Archive for News and Economy

Paramilitary SWAT Teams Now Enforcing Eviction Orders

As local American police forces have become more and more militarized, with weapons grants from the Department of Defense and militarized Keynesianism popular in Washington, DC, it should come as no surprise that even foreclosures are turning into SWAT team-appropriate events.

OregonDOT

© OregonDOT – flickr

The American Free Press has an article out today on a case in Idaho Sprints, Colorado, involing 22 SWAT officers loaded to the ears with military weaponry. What were they doing? Catching a serial killer? Taking down a mass murderer? Saving children from another of the TSA’s monsters?

No, they were enforcing a court ordered foreclosure seizure of a family residence. As the article states, “On October 30, the Clear Creek County, Colorado Sheriff’s Department dispatched 22 SWAT officers—decked out with military-green helmets and uniforms, fully automatic weapons and numerous other “bells and whistles”—to enforce a court order for a U.S. Bank foreclosure on the home of Sarah Donahue.”

The justification for the overwhelming show of force was, of course, to keep the officers “safe.” However, in the interest of total officer safety, the next logical step is for the local police to call in a drone strike to destroy the house completely, while fleecing the local taxpayers to cover the cost of the house.

After all, the taxpayers can pay the bank for the destroyed house, the officers can remain at a safe distance while never having to come into contact with those they “serve” and “protect,” and the federal government can hand out more defense contracts to drone agencies. And finally, with one more house destroyed, prices can only rise as a result of decreased supply, right? Everyone is a winner with militarized police agencies enforcing evictions.

Now, the homeowners who defaulted on their loans should have to face the consequences of such an action. That could involve having to pay back more, or negotiating with their lender for a loan modification of some sort, or simply leaving the property to foreclosure and dealing with the consequences of poor credit. However, they should not be forcibly evicted by a paramilitary organization within their local police force.

Foreclosure Rates – They’re High and Don’t Expect Them to Come Down

The question on many homeowners’ minds is born in regards to foreclosure rates. Are they still rising? Where does the United States currently stand in this foreclosure problem? Most people asking these questions understand that the government has its hand in attempting to solve the problem, prop up} home values, and improve statistics.

©saundraware - flickr

©saundraware – flickr

Government bailout plans have been in effect since October 2007 and another was released early in 2009, yet the national foreclosure rates have continued to increase in many places. Some cities and states are seeing decreases, but many experts are skeptical as to their effects. In fact, some pundits see an even more dismal housing market in the near future.

The problem lies in the vicious cycle associated with some people being in financial straits while others want to prevent it from occurring to them. You may be facing foreclosure, but your bank has many borrowers that may be in the same situation. If they make exceptions for everyone, they may end up putting themselves in the same dire straits. Thus, lenders have been somewhat unwilling to realize the huge losses they have sustained on their mortgage investments, and have been rejecting workout programs as a result.

Back at the end of 2007, the United States Treasury Department was already arranging together plans in an attempt to nip rising foreclosure rates in the bud. Unfortunately, there is obviously a flaw in the plans they have laid out as the number of homeowners who fall delinquent on their mortgage payments continues to increase. The reason is because no resources were made available in the assistance of the growing number of homeowners and the lag in aid led to even more foreclosures.

As the plans currently stand, there are at least five varying bailout programs to assist in lowering the rate of foreclosures nationwide. These include Hope Now, Project Lifeline, the Hope for Homeowners Act, the Home Affordable Modification Program, and the Home Affordable Foreclosure Alternatives plan. So far, none has been as successful as initially expected and hoped for.

The argument made by many financial professionals is that the reason these programs have failed to have the impact wished for is because they are cheap-money policies. All they have really demonstrated is a greater downward pressure on the state of the economy. With localized improvements in foreclosure rates, many hope the limited number of improvements will rise throughout the country.

Will the Foreclosure Crisis Get Better in the Future?

When you examine at the current statistics of the country’s number of foreclosures when compared to a decade ago, you will understand why it is the topic of conversation between many homeowners, economists, and financial analysts. The numbers are scary. Highly populated states with critical housing markets like California, Michigan and Florida have hundreds of thousands of foreclosures every month, while home values continue to decline by the day.

©Frederick Homes for Sale - flickr

©Frederick Homes for Sale – flickr

In the last year, 2.3 million homes in the United States went through or are still going through some potion of the foreclosure process. Seven million families altogether are defaulting on their mortgages or are facing foreclosure. Currently, there are indicators that suggest housing prices may be on the rise in the short term, but with foreclosure rates as large as they are, the future of real estate still looks bad in many areas of the country.

Four years ago, foreclosure rates were six times smaller than they are today. The system currently in place to manage foreclosures was not intended} to handle such outrageous quantities. Local government courts are falling behind in hearing cases and performing evictions, and it may take some lenders months to initiate the process of taking back a home. Also, servicers are taking advantage of the panic-stricken atmosphere to make a profit.

If the mortgage servicing companies see to it that borrowers are unable to qualify for the Home Affordable Modification Program (HAMP), then they gain money from your foreclosure. Neither you as the owner nor your lender have anything to gain from your home being reposessed, so many people are pointing the finger of blame on the servicers, which receive more in fees when a homeowner is late than when they are on time in payments.

Luckily, a great number of borrowers are still able to escape foreclosure by means of mortgage altering or short sales. While other methods such as selling outright or acquiring a foreclosure loan may not be as easy anymore, other answers have begun to present themselves in response to the dire housing market. If you are in a stressful situation and hoping to find a way out of your situation, you may not be out of solutions yet.

Speaking with a financial expert can be the best way to learn of your options and begin taking the steps toward securing your place in your home once again. The future of foreclosures may not be so great in your area, but they can be good for you personally if you act now to protect your property, your finances, and your family from any coming economic depression.

Foreclosure Statistics and the US Housing Market

One of the biggest unavoidable concerns for homeowners today is the seemingly ever-increasing number of foreclosures throughout the nation. 2008 was a horrible year. Foreclosure activity was up 90% nationwide from 2007. Some localized areas were far worse, such as California which saw an increase of 150% between January and February of 2008. These statistics are a little outdated, however, since as of September 2009, country-wide foreclosure statistics have seen a slight improvement. The best news is localized, however, as many of the current statistics are mixed on a nationwide level.

The main areas that real estate investors and owners look at when considering nationwide foreclosure statistics are the number of foreclosure filings in a certain area and the price of homes in those same areas. The current numbers suggest that there may finally be light at the end of the tunnel in terms of thehousing market. Five of the top markets have seen a decreased number of filings. Michigan’s figures have decreased by just over 4%, California is down by almost 5%, the number of filings in Texas has decreased by more than 7%, Florida is down by 8.5% and Arizona has 9% less filings currently than in 2008. Colorado has the most impressive improvement, seeing foreclosure rates drop an impressive 13%. Unfortunately, these promising statistics are not true nationwide. West Virginia, for example, actually had an expansion in foreclosures in excess of 17%.

©401(K) 2013 - 2nd - flickr

©401(K) 2013 – 2nd – flickr

Cities in the states that saw improved numbers of foreclosures are showing great improvement with a smaller number of exceptions to that fact. Phoenix showed that the number of foreclosures decreased by more than 8%. Foreclosure rates in Memphis dropped by almost 12% and Miami showed the most improvement with a 14% decline in filings. Several other cities also saw decreases in their numbers, but these are the most impressive foreclosure statistics nationwide.

The prices in the housing market are also important in evaluating the health of the country’s real estate. Four out of the top five markets in the country have seen an increase in prices. This is great news for homeowners who are looking to sell, although similarly bad news for those hoping to purchase homes at the lowest prices possible. In both states of California and Florida, the percentage of price rises is under 1%, but that amount can make a difference. Michigan, another definitive real estate market, saw home prices go up by 1.4%. Texas was the most impressive with an jump of 4.8% seen in housing prices.

To sum it up, nationwide foreclosure statistics are improving overall, but not everywhere. This rise in prices and decreases in foreclosure filings may have a lot to do with federal government intervention in the housing market. Hundreds of billions of direct aid and subsidies to homeowners and owners have directed huge resources from the rest of the economy back to the housing industry. Numerous foreclosure help programs have also been created to keep property values artificially high and foreclosure rates down. The big question is how much longer the government will be able to prop up home prices, and if there will be an even larger decline if the programs and subsidies stop.

Why Are The Government Mortgage Bailout Plans Such Disasters?

The United States government is aware of the increasing number of foreclosures in these worrisome economic times. Bailout plans have been put in place and it has been said that between 8 and 9 million homeowners have the possibility of qualifying for help to avoid the foreclosure of their home. However, what it boils down to is the question of whether these government bailout plans are working or not. This question will be explored here.

There have been numerous complaints in regards to lack of precise enough information for homeowners to be able to make use of the government bailout plans. They seek help from their lenders, but they have no specifics to give. Others claim a complete lack of help is available at all. Settling on the reasons for the alleged failure of the government bailout plans is difficult to accomplish as people are not willing to have their mistakes publicized or even admit they have asked for help and subsequently been declined assistance.

There are no numbers to accompany the amount of people who have applied for help versus who have been denied or whether any loans were renegotiated. This lack of records and accountability has been one of the chief complaints of homeowner advocates. Obviously, the concern here is that the legislation behind these government bailout plans needs to be improved if the number of people who can find assistance with said programs are to be successful.

One of the main sections of government mortgage bailout plans is for the assistance of people who are stuck living in a home that will sell for less than the principal balance of the mortgage they still owe on it. This is similar to owning a totaled car, except there is no way out of being under water in your home ownership without losing a huge amount of money. Borrowers in this situation have been turning more and more often to strategic default, simply walking away from their homes even if they can make the payments.

©eyewashdesign A Golden - flickr

©eyewashdesign A Golden – flickr

The assistance that government bailout plans offer is limited to those whose mortgages do not exceed 5% of the appraised value. This eliminates help to a large amount of people who need it the most. Investors and those not living in their homes are also disadvantaged by the plans, as they do not qualify for assistance under most of them. But without addressing the rampant speculation and homeowners who bought multiple homes during the boom, the only option for these borrowers is default.

The other important sector of government bailout plans is loan modification. These are possible for borrowers who have become delinquent in their payments for a month or more, but are not yet faced with foreclosure actions. The possible modifications are based on the lender’s discretion and can include anything from temporary suspension of payments, lowered interest rates or other creative changes. The success of this section of government bailout plans is dependent upon the individual lenders and mortgage situations.

Some Recent Foreclosure Statistics – Is Anything Helping Homeowners?

The following are some facts and statistics about the real estate market and the government’s efforts in putting together effective plans to address the foreclosure crisis. Despite the government’s programs, starting in October 2007, and continuing with the latest plan released earlier this year, the foreclosure rate has kept up its dramatic increase.

According to the Mortgage Bankers Association, more than one in every subprime mortgage loan was in foreclosure as of the fourth quarter of 2008. This is 13.71 percent of subprime loans, compared to prime loans in foreclosure at a rate of only 1.88% as of the same time.

©insuranceinbradenton - flickr

©insuranceinbradenton – flickr

Furthermore, more than one third of all subprime adjustable rate loans, as of the final quarter of 2008, were in a state of serious delinquency. This is more than three times the rate of delinquency for prime adjustable rate mortgages.

Under a new incentive program, Fannie Mae has begun paying attorneys who are able to qualify delinquent borrowers for loan modifications, repayment plans, or similar workout solutions as an alternative to foreclosing.

Due to the high rate of foreclosure, most workout plans are taking at least thirty days to be processed by lenders and servicing companies. Homeowners and those working for them should be aware of this significant time lag, especially if a foreclosure sale is on the horizon. It may be best to obtain a delay of any sheriff sale in order to apply for assistance without the threat of losing the home in a short period of time.

As early as October and December 2007, the US Treasury Department was putting together plans to solve the rising foreclosure rates on an industry-wide, voluntary basis. Unfortunately, as the number of people seriously behind in their mortgages kept increasing, no more resources were dedicated to assisting these borrowers, and delays led to more foreclosures.

Thus far, there have been at least five different programs to help homeowners stop foreclosure. These have been the Making Home Affordable Modification Program (HAMP), Making Home Affordable Refinance Program, Hope for Homeowners (H4H), HOPE NOW also known as the American Securitization Forum Plan, and Project Lifeline. Thus far, all have failed to seriously affect the foreclosure rate.

As foreclosures keep rising, the cheap money policies of the Federal Reserve, combined with the poor to nonexistent lending standards of the banks have proven to have far more negative impacts on the economy than any bureaucrat or regulator anticipated. Unfortunately, more cheap money policies have been some of the only fixes proposed and provided by the government, which has caused further downward pressure on the economy.

How Lenders Help Sabotage Government Loan Modifications

The government’s programs to help stop the foreclosure crisis were probably started with the best of intention. Good intentions, however, can not cover for economic ignorance and an unwillingness to face the facts of the housing market. Prices are declining and more people are facing foreclosure due to the poor lending decisions created by cheap easy money and the erosion of lending standards.

©Loan Leaders of America Inc. - flickr

©Loan Leaders of America Inc. – flickr

As well, many of the government’s programs suffer from the same problems. Unfortunately, with each failure, the programs are not canceled. Instead, they are further funded, grow bigger, change names, or a similar plan with only superficial changes is layered on top of the old one. The old plan loses steam, while the next one, almost identical to all previous ones, is announced with far greater optimism than is deserved.

But the problems are never solved. Voluntary participation, unaccountability, lack of responsibility to do anything by the lenders or servicing companies, lack of penalties for not complying with the regulations, and all the power given to the banks are just a few of these problems. They have been the same complaints from consumer advocates and homeowners from the very first plan put in place by the government.

Servicing companies and lenders, for instance, have almost all of the negotiating power that borrowers do not have. When lenders are given the choice of participating in the voluntary government programs, compliance is often lacking and few resources are dedicated to meaningful loss mitigation efforts. The lender decides how much to participate in the plan and has all of the financial power.

The government programs, mandatory or voluntary, also impose few rules for compliance. While servicers have some responsibilities to negotiate with homeowners, the level of participation is often very lacking. Borrowers who have ever tried to communicate with a bank know how frustrating it is when the bank loses faxes numerous times and never returns phone calls, all to be turned down at the last second.

Even if the bank does absolutely nothing to help the borrowers, whether required to or not, how can the lender be held accountable? Unfortunately, it is only in the courts that the consumers can state their claims, and many borrowers try to negotiate for a loan modification or other solution in order to avoid going to court. Especially in nonjudicial states, going to court to enforce a potential negotiation plan may not make sense.

Court-mandated negotiations have also failed to materialize as a widespread solution to foreclosure, as the banks have been able to block legislation that would allow bankruptcy judges to modify the terms of first mortgages or reduce balances. Some states and certain courts, however, have begun to scrutinize foreclosure cases more carefully, which may work out in homeowners’ favor more often.

Unfortunately, the problems associated with the government’s programs to avoid foreclosure have far outweighed any benefits to the small number of borrowers who have received assistance. Three hundred billion dollars to help one borrower, as was the case with the Hope for Homeowners program, probably helped create more foreclosures than the one it fixed. The only real question is if more regulation and legislation is what is needed to fix the programs.

Hopelessly Corrupted — Credit Card Companies, Debt Collectors, and Mandatory Arbitration

©demosphere - flickr

©demosphere – flickr

One tool of the credit card companies has always been to force consumers into unfair arbitration proceedings, where very little is done to help strapped borrowers get back on top of debts. While most people who were involved in such negotiations had a feeling they horribly biased against the consumers, the full extent of the corruption of the process has finally come out in a recent court settlement.

The attorney general for the state of Minnesota recently sued the National Arbitration Forum (NAF), alleging deception and bias in their treatment of credit consumers. Amazingly, the NAF agreed to cease all consumer arbitrations nationwide beginning July 24, 2009, which will effect huge numbers of credit card companies and borrowers. Millions of credit agreements name NAF as the company to handle any arbitration.

The reason for the National Arbitration Forum ceasing operations is that it was found to have been biased in its business dealings, and had failed to disclose these biases. Corporations controlled by a hedge fund ended up owning part of NAF and a national collection agency that used NAF in lawsuits against borrowers. NAF and the debt collector, Mann Bracken, failed to disclose this relationship to consumers.

The Minnesota attorney general’s complaint alleges that the collectors had filed 125,000 collection attempts with the National Arbitration Forum in 2006, while neither party ever disclosed the relationship between the two companies. And this is after NAF had represented itself, according to the attorney general’s complaint, as “independent, operates like an impartial court system, and is not affiliated with any party.”

Obviously, NAF and Mann Bracken were closely affiliated, owned by the same corporations through the hedge fund, and using their business relationship to sue consumers and then throw the cases into arbitration proceedings. In fact, the complaint further alleges that NAF worked with credit card companies to persuade them to include mandatory arbitration clauses in cardholder agreements. In many cases, NAF was appointed the arbitrator in these contracts.

Now that the National Arbitration Forum has ceased administering consumer arbitration proceedings, all of these former contracts are now invalid as written. A further development is that, due to the NAF complaint, the American Arbitration Association has also decided to cease handling collection actions against borrowers. This will be their decision until appropriate standards are developed.

For the present time, it seems that mandatory arbitration clauses in credit card agreements may be worthless. While it is no surprise to consumers that have been forced into the system that it is totally biased in favor of debt collectors, the Minnesota attorney general’s investigation has proved that companies can work together to gain interests in arbitrators and collection agencies and hide these affiliations from consumers.

How many credit card borrowers were pressured to agree to unfair repayment plans or were forced into bankruptcy due to the corrupt practices of the National Arbitration Forum and its affiliated credit card and collection companies? Out of 125,000 complaints that Mann Bracken filed with NAF, how many ended up fairly? It may be safe to assume, based on the claims raised in the AG lawsuit, that none of the arbitrations ended up fairly for borrowers.

Why are Property Taxes Rising as Property Values Crash?

What is most amazing about the real estate downturn and economic depression is that government

©401(K) 2013 - flickr

©401(K) 2013 – flickr

seems to keep on growing. In fact, government at all levels does not seem to have missed a beat, as they all seem to be growing. The only thing that has changed is the reason for continued government growth.

During strong economic times, government kept growing because it needed to provide more services to a rapidly changing world and rapidly growing communities. More police officers were hired to “protect” the community and collect revenue, and more social welfare programs were created to buy votes.

Now that the real estate boom has turned into a catastrophe of historic proportions, government needs to keep growing to meet the demands of a rapidly changing world and growing poverty. More police offers are hired to “protect” dangerous foreclosed neighborhoods, and more social welfare programs are created to buy votes.

The people in the middle who suffer the most are the working people in these communities who are still attempting to hold a job and pay their mortgages. These homeowners are seeing property taxes increase at a time when property values are falling by the day.

In fact, CNN is reporting that home prices have fallen by 27% from their peak, but municipal tax collection has grown by 12% from 2006 to 2008. With fewer homeowners and rising civil unrest, governments across the nation have taken the exact wrong approach by preying on the men and women who are still working and paying their bills..

It seems that the culture of bailout has extended far beyond Wall Street and Washington, DC, as homeowners in all areas of the country are being stolen from in order to pay off anyone with a political connection. The billion dollar bailouts make the news, but many more companies and individuals have profited from government handouts.

The only jobs that have been created by the president’s stimulus plan have been government jobs, all of which need to be funded through additional tax revenue or borrowing. These government jobs, furthermore, have done little else than take resources from the private sector and dump them into giant black holes of public works.

Driving through a large metropolitan area over the weekend, it seemed that there was highway or road construction every few miles, all of which had huge administration recovery plan signs littering the landscape. Some of these roads had been repaired and redone just a few years ago, but are now being repaired again. Some roads were not damaged in the first place.

Is everything the government does just for show? To provide an appearance that, without the central planners, we would all be crawling around in the dirt eating worms and working in caves digging rocks for $1 a day?

But this is not the case, and all of the money being taxed, borrowed, or printed into existence to allow the government to keep growing at the expense of communities will not solve the foreclosure crisis or the broader recession. All we are getting is a show of resources, a few more unnecessary government jobs, and higher property tax rates.

Foreclosure and How to Deal with a Bank Being Taken Over by the FDIC

From Washington Mutual to the local bank on the corner, the government has been busy since the financial crisis began shutting down banks almost every week. Many of these banks are becoming insolvent due to their exposure to the subprime mortgage market and other risky loans that they extended to consumers or invested in to take advantage of exorbitant profits. But with so many banks going out of business, homeowners with loans through these institutions need a plan for staying out of foreclosure.

©Quint Cobb Foreclosure Relief - flickr

©Quint Cobb Foreclosure Relief – flickr

Especially for homeowners facing foreclosure, when a bank is shut down by the government due to insolvency, the situation can become much more complicated. Typically, the assets of a failed bank are sold to another bank after the government has come in and run the bankrupt institution for a period of time. Loans are considered assets since they represent a potential stream of income. But foreclosed loans may be treated with a little less regard.

The big problem that homeowners in foreclosure will face is that they are already behind on their mortgage and it may be difficult to determine which company or agency to speak with regarding any loan modification, repayment plan, or short sale options. If the bank is out of business and not responding to calls, but has instructed its lawyers to move ahead with foreclosure, borrowers may find themselves in some sort of financial limbo.

The best response to this is for homeowners to begin keeping records of their attempts to stop foreclosure with the old lender, the government, or the new bank. They should keep documentation of their efforts to resolve the situation through the courts or outside the system. These records should note when they call, write, or send faxes to the bank and what information they are attempting to obtain, or what solution they are trying to negotiate with the bank.

If the bank is in bankruptcy right now, there is a good chance the homeowners’ loan will be sold to a new bank in a period of time. That bank will only see that the borrowers are behind on monthly payments and in foreclosure. In some cases, they may send a letter or two offering assistance, but may just move directly ahead with foreclosure, taking up where the insolvent lender left off.

In this type of situation, the borrower’s plan should be to save up as much money as possible during the period the bank is in receivership with the government. If they are able to, they should put away at least the amount of their normal monthly payment and put it in a separate bank account. These extra funds can be used to show a good faith effort to pay back the arrears or as a bargaining chip for a mortgage modification or other plan.

Once the new bank contacts the borrowers, whether it is to pursue foreclosure or not, they should start negotiating with the lender, using the documentation and money in the bank as bargaining chips. If the new bank does not work with the owners, then they should take the matter into court and show a judge how they have been saving up their money to pay down the mortgage and attempting to work out a plan but had never gotten a response.

Foreclosure is supposed to be used as a last resort, so if the bank is not responding to homeowners, they need to show that they have tried to fix the situation outside of the court. Even in situations where one bank goes out of business, is taken over by the federal government, and is then sold to another institution, homeowners can make a good case for stopping foreclosure just by saving up money and keep documentation of their efforts to negotiate with their lender.