold some default swaps on them making even more.

When the real estate market started slumping because $4 a gallon for gas caused huge increses in costs of living for people who alreayd had home loans, defaults on mortgages started to rise causing real estate prices to fall. As they fell people who were going to refinance their ARMs to fixed, which was a common practice, found they could not refinance the full amount they needed becase their property values were lower. This caused them to be stuck with a house payment that in some cases jumped from $200 a month to as much as $1000 a month. Add that to higher credit card payments, higher gas prices, and higher food prices, you have a recipe for disaster.

You also have the fact that this housing bubble was created by tax cuts on capital gains to begin with.

Blaming the community reinvestment act is nothing different than the typical right-winger blaming Affirmative Action for not gettign hired.
The largest thing it did, was prevent banks from discriminating against property in lower income areas as long as the borrower cold prove the ability to pay the loan, and the property value was assessed with a reasonable enough value to cover the loan.
Prior to the CRA banks would only loan to indutrial areas, or to the rich leaving the working class forced to rent.

Your Questions About Foreclosures

James asks…

How long can I expand my stay at my house after I receive foreclosure notice?

Hello I am a resident in the state of GA, Gwinnett County. I have just received my Foreclosure Notice and was wondering if there was any way to extend the date described on the letter. I’m not sure but I heard that you can file some sort of form to the local court and they will extend the day that sheriff comes in by months

Your Questions About Foreclosures

The Expert answers:

The only way a court would be of assistance in in prolonging the foreclosure procedure is for you to file for bankruptcy protection under chapter 7 or 11.

Each lender have their own procedures as to when to file a foreclosure against a person that is behind in their mortgage payments. Some file foreclosure procedures immediately after one payment is missed, some as long as 3-9 months or more after missing your first monthly payment.

There are two types of foreclosures normally used in the United States

Non-Judicial Foreclosure

Most lenders use the non-judicial foreclosure procedure. No courts or lawyers are involved.

Under this procedure normally the lender has the right to sell the property after completing the foreclosure procedure. The lender, under this procedure can not normally sue for a judgment after the sale. You do not have the right to reclaim the house under any circumstance.

Under a non-judicial foreclosure and the lender has decided to foreclose on you they issue a “Notice of Default/Foreclosure” this document is recorded at the county recorders office where the property is located.

You will receive a copy of this notice in the mail as well as one will be delivered to your front door.

At this point you now have 90 days to bring the mortgage current, refinance the mortgage or do what ever you want to do to keep your property. Your lender might entertain the idea of refinancing your mortgage for you at this stage.

Once the 90 day period is over the lender then decides to record a “Notice of Sale” at the county recorders office. You will receive a copy in the mail as well as someone will deliver one to your front door. This notice will have a sale date and place of sale.

Once this document has been recorded you now have 20 days in which to refinance or cure your foreclosure. Most lenders will not entertain the idea of refinancing their own loan once this document has been issued. Some might, but most will not. At this point the lender is interested in you paying the mortgage off or bringing it current.

At the sale if the property is sold to someone, they have to get the property recorded in their name so there is lots of legal work to be done before they officially own the property.

This new owner will contact you when all the legal documents are signed and between the two of you select a time for you to move. You might be required to pay rent for the time you stay there but this is between you and the new buyer.

If the property does not sell then the lender has to get a few legal matters taken care of so they have to wait until the legal matters are completed. This normally take 5-7 business days or less.

If this happens once all the legal matters are taken care of the lender normally hires a real estate agency to take care of their real estate sales.

An agent from the agency will contact you about the date and time of your departure. In some instances they will offer you a sum of cash for you to move.

If you are not required to go to court and has not received documents from a court stating that you must appear. This is probably the procedure being used by your lender.

Judicial Foreclosure

If the lender decide to use the judicial foreclosure procedure you will be issued a summons to appear in court. The court will set the time and date of appearance as well as when you will have to vacate the property.

If the lender use the judicial foreclosure procedure they are allowed by law to file a deficiency judgment against you.

Most lenders, though the law allow them to file for a deficiency judgment, do not do so. They would just rather sell the property, write any loss off and move on without other legal problems that might cost them money and then would have to collect on the judgment if they won.

On the other hand the law also allow you the right to reclaim your house after the foreclosure procedure has been completed in some instances any where from three months and in some states up to a year.

If you received a document stating that you have to appear in court and a date for you appearance has been set, your lender is probably using this procedure.

This method of foreclosure is used only by a few lenders where both procedures are allowed.

Under either procedure if the bank can not reclaim the entire loan amount from the sale of the property they claim they have a loss. Since this is a loss to them someone had to have a gain. You are the one considered having the gain, therefore the lender would then send the current owner a 1099 indicating the amount of gain they had.

Upon receipt of the 1099 they must file this gain with their year end taxes as to the amount of gain you have.

For tax and legal matters you should always consult with your tax consultant and attorney.

I hope this has been of some use to you, good luck.


Your Questions About Foreclosures

Carol asks…

Legal Question – about a divroce and a house foreclosure?

My exhusband and I were divorced 3 years ago and he was to have my name off of the mortgage by April of ’06 (according to the divorce decree), he failed to do so. I took him to court for not paying his child support and for getting behind on the mortgage payment and for not taking my name off of it. (Basically he was just running my name through the mud credit wise). The court gave him until the end of this month to get everything caught up. I found out that he’s been lying to me and the house was in foreclosure and has now been sold at Sheriff’s Auction for $8500 less than the appraised value. With my name still on mortgage what are my options? (I haven’t lived in the house for over 4 years and I have the document stating he was to take my name off last year but does that even matter to the bank?)
Please don’t just tell me to ‘talk to my lawyer’, he hasn’t paid his child support since last year I dont have the $ (don’t worry I took him to court for that too)

Your Questions About Foreclosures

The Expert answers:

I feel so sorry for you. Unfortunately, if you can’t afford a lawyer, there isn’t much you can do. Actually, even if you can afford one, you still will have some very tough time ahead of you to get it straighten out with the big three credit companies.

Your Questions About Foreclosures

David asks…

My stepmother and I inherited a house, split 50/50, do we split all that is in the house? Like Appliances?

My father passed away in August. He married a woman for 6 years. By Wisconsin state law we have to split their house 50/50. She has since ended all communication with the family and I. She has left the house, of which she, my grandma, and my father lived in. The house is not worth going into probate, there is only 13,000 in equity. The mortgage was only in my father’s name, so neither her or I are liable financially. To my knowledge neither her or I have taken any legal action to claim the house. We are letting the house go into foreclosure. However, my grandma still resides there. Now my stepmother is coming to take all the appliances. Can she do this legally? What is the protocol on the things within the house when you are to split the property?

Should there be any next steps that I should take?

Any help would really really really be helpful. It has been hard enough losing my father, it’s really hard to deal with these stresses on top of it…
There was no insurance on the house, meaning, that we would have to pay the remaining balance. All they had was $13,000 in equity. I am 22 years old I cannot make the month to month payments. My stepmother cannot afford to make the payments either. Thus we are letting it go into foreclosure.
Also note, I no longer reside at the house. I moved out a year or so ago. My father died in the house, because of this I get overly emotional. I don’t think keeping the house is in my best interest anyhow.
There is no will. My father died unexpectedly at 39. So all I have to go on now is state law. Which, as far as I understand, means I get half of his property. Note that I am 22, my father raised me as a single father and eventually married my stepmother 6 years before his death.
Sorry if my question was not as clear as it could be. In the end I would like to know if my stepmother receives all of the contents in the house e.g. the appliances?
At this point in time my grandmother is staying in t
Essentially my grandma resides there and will do so until she cannot any longer. I am wondering if my stepmother can take the appliances so I can figure out whether or not my grandma and myself have to worry about getting new ones.

Your Questions About Foreclosures

The Expert answers:

I’m confused by your comments. If you have to split the house 50/50 that means you both own it and one could or should sell out to the other and continue making payments on a mortgage. So why you would not make payments and why you would want it to go into foreclosure is beyond me.
To your knowledge you haven’t taken any action to claim the house? That statement sounds strange. So why didn’t you take action to claim the house so you and your grandmother could still live there?

If the place is being foreclosed on and the stepmother paid for the appliances or is trying to save the appliances since you haven’t paid on the mortgage then what she’s doing is trying to save what was hers and her husbands. What’s wrong with doing that?

Should there be any next steps you should take? Why of course, find some place for you and your grandmother to live or call the mortgage lender and ask how long of a time you have before you have to move out.

Your Questions About Foreclosures

George asks…

New York Times Article Addressing the Housing Slump?

I read the following NYT article in regard the housing slump. One part of the article, I did not understand. The author writes that millions of homeowners remain at risk of defaulting on their mortgages if they experience a payment shock because they owe more than their house is worth. Can you explain how lower home value leads to a payment shock which leads to a default on a mortgage.

Assuming you have a fixed rate mortgage, whether the value of your home goes up or down, you still have the same monthly mortgage payment, right? So where is the payment shock coming from? Thank you for your help.

U.S. Tackles Housing Slump
The Obama administration is ramping up talks on how to revive the housing market, which is weighing on the economic recovery—and possibly the president’s re-election in 2012.

Last year, advisers considered several housing-policy prescriptions but rejected them in favor of letting the market sort things out. Since then, weak demand and a stream of foreclosed properties have put renewed pressure on home prices, prompting concern within the White House.

Housing “hasn’t bottomed out as quickly as we expected,” President Barack Obama said at a White House town hall last week. Mr. Obama said housing remained the “most stubborn” problem facing the country and conceded that a raft of federal mortgage-aid programs were “not enough, and so we’re going back to the drawing board.”

Policy ideas include having taxpayer-owned mortgage giants Fannie Mae and Freddie Mac relax their rules for loans to investors, allowing those buyers to vacuum up excess housing inventory. In certain markets, Fannie and Freddie could hold some foreclosed homes off the market and rent them out to ease the property glut.

Officials also could sweeten incentives for banks to reduce loan balances for borrowers who are underwater, or owe more than their homes are worth.

The White House is weighing ideas to strengthen the feeble housing market. Pictured, emptying a foreclosed home in Lawrenceville, Ga., this year.

Discussions are in early stages, and there isn’t consensus around particular ideas. A spokeswoman said the president and his advisers “are always looking at new ways” to strengthen the housing market but wouldn’t disclose details. “While we continue to consider the options available to us, it would be inaccurate to say we are proposing any of these particular ideas at this time,” White House spokeswoman Amy Brundage said.

Home-buyer tax credits worth up to $8,000 in 2009 and 2010 gave a short-term boost to home sales, but demand plunged after they expired. Foreclosures have put pressure on prices and damped residential construction, traditionally an engine of job growth during economic expansions.

“As conditions change, some options that were below the line the way the market was 18 months ago might be above the line today,” said Peter P. Swire, who teaches law at Ohio State University and until last year was a top housing adviser to the White House.

Most of the administration’s housing efforts have focused on helping borrowers refinance or modify their loans to avoid foreclosure. But some economists say too many borrowers won’t be saved through loan workouts and that the administration must do more to soak up the flood of foreclosures by boosting housing demand.

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President Obama’s signature loan-modification program, announced during his first month in office, has lowered payments for around 600,000 borrowers. Meanwhile, around four million borrowers are in foreclosure or have missed three or more consecutive mortgage payments. While mortgage-delinquency rates have fallen, millions more remain at risk of defaulting if they experience a payment shock because they owe more than their homes are worth.

More recent housing relief has targeted unemployed borrowers. Last week, officials said unemployed borrowers with loans backed by the Federal Housing Administration could miss up to 12 months of payments while they look for new jobs. A separate $1 billion program is set to begin providing interest-free loans of up to $50,000 for temporarily jobless borrowers this month.

Unlikely to get Congress to provide additional funds, the administration is left to examine options that it can implement without congressional consent. Fannie and Freddie, the so-called government-sponsored enterprises or GSEs, could be one policy lever. “There are a number of things that we can look at on the GSE side,” said Austan Goolsbee, departing chairman of the Council of Economic Advisers.

Last year, officials considered a range of policies that included allowing borrowers with loans backed by Fannie and Freddie to refinance more easily by relaxing fees that lenders are charged for riskier borrowers.

Others outside the administration have pushed for fede

Your Questions About Foreclosures

The Expert answers:

A couple of things:

a) There are still millions of ARMs out there coming to maturity over the next couple of years. So a barely affordable payment on an ‘upside down’ piece of real-estate may no longer be affordable or practical when compared to walking away.

B) Equity is the means by which people often measure their wealth and calculate the value of ownership vs. Renting. If paying a mortgage for a property where there is no (or negative) equity exceeds the cost of renting, the decision to walk away becomes a valid option (from a purely selfish point of view).

C) Often individuals will make sacrifices to keep their house (ownership) if they experience a bump in the road – layoff or reduced hours or medical emergency or similar. If they perceive that there is no residual or future value in such a sacrifice due to negative equity, they will again walk away rather than tough it out.

Those are the three obvious reasons, anyway.

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Your Questions About Foreclosures
Your Questions About Foreclosures
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Your Questions About Foreclosures
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Your Questions About Foreclosures

Your Questions About Foreclosures