Protect Yourself From Predatory Lending

Predatory Lending

Over the last several years, our nation has made enormous progress in expanding access to capital for previously under served borrowers. Despite this progress, however, too many families are suffering today because of a growing incidence of abusive practices in a segment of the mortgage lending market. Predatory mortgage lending practices strip borrowers of home equity and threaten families with foreclosure, destabilizing the very communities that are beginning to enjoy the fruits of our nation’s economic success. Since the Spring of 1999, HUD has been actively involved in combating predatory lending through research, regulation, consumer education and enforcement actions against lenders, appraisers, real estate brokers, and other companies and individuals that have victimized homebuyers. Read HUD-Treasury Joint Report on predatory lending. If you believe you have been a victim of predatory lending practices there are Federal agencies that can help. Please refer to the list of agencies below and contact the organization or agency that you think can help address your specific problem. Protect yourself from predatory lenders: For information about loan fraud and advice about preventing it, see Don’t Be A Victim of Loan Fraud. Local information on predatory lending: Here are some Local Resources by state, that can help you avoid being a victim of predatory lending. For FHA loans: For problems relating to origination, underwriting, or appraisals contact the FHA Resource Center at (800) CALL-FHA / (800) 225-5342. Avoiding foreclosure on an FHA loan: Visit the HUD National Servicing Center web page or contact them toll-free at (800) CALL-FHA / (800) 225-5342. Non-FHA mortgage loans: For complaints concerning practices which include disclosure of interest rates and finance charges (APR), prepayment penalties, credit life insurance, fraud, deception, etc. contact the appropriate agency from this list to complain about the mortgage lender or mortgage broker. Lender threatening to foreclose or mortgage in default: HUD funds housing counseling agencies throughout the country. To find a housing counseling agency near you, call toll-free (800) 569-4287 immediately for free guidance or visit the web page. Settlement Procedures: (FHA and non-FHA mortgages). Visit the RESPA web page for information on RESPA disclosure requirements such as the Good Faith Estimate, HUD-1 and escrow account statements, and how to file a complaint with your lender concerning the servicing of your loan. If you are still unsure who can best help you, please let us know. File a housing discrimination complaint: Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and HUD’s Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. Learn how the Fair Housing Act can help you fight predatory lending. Thanks, Carol Perdew (209) 239-7979 E-mail: Carol@PerdewHomes.com wwwCentralValleyHomes.com

FORECLOSURE OVERVIEW

What is Foreclosure?

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways:

• The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure.
• The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
• A third party buys the property at a public auction at the end of the pre-foreclosure period.
• The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These properties are also known as bank-owned or REO properties (Real Estate Owned by the lender).

Foreclosure Opportunities

Pre-Foreclosure:

Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with the equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.

Public Auction:

If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.

Bank-Owned (a.k.a. REO):

If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually re-sell the property to recover the unpaid loan amount. The lender will typically clear the title and perform needed maintenance and repair; however, the discount for these REO homes is typically less than a pre-foreclosure or auction property discount. Bank foreclosures can become government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property.

 

This great article is compliments of Yahoo Real Estate.  Our real estate market has plenty of foreclosure and bank owned properties. Search for foreclosed and bank owned homes at www.CentralValleyHomes.com.

 

Carol Perdew
(209) 239-7979
Carol@PerdewHomes.com

 

TIPS FOR AVOIDING FORECLOSURE

Here are some great tips from U.S. Department of Housing and Urban Development for avoiding
foreclosure. When you are having a difficulty making your mortgage payments, it is important to
communicate with you lender and look at all of your options. Hope this help answer your questions.

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them? Don’t ignore the letters from your lender Contact your lender immediately Contact a HUD-approved Housing Counseling Agency Toll FREE (800) 569-4287 TTY (800) 877-8339 If you are unable to make your mortgage payment: 1. Don’t ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house. 2. Contact your lender as soon as you realize that you have a problem. Lenders do not want your house. They have options to help borrowers through difficult financial times.   3. Open and respond to all mail from your lender. The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems.  Later mail may include important notice of pending legal action.  Your failure to open the mail will not be an excuse in foreclosure court. 4. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can’t make your payments.  Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.   5. Understand foreclosure prevention options. Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL . 6. Contact a HUD-approved housing counselor. The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide.  Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339. 7. Prioritize your spending. After healthcare, keeping your house should be your first priority.  Review your finances and see where you can cut spending in order to make your mortgage payment.  Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage. 8. Use your assets.   Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income?  Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.   9. Avoid foreclosure prevention companies. You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender.  While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them. 10. Don’t lose your house to foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home!  Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

 

Tips for Buying Bank Owned Homes

CHOOSING A REALTOR® Of all the decisions you’ll face when buying a home, there’s none more important than the person you choose to represent you. The job of your REALTOR® is to support you in finding the right home with the best possible terms, and to aid you through the entire process. Your Associate will explain the process of buying a home, and familiarize you with the various activities, documents and procedures that you will experience throughout the transaction. Tips For Selecting a Realtor® Your real estate professional should be: Knowledgeable about the communities of interest to you. Aware of the complicated local and state requirements affecting your transaction. Effective in multi-party, face-to-face negotiations. Highly-trained, with access to programs for continued learning and additional certifications. Technology-focused. Assisted by a fully-staffed marketing department. Supported by professional legal counsel.

 

HOW TO PROFIT FROM FORECLOSURES

Take a look at this informative article from Forbes.com.  Foreclosures and bank owned homes are continuing to grow. Buyers are drawn the foreclosure market with the hopes of finding a deal. Hope you enjoy reading this article.

Smart Ways To Profit From Foreclosures

By Matt Woolsey, Forbes.com

Jun 18th, 2008

With 700,000 bank-owned homes on the market, and another one million in some state of foreclosure, according to RealtyTrac, an Encino, Calif., provider of foreclosure listings, you might be tempted to add a distressed property to your portfolio.

Beware. Buying a home in foreclosure is not for the meek. Those with an appetite for risk, however, will find the tumultuous market stocked with plenty of investment opportunities.

These may include the sale of brand new luxury homes in an upscale Nashville community for half their marked value or a bank giving away a foreclosed property in a poor Detroit neighborhood for back maintenance.

But this complex arena is teeming with professionals. Private equity juggernaut Blackstone Group alone this year raised an $11 billion war chest to chase distressed properties, and large homebuilders looking to recapitalize, like Centex and Lennar, unloaded over $1.5 billion in homes to vulture funds between December 2007 and April 2008, for between 30 and 40 cents on the dollar.

Whether you’re looking to flip a home, buy into a neighborhood you couldn’t otherwise afford or planning to rent the home, you, like these big companies, must have heaps of cash on hand.

There are properties that can be turned within a few months, but the overall market is still slow. Even if you have a renter lined up or have enough money for a 10% to 20% down payment, you should be ready to weather a depressed market for another two or three years.

Go to the county assessor’s office and study recent sales for price-per-square foot and time spent on market to determine what sort of price you can expect at resale. Be conservative. If you are renting, calculate a capitalization rate, and subtract 10% or more of the annual yield for maintenance and depreciation. Make sure that your endeavor is still profitable if you incur two to three years of carrying costs and depreciation.

It’s also crucial to remember that bad loans that plagued speculators and unprepared borrowers don’t simply disappear when distressed owners sell their properties. Unless the property goes through foreclosure auction and becomes bank-owned, outstanding liens and fees are simply transferred to the new owner. If you plan to buy out of pre-foreclosure, make sure the property has a clean title; otherwise you’ll just be trading places with the distressed homeowner.

In such situations, outstanding fees, second liens and the like aren’t automatically washed away. It isn’t always the case that pre-foreclosure homes lack clear title, but once a home goes into the auction on the courthouse steps and is bought back by the bank, it is clear of all the bad loans that got the original owner into trouble. Making sure a home has clean title is a critical first step to a sound investment.

It’s also important to note that you make money on a foreclosure the moment you buy the home. You can make a good return if you’re selling in a sinking market, for example, by unloading a home at 70 cents on the dollar, if you bought it for 50 cents on the dollar. In heavily hit foreclosure areas, banks are juggling so many properties that offers on distressed homes, out-of-business homebuilders’ developments and excess inventory are being entertained at under-listing prices.

Just don’t get attached. As in any market, falling in love with a home–and overpaying–is a surefire way to lose money in a highly risky one.

When you’ve located an appealing property, order a new appraisal and study foreclosure patterns in the neighborhood. You’ll also want to explore creative financing options to defer costs.

However you do the math, the most important thing to keep in mind is that the investment has to be worthwhile–even if you can’t sell the home at your desired price for two or three years and the current housing market deteriorates a further 10% to 20%.

PREVIEW BANK OWNED HOMES AT  http://carolperdew.com/index.php/page/bank-ownedrealestate

 

Bank Homes Specials

There is an abundance of Bank Owned Homes and REO (Real Estate Owned) homes on the resale market.  Lenders price their properties at the lower end or below market value to encourage multiple offers and a quicker sale.

 

Banks typically are looking for closer to asking price on homes that are new on the market. Multiple offers sometimes push up the price above asking price.

 

Bank Owned Homes that have been on the market for thirty days or longer usually have more room to negotiate. Banks are more willing to look at lower offers the longer the home is on the market.

 

Check the history on a Bank Owned Home to find out if there have been any lower price adjustments. Banks typically will not accept lower offers after a recent price change.

 

Take a look at homes that have do not have any pictures or only a front picture.  Homes without pictures often get less showings causing the bank to be open to negotiation.  

 

Don’t let a poor exterior condition of dead grass and weeds mislead you because often hidden from view is a desirable home inside that has plenty of potential.

 

Take a look at Bank Owned Homes throughout the Central Valley In San Joaquin County, Stanislaus County and Merced County at

 http://carolperdew.com/index.php/page/bank-ownedrealestate

 

U.S Foreclosure Filings Surge

Our real estate market is affected by the soaring foreclosures filings and foreclosed homes. With the surge in foreclosure filings, bank owned homes continue to dominate the resale market.  Since bank owned homes are typically priced around 20% below market, this is a great time to buy real estate! Take a look at this article with the latest news.

 

 

US Foreclosure Filings Surge 48 Percent in May By Alan Zibel, AP Business Writer

Housing crisis worsens as number of US homes facing foreclosure in May up 48 percent

WASHINGTON (AP) — Soaring foreclosures are continuing to raise questions about the mortgage industry’s claims that lenders are making a dent in the housing crisis.

Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.

The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren’t keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

“It’s clear that these voluntary efforts in and of themselves cannot really make a dent,” said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America. “Government intervention is going to be necessary.”

Mark Zandi, chief economist of Moody’s Economy.com and an adviser to Republican John McCain’s presidential campaign, wrote earlier this week that “the Bush administration’s efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed.”

A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 percent of all U.S. homes.

Sobering statistics like these are leading to more calls for government intervention, especially from lawmakers pushing a plan for the government to guarantee as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.

A new government report released Wednesday found that among mortgages held by nine large banks, including Bank of America and Citigroup Inc., foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

In a speech, Comptroller of the Currency John Dugan said the federal agency conducted its own examination of foreclosures and loan modifications after finding “significant limitations” with data collected by trade groups like Hope Now.

“Virtually none of the data had been subjected to a rigorous process to check for consistency and completeness,” Dugan said. “They were typically responses to surveys that produced aggregate, unverified results from individual firms.”

The comptroller’s report found that 2.7 percent of seriously delinquent mortgages had been modified as of March, up from 1.8 percent in November 2007.

The industry has continued to favor repayment plans, which help borrowers get back on track after missing a few payments, rather than permanent loan modifications, such as lower interest rates.

Faith Schwartz, executive director of Hope Now, said in an e-mailed statement that the group’s statistics “encompass more member data and provide a broader view of the range of solutions delivered by a larger number of mortgage servicers.”

Rep. Barney Frank, D-Mass., said this week that Dugan’ analysis shows that “much more aggressive action is needed.”

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can’t find buyers or owe more than their home is worth and can’t get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.

According to the RealtyTrac report, one in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

Rick Sharga, RealtyTrac’s vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. “I don’t think we’ve seen the high point,” he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody’s Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that’s a positive for the real estate market, buyers in other parts of the country are still holding back.

“I think a lot of people are waiting to see if we really have hit the bottom,” Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be “feeble.”

 

Bank Owned Real Estate Specials

Our real estate market has many bank owned listings with tremendous savings.  Bank owned listings are often priced below market because the lenders price their listings with the hope of a quick sale. 

Go to http://carolperdew.com/index.php/page/bank-ownedrealestate to view top bank owned real estate specials throughout the Central Valley. Check out real estate information at www.CentralValleyRealty.com.

Foreclosure Help!

Take a look at this informative article that gives steps on how to prevent foreclosure. This provides information on where to go and how to get help!

How To Prevent Foreclosure

Contacting lender before missing payments offers advantage

By Ilyce R. Glink

I received a call to my radio show just before the end of the year from a woman who had just received a letter from the bank that it was starting foreclosure proceedings.

Let’s just say that it wasn’t the year-end gift she was hoping for.

She told me how she had lost her job and used up all her savings to keep making her mortgage, home equity line of credit, and credit-card payments each month. After awhile, it was too much to manage, even after she got a new job.

What she wanted to know was where she could go to get help that would stop the foreclosure proceedings.

By the time you get a court date, it’s a little late to unwind the clock. Instead, if you want to stop the bank from foreclosing on your house, the time to get help is before you’ve missed a single payment.

Most people know how to account for every dollar that comes in. It may not be your favorite task each month, but if money is tight and you’re trying to make ends meet, you know when the budget is about to snap.

When you have a list of debts and bills, you should sort them from most important to least important. While all of the bills should be paid, the one that goes at the top of the list is the one that will cause your family the most damage if it isn’t paid on time.

If I were organizing a list, it would read: mortgage payment; home equity loan/line of credit payment; utility bills; car payment(s); credit-card debt(s); and other bills.

Once you know that you won’t have enough cash to go around, it’s tempting to skip the biggest bill, which is typically your mortgage payment. But in some states, foreclosure is fast-tracked, which means you could find yourself receiving a foreclosure notice from your lender in as little as 60 days.

So let’s back up: Once you know there isn’t enough money to go around, and you know you’ll be missing a payment, you need to call your lender. If you’ve already missed a payment, and your lender has called you, you need to pick up the phone and return the call. Talking to your lender is the best way to stop foreclosure.

Many borrowers have complained that when they call their mortgage company, no one picks up the phone. Or, they get transferred from department to department.

The truth is, if you don’t talk to the lender, and it doesn’t get recorded in your file, it doesn’t matter how often you tried to call. When it comes to foreclosure, “trying” doesn’t count.

If you’re having trouble reaching your lender, call a HUD-certified housing counselor, who may be able to reach out to your lender on your behalf. The toll-free number is (800) 569-4287, or go online to www.HUD.gov/foreclosure/index.cfm.

Once you miss a payment, your lender will start sending you letters. If you want to avoid foreclosure, open the letters. These are supposed to contain information on how you can save your home.

In order to help you save your home, lenders can make changes to the terms of your loan agreement. The best time to do this is either just before or just after you miss your first payment.

Lenders can: (1) reinstate your loan (you’ll catch up with everything you owe by a certain date; (2) offer forbearance (give you a few months off from making payments, while developing a plan to get you current on your loan down the line; (3) set up a repayment plan (where you agree to pay a little each month for the next six months or a year until you’re caught up); or (4) modify your loan (this will change the terms so that the payments are more affordable).

All of the talk you’re hearing about the government-sponsored solution to the mortgage crisis deals with loan modifications. The federal government is pushing investors who bought your loan to agree to modify the terms for the next few years. When a lender agrees to modify your loan, it could mean that the missed payments will be added to the loan amount, or that the interest rate will be changed from a variable rate to a fixed, or perhaps it will be lowered to a different interest rate. A final loan modification option is to adjust the amortization schedule, so that you have a longer loan term, but your payments each month are smaller.

For some borrowers, there’s one other way to save your home: It’s called a partial claim. A partial claim may be available only on certain loans and in limited circumstances. If you and your loan are eligible, you can set up an additional loan that will help you make up your missing payments.

This limited program is available to people who are several months behind in their home loan payments, and it allows them to become current on the loan. But the borrowers’ circumstances must be such that they have overcome the reasons why they couldn’t make their payments and can make the future payments on their loan. For more information, you can contact your current lender or get more information from HUD at http://www.hud.gov/offices/hsg/sfh/nsc/faqpc.cfm.

But don’t delay in contacting your lender. The longer you wait, the tougher it will be to stop the lender from foreclosing on your property.

For more Bank Owned Info Visit www.BankOwnedHomes.com