A year ago, Sharon Roullins thought she was getting a chance to “start over.”

Finally approved for credit after three years of trying to buy a home in the Kansas City area, Roullins bought a three-bedroom home off Ward Avenue in East Lawrence last June.

For the first time, her children had their own rooms. Her two grade-school aged daughters liked their new school, and for single mom Roullins, the difference from Kansas City was “night and day.”

But Roullins was in for a nightmare when foreclosure proceedings began. Foreclosure occurs when a lender acts to repossess a property, usually when the homeowners get too far behind on their mortgage payments. This week, her home and four others are scheduled to be auctioned from the steps of the Douglas County Judicial and Law Enforcement Center, 111 E. 11th St. Roullins is one of the scores of Douglas County homeowners who have faced prospects of foreclosure this year.

“I really don’t know what to do,” Roullins said.

For Roullins, the downward spiral into foreclosure started with a trip to the emergency room last September. The visit was followed by a stay in the hospital that lasted into November, meaning there was little money to make the roughly $850 monthly mortgage payment.

“Basically, I got sick, went into the hospital and just fell behind,” Roullins said. “I missed one payment, and it just kind of snowballed.”

Now she gets daily phone calls from her mortgage company asking her about the payments and letters in the mail from businesses that say they want to help her.

But Roullins said her credit score is too low to qualify for any of the programs her mortgage company is offering, and she doesn’t trust out-of-town companies whose offers to help seem too good to be true.

She can’t find the real estate agent who sold her the house, and she doesn’t have the expertise to sell the house herself. Nor does she have the money to hire a lawyer.

So Thursday — the day of the sale — looms.

“Social services, church, family — we just don’t have those things to fall back on,” Roullins said.

Rash of foreclosures

The number of foreclosures has increased across the country, and Douglas County is no exception. In the first four months of 2007, the Douglas County Sheriff’s Office — which presides over the sale of homes that go into foreclosure — auctioned 39 homes. Comparatively, in the first four months of 2006, 28 Douglas County homes were auctioned at a sheriff’s sale. That’s a roughly 40 percent increase.

Many more homeowners, closer to 80, have received notices from the sheriff’s office that auction was pending unless they paid up on their mortgages.

Robert Baker, education coordinator and counselor at Lawrence’s Housing and Credit Counseling Inc., said a main reason for the increase in foreclosures is a change in the economy.

“The economic times aren’t quite as heady as they were in the go-go ’90s,” Baker said. “So, if people have any kind of economic setback — serious health problems, reduced income, that sort of thing — it is going to affect their ability to pay all their bills, and sometimes that affects their mortgage payment.”

Jonathan Becker, a bankruptcy and real estate attorney, lists four reasons for the rise in foreclosures: a lessening of credit standards, an increase in the kinds of loan options, a lack of home value appreciation, and a decrease of new homebuyers’ financial experience and education. Combined with any catastrophic event such as a job layoff, reduced income, illness or car accident — “you’ve got a recipe for foreclosure,” Becker said.

Although foreclosures in Douglas County have jumped, those who deal with the housing market in Lawrence say the community is not nearly as bad off as other parts of the country where waves of homeowners have defaulted on mortgages. For the first quarter of 2007, Kansas ranked 34th in the country for foreclosure rates, according to RealtyTrac, a Web site that compiles a database of foreclosures nationwide.

“We haven’t seen it here, but it doesn’t mean it isn’t coming,” said Doug Stephens, president of Stephens Real Estate Inc.

Baker, the housing and credit counselor, said higher housing prices in Douglas County have precluded many lenders from issuing riskier loans. Known as subprime loans, these lending options are made to borrowers with below-average credit scores and require little or no money upfront. And according to Baker, they are much more likely in a market where homes go for $50,000 or $80,000, not $200,000.

However, Becker said he is starting to see a lot more homeowners come into his office who are caught with loans that carry interest rates that are suddenly going up.

In the past few years, companies have offered low-interest, adjustable rate mortgages — but the low rate lasts only a few years. After that — for up to 28 years of a 30-year mortgage — the interest rate has a good chance of moving higher.

In the next few years, millions of these mortgages are expected to reset at higher interest rates, meaning homeowners will see a dramatic jump in their monthly mortgage payments.

“The 2-28 loan was becoming the welcome mat into the house. It’s now becoming the prison bars when the 28 (years) kicks in,” Becker said.

Staving off foreclosure

On Chastity Beerbower’s birthday, Jan. 18, her family’s house in Eudora was slated for sheriff’s sale. If the foreclosure had gone through, Beerbower wasn’t sure what her family — husband Jack, three boys and a girl — would have done.

“It’s either keep the house or become homeless,” Beerbower said. “Right now we don’t have the money to move, and no one wants to rent to someone who forecloses.”

The day before the sheriff’s auction, the sale was canceled. The family was able to save the house by filing for bankruptcy protection.

But it was a close call, Beerbower said. She and her husband, a self-employed carpenter, saw an ad for a lawyer who handled foreclosures. They hired him and were told to file for bankruptcy immediately.

Two years ago, the couple purchased a house on Acorn Street for $145,000. The five-bedroom home in a neighborhood with trees and nice yards was the first the Beerbowers had owned.

“We were going along just fine until (Jack’s) knee injury,” Beerbower said.

With her husband being out of work for injuries and then not being able to find work, the family got behind in paying their mortgage, Beerbower said. In a year and half, Jack had surgery on his knee and back. And in between the time off to recover from the surgeries, he found a sputtering construction market and few jobs.

A stay-at-home mom for 10 years, Chastity Beerbower went back to work at Eudora’s Kwik Shop, where she is an assistant manager. Jack traveled as far as Junction City and Louisiana for jobs, Beerbower said. As foreclosure was pending, they kept thinking the work would come.

“What our plan was: Get income, then pay up and hope for the best,” she said.

Eventually, the only choice was to file for bankruptcy, which stopped the foreclosure process.

Bankruptcy allowed the family to stay in the house, but Beerbower said they are still teetering on the edge of foreclosure if they can’t make their $1,500-a-month mortgage payment.

The family was willing to take the hit bankruptcy would leave on their financial record, Beerbower said, because it was better than losing the house. The main concern was making sure their children had a stable environment.

Filing for bankruptcy

When a foreclosure is pending, Becker said, filing for bankruptcy can be like nabbing home field advantage for the homeowner. In most cases, Becker said, the bankruptcy has to be filed before the court issues a judgment on the foreclosure and the notices start to go out that the house will be auctioned at a sheriff’s sale.

The bankruptcy will allow the homeowner to keep the house and set up a payment plan to the mortgage company through the court. The homeowner also still has to make the regular monthly payment to the mortgage company.

Bankruptcy does leave a mark and stays on credit reports for seven years.

However, Baker said that most credit scores are largely based on payment history from the past two years, the amount of debt and whether there is enough income to cover the loan.

Seeking options

Instead of traveling the bankruptcy route, many homeowners opt for dealing straight with their mortgage company in attempts to save the home.

Baker said the No. 1 mistake is to not act immediately.

“The longer you are delinquent and the more you owe, the less options you have. So start early,” Baker advised on seeking help, whether it comes from a certified mortgage default counselor, lender or even a relative who could loan the money.

Becker said many mortgage companies operate on a calendar that starts the foreclosure process rolling when payments are more than 59 days late. Letters are issued and attorneys contacted.

At that point, Becker said, the homeowner has to cover not only the missed payments but also the mortgage company’s attorney fees.

“Once you get to the 59 days, the alarms go off,” Becker said. “Automatically add on $800 to $1,000.”

Looking back, Beerbower said she recommends that those approaching foreclosure stay on top of the problem.

The effort can take hours, but most mortgage companies will work with borrowers who are seeking a remedy.

“They don’t want to repossess your house. If they foreclose on your house, they have to market it to sell it,” Baker said.

http://www.TheHomeBuyingCenter.com

 

June 10, 2007

SACRAMENTO, CA – People who want sell a home fast for a lot of cash are having trouble selling their house quickly and easily these days in most markets in the United States due to problems with foreclosures and subprime mortgage loans.  This does, however, present opportunities for people who want to buy a house, like Fred Masterson of Sacramento, California.

“We want to buy a house, but we’re waiting for the market to really hit bottom before we jump in the market,” Masterson said recently.  Mr. Masterson reported that he spends a lot of time on the internet looking for houses to buy and carefully reads the news to gauge which way the single family home market is moving.

He, like many other home buyers in Sacramento and cities across the nation, is waiting for the right opportunity to buy a home and hopes he can time the market just right.

Some of the reasons for the decline in prices include a large inventory of new homes and existing homes on the market, tighter underwriting standards for borrowers to qualify for home loans, and interest rates that have risen since the early years of this decade.

“If we see interest rates rise, this will add significant costs over the life of a loan for home buyers, and could wipe out the advantages that buyers have now,” said Patrick McGilvray, President of http://www.TheHomeBuyingCenter.com.  He added, “but, nobody has a crystal ball and it is unclear whether the Fed will raise or lower rates in the rest of the year.”

The Federal Reserve has raised the federal funds rate up from 1% to 5.25% between June 2004 and June 2006. The rate has not changed since that time.

As this was happening, Freddie Mac, one of the nation’s largest purchasers of mortgages, reported that average interest rates on 30 year fixed rate mortgages rose from 5.23% in June of 2003 to 6.26% in May of 2007.

SACRAMENTO, CA – Foreclosure filings in the United States were up 62 percent in April of 2007 from the previous year according to an Irvine, California-based RealtyTrac.  This glum news was somewhat tempered by the fact that foreclosure activity dipped from March of 2007 by about 1 percent.

Statistics from RealtyTrac showed almost 148,000 filings in March such as default notices, auction sale notices, and bank repossessions.  Slowdowns or declines in home values and problems with so-called subprime loans made to borrowers with shaky credit histories are widely credited with fueling the housing slump.

A majority of cities on the top 10 most affected list are in California. 

Making matters worse for these troubled markets and the challenged borrowers who undergird these statistics is the fact that many of the subprime borrowers are now seeing their payments, after an introductory low mortgage period, jump significantly.

“People call me every day from all across the country who want to sell their homes fast because they are facing possible foreclosure after their adjustable rate mortgage reset bring much higher payments.  These folks, contrary to what they believed in the past, cannot easily sell their homes nor refinance them,” said Patrick McGilvray, J.D., CFP®, President of Sacramento-based http://www.TheHomeBuyingCenter.com. 

One housing industry watchdog, the Center for Responsible Lending, has been predicting that upwards of 2 million borrowers who took out subprime mortgage loans will lose their homes to foreclosure.  Not surprisingly, they predict that most of the problems will occur in the markets that appreciated the most through 2005.  Some of the reasons included a buying frenzy mindset that was fueled by a belief that prices could not do anything but continue to go up and unrealistic expectations by homeowners and real estate speculators and investors alike.

A broader look at the American economy seems to suggest that things are going well, but the woes in the single-family housing market will most likely be a drain on other sectors for some months to come.

 

 

We all have hopes and dreams for the future of our families. We all have dreams of happiness and success for our children and grandchildren.

We may have dreams of money, job or romance for ourselves. For many of us, the future of our dreams includes a home of our own or perhaps a bigger or newer home.

We all can take pride in the fact that America is the land of opportunity. Millions of people from all over the globe have come to our nation in search of their dreams. One of the main components of the American Dream is a home of our own. Today, nearly 70 percent of all American families can call themselves homeowners. Realtors are proud of the role we have played in making the American Dream a reality for our customers and clients.

Innovative loan programs have made homeownership available to many families who would never have qualified for a mortgage under the more traditional programs. Individuals with less than perfect credit and with little or no down payment may have access to mortgage financing. In addition, the recent surge in home prices has given rise to interest-only loans, payment option adjustable-rate mortgages and other programs designed to increase the buying power of potential home buyers.

While these programs have been beneficial to many homeowners, they have sadly contributed to an alarming increase in housing foreclosures around the nation.

“Foreclosures threaten the very communities that Realtors work to build,” said Pat V. Combs, president of the National Association of Realtors (NAR). “Realtors care as much about keeping families in their homes as we do about helping them find the home of their dreams.”

To help those threatened by foreclosure, NAR has partnered with the Center for Responsible Lending and NeighborWorks America to produce a pamphlet titled, “Learn How to Avoid Foreclosure and Keep Your Home.” This pamphlet is available from your local Realtor.

If you are being threatened with foreclosure from “payment shock” from a mortgage rate adjustment or because of other issues such as job loss or health problems, there are several steps you can take to try to keep your home. The best advice is to talk to your lender and talk to them early. Many people make the mistake of thinking their problems will go away, or they ignore their problems until it is too late.

Most lenders end up losing money when they foreclose on a home. Generally, lenders will work with you to avoid foreclosure if you call them before it is too late to stop the process.

Some of the options to discuss with your lender include:

Forebearance - the lender may let you make a partial payment or skip payments if you have a reasonable plan to catch up. Tell the lender about any tax refund, bonus or new job in your future.

Reinstatement - a lender may allow you to make a payment covering your late payments, usually at the end of a forebearance period.

Repayment plan - a lender may give you the option of paying an additional amount each month until you catch up.

Loan Modification - you might ask the lender about various options to modify your loan to make it work for you. These might include adding missed payments to the amount of the loan, changing to a fixed-rate mortgage, or adding more years to the life of the loan. If your current lender does not have any options for you, you may want to ask your Realtor for the names of other lenders to contact about refinancing your home.

If you can’t work out a plan to get caught up, there are two last options to avoid foreclosure. One is to contact your Realtor and sell your home. Your Realtor will work with your lender to gain time to find a buyer. If your home sells for less than you owe, your Realtor will attempt to negotiate a “short sale” with your lender. Under this situation, the lender would forgive the amount owed above the sales proceeds. Unfortunately, under current federal law the Internal Revenue Service will count the amount forgiven as income to you.

The final option is to sign the property over to the lender in exchange for debt forgiveness. This will hurt your credit, but it is better than having a foreclosure in your credit history.

As keepers of the American Dream, Realtors are dedicated to helping people keep their place to call home. Contact your Realtor for more information on financing programs and options available in St. Charles County.

http://www.TheHomeBuyingCenter.com

 

June 3, 2007

SACRAMENTO, CA – Foreclosure filings in the United States were up 62 percent in April of 2007 from the previous year according to an Irvine, California-based RealtyTrac.  This glum news was somewhat tempered by the fact that foreclosure activity dipped from March of 2007 by about 1 percent.

Statistics from RealtyTrac showed almost 148,000 filings in March such as default notices, auction sale notices, and bank repossessions.  Slowdowns or declines in home values and problems with so-called subprime loans made to borrowers with shaky credit histories are widely credited with fueling the housing slump.

A majority of cities on the top 10 most affected list are in California.

Making matters worse for these troubled markets and the challenged borrowers who undergird these statistics is the fact that many of the subprime borrowers are now seeing their payments, after an introductory low mortgage period, jump significantly.

“People call me every day from all across the country who want to sell their homes fast because they are facing possible foreclosure after their adjustable rate mortgage reset bring much higher payments.  These folks, contrary to what they believed in the past, cannot easily sell their homes nor refinance them,” said Patrick McGilvray, J.D., CFP®, President of Sacramento-based http://www.TheHomeBuyingCenter.com.

One housing industry watchdog, the Center for Responsible Lending, has been predicting that upwards of 2 million borrowers who took out subprime mortgage loans will lose their homes to foreclosure.  Not surprisingly, they predict that most of the problems will occur in the markets that appreciated the most through 2005.  Some of the reasons included a buying frenzy mindset that was fueled by a belief that prices could not do anything but continue to go up and unrealistic expectations by homeowners and real estate speculators and investors alike.

A broader look at the American economy seems to suggest that things are going well, but the woes in the single-family housing market will most likely be a drain on other sectors for some months to come.

A few things have happened in the last few days that may ultimately ease what many are calling an onrushing foreclosure train wreck.

While some attempts are more meaningful and far-reaching than others, at least a couple of institutions which can do something to avert any coming catastrophe appear to be moving in that direction and it is heartening to see that the system may be capable of responding to trouble.

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) just issued a joint consumer alert on mortgage payment increases. The alert urged homeowners with adjustable rate mortgages and especially those with the non-traditional types such as interest only or payment option mortgages to plan immediately for any resets of their rates in the coming year.
The advisory states that borrowers should seek information on the characteristics of their mortgages and begin to budget to meet any future rate shocks. Consumers are also urged to contact their mortgage servicers immediately if they anticipate problems or are already having difficulty with their payments.

 

The two organizations also issued a letter to mortgage servicers and providers urging them to reach out to their borrowers to provide appropriate loan information and to work with them to prevent the loss of their homes.

CSBS Senior Vice President for Regulatory Affairs Michael Stevens said, “Servicers should provide information on when the recast will occur and how much the monthly payment will adjust. Should the loan go into default, servicers should consider workout arrangements to prevent foreclosures.”

Freddie Mac is also touting its foreclosure avoidance activities. The corporation, along with Fannie Mae, the Mortgage Bankers Association, and 20 other mortgage industry leaders has established NeighborWorks America which is sponsoring a public service advertising campaign on television urging troubled homeowners to face their problems and seek help. Two of the ads can be viewed on the Freddie Mac website

A Freddie-sponsored survey conducted by Roper Public Affairs and Media found that 74 percent of home mortgage borrowers were very interested in seeking the assistance of housing counselors in avoiding foreclosure yet only 64 percent had been aware of the existence of such counselors. Only 61 percent of borrowers who were already late on mortgage payments were even aware that there was help available to them.

Freddie Mac is working with its servicers to establish and enforce guidelines for avoiding foreclosure and offering incentives to servicers who are proactive in this regard. Freddie, however, also wants its servicers to conclude the legal proceedings in a timely manner if the loan can not be salvaged. The corporation has a complicated schedule of rewards (some quite substantial) and penalties for servicers who follow or fail to follow the various standards.

Perhaps the most far-reaching housing effort was announced on Thursday by Rep. Barney Frank (D-MA) although it is designed to make housing more affordable going forward rather than reducing the problems with existing mortgages.

Frank, who is chairman of the House Financial Services Committee, has introduced a bill which would put $1 billion into a fund to build affordable housing. The money, which would be partially funded by profits from Freddie Mac and Fannie Mae, would go directly to local communities, states, and other recipients to build or rehabilitate 1.5 million housing units in the next 10 years.

In announcing the new legislation Frank laid part of the blame for the current subprime mortgage problems on the lack of affordable housing, saying that lack pushed many people into purchasing homes they could not afford.

Hearings on the proposed legislation will begin on July 12.

In related news, Caliber Global Investment Ltd., a fund listed on the London Stock Exchange announced on Thursday that it is closing down due to the turmoil in the subprime market. The fund which is managed by Cambridge Place Investment Management hopes to sell all of its assets over the next year and return as much money as possible to its investors.

Caliber controlled almost $1 billion in assets. More than half of the assets were residential mortgage-backed securities, the majority of which were from the U.S.

http://www.TheHomeBuyingCenter.com

We Buy Houses so you can sell your house fast