I believe there are folks who believe that I am a huge Negative Nancy when it comes to talking about the economy. So much so, that they do not even want to bring up the subject around me. As I have mentioned: I am not an economist. I did not do well in economics while in college. I found it…quite honestly…a tad dry. It was also at 8:00 am. None of that means that I do not have the wherewithal to see that things all around us are not well.

I judge how well the economy is doing by how much it costs to fill my tank or buy groceries. I judge how well the economy is by how many vacant store fronts I see in downtown Boston, or how many I walk by on the way home. And I judge how well the economy is doing by how there is more and more positive spin (or what some people might call propaganda) on how things really are not as bad as they seem. And there are clients (and if you’re reading this, you know who you are) that are banking that “things will pick up later this year” or “I think we’ve hit bottom.”

At the risk of sounding like a Negative Nancy: Things ain’t looking so hot.

A post yesterday at Calculated Risk highlighted certain remarks made in a UPS Conference Call. Among them: “At this point, we see no immediate signs of economic improvement.” The tone of that remark seems a bit negative.

There were other tidbits in the news. There are stories about Americans hoarding food, and some retailers limiting the quantities that customers may purchase. Foreclosures continue to rise. It's all so very negative. And some people say we’re in a recession while our President assures us that we’re not.

And me? Yesterday, I had to fill my tank. I am thankful I live in town and do not need to fill it as often as I did when I was commuting. But I think I may be in a bit of a shock. No. Actually, I am pretty sure I am in a bit of shock. Though I bet others might argue that I’m just being negative.

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First, the news...
When a storm is coming, it's not uncommon for New Englanders to stock up on bread and milk. According to today's Financial Times, banks are apparently stocking up on cash. Does the FDIC's announcment that it plans to add 140 new workers in anticpation of bank failures have anything to do with it?

New home sales fell to a 13-year low in February. Consumer confidential fell to a 5-year low in March. Also falling, the number of retail jobs in Massachusetts.

In Sacremento, the SPCA is seeking a jump in the number of animals being surrendered by their owners who are losing their homes.

And now, the series...

Starting next Wednesday, and continuing each and every Wednesday, there will be a special blog entry dedicated to "Storm Preparation": dedicated to providing information to people and businesses who may be facing a financial storm.

Each week, I'll offer tips, news and strategies to help people and business prepare for the financial storm clouds they may see on their horizon. Remember, nothing you read here is meant to replace legal advice - and if you're facing a financial crisis now, I urge you to see an attorney.

If you have a question or a topic you'd like to see on "Storm Preparation", please email us at info@mcleodlawoffices.com.

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A friend passed along this story from today's Boston Globe: "Going Into 'survival mode.'"" The report takes a look at the ways people from all over the area are cutting back on monthly expenses as the anxiety over the economy continues to rise. It's worth the read.

I know there are those out there who proclaim that the economy will continue its decline so long as we continue to talk about it. I am not sure we can talk ourselves into anything - if we could, I am sure I could have talked my way into a 32 inch waist by now. But is it is hard not to talk about the economy when you read things like this blog entry over at Calculated Risk: Goldman Predicts $460 Billion in Credit Losses.

Finally, a reminder of the effects of foreclosures: family pets. From today's USA Today:

...a man ...arrived at the shelter this month saying he had to give up his cat and two small dogs. When an employee walked outside to help him get the animals into the shelter, "she discovered that he had arrived in a U-Haul loaded with boxes and furniture. He had lost his home and had no place to go. The very last thing he did was surrender his animals."

And from Whitter, California:

One man brought in his cat, Speedy, but visits every day and hopes to get him back when he finds a place to live...

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Bad news: Check this out at Calculated Risk:

Moodys: 8.8 Million Homeowners Underwater

Mass. foreclosures rise 128% in January

Good News: T.G.I.F. (sorry, that's all I got... enjoy your weekend).

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I have a message to all of those folks out there who are hoping that the economy will get better, that their mortgage company will “work” with them, or that the government will do something to help them through the financial quagmire they find themselves in: the sun is not going to come out tomorrow. Perhaps more succinctly said: it ain’t going to happen. I know I sound really negative, but hear me out.

Contrary to what you may read in the news, there are not a lot of mortgage work-outs and rewrites going on. If you do not have equity in your real estate, you’re going to have a tough – if not impossible time trying to refinance. The same applies if you are behind in mortgage payments or if the income is not there to pay the monthly mortgage payments. If you got sucked into an exotic mortgage product with the hope that the value of your real estate was only going to appreciate, then if you think you’re in a precarious position now, it’s only going to get worse.

Property values are depreciating everywhere. If you think I am being melodramatic, read about what’s happening in Arizona, California and Maryland. Then look further.

Property values are starting to go below the mortgage notes secured by the property ….and this hurts even those who did not get into exotic loans. Read more here: here’s a homeowner that bought a home for approximately $400,000 and the value has dropped 20%. Let’s assume that the homeowner put down a $40,000 as a down payment. If the value has dropped 20%, that down payment has evaporated. Poof. All gone (and unfortunately, I have clients in a very similar situation). If the homeowner was in an interest only payment period, then none of those payments were being applied to principal. Without equity, that homeowner has little chance of refinancing.

In addition to all of that the economy is tanking. I am no economist, nor do I pretend to be, but I did grow up during the 70s. I remember the gas lines, the “WIN” buttons and the nightly news updates reporting the price of gold. At that time, it touched just over $800 per ounce. A few years ago, on this very site, I wrote that a rise in the price of gold should be expected. Here’s what I wrote on October 17, 2005:

[W]hat can we Americans expect in the days, months and years to follow? Expect foreclosures to sky-rocket. Expect real estate values to plummet. Expect a slow down in consumer spending. Expect lay offs and business closings. Expect the price of gold, an indicator of inflation, to push past its now 18 year high (a fact which is curiously under reported in the main stream media).

As I write this article, gold is over $900 per ounce. In October 17, 2005, the price of gold closed at $473.80. And we’re no where near the end of this mess.

I’m not the only one touting this fact: Treasury Secretary Henry Paulson is. Watch these videos at Calculated Risk. Mr. Paulson is asked: “Is the worst over?” His answer speaks for itself.

Despite the wishful (and perhaps understandable) thinking of real estate professionals, the real estate market has not hit bottom. The price of gold (and likely silver) is only going to continue to inch its way up to history making highs. If the financial storm has not hit you yet, be thankful but do not assume you are safe and secure on high ground. Think of it this way: the flood waters are still rising, and no one really knows where “safe” high ground really is. All you can do is be aware, pay attention and prepare because when it comes right down to it, “the worst isn't over, the worst is just beginning.”

In other words, the sun is not going to come out tomorrow. Please plan accordingly.

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Houston-based LTD Financial Services got slapped with $1.3 million in civil penalties to settle FDCPA violation charges.

Washington Mutual issued a press release in response to the action filed by the NY Attorney General. We reported on that action earlier this week.

An astute observation on the passage of BAPCPA: "Be careful what you wish for."

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From today's New York Times:

Borrowers who took out loans in the first six months of 2007 are falling behind on payments faster than homeowners who took out loans last year, according to a report by Friedman, Billings, Ramsey, an investment bank based in Arlington, Va. The data suggested that more Americans could lose their homes and that the housing market’s troubles might persist longer than many analysts have been predicting.

Read more here

Source

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This morning's Worcester Telegram is reporting that from January 1, 2006 through June 30, 2007 a total of 1,370 foreclosure notices were filed by lenders against Worcester homeowners. It also does not appear it will get better anytime soon:

Trouble could continue for the next two years, according to Mr. [Clark Ziegler, executive director of the Massachusetts Housing Partnership]. ARMs on about 200 more Worcester homes are scheduled to reset before the end of this year, he said. About 1,000 more ARMs reset in Worcester next year, followed by 1,000 more in 2009, he said.

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Bank of America reports that “’unprecedented dislocations’ in credit markets will have a ‘meaningful impact’ on third-quarter results at its corporate and investment bank.” Unprecedented dislocation sounds painful. Perhaps that’s why they recently hiked up their ATM fees.

Source

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Today the The Wall Street Journal reports that the bankruptcy of American Home Mortgage Investment Corporation puts thousands of homeowners in “imminent risk” of losing their homes.

From the New York Post: Countrywide reportedly continues its struggle in this mortgage and housing meltdown.

And finally, USA Today reports that there should be no assumptions that the Federal Reserve will cut interest rates.

Dallas Federal Reserve Bank President Richard Fisher said the U.S. economy appears to be weathering troubles in housing and financial markets, but it is uncertain how things will play out.

"Our economy appears to be weathering the storm thus far. The future path of that storm and the appropriate policy course, however, are still to be determined," Fisher said in remarks prepared for delivery to a community forum in Laredo, Texas.

Last summer, I questioned whether we were heading into a Perfect Storm. If you read the news close enough, it would appear that we are. Are you prepared?

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One of the most common client complaints I have heard throughout my career is how long the legal process can take. I can appreciate that. At the same time, what’s worth doing right, is worth doing well. Sometimes, it takes time to do something well. And lately, time is something that has been a luxury with some of the clients I see. Today, I was reminded how important time can be.

I received a call from some homeowners. They are in one of my least favorite mortgage products: 2/28, interest only. Translated: the first two years of their mortgage payments are “interest only.” Then, in 2 months, the principal will be added to their already high interest-only mortgage payment.

Fortunately, they are not behind. Yet. But they will be if time continues to march forward without some intervention. And even more fortunately, they are calling me early enough that we can take our time and explore all reasonable options available. There is no rushing to the Bankruptcy Court to stop an auction. We can take our time, explore the options, and move in the best direction for them.

Not everyone has that option, but the fact is, the only reason why they do not have the option is because they do not, or cannot look at the handwriting on the wall. Privately, colleagues have expressed their view that I tend to have a negative view of the economy. At the risk of continuing to sound like a 'Negative Nancy', today the stock market decided to deal with the summer heat by slipping into the deep end of the pool. Is the end nigh? No. But one cannot ignore that come October $50 billion worth of mortgages will be adjusted to reflect higher interest rates. For real. The handing writing is on the wall for more than the folks who were brave enough to pick up the phone today.

If you see the handwriting on the wall – and perhaps most importantly, if you can muster up the strength to look at what might not be so pleasant to look at on that yonder wall, call someone. Call someone now. It’s only July. There’s two full calendar months before October to plan, prioritize and strategize. That is time. And time is a precious commodity when it comes to saving your home.

October is a time for pumpkins, leaf raking and the World Series. If you are looking to October with a sense of dread, it’s time to do something about it. You can. There is time.

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I am just getting back from a much needed respite. I had originally contemplated writing about my attending the Northeast Consumer Forum in Newport, Rhode Island. But after I wrote about it, I thought it was a pretty boring piece. So instead, I’ll simply mention that I happened across this article out of San Diego on the foreclosure crisis.

But before I do, I need to create the mood, and since I am still trying to get back into the swing of things, I cannot manage a more artful segue than to tell you that I am going to create mood and thus, I am going segue.

In the 2001 film Moulin Rouge, Satine, played by Nicole Kidman is a doomed temptress at the French Club which is run by Harold Zidler, played by Jim Broadbent. Satine needs to tempt the Duke to give money to the club to fund a show. But before she can finish singing her first number, she passes out to the horror of the “guests” of the club. As she is carried backstage, concerned people fawn all around. When she awakes, she is coughing up blood, a fact her attendants are all too careful to hide from Harold who desperately needs the Duke’s money, and presumably, the Duke’s happiness, and sees the only way of getting both is through Satine.

Being the trooper that she is, she gets up. She is clearly having difficulty breathing. She doesn’t look like she can stand, and she’s sweating profusely. She assures Harold she’s fine, and Harold who can see only what he wants to see, announces gleefully “e-very-thing’s go-ing so welllll!” It’s painfully funny and sad.

Segue back to this article. Here’s a tid bit:

Now that the dice have come up snake eyes on the housing market, other shoes will probably be dropping soon. Retail sales, which are plummeting at places like Home Depot and Sears, seem likely to decline further as defaulting home buyers cut down on their big-ticket purchases. In June, retail sales excluding gasoline fell 0.9 percent.

If retail sales continue to fall, adding to the declines in construction and real estate employment, unemployment could start to rise. The Norris Group's latest real estate market report presents a feasible scenario in which unemployment in California rises above 8 percent, compared with its current level of 5.2 percent.

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Minimum payments on Bank of America credit cards: going up.

The Massachusetts foreclosure rate as measured by April filings: going down.

Gasoline prices: going up.

The cost of electricity as we head into the summer season: going down.

Number of people over the age of 45 seeking bankruptcy protection: going up.

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You might want to read this from yesterday's New York Times:

...it’s now clear that people who chose renting over buying in the last two years made the right move. In much of the country, including large parts of the Northeast, California, Florida and the Southwest, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It’s almost as if they have thrown money away, an insult once reserved for renters.

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Subscribers to our e-newsletter, Debt|Dollars|Sense might remember our recent recommendation of Calculated Risk as a blog worth taking a look at. This blog provides unique analysis and insight into what's going on with our economy, the housing market and the sub-prime mortgage crisis (and what we might expect in the days, months and years ahead).

If you have not done so already, please check it out - and check back often.

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The news on the housing market is not cheery.

The FDIC reports that residential mortgage loan charge offs climbed to almost 200% during the 4th quarter of last year. The FDIC also reports that the number of deliquent loans at banking institutions is also on the rise.

The Japanese are getting concerned over increasing defaults in sub-prime mortgage loans here in the US. They are not the only ones. Freddie Mac today announced "today announced that it will cease buying subprime mortgages that have a high likelihood of excessive payment shock and possible foreclosure."

So there's all that news, and then we have today. Apparently tired of the cold winter weather, the stock market headed south. Marketwatch reports that todays drop (which included a 200 point drop in one minute) is the worst one-day drop since 2001. From Breitbart.com:

The housing market, which the Street had been hoping had bottomed out, also looked far from recovery after a Standard & Poor's index indicated that single-family home prices across the nation were flat in December. A later report from the National Association of Realtors said existing home sales climbed in January by the largest amount in two years, but the data didn't erase housing-related concerns, as median home prices fell for a sixth straight month.

Some argue that the drop is simply a long overdue correction. Others blame the Drudge Report.

All I can say is that these sure are interesting times.

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In recent years, the Massachusetts housing market has been – in a word – ridiculous. Prices of modest homes have not been in line with income. In other words, owning a home in Massachusetts has been unaffordable for many. As a way around this, mortgage companies (and brokers) came up with creative mortgages. For example, a borrower could pay interest only for a few years, while paying nothing towards principal. The thought of getting a 100% mortgage did not seem so daunting at the time because homeowners have believed that they could refinance later when the values of their homes increased with the market. Those prospects are looking slim.

Home prices in Massachusetts are falling and 2006 saw the worst one-year drop in prices since 1993. As reported in the Boston Herald:

The median price -- the point where half of homes sell for more and half sell for less -- dropped 5.8 percent, from $345,000 in 2005 to $325,000 last year, according to a report by The Warren Group, a Boston-based publisher of regional real estate data and other financial information.
That price had grown 12 straight years, beginning in 1994.
"You have to realize that that was a wonderful decade," said Timothy Warren, CEO of The Warren Group, referring to the last 10 years of home sales. "I think we have to take our medicine and realize that it can't go up forever."

A realtor told the Standard-Times that the market is not crashing at all. He “likened the market to being at the top of a pyramid, about to roll over into a plateau of moderation and consistency.” This is not a particularly good metaphor since the only pyramids I have ever seen with a “plateau” are those from the Mayan era, and what happened on those “plateaus” was rather heart-wrenching (pardon the pun). Also, I have noticed that the the other side of the “plateau” goes down.

Even though the articles end on an upbeat financially distressed homeowners need to be proactive. Contact a professional. Learn more about your options. Listen carefully and choose wisely. And don't assume that because people are whispering things like "soft landing" and "plateau" that the news will be any better tomorrow.

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So says John Bitner, chief economist for Boston’s Eastern Bank and local housing market cheerleader who tells the Boston Herald that the Massachusetts real estate market should see an “uptick” come spring (which given the perplexing weather we have had here, coupled with blooming cheery blossoms on the Esplanade, some might argue is now). Another commenter, “Barry Bluestone, a housing expert at Northeastern University, agreed the housing market could hit bottom this year - but his hunch was that it might take until the summer” to reach an "uptick."

But there is no mention of the Center for Responsible Lending study that predicts 2.2 million foreclosures. There is no mention that the failures in the sub-prime mortgage market are only rising (and certainly no mention that mortgage companies and servicers are also heading into bankruptcy). There is no mention that these failures are only going to increase inventory which will have a negative impact on prices. As Michael Dawson from TheTimeAndMoneyGroup.com recently said that this all means that “…the value of your house is going down and its not stopping for awhile.” None of this is good news for homeowners who have refinanced over and over again, or recently purchased a home.

I cannot help but wonder if there is any harm to only glossing over what’s really going on out there in the housing market. For those who have sat through two days of rain on this weekend, and are awaiting the kick-off between the Chargers and the under-dog Patriots, I guess there’s no harm in hoping that the sun will come out tomorrow. However, I say that only with the hope that people remain prepared – emotionally and financially – for a lot more rain.

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Interest rates have pushed mortgage payments higher. The softening real estate market has made it difficult for homeowners to sell or refinance. And just in time for the holidays, Boston is increasing its residential tax rates…and for some, the increase is going to hurt even more. From Boston.com:

The annual tax bill for the average single-family house will increase from $2,755 this year to $3,093, starting in January. The estimated bill for the average two-family house will jump from $3,307 to $3,857, while the bill for the average three-family house is expected to increase from $3,725 to $4,309.

Meanwhile, in other news, some argue that the financial crisis facing homeowners is nothing like it was in the early 1990s. The Lowell Sun reports that might not be the case:

Massachusetts homeowners had 4,891 foreclosure actions filed against them during the third quarter of this year, 66 percent higher than the same period in 2005, according to ForeclosuresMass.com, a provider of such data. The most recent data indicates that foreclosure filings are on record pace, higher even than the dark days of 1991.

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The Boston Sunday Globe's Magazine asks this question:

As property values soared, we got hooked on the idea of using our house as a bank, pulling out blocks of equity to pay for renovations, vacations, and more. Now, will the softer real estate market cost some of us our homes, our shirts, even our retirement?

For many Massachusetts homeowners, the short answer is yes.

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The housing market is slowing down. At this point, it should not be news to anyone. But after reading this from the Globe and Mail (Canada), and after reading the preceding article on Nightmare Mortgages, it is even more clear that the folks are hardest hit by the declining real estate market are those who were seduced by mortgage brokers selling adjustable mortgages.

I could call for reform, but that is not going to make bill collectors stop calling. I could chastise the industry, but that is not going to make a distressed homeowner sleep easier tonight. Instead, all I can do is urge homeowners to prepare for what may be The Perfect Storm.

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In the local news the foreclosure rate in Massachusetts "spiked" during the month of July. Local real estate agents have told me that the market is slowing. And across the pond, there is talk that portends even worse news.

Some are suggesting that the housing market in the US is in a "free fall." Their words. Not mine.

The slowdown in the US housing market will force businesses to slash 73,000 jobs a month next year and could be more damaging to the world economy than the dotcom crash, warn economists.

"Things do seem to be getting worse very quickly. Freefall is a strong word, but I think it's the right one to use here,' said Paul Ashworth, chief US economist at Capital Economics.

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The Association of Community Organizations for Reform Now is concerned about the impact rising interest rates have on homeowners. From the Houston Chronicle:

ACORN also is worried that many of those with adjustable-rate mortgages, which made up three-quarters of all subprime, or nonconventional, loans in 2005, will find themselves saddled with debt as interest rates rise.

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We are not talking about puppies. From MSNBC and Newsweek:

Millions of Americans bought into the real estate boom with adjustable mortgages and home equity loans. Now rising interest rates are forcing them into agonizing financial choices.

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I just got through reading many of the comments posted to the Globe’s Spotlight series Debtor’s Hell.comments posted to the Globe’s Spotlight series Debtor’s Hell. They range from folks sharing their own experiences, to other more pompous remarks that the consumers profiled got what they deserved because they should not buy what they cannot afford. The latter reflects a profound lack of understanding of those things in life that push people into debt to begin with.

It’s rare that my clients have not suffered through a divorce, a job loss, a health care crisis, or in some cases, a death of the primary bread-winner. I have represented people who have had to use credit cards to put food on the table. In addition, as I have commented on here, there is a lack of financial literacy education in our schools. If parents cannot control their money, how are their children going to do it?

But more importantly, the latter comments reflect a lack of understanding of how the credit card industry engages in tactics that are not all together dissimilar from a stereotypical loan shark. Default interest rates, interest rates upwards of 20 and 30 percent, and card user agreements that are often stuffed into monthly bills along with advertisements for useless trinkets. The system is one-sided and fundamentally unfair. It is also perfectly legal.

Richard Daniels, a creditor’s attorney, made this astute observation:

''Any system that puts people's backs up against the wall doesn't work,'' he said in an interview. Daniels described the penalties and fees that credit card companies tack onto consumer bills as ''usurious'' and ''totally unconscionable,'' making it impossible for people to get out of debt. Such charges, Daniels declared, amount to ''classic abuse I wish to hell Congress would do away with.''

''This used to be an honorable business,'' Daniels said, when discussing collections for credit card companies. ''Now, the guys on the other side are thieves.''

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From today’s CapeNews.net:

Home foreclosures on Cape Cod, and in two Upper Cape towns in particular, have increased at a dramatic rate according to a new report from ForeclosuresMass.com.
The web site, which tracks home foreclosures for prospective home buyers through land courts, reported this week that foreclosures in Barnstable County have shown the sharpest increase over the past year of any Massachusetts county. In comparing bank foreclosures from June 1, 2005, to June 1 of this year, ForeclosuresMass.com found that foreclosures had increased 77.93 percent in that time.

What’s unclear from these figures is what percentage of these properties in foreclosure represent second homes, vacation homes or investment property (i.e. rented to tenants) and what percentage is a primary residence for the borrower.

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I drove to a conference in Newport, Rhode Island over the weekend. I filled my car up on Friday, and it was $3.15 a gallon. I had to fill it up again on Sunday, and the price had jumped - in just two days - to $3.29 a gallon. In California, the price of gas is hitting some residents hard. From the LA Times:

That's especially so in California, where long commutes are the norm and public transit is of little use to the masses who in recent years moved ever farther from their jobs to find affordable housing.

"For some people, their cost for gas has doubled in a short amount of time," said Susan Ulaga, senior vice president at Consumer Credit Counseling Services, a California nonprofit. "People are able to shift money around for a while, but eventually the credit card limits kick in … and once that credit is used up, they are saying, 'What do I do now?'"

A growing number of them are heading to pawnshops, said Mike Robinson, a co-owner of Orange Pawnshop in the city of Orange.

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I may have mentioned on more than one occassion: I am not an economist. However, there are some numbers that are just not adding up.

On one hand, this sounds good: at the end of the June, the US Commerce Department reported that consumer spending rose during the month of May by 0.4 percent, after a 0.7 gain in April.

The government reported Thursday that the overall economy raced ahead at an annual rate of 5.6 percent in the January-March quarter, the fastest pace in 2 1/2 years.

So this means people are earning more, and thus spending more.

Yet on the other side of the coin, the Federal Reserve reports that consumers took on $4.4 billion more in debt in the same month.

Credit cards and other forms of revolving debt jacked up the overall number. U.S. consumers added $6.7 billion in revolving debt in May, up 10% from the prior month to a total of $812 billion.

And then, there is this factoid:

Americans' personal savings rate, the amount of saving left from disposable income, dipped to a negative 1.7 percent in May, down from a negative 1.6 percent in April. The savings rate has been negative for 12 consecutive months, meaning that Americans are dipping into savings or borrowing more to finance a spending level that is exceeding their after-tax incomes.

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Yesterday the news was about the escalating foreclosure rate in Massachusetts.

Today, Boston.com is reporting that home prices in Massachusetts dropped 4% during May.

That might not seem like a lot, but let’s look at this possible scenario: a home that might have fetched $400,000, is likely to get only $384,000.

Many are also accruing little equity or losing what little they may have acquired. Interest rates on five-year adjustable-rate mortgages have increased more than one-half percentage point this year, to 6.32 percent, according to Freddie Mac, the national mortgage backer.

But the report ended on a peculiar note:

…economists said that as long as the national economy remains strong and job growth continues, the housing decline in Massachusetts would not be severe. ``You've seen pretty tremendous home price appreciation so as that cools off you're going to see some fundamental changes," said Bob Walters, chief economist for Quicken Loans in Detroit. But a strong deterrent to a market crash like the one Massachusetts experienced in 1991 is strength in the US and local economies, which generates jobs and income for houses, he said.

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Are we headed for one? The number of foreclosures in Massachusetts continues to inch upward. According to a Press Release from ForeclosuresMass.com, the rate of foreclosures during the month of May are 105% higher than they were in May 2005 and over 165% higher than they were in May 2004.

From Jeremy Shapiro, president and co-founder of ForeclosuresMass.com:

"It is clear that many homeowners, especially those with adjustable rate mortgages, are being pushed closer to the edge as interest rates rise at such a consistent clip. We may be witnessing a 'perfect storm' scenario where a flat real estate market, higher interest rates, rising energy costs and specialty loans are causing significant difficulty for thousands of Massachusetts property owners."

A Perfect Storm might sound a little dramatic. However, interest rates continue their creep upwards and it is expected that the Federal Reserve will announce a 25 basis point increase after their meeting on Thursday. It is expected that there will be a further increase in August.

And like all storms, the only way to protect yourself, your home and your family is to be prepared.

Posted by Bill McLeod at 12:56 PM | Permalink | Comments (0) | TrackBacks (0)

Foreclosures in Massachusetts continue to rise. ForeclosuresMass.com reports that they are at a 12-year high.

From today's Worcester Telegram:

The role played by the state’s slow economy [in the high foreclosure rate] is not clear, but many home buyers who used sub-prime loans or variable-rate mortgages are having trouble keeping up with payments as interest rates increase — especially those who purchased properties with little or no down payment.

Posted by Bill McLeod at 12:17 PM | Permalink | Comments (0) | TrackBacks (0)

I’ve been spending the last two days walking in the New Orleans humidity back and forth from my hotel (the Riverside Hilton) to the hotel where the conference is (the Marriott). I did not pack the right shoes and my feet are killing me. Today’s conference ended early so fortunately, I have the afternoon to roam around, rather than focus on dischargeability issues and means test applications.

But I am afraid this evening, I may be shuttling back and forth between the hotels more than I have in the past two days. Today, New Orleans votes for a mayor. Incumbant Ray Nagin’s post election party is at the Marriott. His challenger's, Lt. Gov. Mitch Landrieu's is at the Hilton. The media trucks are lining up as if they were following a sensational trial. This election, as it turns out seems to be a trial for the City of New Orleans. Tonight, the City renders its verdict. The drama however, has only just begun.

Continue reading "A Lawyer in New Orleans, Day 4: Election Day" »

Posted by Bill McLeod at 4:25 PM | Permalink | Comments (0) | TrackBacks (0)

I am on a lunch break and am passing along this link to a USA Today article that further goes into the economic impact New Orleans is feeling. This article however, takes it from the perspective of one of the areas beloved attractions: the local aquarium.

Posted by Bill McLeod at 12:17 PM | Permalink | Comments (0) | TrackBacks (0)

This week I am off to join my colleagues at the annual conference of the National Association of Consumer Bankruptcy Attorneys. This year the convention is in New Orleans.

This will be my third NACBA convention. While I am looking forward to catching up with people I only see once a year or so (and comparing receding hairlines and expanding waistlines....for some), I sort of know what to expect.

This year, I am heading down a day early (and staying an extra day) in hopes of making my way out of downtown, and into the neighborhoods that have been hit. I know what I read in the media and we all know what happened last fall when the two storms destroyed so many lives. Yet despite that, I am really not sure what I can expect.

But I will report it here.

While the economic issues faced by the survivors are very unique, they are not all that dissimilar from those who find themselves adversely affected by something they had no control of. For the people of New Orleans, it was the hurricane season of 2005. For others across the country, from Boston to Bozeman, it might be a death in the family, an accident, an illness or a plant shut down. All of those events can lead an individual or a family down a road of economic hardship. All of those events can leave one feeling like the universe has just pummeled them. Yet despite that, New Orleans is rebuilding.

So stay tuned. I have every reason to believe the New Orleans conference will be something worth reading about.

Posted by Bill McLeod at 7:02 PM | Permalink | Comments (0) | TrackBacks (0)

Fannie Mae announced that it is extending the foreclosure moratorium to homeowners in the Gulf who were hard hit by Hurricanes Katrina and Rita to August 31, 2006.

Posted by Bill McLeod at 6:59 PM | Permalink | Comments (0) | TrackBacks (0)

Boston Mayor Thomas Menino has announced that city officials have scheduled meetings with Ameriquest to “discuss lending practices in Boston.” The foreclosure rate continues to climb. Folks in Boston neighborhoods are already burdened by “creative mortgages” in a climate where interest rates are inching their way up. And Ameriquest is shelling out more than $325 million to settle claims stemming from its predatory lending practices.

It’s too little, too late for both parties.

Unfortunately, it is also too little and too late for many Boston homeowners.

Posted by Bill McLeod at 1:04 PM | Permalink | Comments (0) | TrackBacks (0)

When the reform laws were under consideration, I recall a conversation with a Senate staffer who said that the Senator (who for now, shall remain nameless) was concerned that bankruptcy was becoming a "life style choice." This sound bite was among the chorus of others singing of the so-called abuses of the bankruptcy system. But what is really pushing people to file bankruptcy? Is it the sense of entitlement that comes from having access to credit and shopping malls? Or is it something different? Our friends down under might be able to shed light on it.

More and more Australians are finding themselves in bankruptcy as the price of as pushes a bigger economic burden on households. This higher gas prices have apparently been leading to higher default rates on mortgages. Bankruptcy filings are up 25%.

At the same time, there are reports, and more reports, and even more reports on the prices of oil and gas in the United States. This leaves one to wonder: how long it will be before this trend pushes more people into bankruptcy?

Posted by Bill McLeod at 3:16 PM | Permalink | Comments (0) | TrackBacks (0)

It appears that the industry thinks so. Given the increase in foreclosures being attributed to such lending practices, one must ask what is going on in the minds of industry executives.

Posted by Bill McLeod at 12:46 AM | Permalink | Comments (0) | TrackBacks (0)

More and more, I am speaking with and meeting folks who have no equity (or virtually no equity) in their homes, or worse, "negative equity." In other words, the balance of the mortgage(s) due on the property is greater than the value of the property. MSN Monday's Liz Pulliam Weston tells us that "[a]ll though ARMs and teaser rates are coming home to roost.".

Posted by Bill McLeod at 6:04 PM | Permalink | Comments (0) | TrackBacks (0)

From today's The Mariner:

While the number of deeds and mortgages recorded at the Plymouth County Registry of Deeds decline slowly but steadily, the number of foreclosure deeds recorded in February jumped to a recent high of 25. Register of Deeds John R. Buckley Jr. reported by way of comparison that Plymouth County recorded only six foreclosure deeds in February of 2004.

Read the rest here.

Posted by Bill McLeod at 3:53 PM | Permalink | Comments (0) | TrackBacks (0)

In today's Boston Herald, columnist Brett Arends takes a look at a real estate market that for some, is not meeting expectations.

Posted by Bill McLeod at 10:46 AM | Permalink | Comments (0) | TrackBacks (0)

This week the a Washington Post report addressed the country's reliance on the housing market for a strong economy. It was nice to see that at least the post referenced the housing slump in the 80s, which many who claim that "housing values never go down" seem to forget.

Posted by Bill McLeod at 11:25 AM | Permalink | Comments (0) | TrackBacks (0)

Andrew Laperriere writes in The Weekly Standard that the housing bubble topic has been a favorite topic of bloggers (…and I infer that should include yours truly) “who argue that President Bush’s tax cuts and other policies have created a hollow and unsustainable economy.”

That's not to say