Mortgage Lowdown

Baltimore is witnessing a disturbing trend. Agreed, the number of foreclosures in the city dropped more than 8 percent over a four-year span. However, a new study shows that the rate of foreclosures compared to the number of homeowners in the city was almost twice that of Philadelphia. This trend has cost the city $1.8 billion.

This trend is causing great concern among the city agencies, housing groups, lenders and nonprofits. So they decided to come together and launch a new initiative to help people facing foreclosure. They also hope to sustain Baltimore’s momentum in boosting its roster of homeowners with this move. Baltimore.bizjournals.com reports:

Prospective homebuyers will get access to independent counseling on the costs of homeownership and spotting fraudulent real estate practices as part of the effort launched by Mayor Martin O’Malley and a new group called the Baltimore Homeownership Preservation Coalition. Homeowners threatened with foreclosure will be able to call 311, the city’s One Call Center, where operators will connect them to trained counselors and refer them to housing aid organizations.

Read more: City’s high foreclosure rate spurs hotline, counseling

I know this is news that comes from a really far off place, but the fact is that distances don’t change people and that we are not alone in our mortgage sufferings. Recently, the Reserve Bank in Australia noted that there has been a recent increase in the number of people behind on their mortgage payments. Abc.net.au reports:

The central bank also says Australian households have adopted a more cautious approach to their finances, with consumer spending rising broadly in line with incomes. The Reserve Bank is challenging banks and other lenders to avoid a further erosion of credit standards as they chase business in a competitive home loan market.

Read more: Increasing number of mortgages in arrears, says RBA

I recently read about a couple, the Wolfes, who purchased a home they couldn’t afford. Now I know what you are thinking… “What’s so unique about that? Just about everyone’s been doing that”. Well, yes you are right. A large, too large for comfort, number of people took loans they could ill afford and are now ruing it as they find it difficult to repay them. However, this senior couple had more than just this much of bad luck. They took this house because their agent promised guaranteed financing. Many predatory lenders resort to this trick wherein they tend to loan money to people with bad credit with the express purpose of taking their home.

Now that they had fallen prey to this lender and realized that they couldn’t make payments on their mortgage, they decided to sell off their home and move to a smaller, more affordable home. A real estate company contacted the Wolfes and sent them a form to sign. The company claimed that this would expedite the sale of their home. The couple was expecting to save some money from the profit of the sale. What the Wolfes didn’t realize was that they had signed the last page of a quitclaim! This meant they had lost all rights to their house and the profit from the sale — a profit of $125,000!

By the way, if you’ve fallen prey to such a lender, you don’t have to panic. You do have legal recourse. While each of the individual steps these companies take are generally legal, when you look at the whole picture, the deal becomes what the court system calls “unconscionable”. All you need to do is get in touch with the attorney general’s consumer protection division.

Foreclosure has become a national problem now and just about anybody who can find a solution to this problem is encouraged and appreciated. In such an attempt, NeighborWorks America recently announced national honors for three organizations that have developed innovative and cost-effective approaches to preserve homeownership for families in jeopardy of foreclosure.

Montana-based Neighborhood Housing Servicing of Great Falls (NHSGF) got recognition in the “Innovative Outreach” category, for their ‘Who’s Got a Sheriff?’ program. In the state of Montana, the Sheriff’s office serves all foreclosure notices. This way, whenever a foreclosure notice is served to a homeowner, the county Sheriff provides valuable information on NHSGF’s foreclosure prevention services. The Consumer Credit Counseling Services of San Francisco’s Outbound Telephone Counseling program also won accolades. At the time of mortgage delinquency, CCCS doesn’t wait for the family to call, and calls them instead. Dsnews.com reports:

In the “Innovative Partnerships to Prevent Foreclosure” category, the Tippecanoe County HomeOwnership Preservation Initiative (HOPI) in Lafayette, IN was recognized. Lafayette Neighborhood Housing Services (LNHS) and other partners brought foreclosure problems to the attention of municipal officials and leaders through the Tippecanoe County HomeOwnership Preservation Initiative (HOPI). The group studied local causes of foreclosure and defined potential solutions, and a successful partnership between citizens and LNHS yielded positive results for the community.

Read more: NeighborWorks America and MetLife Foundation Recognize Key Foreclosure Prevention Efforts

The Mortgage Bankers Association recently reported that home loan applications in the last week of July fell to their lowest level in four years. This is just a confirmation of what is common knowledge today — that a combination of factors has led to the cooling of the housing market. Usnews.com reports:

Freddie Mac economist Frank Nothaft said Wednesday that the latest numbers still give him hope for a soft landing. Housing sales will most likely end the year lower than 2005’s all-time record, but that will still make 2006 one of the busiest years in real-estate history, he noted.

Read more: Mortgage loan applications at lowest levels in four years

To reduce the number of foreclosures in the Taunton-Attleboro area, Massachusetts, Pro-Home Inc., a non-profit group is counseling homebuyers before they get into trouble. The group is trying to help homeowners facing foreclosure navigate their way through the crisis.

According to recent statistics, foreclosure figures in Massachusetts have shot up in the past few months. Figures for the second quarter show that foreclosures have increased 66 percent. This figure leaves in its trail, ruined families, their finances in a mess and an uncertain future. These people may even not be able to envisage a future where they could get back into a home of their own. I know all this sounds scary, but we should get beyond the fear and look for solutions.

You probably couldn’t do much about the bursting of the housing bubble. But you cannot disagree with me when I say that you’ve done your bit to worsen your situation. How so? Well you allowed an aggressive lender pressure you into buying a home you just couldn’t afford. Or you fell into an online mortgage lender trap, which seemed so great — you didn’t need to prove income and were qualified for much more than you could afford. I mean, why couldn’t you see through this trick. It was too good to be true. Right? Then why didn’t your alarm bells ring?

Fine, I guess I’ve done my bit. Now for people in the Taunton-Attleboro area, there’s help. Pro-Home doesn’t just advice you on what you can do. It actually offers concrete help. As of now, I don’t have many details on these guys. But I promise, I’ll be back with some more info on this group and any other in other states. Till then, try holding onto your homes.

Every day in America, consumers are victims of mortgage loan schemes that cost more time and money than you were told it would. This phenomenon even has a name: predatory lending a term that has become quite common nowadays. But just because it has a name, it doesn’t become okay to do something like this. And if for some reason, you feel a mortgage lender is cheating you, you can always dump that lender and go in for a more open procedure. Worried if you’d find something that’s transparent, and fair? Well, not everyone is taking such injustice lying down and one such person has devised a method that will help you get out of the clammy clutches of unscrupulous mortgage lenders.

Tammy Butler, a Certified Mortgage Banker with over 20 years of industry experience, and her team have created a unique, new Self-Serve mortgage lending technology. This technology allows the consumer, real estate agent or builder to go online in a secure environment. Within 15 minutes, they receive a true loan approval for themselves or their client without ever having to speak with a loan officer. HomeOwnerDirectLending.com evaluates each individual person’s specific financial situation including credit, and in real-time matches and presents the borrower with a selection of lending products from tens of thousands of mortgage options.

All you need to do is select the type/term of loan that you are interested in. The system then immediately begins the underwriting process. The borrower can even view all actual (not estimated) closing costs for each loan match presented. This is, based on the lending program and geography. This means there is absolutely no room for error and no opportunity to add additional costs to the loan. Based on the your loan choice, all figures presented by the website represent an accurate snapshot of the true cost of the loan.

You’ve waited long to buy that dream home and now you think you are ready. You check the market and come across an unbelievable loan offer. It’s just too good to be true. What should you do? Tread very carefully. Such loans usually come with caveats that are invisible initially but will drain you of your money slowly. It is important to remember three things should you ever find yourself faced with this type of situation:

One of the first things you should check before you go in for a home is if you can afford it. If you cannot afford to buy the home, don’t buy it. There are some serious arguments that suggest that the so-called tax advantage to owning a home may be somewhat overstated.

If you think it just might be possible to buy the home then examine your finances first. Determine how much the house is worth and readjust your budget accordingly. Sometimes, you may be face a temporary financial problem. If that is the case, then go in for the home after examining if the loan is good and meets with your requirements. If your financial affairs will take longer to sort out, then it is important to realign your budget so you can afford to make payments on your mortgage loan. But if you cannot sort out your problems try throwing in the towel. It may be a painful decision but will be beneficial in the long run.

If you were very tempted and ended up buying a home with a sub-prime loan, don’t worry. You still have options before you. If you cannot afford your home, attempt to sell it before the lender forecloses. You may find that during the brief time you lived in the house, the property may have appreciated giving you some exit money in the process.

But the best option still is to stay away from sub-prime loans. Some of the most common ways to save money on that mortgage are the ones easiest done before you look for a home: Fix your credit score, save for the down payment, re-adjust your budgets.

I’m sure most of us dream of the day when our home will be our own. No loans to repay and a secure roof over our heads. Sounds lovely doesn’t it? Well, there are some people who actually believe that debt, especially debt incurred from mortgage loans is not so bad. These experts say that your home is your piggy bank. And this bank already has quite a bit of money in it — the money that you’ve already invested in it.

If you are facing a financial problem and are badly in need of cash, you can always take out a home equity loan. You can also put more money into your house by taking an additional mortgage. There are however certain rules to be followed when you take a mortgage loan

When you plan to purchase a home for the long term, one of the first things you need to do is get your finances in order before you begin looking for a loan. This is especially important if your credit isn’t too good because then you’ll realize how difficult it is to get a decent loan to buy a home. Blackenterprise.com reports:

William C. Johnson Jr., a Washington, D.C., attorney specializing in consumer protection and civil rights, says that many times the allure of buying a home clouds the buyer’s judgment. "When someone wants a home, their wants may override their needs or what they can afford," he explains, adding that a prospective homebuyer must consider his or her debt-to-income ratio before buying.

Read more: Preparing To Buy A Home