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.
Clients have been kind enough to share with me some of the many letters and solicitations they receive from people and companies who have learned of their looming foreclosure. Actually, to be more accurate, clients tell me they are deluged with these letters. Some of these letters offer assistance and provide truthful and accurate information. Others however, are clearly designed to mislead.
Recently a co-called “US agency” (who for now will remain nameless) sent a letter to a client declaring this:
Bankruptcy stops foreclosure but you will lose your home. (Note: Only 11% of bankruptcies are successful.)
Wow. Talk about scare tactics. Needless to say, this is not true. A Chapter 13 Bankruptcy can be used to save the home from foreclosure assuming a confirmable plan can be put together. The “11%” is neither cited to any source nor supported by any facts. Such a sweeping generalization is clearly and unambiguously intended to sway people away from even considering bankruptcy as an option.
People facing foreclosure need to do their research and not rely on what one company, or a group of companies tells them. Unless a bankruptcy attorney who they have met with has told them that in no uncertain terms, bankruptcy is not an option, no one should assume that it is not. And companies who make such broad sweeping generalizations that are simply false should be avoided.
Subscribers to our newsletter might remember our recommendation of iamfacingforeclosure.com as a recommend blog to visit often. Casey Serin is a 24 year old “would be real estate mogul” who is learning some difficult lessons about real estate, investing, mortgages, and foreclosures. On his blog, he shares his thoughts and experiences on his journey through this undeniably difficult process.
I have been told more than once that people follow this site for months before they have the courage to call me seeking advice. Today, Mr. Serin says simply: “Something’s Gotta Give.” A review of the postings of the last several weeks reveal that the pressures he faces are, on some level, taking a toll. But the fact that he shares them with the public and admittedly wants to “help others in trouble” is something readers of this blog need to know.
By the time many people come to see me, they have already been feeling overwhlemed for some time. The financial pressures can lead to depression and isolation. Here, Mr. Serin is providing an exceptional public service: reminding others similarly situated that they are not alone.
Please visit I am facing foreclosure.com.
From Today’s Boston Globe: Boston’s Department of Neighborhood Development (DND) announced that the foreclosure rate in Boston has quadrupled since 2005.
The numbers are still much lower than the 1,700 foreclosures in Boston in 1992, when the technology-based economy ran aground and some property values were cut in half. But Mayor Thomas M. Menino said he is concerned about the current figures, fueled by the rising delinquencies of risky subprime mortgages.
‘‘It’s not just a Boston problem. It’s a nationwide problem,’’ he said. ‘‘We need state help. We need federal help.’’
That help may have to come from Washington. In an April 17 decision (Waters v. Wachovia Bank, N.A., et al.) the US Supreme Court held that Wachovia’s mortgage business, whether it was conducted by the bank itself or through the bank’s operating subsidy, is subject to the oversight of the Office of the Comptroller of the Currency pursuant to the National Bank Act (12 USC Section 1, et seq.). It is not subject to the “licensing, reporting and visitorial regimes of the….States.” A bank’s subsidary mortgage company is subject to state regulation only if the parent bank would be if it performed the same function.
Consumer groups have called for Congress to reform the bankruptcy code to save the homes of Americans who are mired in the subprime mortgage foreclosure crisis.
“For most of these families, bankruptcy is the only viable option to save their home,” said Henry Sommer, president of [the National Association of Consumer Bankruptcy Attorneys]. “This current exclusion is contrary to sound policy, and operates to disadvantage low-wealth and middle-income borrowers as compared to debtors with the wealth to own more than one home.”
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.
On Paula Zahn Now, host Paula Zahn examines whether mortgage brokers are to blame for the mortgage crisis. The series “Debtor Nation” continues tonight at 8:00 pm ET. Transcripts from last nights “Debtor Nation” are available here
I spent last night at the Kendall Square Cinema in Cambridge with a number of local bankruptcy attorneys for a special screening of Maxed Out. The movie tackles an important subject for my clients, for me and for just about everyone else I know: debt.
Director James Scurlock take us on a journey from the living rooms of average Americans to the halls and hearing rooms of Capital Hill. From there you will hear the personal stories (some funny, some not) of average people. You’ll hear from bankers and credit card companies. You will hear from folks that you can agree and empathize with. You will also hear from folks that will leave your stomach feeling a little…um, let’s just say a little “off.” If you are remotely curious how the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 sailed through the House of Representatives, you need to see this movie.
Also, if you are wondering…
…how and why people are facing foreclosure;
…how and why people find themselves buried in debt they can not (and may not ever) climb out of; and
…what average people do when they are staring the debt-monster in the eye,
see this movie. No one can afford to miss it.
The screening was sponsored by Americans for Fairness in Lending, a non-profit group based in Boston. Please visit their website where you can learn more about what they do.
Click here for movie times at the Kendall.
Many distress homeowners tell me that they are hoping to refinance their way out of their adjustable rate mortgages. USA Today reported this weekend that lenders are already raising the bar for prospective borrowers. In other words, it is not nearly as easy to refinance as people may need it to be.
To stem their losses, lenders nationwide are notifying mortgage brokers to cancel loan programs. Many of them are:
•Reducing loans for 100% of the purchase price.
•Reducing the number of “piggyback” loans, whereby a lender makes one loan for 80% of the purchase price and a second loan for the remaining 20% of the price at a higher interest rate.
•Raising the required credit score.
•Requiring more documentation of a borrower’s income and scrutinizing the appraisal and comparable-home sales data.
.
None of this bodes well for distressed homeowners.
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.