Tag: Home Owners

Mortgage Plot Thickens!

If you have been listening to the news then you are aware that there is some shenanigans going on with people’s mortgages….and the game is all about the foreclosures….not the rescue of the homeowners home…..if you have a mortgage it might be a good idea to keep an eye on what is happening behind your back….

I posted these two articles on Twitter…if you dislike Twitter or just do not have it I have posted them here also….it is a bunch of reading….but if I were you and had a mortgage then I would be interested on the games that these dicks are playing with my home…

Own a home? Read this! http://bit.ly/aEGmFj

Or read this! http://huff.to/ccWxq4

There is one more mortgage thing….http://bit.ly/deFshT

Do not ignore the stories or roll your eyes….your mortgage could be next!

Homeowners Face A Dismal Future

Bloomberg is reporting on mortgages:

Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb.

I had heard a report recently stating that by 2011 one half of all mortgages would be considered underwater.  The news and predictions continue to be dismal and the government is looking the other way as the American people sink further and further into the muck of the economic crisis.

The plans and hopes of the Obama admin for the people living on Main Street are falling far short of any substantial help.  In an article written by David Walsh:

According to a US Treasury report August 4, mortgage servicers, under the Home Affordable Modification Program (HAMP), have offered to change 406,500 loans and have actually modified, on a three-month trial basis, only some 235,000, just 9 percent of delinquent borrowers.

A number of banks that have received billions in taxpayers’ money, such as Wells Fargo, Wachovia and Bank of America, have modified even a smaller percentage of mortgages (6 percent or less).

These derisory figures come in the face of what a representative of the National Consumer Law Center (NCLC), in testimony before a Senate committee July 23, called “a foreclosure tsunami, which threatens to destabilize our entire economy, devastate entire communities, and destroy millions of families.”

A July 30 New York Times article suggested that lenders “have little incentive to help homeowners.” It notes that the main impediments to a greater number of loan modifications are not staff shortages and logistical issues, as the mortgage firms claim, but their reluctance “to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans. Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue—fees for insurance, appraisals, title searches and legal services.

The Times observes that mortgage companies are paid to manage pools of loans owned by investors and typically collect a percentage of the value of the loans they service. “They extract their share regardless of whether borrowers are current on their payments. Indeed, their percentage often increases on delinquent loans.”

A recent paper by the Federal Reserve Bank of Boston concluded, “The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify.”

As usual, Banks and Wall Street are the ONLY ones making out in the econbomic crisis.  Homeowners face a dismal future……and as usual, Wall Street is getting richer at their expense.

On another sour note, Reuters is reporting:

The U.S. Treasury Department should consider expanding programs to cleanse troubled assets from bank balance sheets if current efforts fail to restart markets or if economic conditions worsen, a U.S. bailout watchdog panel said on Tuesday.The Congressional Oversight Panel said in its latest monthly report that toxic loans and securities continue to pose a threat to the financial system, particularly for smaller banks that face mounting losses on commercial real estate loans.

Last October, the entire $700 billion U.S. bailout program was aimed at buying up the toxic assets that threatened to bring down the financial system. But due to the plan’s complexity and with market confidence rapidly deteriorating, then-Treasury Secretary Henry Paulson quickly shifted gears to use the money for direct capital injections into banks.

Since then, Paulson’s successor, Timothy Geithner, announced plans to entice private investors to buy “legacy” securities and whole loans from banks. But accounting forbearance that allowed banks to avoid recognizing losses on these assets combined with large institutions’ ability to raise capital after regulator “stress tests” in May reduced investor angst over toxic assets.

Do not look now but it is sounding like Wall Street will get more of your money and you will get the same song and dance that you got last year.  If money is being shoved at someone it should be Main Street for they will most likely spend it and in doing so create demand for goods and services.  The pursuit of liquidity is not doing much to solve the economic problems that Main Street is facing.  It ius however, making those on Wall Street very happy and a lot richer.

Foreclosure Help, Is It Coming?

Are you having a problem paying your mortgage payment?  The government is here to help.  But just how will they help the average home owner that is having problems with his mortgage?

In a vote that demonstrates the veto power exercised by Wall Street on US government policy, the Senate on Thursday rejected a measure that would have allowed bankruptcy judges to modify the terms of mortgages to help distressed homeowners avoid foreclosure. The legislation would have enabled bankruptcy courts to lower the outstanding principal as well as interest rates on some home loans.

The provision, put forward as an amendment to a broader housing bill backed by the Obama administration, was defeated in a 45 to 51 vote, with 12 Democrats joining all of the Republican senators in voting “no.” According to Democratic leaders in the Senate, the provision would have enabled 1.7 million homeowners to remain in their homes. This is only a small fraction of the estimated 8 million Americans who will be forced out of their homes by the banks over the next several years.

The opposition of the banks secured “no” votes from Democrats Max Baucus and Jon Tester of Montana, Michael Bennett of Colorado, Robert Byrd of West Virginia, Thomas Carper of Delaware, Byron Dorgan of North Dakota, Tim Johnson of South Dakota, Mary Landrieu of Louisiana, Blanche Lincoln of Arizona, Ben Nelson of Nebraska, Mark Pryor of Arkansas and Arlen Specter of Pennsylvania.

Obama had declared his support for what is known in Washington circles as the “cramdown” provision when he announced his “Homeowner Affordability and Stability Plan” in February. That plan, presented as a boon to homeowners hit by declining home values, the loss of their jobs, and adjustable mortgage rates that had shot up, was, in fact, tailored to serve the interests of the banks, mortgage servicers and big investors.The banks remained opposed and shifted their efforts to kill the measure to the Senate. At that point, the Obama administration caved in and tacitly dropped its support for the provision.

Stripped of the mortgage cramdown “stick,” all that remains in Obama’s “Homeowner Affordability and Stability Plan,” which the Senate is expected to pass next week, are a series of “carrots” for the banks.

One provision inserted into the bill at the bidding of the banks will reduce a proposed premium owed by the banks to the Federal Deposit Insurance Corporation, in return for hundreds of billions of dollars in FDIC guarantees on the banks’ bond issuances, by more than 50 percent. This will save the banks an estimated $7.7 billion.

A second provision will make permanent the temporary increase in bank deposits guaranteed by the FDIC to $250,000 from $100,000.

The bill also includes a safe harbor provision for mortgage servicers—firms that manage loans for investors and lenders—from lawsuits related to loan modifications. This provision, in fact, will provide legal protection for banks that have engaged in lending practices that skirt or violate the law.

I was afraid that the bill in its original form would have a problem in the Senate.  Appears that the banks still have their juice in Washington.  The homeowner in trouble will remain in trouble and only those with prefect credit will be the only ones receiving help.

Is The Government Here To Help?

Good damn question!  So far they do not seem to be helping anyone that is truly in harm’s way other than Wall Street.  The new plan to save people from foreclosure is not really all that much help either……the people that need the help the most are the ones that will be screwed in the long run……not much change there, huh?

The Obama administration’s housing plan is intended to help 9 million struggling homeowners avoid foreclosure, but it leaves out tens of thousands of borrowers in the most battered housing markets who won’t qualify because their homes have lost too much value.

The program detailed Wednesday offers refinanced mortgages or modified loans with lower monthly payments. Yet its refinancing plan is limited to borrowers who owe up to 5 percent more than their home’s current value. Loan modifications, supported by $75 billion in federal funding, are unlikely for severely “underwater” borrowers.

The plan doesn’t help homeowners in states “that are at the epicenter of the housing debacle,” said Greg McBride, a senior financial analyst at Bankrate.com.

The ineligible households are concentrated in California, Florida, Nevada and Arizona, but can also be found in struggling cities such as Detroit and Grand Rapids, Mich. Even houses in the outlying suburbs of the nation’s capital, where the economy is relatively healthy, have dropped substantially in value.

Government officials acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades.

Of the nearly 52 million U.S. homeowners with a mortgage, almost 14 million, or nearly 27 percent, owe more on their mortgage than their house is now worth, according to Moody’s Economy.com.

The program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowners, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.

For the modification program, which runs through 2012, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify. In the affidavit, applicants will have to cite the reasons behind their financial woes, such as job loss or a drop in income. The government will then take steps to verify the information.

Borrowers are only allowed to have their loans modified once, and the program applies for loans made on Jan. 1, 2009, or earlier. Mortgages for single-family properties that are worth more than $729,750 are excluded.

Lenders could reduce a borrower’s interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.

In case you are interested……this plan will help about 11% of those with mortgage problems…now there is a plan that we should get behind (sarcasm intended).

While the government is here to help…more and more home owners who were crapped on by the unscrupulous lenders will continue to lose their homes…how is this helping those of us on Main Street?

Obama’s Housing Plan

The Obama administration released guidelines on its plan to stem the collapse of the housing market with its “Making Home Affordable” initiative, or Homeowner Affordability and Stability Plan (HASP). The plan claims to offer “assistance to as many as 7 to 9 million homeowners.”

Part of the program, costing $75 billion, pertains to private lenders, providing funds to them if they agree to renegotiate home loans. A separate $200 billion component will make funds available to Fannie Mae and Freddie Mac, the two federally-backed mortgage lending giants, so that they can modify a share of the home loans they control.

The newly-announced guidelines pertaining to private lenders make clear that the program’s primary aim is not to assist homeowners, but to further prop up the banks. The plan does not reduce the grossly overvalued debt homeowners owe banks. It will not affect homeowners “underwater” by more than 5 percent—that is, those who owe more than 5 percent more than their homes’ current market value.

Hurdles have been thrown up to prevent easy access to the program. In order to qualify, homeowners must submit an “affidavit of financial hardship,” in addition to payroll documents, tax forms, and extensive information about other debts and assets in order to prove that they have made “every possible effort” to pay their mortgages. Some participating households will be required to seek debt counseling through government-approved “community organizations,” funded by HASP.

According to Moody’s Economy.com about 27 percent of homeowners, or 14 million out of 52 million households, are underwater, owing more than their houses are worth. A survey by First American CoreLogic, the research wing of a major real estate and home title firm, has found that the number of underwater homeowners is likely to increase markedly in the coming months. If home values should fall by the relatively modest figure of 5 percent, another 2.16 million homes would go underwater, according to the report. Housing values have already fallen by 26 percent since 2006 as measured by Standard & Poor’s/Case-Shiller index.

This plan has little chance of helping the majority of the homeowners….it will however give those that may not need assistance help while condemning others to homelessness.  Your tax dollars at work.

Ever Hear Of Land Value Taxation?

A New Year and a new beginning—so why not do something new?  Nothing that governments are doing sdeem to help gain the revenue they need for much needed programs.  And at the same time heap a pile of stuff onto the taxpayer.  Why not look for a better answer?

I recently posted this on my Mississippi blog, Gulf South Free Press, as a possible answer to the shortfall in tax revenues.  It would also be something to consider for the nation.  The news in at least 43 states is dire, they are scrambling for funds for projects, to the point of asking the Feds to get involved.  LVT would save the states and their programs.

LVT?  What is that, Professor?  I am glad you asked.

In the strict public policy application, Land Value Taxation (also known as split-rate real property taxation, and two-tiered real property taxation) is a type of real property taxation.  Whereas the typical real property tax taxes both land and the improvements on the land at the same rate, land value taxation taxes land at a higher rate while simultaneously reducing, or even eliminating, the tax on improvements.

The major points of a LVT:

•           A shift to LVT, even when structured in a revenue-neutral manner, usually results in net tax reductions for the vast majority of residents.

•           The problem of inaccurate or radically higher assessments is reduced because of the reduction in reliance on the building portion of the property tax.

•           The damage that taxes like sales and income taxes do to working families and local commerce can be lessened.

•           By reducing or eliminating the tax on improvements, there is a greater incentive to build, to build with higher quality materials, to maintain, to avoid blight, and to redevelop economically depressed areas.

•           Cities are almost always on the “short end of the stick” when economic development dollars are handed out.  This program helps achieve the same goals with no public investment.

•           When cities DO get permission to give out tax abatements, they lead to a revenue loss to the community with no assured payoff later.  LVT is purely revenue neutral to the city.  There is no tax shifting to citizens and property owners who have already done their bit.

•           A tax on land also has the advantage of being a “value capture tax.”  A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up.  Thus, the new public improvements would be paid for by those most benefited by the new public improvements — i.e., those whose land value went up most.

•           A tax on land has been shown to result in better land use patterns and more in-fill development.  This has the benefit of reducing sprawl.

•           Several Nobel Prize winners in economics have stated their approval of government revenue being raised from taxes on land.

•           Support for LVT cuts across political lines.  Free-market economists like how it reduces distortions in economic decision-making.  Environmentalists like how it reduces sprawl and helps fund public transportation.  Developers appreciate how it makes new homes more affordable for their customers.  Citizens like the reduction in taxes.

Ad valorem taxes are increasing nationally.  The assessments were made when the market value of real estate was hugh and now that it has lost almost 40% of its value, people will be paying a higher rate until the next assessment.

These days of uncertain times, it is a new thinking that is needed….and LVT is that new thinking.

I would like to thank Henry George and urbantools.org for the ideas in this post.  For years I have advocated the LVT and now it seems that it is time for action, not begging.

No Evictions For Fannie

Fannie Mae said on Monday it will allow tenants to remain in their homes and avoid eviction even if the building’s landlord goes into foreclosure.

Fannie Mae, the government-controlled U.S. mortgage finance company, said it now plans to sign new leases with rent-paying tenants living in the up to 4,000 single- and multi-family foreclosed dwellings owned by the company.

The leases are likely to be short-term as Fannie Mae continues to market the properties for sale, according to Brian Faith, Fannie Mae spokesman.

Foreclosures are at an all-time high and many economists, as well as the Mortgage Bankers Association, expect them to mount along with unemployment.

The company previously said it would not evict tenants during the year-end holiday season.

The company’s tenant eviction and foreclosure sale suspension is in place until January 9. It estimates 7,000 to 10,000 families have been able to stay in their homes because of this policy.

Freddie Mac, the second largest U.S. home funding company that also came under government control in September, is working on similar options that it expects to start rolling out in January, according to company spokesman Brad German.

We will see just how successful this will be or if they decide to say screw the homeowner, banks first.

If The Brits Can Do It, Why Not The US?

Many people hit by the downturn will be able to defer part of their mortgage interest payments for up to two years under plans unveiled by Gordon Brown.

The plan is designed to give those who lose their jobs or suffer a big cut in income extended breathing space if they are facing repossession.

The scheme will cover mortgages worth up to £400,000, the BBC understands.

The lender and homeowner will agree on the proportion of payment to be deferred, but it could be up to 100%.

Mr Brown made the announcement during a House of Commons debate on the Queen’s Speech, which took place earlier.

The prime minister told MPs the eight major mortgage lenders had signed up to the plan, which will start early in the new year and is meant to cut the risk of homes being repossessed.

It comes amid predictions repossession numbers could rise to 75,000 next year.

The full details of the scheme have yet to emerge, but it is understood the government will underwrite interest payments, which will then have to be repaid in full at a date to be agreed with the lender.

The scheme could help a two-income family where one earner has become redundant, a homeowner who has suffered a significant loss of overtime or people who have had to take a lower-paid job, Downing Street said.

People could also convert a repayment mortgage into an interest-only loan to take advantage of the scheme, Mr Brown’s official spokesman said.

The plan is designed to boost the wider economy, with a government source describing repossession as “a small risk of something disastrous happening to you” which had a major effect on confidence.

Looks like the Brits are way ahead of the curve on helping its people, the US still is working on the premise that if Goldman survives then all is well.  Sorry to tell them, Irene, they are smoking crack.  Letg me see if I have this about right, Goldman is using the money to buy other companies and the Brits are helping their “Main Street”.  You decide which is working for the people that put them in office.

Foreclosures Rising

Foreclosure activity in October rose 25 percent from a year earlier, although filings in California fell by double-digit percentage points for the second consecutive month due to a state law slowing the foreclosure process, according to a monthly report by RealtyTrac.

Foreclosure filings — default notices, auction sales notices and bank repossessions — rose by 5 percent from September to 279,561 in October, according to Irvine, California-based research firm RealtyTrac.

That means one in every 452 U.S. housing units received a foreclosure filing in October, the firm said in its report released on Thursday.

Years of lending to risky, or “subprime” borrowers that fueled the housing boom has created an unprecedented number of foreclosures due to the inability of many of those borrowers to pay their mortgages, particularly as interest rates reset and as plunging home values nationwide increasingly render properties worth less than the mortgage.

The numbers might also be showing the effects of the economic downturn.

Homeowners facing foreclosure who are spending more than 38 percent of their income on mortgage payments could have monthly payments reduced by Fannie Mae and Freddie Mac, the two largest U.S. mortgage finance companies.

“The good news is that there are programs and facilities in place that could actually have a material effect of stemming the tide of foreclosures, but as always the devil is in the details,” Sharga said, adding that he does not expect to see that effect until late in the first quarter of 2009.

RealtyTrac counts foreclosures by compiling the total number of properties with at least one foreclosure filing reported during the month. If more than one foreclosure document is filed against a property, RealtyTrac counts only the most recent filing.

You may take solice in knowing that your government is doing everything it can to see that your family has to move into a refrigerator box under an overpass. Do you feel secure knowing your government is more worried about American Express and AIG than what happens to you and your family?

Do You Really Want To Fix Main Street?

The bailout package just approved by Congress doesn’t address this problem at all. Homeowners and consumers still have the same debt, still face the same monthly payments. The only change is that the U.S. government has become a collection agent for the banks and investors.

The solution is to reduce the amount that working people owe. Reduce homeowners’ and consumers’ debt to the level it would be at if reasonable lending standards had been applied in the first place. Conservative practice is that families should pay no more than 25 percent of their income for housing. So a people’s bailout plan would mandate that mortgages be reduced so that monthly payments will be 25 percent of household income. But in no case should the debt be for more than the real value of the house, as determined by historical price levels adjusted for inflation. Credit card debt, second mortgages, and home improvement loans, college loans, and medical debt could also be adjusted by similar calculations, to a maximum of 10 percent of household income.

This would not cost the government a penny — it would force banks and investors to recognize the losses resulting from their own bad judgment and fraudulent practices. Millions of people would still be in their homes, and neighborhoods and local tax bases would be stabilized. And the financial system would be more stable because the banks could now be confident of receiving a steady stream of payments, even though these payments would be less than what they originally expected.

The proposals to revive the economy, listed at the beginning of this article, should still be adopted. The economic stimulus package that was blocked in the Senate by a Republican filibuster a few weeks ago included some of those provisions. And major reform and regulation of the financial industry is necessary; there are some excellent proposals to take over failing banks, regulate the financial industry, and tax financial transactions and exorbitant compensation to control speculation and help pay for the program. But until we clear up the massive, unfair, and often illegal debt that has been fastened on working families, it will act as an anchor dragging down the economy, and Main Street will be haunted by insecurity and misery.

Democratic leaders in Congress had a number of proposals that would have reduced the amount families owe on their mortgages. They were blocked by the Republicans, who don’t support any meaningful relief for homeowners.