Squeezed Homeowners In South Florida "Country Club"
Communities Fight Back
In Boca Raton, Florida, the South Florida Daily Business Review reports:
Almost a decade after Howard Cohan moved into Devon Place, a neighborhood within Boca’s Woodfield Country Club, he was told he would be required to establish a social membership in the golf and tennis club and pay annual dues of more than $10,000 to continue living in the community.
He also was told he would be required to spend a minimum of $2,500 per year in food and beverages at the club. That was in 2003, and despite his displeasure with the homeowners association, Cohan paid his dues each year.
Finally, Cohan had enough and recently filed a lawsuit challenging the club’s mandatory membership. Cohan’s attorney, Andrew Bray, is seeking class action status for the suit against the Woodfield Country Club Homeowners’ Association.
And Cohan isn’t the only homeowner fighting mandatory fees.(1)
For more, see Country club living putting squeeze on some homeowners.
For Mr. Cohan's lawsuit, see Cohan v. Woodfield Country Club Homeowners Association Inc.
For another similar lawsuit by a homeowner against a homeowner association offering "country club living," see:
Nichols v. The Hamlet Residents Association, Inc.
(1) In another similar lawsuit, Palm Beach Circuit Judge David French late last year ruled the membership fee requirement was “unreasonable” and “unenforceable” for new buyers. The suit is before the 4th District Court of Appeal. The appeal claims French should not have ruled in the case because he lives in a country club community. Go here for Judge French's ruling.
Saturday, March 21, 2009
FICO SHOULD GO BYE-BYE
Should FICO scores ignore recent foreclosures?
Zac Bissonnette
The unprecedented wave of foreclosures is certainly weakening the social stigma that comes with giving up a home, and Todd J. Zywicki, a professor of law at George Mason University says that it may also result in a dulling of the impact foreclosure has on credit scores.
''It just seems obvious that a foreclosure in 2008 or 2009 doesn't have as much information value as a foreclosure five years ago,'' he says. ''To the extent that foreclosure doesn't predict future behavior as much as it did in the past, you'd expect that the FICO algorithm would change to adjust for that.''
While providing FICO score relief to victims of foreclosure has a certain intuitive appeal to it, it actually might be a terrible idea. First, it would make FICO scores even more useless than they already are. Second, it would eliminate the one remaining reason that people have not to give up homes they're underwater on.
One of the primary motives behind all the housing stimulus programs has been to reduce the amount of inventory on the market in distressed areas. If you give people on more reason to give up their homes, the hardest-hit markets could be even more flooded than ever. About 52% of Nevada mortgages are underwater, followed by 32% in Arizona and 30% in Florida and California, according to First American CoreLogic.
Without the FICO score deterrent, 52% of Nevada home owners with mortgages would have every reason to abandon their homes. That would spell disaster for that housing market.
A better solution is for the FICO score's treatment of foreclosures to remain unchanged -- or present two numbers, one that reflects the foreclosure and one that doesn't. Then leave it to the lender to decide how much he cares about the foreclosure.
Source
Zac Bissonnette
The unprecedented wave of foreclosures is certainly weakening the social stigma that comes with giving up a home, and Todd J. Zywicki, a professor of law at George Mason University says that it may also result in a dulling of the impact foreclosure has on credit scores.
''It just seems obvious that a foreclosure in 2008 or 2009 doesn't have as much information value as a foreclosure five years ago,'' he says. ''To the extent that foreclosure doesn't predict future behavior as much as it did in the past, you'd expect that the FICO algorithm would change to adjust for that.''
While providing FICO score relief to victims of foreclosure has a certain intuitive appeal to it, it actually might be a terrible idea. First, it would make FICO scores even more useless than they already are. Second, it would eliminate the one remaining reason that people have not to give up homes they're underwater on.
One of the primary motives behind all the housing stimulus programs has been to reduce the amount of inventory on the market in distressed areas. If you give people on more reason to give up their homes, the hardest-hit markets could be even more flooded than ever. About 52% of Nevada mortgages are underwater, followed by 32% in Arizona and 30% in Florida and California, according to First American CoreLogic.
Without the FICO score deterrent, 52% of Nevada home owners with mortgages would have every reason to abandon their homes. That would spell disaster for that housing market.
A better solution is for the FICO score's treatment of foreclosures to remain unchanged -- or present two numbers, one that reflects the foreclosure and one that doesn't. Then leave it to the lender to decide how much he cares about the foreclosure.
Source
Saturday, March 14, 2009
CALL TO HELP !
The banking industry is swarming over Capitol Hill in an effort to gut or defeat S. 61, the Helping Families Save Their Homes Act. The latest tactic is to try to limit the loans that can be modified in bankruptcy to sub prime loans.
These Senators are thought to be undecided or subject to being swayed one way or the other:
Max Baucus – Montana
Robert Byrd – West Virginia
Tom Carper – Delaware
Tim Johnson – South Dakota
Mary Landrieu – Louisiana
Joe Lieberman – Connecticut
Blanche Lincoln – Arkansas
Claire McCaskill – Missouri
Ben Nelson – Nebraska
Mark Pryor – Arkansas
Jon Tester – Montana
The freshman Democratic Senators have no history with this issue:
Mark Begich — Alaska
Michael Bennett – Colorado
Roland Burris – Illinois
Kirsten Gillibrand — New York
Kay Hagan – North Carolina
Ted Kaufman – Delaware
Mark Udall – Colorado
Tom Udall – New Mexico
Mark Warner – Virginia
A few Republicans
Bob Corker – Tennessee
Richard Lugar — Indiana
Mel Martinez – Florida
Arlen Specter — Pennsylvania
George Voinovich — Ohio
If you or family or friends are constituents of any of these lawmakers, give them a call or email in support of a no cost opportunity to stop the housing collapse.
Call them toll free: 877.354.4958
Or email at: www.nacba.org/TellCongress
Ask them to support a strong and comprehensive judicial mortgage modification buill.
These Senators are thought to be undecided or subject to being swayed one way or the other:
Max Baucus – Montana
Robert Byrd – West Virginia
Tom Carper – Delaware
Tim Johnson – South Dakota
Mary Landrieu – Louisiana
Joe Lieberman – Connecticut
Blanche Lincoln – Arkansas
Claire McCaskill – Missouri
Ben Nelson – Nebraska
Mark Pryor – Arkansas
Jon Tester – Montana
The freshman Democratic Senators have no history with this issue:
Mark Begich — Alaska
Michael Bennett – Colorado
Roland Burris – Illinois
Kirsten Gillibrand — New York
Kay Hagan – North Carolina
Ted Kaufman – Delaware
Mark Udall – Colorado
Tom Udall – New Mexico
Mark Warner – Virginia
A few Republicans
Bob Corker – Tennessee
Richard Lugar — Indiana
Mel Martinez – Florida
Arlen Specter — Pennsylvania
George Voinovich — Ohio
If you or family or friends are constituents of any of these lawmakers, give them a call or email in support of a no cost opportunity to stop the housing collapse.
Call them toll free: 877.354.4958
Or email at: www.nacba.org/TellCongress
Ask them to support a strong and comprehensive judicial mortgage modification buill.
THANK YOU JUDGE DONNA PADAR BERLIN !!!!
Sarasota Judge Cancels Foreclosure Sale
As a foreclosure defense attorney in Sarasota, I am glad to say that Sarasota Circuit Court Judge Donna Padar Berlin recently issued an Order canceling a foreclosure sale in a mortgage foreclosure case. Sarasota is now, in my opinion, taking a firmer stance against abuse in the mortgage foreclosure system by the mortgage companies. This is an excellent step in the right direction.
Prior to the Court's March 6, 2009 Order canceling the March 30th sale date, the Court had issued a prior Order on February 6, 2009 which stated that the mortgage company could not set another sale date. Despite that Order, The sale date on the defendant's home had been set for March 30, 2009. The Sarasota Judge canceled the sale when she found out that the mortgage company represented to the homeowner that she could modify her mortgage and that the mortgage foreclosure lawsuit would be abandoned.
Kudos to Judge Donna Pader Berlin for putting a stop to a practice that is all too prevalent in today's economy.
As a foreclosure defense attorney in Sarasota, I am glad to say that Sarasota Circuit Court Judge Donna Padar Berlin recently issued an Order canceling a foreclosure sale in a mortgage foreclosure case. Sarasota is now, in my opinion, taking a firmer stance against abuse in the mortgage foreclosure system by the mortgage companies. This is an excellent step in the right direction.
Prior to the Court's March 6, 2009 Order canceling the March 30th sale date, the Court had issued a prior Order on February 6, 2009 which stated that the mortgage company could not set another sale date. Despite that Order, The sale date on the defendant's home had been set for March 30, 2009. The Sarasota Judge canceled the sale when she found out that the mortgage company represented to the homeowner that she could modify her mortgage and that the mortgage foreclosure lawsuit would be abandoned.
Kudos to Judge Donna Pader Berlin for putting a stop to a practice that is all too prevalent in today's economy.
CHANGES TO FAIR DEBT COLLECTION...ITS ABOUT D____-TIME !
The Federal Trade Commission has proposed changes to the Fair Debt Collection Practices Act (FDCPA) that could have a major impact on the debt collection industry, including increasing damages for FDCPA suits, restricting collectors from calling mobile phones or texting, and laying out specific criteria for information in a debt validation notice.
To bring the FDCPA current with changes in the industry, the FTC made a number of proposals for changes to the law that governs collector behavior:
Debt collectors should provide better information in debt validation notices, including: (1) the name of the original creditor; and (2) itemization of: the principal, the total of all interest, and the total of all fees and other charges
The statutory damages awarded under the FDCPA should be increased to account for inflation.
The FTC should have regulatory authority under the FDCPA.
The law should generally prohibit debt collectors from contacting consumers via cell phones unless they have obtained prior express consent to such contacts.
Although the FTC recommended that statutory damages under the FDCPA be updated to reflect inflation, it did not offer a suggested amount. The report did note that the $1,000 cap put on violations in 1977 would be about $3,600 in 2008 dollars. The FTC said that it still believes the FDCPA is best enforced by private suits and class actions, a central rationale for increasing damages.
The report is the result of comments and testimony provided in a two day workshop held in Washington in October 2007. Read the full FTC report: http://tinyurl.com/bfflr3.
To bring the FDCPA current with changes in the industry, the FTC made a number of proposals for changes to the law that governs collector behavior:
Debt collectors should provide better information in debt validation notices, including: (1) the name of the original creditor; and (2) itemization of: the principal, the total of all interest, and the total of all fees and other charges
The statutory damages awarded under the FDCPA should be increased to account for inflation.
The FTC should have regulatory authority under the FDCPA.
The law should generally prohibit debt collectors from contacting consumers via cell phones unless they have obtained prior express consent to such contacts.
Although the FTC recommended that statutory damages under the FDCPA be updated to reflect inflation, it did not offer a suggested amount. The report did note that the $1,000 cap put on violations in 1977 would be about $3,600 in 2008 dollars. The FTC said that it still believes the FDCPA is best enforced by private suits and class actions, a central rationale for increasing damages.
The report is the result of comments and testimony provided in a two day workshop held in Washington in October 2007. Read the full FTC report: http://tinyurl.com/bfflr3.
NAACP STARTS SUING BANKS
NAACP sues major lenders
The lawsuit alleges that HSBC and Wells Fargo gave subprime rates to African-Americans who qualified for better rates.
NEW YORK (CNN) -- The NAACP filed lawsuits Friday against two of the nation's largest mortgage lenders -- HSBC and Wells Fargo -- alleging "systematic, institutionalized racism" in their sub-prime lending.
"We have targeted these banks because we have gone through what we can get our hands on, and it seems like there's a real problem here," NAACP CEO Benjamin Jealous told CNN.
He added that the group wants "transparency. We want to see the books. We are not seeking damages, we just want them to fix the problem."
Both companies denied the allegations.
HSBC (HBC) spokeswoman Kate Durham said the company does not comment on litigation, but she added, "We stand by our lending practices."
Wells Fargo (WFC, Fortune 500) spokeswoman Melissa Murray issued a statement saying, "The NAACP's allegations are totally unfounded and reckless. We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products, or services."
She went on to say that the company has been "working with the NAACP for the past two years to develop a partnership that would benefit the NAACP, its constituents, and our communities, so we are dismayed that the NAACP has chosen to abandon that constructive dialogue in order to pursue this litigation."
Under subprime lending, people who don't qualify for lower interest rates can borrow money at higher rates. The NAACP lawsuits argue that the companies gave subprime rates to African-Americans who qualified for better rates, and gave better rates to white customers with similar credit histories.
The lawsuits, filed in U.S. District Court in central California, note several studies showing African-Americans have been disproportionately affected by subprime lending.
"These statistical disparities are not mere happenstance, but instead result from the systematic and predatory targeting of African-Americans, as well as facially neutral lending policies and practices that have a disparate adverse impact on African-Americans," the lawsuits say.
The NAACP previously launched similar suits against numerous other lenders. In its statement Friday, the nation's oldest civil-rights group said, "One lender has already entered into a preliminary settlement agreement with the NAACP, and a number of other lenders are engaged in similar discussions."
The lawsuit alleges that HSBC and Wells Fargo gave subprime rates to African-Americans who qualified for better rates.
NEW YORK (CNN) -- The NAACP filed lawsuits Friday against two of the nation's largest mortgage lenders -- HSBC and Wells Fargo -- alleging "systematic, institutionalized racism" in their sub-prime lending.
"We have targeted these banks because we have gone through what we can get our hands on, and it seems like there's a real problem here," NAACP CEO Benjamin Jealous told CNN.
He added that the group wants "transparency. We want to see the books. We are not seeking damages, we just want them to fix the problem."
Both companies denied the allegations.
HSBC (HBC) spokeswoman Kate Durham said the company does not comment on litigation, but she added, "We stand by our lending practices."
Wells Fargo (WFC, Fortune 500) spokeswoman Melissa Murray issued a statement saying, "The NAACP's allegations are totally unfounded and reckless. We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products, or services."
She went on to say that the company has been "working with the NAACP for the past two years to develop a partnership that would benefit the NAACP, its constituents, and our communities, so we are dismayed that the NAACP has chosen to abandon that constructive dialogue in order to pursue this litigation."
Under subprime lending, people who don't qualify for lower interest rates can borrow money at higher rates. The NAACP lawsuits argue that the companies gave subprime rates to African-Americans who qualified for better rates, and gave better rates to white customers with similar credit histories.
The lawsuits, filed in U.S. District Court in central California, note several studies showing African-Americans have been disproportionately affected by subprime lending.
"These statistical disparities are not mere happenstance, but instead result from the systematic and predatory targeting of African-Americans, as well as facially neutral lending policies and practices that have a disparate adverse impact on African-Americans," the lawsuits say.
The NAACP previously launched similar suits against numerous other lenders. In its statement Friday, the nation's oldest civil-rights group said, "One lender has already entered into a preliminary settlement agreement with the NAACP, and a number of other lenders are engaged in similar discussions."
Friday, March 13, 2009
revamp bk reporting??/DUH
Court Ruling: Credit Bureaus Must Revamp Their Bankruptcy Reporting
By Sonya Smith-Valentine
Millions of consumers who have filed for bankruptcy are about to get a second chance at a fresh start.
A recent federal court order required the three major credit reporting bureaus to clean up the credit files of millions of consumers who have filed for Chapter 7 bankruptcy. The problem: old debts that were discharged by the courts in a bankruptcy filing are still being reported as active on many consumers’ credit reports. The court-mandated changes come at a time when more consumers are filing for bankruptcy amid rising loan defaults and tighter credit standards.
This ruling is expected to clean up the credit files – and potentially boost the credit scores – of an estimated 6 to 10 million people who filed for Chapter 7 bankruptcy but still had errors in their credit report files. Consumers with old debt are likely to get some relief if those debts were discharged under Chapter 7 protection.
Current reporting systems
arnt as accurate as they should be and errors in credit reports are common. Credit report inaccuracies can result in lower credit scores, credit denials and higher interest rates.
Current reporting systems aren’t as accurate as they should be and errors in credit reports are common. Credit report inaccuracies can result in lower credit scores, credit denials and higher interest rates. In many cases, old discharged debts linger on credit reports if lenders don’t update their records or if collection agencies ignore the fact that debts were discharged in bankruptcy. Also, some creditors or buyers of debt will not report the bankruptcy discharge to the credit bureaus and will instead “park the debt” during the bankruptcy and then try to collect the debt after it has been legally discharged. The new court-mandated procedures should ensure that anyone who files for bankruptcy in the future will have more accurate credit reports.
The court order stems from a class action lawsuit alleging that each of the credit bureaus violated the Fair Credit Reporting Act by failing to maintain reasonable procedures to assure the accurate reporting of debts that were discharged in bankruptcy. The lawsuit could now move to a trial to determine liability and damages if the court decides to give the damages portion of the case a class action status.
The ruling is significant because the credit bureaus will have to make wholesale changes to the way they report key credit information related to bankruptcy filings. It used to be that the credit bureaus would remove/update pre-bankruptcy debts on consumers’ credit files only if the creditors updated their accounts. Now, accounts included in a Chapter 7 bankruptcy will be required to show a zero balance. It appears the credit bureaus were showing the “included in bankruptcy” accounts as having balances and, in some cases, showing active history which could keep the account on a credit file for longer than the seven-year limit. A bankruptcy on the credit report is bad, but when there is a bankruptcy and there are also debts showing up as overdue and not paid — that’s a double hit.
Once a consumer has completed the bankruptcy process, they should request a copy of their credit report from all three credit bureaus. The credit report should indicate a zero balance next to all creditors listed in their bankruptcy petition, unless they acquired new debt during or subsequent to their bankruptcy or re-affirmed the existing debt during the bankruptcy. If their credit report indicates an error, they should send to the credit bureaus a dispute letter with proof the debt was discharged in bankruptcy. If the credit bureau does not correct the error in the credit report and the consumer then suffers some harm, the consumer can file a lawsuit for damages for violations of the Fair Credit Reporting Act.
Sonya Smith-Valentine is a member of the Valentine Legal Group, LLC. She concentrates her practice on personal finance litigation: credit reporting errors, debt collection disputes and banking problems.
previous next
Publications : Bar Bulletin: February 2009
By Sonya Smith-Valentine
Millions of consumers who have filed for bankruptcy are about to get a second chance at a fresh start.
A recent federal court order required the three major credit reporting bureaus to clean up the credit files of millions of consumers who have filed for Chapter 7 bankruptcy. The problem: old debts that were discharged by the courts in a bankruptcy filing are still being reported as active on many consumers’ credit reports. The court-mandated changes come at a time when more consumers are filing for bankruptcy amid rising loan defaults and tighter credit standards.
This ruling is expected to clean up the credit files – and potentially boost the credit scores – of an estimated 6 to 10 million people who filed for Chapter 7 bankruptcy but still had errors in their credit report files. Consumers with old debt are likely to get some relief if those debts were discharged under Chapter 7 protection.
Current reporting systems
arnt as accurate as they should be and errors in credit reports are common. Credit report inaccuracies can result in lower credit scores, credit denials and higher interest rates.
Current reporting systems aren’t as accurate as they should be and errors in credit reports are common. Credit report inaccuracies can result in lower credit scores, credit denials and higher interest rates. In many cases, old discharged debts linger on credit reports if lenders don’t update their records or if collection agencies ignore the fact that debts were discharged in bankruptcy. Also, some creditors or buyers of debt will not report the bankruptcy discharge to the credit bureaus and will instead “park the debt” during the bankruptcy and then try to collect the debt after it has been legally discharged. The new court-mandated procedures should ensure that anyone who files for bankruptcy in the future will have more accurate credit reports.
The court order stems from a class action lawsuit alleging that each of the credit bureaus violated the Fair Credit Reporting Act by failing to maintain reasonable procedures to assure the accurate reporting of debts that were discharged in bankruptcy. The lawsuit could now move to a trial to determine liability and damages if the court decides to give the damages portion of the case a class action status.
The ruling is significant because the credit bureaus will have to make wholesale changes to the way they report key credit information related to bankruptcy filings. It used to be that the credit bureaus would remove/update pre-bankruptcy debts on consumers’ credit files only if the creditors updated their accounts. Now, accounts included in a Chapter 7 bankruptcy will be required to show a zero balance. It appears the credit bureaus were showing the “included in bankruptcy” accounts as having balances and, in some cases, showing active history which could keep the account on a credit file for longer than the seven-year limit. A bankruptcy on the credit report is bad, but when there is a bankruptcy and there are also debts showing up as overdue and not paid — that’s a double hit.
Once a consumer has completed the bankruptcy process, they should request a copy of their credit report from all three credit bureaus. The credit report should indicate a zero balance next to all creditors listed in their bankruptcy petition, unless they acquired new debt during or subsequent to their bankruptcy or re-affirmed the existing debt during the bankruptcy. If their credit report indicates an error, they should send to the credit bureaus a dispute letter with proof the debt was discharged in bankruptcy. If the credit bureau does not correct the error in the credit report and the consumer then suffers some harm, the consumer can file a lawsuit for damages for violations of the Fair Credit Reporting Act.
Sonya Smith-Valentine is a member of the Valentine Legal Group, LLC. She concentrates her practice on personal finance litigation: credit reporting errors, debt collection disputes and banking problems.
previous next
Publications : Bar Bulletin: February 2009
Friday, March 6, 2009
CRAM IT ... IS NOW A GOOD THING !
House OKs mortgage reductions in bankruptcy cases
Legislation would allow bankruptcy judges to modify loans of struggling owners
By Jim Puzzanghera | Washington Bureau
March 6, 2009
WASHINGTON—In an attempt to ease the foreclosure crisis, the House on Thursday approved a major change to bankruptcy law, giving judges new powers to modify home mortgages.
The revision, which was approved 234-191 as part of a broader housing bill, would allow bankruptcy judges to reduce or "cram down" the principal owed on an existing mortgage for a primary residence. First, however, a homeowner would have to seek a voluntary modification from their lender and share any profit if they sell the house within five years.
The legislation faces a tougher road in the Senate, although supporters were optimistic that the nationwide surge in foreclosures would help them pass it as early as next week.
Since 1978, when major changes were made in the bankruptcy laws, judges have had the authority to reduce the principal on loans backed by almost all forms of property, including second homes, cars and boats but not on primary residences. Supporters of the legislation said it should be extended to primary residences.
"This is the same opportunity that owners of vacation homes, investment properties, private jets [and] luxury yachts have long enjoyed," said Rep. Zoe Lofgren (D-Calif.). "I think it's only fair that we offer it now to average families as well."
Supporters hope the threat that a bankruptcy judge could reduce the mortgage principal would induce lenders to work with homeowners to modify mortgages to reduce monthly payments and avoid foreclosure.
But most of the mortgage industry and many Republicans oppose the legislation. They argue it would make bankruptcy too easy for struggling homeowners. That would lead to a flood of filings to reorganize debt under Chapter 13 and to higher mortgage rates as lenders try to offset losses they might suffer if a loan were later modified, opponents said.
"It is a classic example of the law of unintended consequences," said Rep. Dan Lungren (D-Calif.). "When you introduce additional risk … you are going to jeopardize the accessibility and eligibility of these mortgages to everybody."
The House vote came as the Mortgage Bankers Association released a survey showing a record 5.4 million U.S. homeowners, or nearly 12 percent, were at least a month behind in their payments or in foreclosure. In Illinois, the percentage was higher, at 12.3 percent, or 218,000 homeowners.
President Barack Obama has called for the change in bankruptcy law as part of his broader plan to reduce foreclosures, which continue to drive down housing prices and infect the economy.
Legislation would allow bankruptcy judges to modify loans of struggling owners
By Jim Puzzanghera | Washington Bureau
March 6, 2009
WASHINGTON—In an attempt to ease the foreclosure crisis, the House on Thursday approved a major change to bankruptcy law, giving judges new powers to modify home mortgages.
The revision, which was approved 234-191 as part of a broader housing bill, would allow bankruptcy judges to reduce or "cram down" the principal owed on an existing mortgage for a primary residence. First, however, a homeowner would have to seek a voluntary modification from their lender and share any profit if they sell the house within five years.
The legislation faces a tougher road in the Senate, although supporters were optimistic that the nationwide surge in foreclosures would help them pass it as early as next week.
Since 1978, when major changes were made in the bankruptcy laws, judges have had the authority to reduce the principal on loans backed by almost all forms of property, including second homes, cars and boats but not on primary residences. Supporters of the legislation said it should be extended to primary residences.
"This is the same opportunity that owners of vacation homes, investment properties, private jets [and] luxury yachts have long enjoyed," said Rep. Zoe Lofgren (D-Calif.). "I think it's only fair that we offer it now to average families as well."
Supporters hope the threat that a bankruptcy judge could reduce the mortgage principal would induce lenders to work with homeowners to modify mortgages to reduce monthly payments and avoid foreclosure.
But most of the mortgage industry and many Republicans oppose the legislation. They argue it would make bankruptcy too easy for struggling homeowners. That would lead to a flood of filings to reorganize debt under Chapter 13 and to higher mortgage rates as lenders try to offset losses they might suffer if a loan were later modified, opponents said.
"It is a classic example of the law of unintended consequences," said Rep. Dan Lungren (D-Calif.). "When you introduce additional risk … you are going to jeopardize the accessibility and eligibility of these mortgages to everybody."
The House vote came as the Mortgage Bankers Association released a survey showing a record 5.4 million U.S. homeowners, or nearly 12 percent, were at least a month behind in their payments or in foreclosure. In Illinois, the percentage was higher, at 12.3 percent, or 218,000 homeowners.
President Barack Obama has called for the change in bankruptcy law as part of his broader plan to reduce foreclosures, which continue to drive down housing prices and infect the economy.
FORECLOSURE NATION
by Scott Van Voorhis March 6, 2009 09:00 AM
Looks like the foreclosure epidemic is getting its second wind.
The first wave of foreclosures featured homeowners duped into buying homes they couldn’t afford with goofy, subprime loans. Not to mention a whole lot of small-time investors who bought units in hopes of flipping them for big profits, as well as a just outright fraudsters who used straw buyers to create artificial sales.
But much of that first wave of crazy subprime mortgages gone bad has already crashed into the housing market and economy. Now we are starting to see the second wave, regular homeowners who are losing their jobs and their homes due to the economic downturn, of course triggered in part by the subprime fiasco.
Anyway, that is the way some are reading the latest foreclosure stats, with the number of troubled mortgages rising to 7.8 percent of all home loans, the highest since 1972, Bloomberg reports. Loans actually in foreclosure now amount to 3.3 percent of all mortgages in the country, an all-time high.
The Mortgage Bankers Association is pointing to the deepening recession and job losses as a key factor behind the growing number of bad loans.
Let’s just hope President Obama’s $75 billion lifeline to homeowners in trouble works a bit better than the now long list of previous multibillion-dollar rescue plans rolled out by the federal government and several states, including Massachusetts.
Still, even the president’s ambitious effort won’t help you if you’ve lost your job and have no money at all to pay your mortgage.
Comment Permalink Email ShareThis« Back to Front Page Previous Entry Next Entry 16 comments so far...
It's not like it matters, since the government insists on just giving these people the houses that they're living in at the expense of the rest of us who worked hard, saved to buy a home, and then got slapped in the face the first time by being locked out within the last 10 years. Now this second slap in the face. It's disgusting and wrong on so many levels. Maybe I'll stop making my car payment and just have all of you pay the bill. Why not? While we're at it, I'll go get a free house of my own..
Foreclose on them all.
Posted by Foreclose on these lowlives March 6, 09 09:22 AMThat's a big joke, buyers who were duped. They were stupid, plain and simple - NOT DUPED.
Posted by chris March 6, 09 09:30 AMI wonder what the percentage of 30 year fixed rate mortgages where the buyer put 20% or more down are in foreclosure?
Posted by CambridgeLandlord March 6, 09 09:54 AMI totally trust in Obama but we are experiencing a fundamental breakdown of some major systems. I don't expect one administration or even one term to be able to set this right. We will see many waves of foreclosures, whether there is a bailout or not.
Posted by Rhea March 6, 09 09:58 AMWhen people lose their jobs or are in serious fear of losing their jobs they Do Not Buy Homes. End of Story. We are going through an enormous shift. No longer will people reach or extend themselves for a home. The negative look on renting is going away quickly. Millions of homeowners now wish they were renting (including me). Housing will continue to Free-Fall and in fact pick up steam to the downside for years to come. We are seeing such Wealth Destruction that we will not recover for years in the stock market. Housing will revert back to shelter.
I am a lifelong Democrat and what Obama did since about July is say the economy is terrible and kept scaring people. Now Of course it was and is terrible, but you cant have the president yelling in everyones face of how dire it is. The economy is largely psychological and he has really shaken people along with his terrible leadership to the capital markets and Wall St. People will not nor should they invest if they dont knwo what the rules are. They are making things up as we go. No wonder everyone is in 3 month treasuries yileding barely over .15 of a % point.......
My children who are 6 and 11 and your children are getting royaly screwed over by the leadership of this country.
Posted by Fearful March 6, 09 10:18 AMwe haven't seen anything yet, especially here in Boston, which will go the way of CA...
Posted by Hung Wang March 6, 09 10:44 AMprime mortgages are now starting to see really high default rates - as some of us have been saying all along, calling it a subprime problem was never accurate.
Subprime was more the canary in the coal mine than the cause - the cause was over-leveraging the economy, spending way beyond our means.
Posted by charles March 6, 09 10:55 AMYou said that the second wave of foreclosures is due to people losing their jobs. Then, at the end, you say that the gov lifeline won't help you if you've lost your job.
So, it's like trying to bail water with a dixie cup while the Titanic is sinking.
I don't know, I didn't read all the details about Obama's plan.
Posted by julio March 6, 09 11:50 AMObama, are you listening??!!
Posted by Jeff March 6, 09 12:00 PMI think the hike in foreclosures will now be driven by unemployment. While there is still a significant amount of toxic mortgages out there, the problem is that if households lose their income they may lose their homes. Responsible people that saved, stayed debt free, and have equity are feeling the brunt of the economy on their savings and jobs. The rule of thumb for 6 mos - 12 mos of saving means nothing today. You need 24 mos. Where 401ks may have been a last resort, they are so depleted it is a joke. We are in a downward spiral in housing, but it is way beyond that now.
Posted by Mish March 6, 09 01:25 PMSubprime buyers were not duped into buying houses they could not afford. Other than a potential hit to their credit rating if foreclosure happened, which was probably bad to begin with, they were basically given a call option with maximum upside and zero downside by banks who were then offloading these loans via securitization. Who would not take such an option ?
The tragic thing now is that conservative tax payers, including those who preserved capital by opting out of the housing boom, are seeing their tax dollars subsidize losses by banks and homeowners alike, at the opportunity cost of what these tax dollars could have otherwise be spent on.
Posted by Thien March 6, 09 04:20 PM"Obama, are you listening??!!"
No, unfortunately he's busy having petty arguements with right-wing radio hosts and newspeople. If I didn't hear it, I wouldn't believe it.
Posted by lama March 6, 09 05:13 PMThe overall economic decline is snowballing and it is due to many factors, of which the subprime issue is just one part. People are losing homes now due to loss of their jobs and income, with inability to pay mortgages, but not all these people purchased homes in the past 5 years. Alot of responsible people simply lost their jobs throught no fault of their own. A sinking ship carries everyone down.
Posted by bostonrunner March 6, 09 06:21 PM"I totally trust in Obama ....."
Another sucker who trusts our politicians. The monitary policy is of more importance than the bailout Porkage. Poring money down AIG and Citi rat holes is another great loss to bail out the cronies....
Posted by Dan H March 6, 09 06:48 PMObama does not have the courage or conviction to stand up and actually implement the promises he made to us during the campaign. The first and foremose is earmark reform. He told us that he would veto bills laden with pork, and has already let us down. I voted for this man because I believed in his platform and long for the promise of change.
The very first legislation of substance that he signed was the stimulus bill. This bill contains more pork than anu other bill in our nations history, and the Omnibus spending bill [our regular budget] contains just as much, yet he will sign it anyway. Nancy Pelosi, Harry Reid and Barney "The Big Joke" Frank are running the Government and I think Obama is afraid of them.
This tragedy that is our current Government will do nothing more than be the cause of millions of starving people, massive civil unrest and the transformation of our good republic into a fascist police state.
What a tragedy. I weep for my children.
Posted by Mark A. March 6, 09 07:44 PM"Obama, are you listening". No, he is orating while watching the tennis match.It is becoming apparent that he is more orater than decision maker.
Looks like the foreclosure epidemic is getting its second wind.
The first wave of foreclosures featured homeowners duped into buying homes they couldn’t afford with goofy, subprime loans. Not to mention a whole lot of small-time investors who bought units in hopes of flipping them for big profits, as well as a just outright fraudsters who used straw buyers to create artificial sales.
But much of that first wave of crazy subprime mortgages gone bad has already crashed into the housing market and economy. Now we are starting to see the second wave, regular homeowners who are losing their jobs and their homes due to the economic downturn, of course triggered in part by the subprime fiasco.
Anyway, that is the way some are reading the latest foreclosure stats, with the number of troubled mortgages rising to 7.8 percent of all home loans, the highest since 1972, Bloomberg reports. Loans actually in foreclosure now amount to 3.3 percent of all mortgages in the country, an all-time high.
The Mortgage Bankers Association is pointing to the deepening recession and job losses as a key factor behind the growing number of bad loans.
Let’s just hope President Obama’s $75 billion lifeline to homeowners in trouble works a bit better than the now long list of previous multibillion-dollar rescue plans rolled out by the federal government and several states, including Massachusetts.
Still, even the president’s ambitious effort won’t help you if you’ve lost your job and have no money at all to pay your mortgage.
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It's not like it matters, since the government insists on just giving these people the houses that they're living in at the expense of the rest of us who worked hard, saved to buy a home, and then got slapped in the face the first time by being locked out within the last 10 years. Now this second slap in the face. It's disgusting and wrong on so many levels. Maybe I'll stop making my car payment and just have all of you pay the bill. Why not? While we're at it, I'll go get a free house of my own..
Foreclose on them all.
Posted by Foreclose on these lowlives March 6, 09 09:22 AMThat's a big joke, buyers who were duped. They were stupid, plain and simple - NOT DUPED.
Posted by chris March 6, 09 09:30 AMI wonder what the percentage of 30 year fixed rate mortgages where the buyer put 20% or more down are in foreclosure?
Posted by CambridgeLandlord March 6, 09 09:54 AMI totally trust in Obama but we are experiencing a fundamental breakdown of some major systems. I don't expect one administration or even one term to be able to set this right. We will see many waves of foreclosures, whether there is a bailout or not.
Posted by Rhea March 6, 09 09:58 AMWhen people lose their jobs or are in serious fear of losing their jobs they Do Not Buy Homes. End of Story. We are going through an enormous shift. No longer will people reach or extend themselves for a home. The negative look on renting is going away quickly. Millions of homeowners now wish they were renting (including me). Housing will continue to Free-Fall and in fact pick up steam to the downside for years to come. We are seeing such Wealth Destruction that we will not recover for years in the stock market. Housing will revert back to shelter.
I am a lifelong Democrat and what Obama did since about July is say the economy is terrible and kept scaring people. Now Of course it was and is terrible, but you cant have the president yelling in everyones face of how dire it is. The economy is largely psychological and he has really shaken people along with his terrible leadership to the capital markets and Wall St. People will not nor should they invest if they dont knwo what the rules are. They are making things up as we go. No wonder everyone is in 3 month treasuries yileding barely over .15 of a % point.......
My children who are 6 and 11 and your children are getting royaly screwed over by the leadership of this country.
Posted by Fearful March 6, 09 10:18 AMwe haven't seen anything yet, especially here in Boston, which will go the way of CA...
Posted by Hung Wang March 6, 09 10:44 AMprime mortgages are now starting to see really high default rates - as some of us have been saying all along, calling it a subprime problem was never accurate.
Subprime was more the canary in the coal mine than the cause - the cause was over-leveraging the economy, spending way beyond our means.
Posted by charles March 6, 09 10:55 AMYou said that the second wave of foreclosures is due to people losing their jobs. Then, at the end, you say that the gov lifeline won't help you if you've lost your job.
So, it's like trying to bail water with a dixie cup while the Titanic is sinking.
I don't know, I didn't read all the details about Obama's plan.
Posted by julio March 6, 09 11:50 AMObama, are you listening??!!
Posted by Jeff March 6, 09 12:00 PMI think the hike in foreclosures will now be driven by unemployment. While there is still a significant amount of toxic mortgages out there, the problem is that if households lose their income they may lose their homes. Responsible people that saved, stayed debt free, and have equity are feeling the brunt of the economy on their savings and jobs. The rule of thumb for 6 mos - 12 mos of saving means nothing today. You need 24 mos. Where 401ks may have been a last resort, they are so depleted it is a joke. We are in a downward spiral in housing, but it is way beyond that now.
Posted by Mish March 6, 09 01:25 PMSubprime buyers were not duped into buying houses they could not afford. Other than a potential hit to their credit rating if foreclosure happened, which was probably bad to begin with, they were basically given a call option with maximum upside and zero downside by banks who were then offloading these loans via securitization. Who would not take such an option ?
The tragic thing now is that conservative tax payers, including those who preserved capital by opting out of the housing boom, are seeing their tax dollars subsidize losses by banks and homeowners alike, at the opportunity cost of what these tax dollars could have otherwise be spent on.
Posted by Thien March 6, 09 04:20 PM"Obama, are you listening??!!"
No, unfortunately he's busy having petty arguements with right-wing radio hosts and newspeople. If I didn't hear it, I wouldn't believe it.
Posted by lama March 6, 09 05:13 PMThe overall economic decline is snowballing and it is due to many factors, of which the subprime issue is just one part. People are losing homes now due to loss of their jobs and income, with inability to pay mortgages, but not all these people purchased homes in the past 5 years. Alot of responsible people simply lost their jobs throught no fault of their own. A sinking ship carries everyone down.
Posted by bostonrunner March 6, 09 06:21 PM"I totally trust in Obama ....."
Another sucker who trusts our politicians. The monitary policy is of more importance than the bailout Porkage. Poring money down AIG and Citi rat holes is another great loss to bail out the cronies....
Posted by Dan H March 6, 09 06:48 PMObama does not have the courage or conviction to stand up and actually implement the promises he made to us during the campaign. The first and foremose is earmark reform. He told us that he would veto bills laden with pork, and has already let us down. I voted for this man because I believed in his platform and long for the promise of change.
The very first legislation of substance that he signed was the stimulus bill. This bill contains more pork than anu other bill in our nations history, and the Omnibus spending bill [our regular budget] contains just as much, yet he will sign it anyway. Nancy Pelosi, Harry Reid and Barney "The Big Joke" Frank are running the Government and I think Obama is afraid of them.
This tragedy that is our current Government will do nothing more than be the cause of millions of starving people, massive civil unrest and the transformation of our good republic into a fascist police state.
What a tragedy. I weep for my children.
Posted by Mark A. March 6, 09 07:44 PM"Obama, are you listening". No, he is orating while watching the tennis match.It is becoming apparent that he is more orater than decision maker.
DEPRESSION OR ARE WE DEPRESSED?
The comparison to the 1920's and today are everywhere and since my profession is real estate I tend to hear this alot.
Banks are going under, Americans are waiting in lines for jobs and it really is bleak . All of this depression talk is causing folks to be depressed...clinically I mean !
Stock of the drugs company's making these anti depressant look good now. (this may be a good time to buy stock in Merck,Pfiser and who ever else provides these pills). Remember penny stocks?
In the 20's people were forced to live with their relatives...without reality tv,videos,computers,cell phones,appliances and cars. That is NOT likely to happen again ... there are just some things that Americans wont do.
People grew there own food-now this is a good idea ! However we may not have houses with yards or even houses (there was no mortgage sub prime meltdown in the 20's). So a trip to the grocery store is more feasible.
In the 20's simple pleasures were canning jams ,playing the guitar on the porch,and reading the good book.
Church and god are popular again (for some of us it always was) but in 2009 we want to connect to a power greater than our selves and praying just seems right now.When all else fails...PRAY.
We may not be jumping out of windows but the call of nature (beach,lakes,parks and playgrounds) are are simple pleasures again.
Back to the depression issue..we live on drugs to keep us healthy,drugs to keep us slim,drugs to help with pain ,drugs to make us lose weight but yes the real difference between depression then and depression now is a visit to your local pharmacy...
Banks are going under, Americans are waiting in lines for jobs and it really is bleak . All of this depression talk is causing folks to be depressed...clinically I mean !
Stock of the drugs company's making these anti depressant look good now. (this may be a good time to buy stock in Merck,Pfiser and who ever else provides these pills). Remember penny stocks?
In the 20's people were forced to live with their relatives...without reality tv,videos,computers,cell phones,appliances and cars. That is NOT likely to happen again ... there are just some things that Americans wont do.
People grew there own food-now this is a good idea ! However we may not have houses with yards or even houses (there was no mortgage sub prime meltdown in the 20's). So a trip to the grocery store is more feasible.
In the 20's simple pleasures were canning jams ,playing the guitar on the porch,and reading the good book.
Church and god are popular again (for some of us it always was) but in 2009 we want to connect to a power greater than our selves and praying just seems right now.When all else fails...PRAY.
We may not be jumping out of windows but the call of nature (beach,lakes,parks and playgrounds) are are simple pleasures again.
Back to the depression issue..we live on drugs to keep us healthy,drugs to keep us slim,drugs to help with pain ,drugs to make us lose weight but yes the real difference between depression then and depression now is a visit to your local pharmacy...
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