Economists fear wave of evictions on way in US

Last updated: September 7 2007 03:00

The fate of the US housing market is increasingly in the hands of an opaque part of the financial system normally associated with moves to evict families from their homes.

Mortgage service companies, which are responsible for calling on Americans to keep up with their loan payments, have assumed a pivotal role in President George W. Bush’s market-oriented strategy for dealing with the pending wave of foreclosures in the subprime mortgage sector.

An estimated 6m high-risk subprime loans, worth a total of more than ,000bn, are outstanding, which will in many cases reset to higher interest rates in the next 18 months, putting more than 2.5m Americans at risk of foreclosure.

"It is sort of like being in New Orleans a month before Hurricane Katrina hit when you know there is a storm coming," said Guy Cecala, of Inside Mortgage Finance.
Economists fear that a wave of evictions of borrowers unable to afford the higher payments will blight neighbourhoods, hit home prices, deepen the worst housing downturn in 16 years, and harm the wider economy.

The response to this crisis outlined by the president places considerable faith in the ability of mortgage servicers to mitigate this blow by helping distressed borrowers to stay in their homes.
Edward Lazear, chairman of the Council of Economic Advisers, said: "I believe, and I think the president believes, that markets are very good at finding ways to solve problems."
But many experts claim that the mortgage service sector is not fit for this purpose.

They argue it does not have the capacity to perform this role, and lacks the personnel, financial resources, technical tools, experience, incentives and oversight to deal with an economic crisis of this scale.
"Theoretically, it makes sense, but not in the real world," said Scott Syphax,a director at the Federal Home Loan Bank of San Francisco. "These institutions are not built to handle this scale and volume of problems."

"The notion that federal regulators can urge services to reach out and contact borrowers who may face distress is unrealistic," said Mr.Cecala. The mortgage markets’ success rate where it does modify loans is also poor. About half of loans that are modified still wind up in foreclosure a year later. In past housing downturns, large banks have been able to retool their mortgage servicing operations to adapt to conditions.

But shifts in mortgage finance and innovations in the financial sector mean that most subprime loans are no longer handled by federally regulated banks.

Most have been issued by specialist lenders that have sold the mortgages on to secondary markets through complex financial instruments.
The job of servicing many of these loans has also fallen to myriad smaller companies that have no contact with the ultimate owners of the loans and are themselves coming under stress.
American Home Mortgage services about bn of loans and filed for bankruptcy last month.

A court order has given the subprime lender until October 31 to sell its mortgage servicing operation.
But as more service companies fall into the hands of vulture investors, the task of co-ordinating a national response is likely to become complicated.

"The fixes being proposed by the president are not going to result in Americans being rescued from their homes, quite the opposite," said Richard E. Gottlieb, a lawyer who specialises in mortgage servicing.”

http://www.ft.com/cms/s/0/5f67d75a-5cdb-11dc-9cc9-0000779fd2ac.html
TO RUKIDDING: tell that to the people being evicted from their homes. And I don’t "hope" for a bad economy, I just don’t paint daisies and rainbows on piles of dog crap like YOU’RE trying to do.
To Gman: WE DON’T HAVE A "FREE MARKET SYSTEM.

Geez you people KILL me.
To EastCoaster: You clearly did not READ the article.

Why are you people so allergic to words?
To "a bush family member" Not even close. I must admit, albeit begrudgingly, that I am mesmerized by that small percentage of automatons like you who will bow and scrape and bleed to come up with whatever geometry or ballet or cubism is necessary to throw CLINTON into the mix.

bush is 100% responsible for the greasy pit of GREED which has taken over America.
To Aim: Did I say anything about "bailing out homeowners?"

No, I didn’t. But I notice that YOU did not say anything about the

FIFTY BILLION BUSH GAVE TO "BAIL OUT" THE PREDATORY LENDERS.

And the problem isn’t 50K a year people shopping for 0K homes, doll. The PROBLEM is predatory lenders (GREED, thanks bush) and people losing their JOBS (thanks bush).

I really don’t get it.
People like you don’t think regular citizens should get help, but don’t bat an eye when bush gives BILLIONS AND BILLIONS to corporations.

I really don’t get it.
Again to Amy: Yeah, here’s a "sidenote" for you:
YES. bush is responsible for what has taken over this country in the past seven years. Don’t whine to me that you have blinders on.

Details: My husband has a recent bankruptcy on his credit record (I was not included on bankruptcy). The bankruptcy is less than a year old.

My credit is decent, but I have been a stay-at-home-mom and full-time student for the past ten months, therefore have no income of my own.

My husband makes good money and has been current on our bills since the bankruptcy was discharged. Since the bankrutcy has freed up our finances, we can easily swing a house payment at this point.

So, what are our chances of getting a mortgage? And do you have any suggestions for making us look as good as possible to the lender? Can I go on the mortgage since I don’t have an income right now? Thanks!

will a mortgage company finance us for a house.

We closed on a new home mortgage on 3-30-07. SouthStarFunding carried the 2nd on that loan. On 3-30-07 SSF closed the doors but funds were rec’d at closing. 1st mortgage lenders assured me that they did purchase the 2nd when SSF closed but to date, I don’t have a new account number or, anything at all, in regards to this being done/settled. 1st payments on both notes are due in 14 days and we are concerned about not having rec’d anything about the 2nd mortgage. Shouldn’t we have rec’d something, anything, by now? And what do we do if we still don’t hear anything within the next week or so? Although 1st lender has been great with us during this whole process, my questions about the 2nd seem to be trivial now. Are they?

I’m looking to purchase some real estate in Romania & have heard that you can get financed as a foreign non resident. Where can I find out about getting a mortgage if I do not live in Romania. I am a US citizen & live in the US. Thank you.

I think it is great that Bush is going to bailout the homeowners that have been ripped off by the mortgage industry. These crooks have taken money from folks that just want to be a part of the ‘ownership society’ by owning their homes. Will we be allowed to get grant money for the exorbanant excess finance fees already paid by the reset interest rates? I think the mortgage companys should at least have to pay it back to us that have had resets. Do you think the govt can help us with the credit card interest rates that are also a rip-off? These banks are filthy rich on our backs of labor and owe us a refund and more normal interest rates going forward…

what do you think? thanks

The big CEOs, CFOs and the smart mortgage brokers have got out of the game early and took with them millions of dollars, leaving behind troubled housing and financial markets. While paying more taxes to fund this proposal is unfair to the people - especially the middle class, I believe the bail-out plan is necessary. We often think of our own bottom line, but the US and global economies seriously need help. As the financial system is the foundation of the US economy and the US economy drives the global market, we cannot sit still and see it crashing. Every business (especially small business owners) relies on the presence of the financial system; we live our lives surrounding the financial system. We are LIFE. We are FINANCE. When the financial system crashes, we crash. So stop thinking about just taxes. Look at how much we have lost in our retirement accounts. Think big and think ways ahead; lose a little bit now by paying taxes to fund this needed plan or pay a lot more seeing our retirement plan balance eroding. And who is there to blame? I guess we already know that lame duck and we don’t need to mention his name.

During the summer we completed the purchase of a new home. Our existing home which is in move in condition in a great area and being marketed at a competitive price has failed to sell because of the time of year and for no other reason. We are now committed to buy the other home however the sub prime mortgage market has collapsed in the meantime meaning that raising the bridging finance is proving next to impossible. We have 3 weeks to raise 150,000 pounds (I am in the UK). Our IFA is working hard to find a suitable mortgage product but the changing market conditions are making this very hard. We have no rich relatives. The issue is mostly that we were going to borrow on the 200K+ equity on our existing home self cert to do the bridge but the loan to value available has been dropped dramatically as lenders play safe, leaving us stuck with a problem in the meantime. Help! What is the quickest way to raise this money?
Can I just emphasise that I am in the UK, so need a loan in sterling. Also anyone who replies offering finance but without a phone number and website and some means of verifying themselves will be ignored.

Please. Massachusetts Voters need to wake up and vote this man out. Barney Frank had everything to do with the current recession we are in. Creating legislation so that people who couldn’t afford a Mortgage could and did get one…..

What are your thoughts on this?

Link: http://www.boston.com/news/nation/washington/articles/2009/08/25/frank_focused_on_reshaping_us_finance/

My Fico score as of March 21, 2008 was 593.

There are negative debts on my credit report, none of which belong to me. Several of the negative debts appearing on my credit report were given to my ex-wife in our divorce decree. The other negative debts appearing on my credit reports are accounts that were opened in my name using my personal information without my knowledge or consent. At the time these accounts were opened, I was in critical condition in a hospital following a near fatal car accident. We have been disputing these debts with the major credit bureaus since January 2007. We enclosed proof along with the disputes that these are not my debts but they still remain.

My current wife & I found a mobile home in WV that we really want to buy in order to provide a better life for our children & grandchildren but we need a loan for ,000 to buy it — the owner will finance the remainder of the cost.

If anyone can help us, it will be greatly appreciated by both of us.

I am looking to buy a property in the US. However I want to mortgage if I can, with a Canadian financial institution because they’re just more regulated and safe than American banks. I am an Canadian citizen. Does anybody know of any Canadian places that will mortgage American property?
Please help!

We bought our home about 7 years ago and the seller financed us and gave us a 15-year mortgage. Now we need to move and sell the place. How can I legally offer owner finance to a prospective buyer without having to pay off my mortgage which is around ,000?

My husband and I bought a house and we take posession before the deal on our house closes. There is a week inbetween and we were told we needed interm financing or a bridge mortgage to make up the different between the sale of our house and the posession of our new house. The mortage company made a huge mistake and didn’t calculate our bridge financing into our mortgage and because it was left to the last minute, we had to literally put together ,000 in a matter of 4 hours or we risked loosing our new house and the ,000 deposit we put on it. Because we didn’t have the money (who DOES after just buying a 1,000 house?) we had to borrow from our line of creit and even had to ask my mom for money. Now we are ,000 in the hole. My question is how much does it cost to re-finance a mortage and what is the penalty for that? Is there any way we can take that ,000 out of our mortgage so we can pay everyone back?
Also, we are Canadian, not American.

I have a nice 4/2 house in College Station, and while trying to rent it we have found many more people who want us to finance the purchase…How can we do this without triggering the due on sale clause, and how do we transfer title, taxes & insurance?

Our mortgage company wants to reinstate our arm mortgage to a fixed mortgage. They forclosed on us, tried to sherriff sale our home several times. We stopped it with a bankruptcy. We told the court why they forclosed on us but when they sent us the papers it was for something different that the forclosure was for unpaid interest from about 1 yr.prior. We will be able to show the unpaid interest was not true once we get our bank and phone records. They even tried to finance a loan for us cutting the loan by ,ooo.oo to a fixed rate but found it was inlawful to sale the home back to the same ones they forclosed on. Now they will reinstate the loan at ,000.00 at a low fixed rate if we want. This will hopefully fix our credit. I know it seems unthankful of us. But the hell they put us and our kids through, trying to find rentals in our area as not to change schools, not being able to buy even a used car or to buy fuel for our home furnace, my patent on hold the kids sports and grades.

About 6 months ago everything was going great. My wife and I had steady decent paying jobs and combined we were making about 75K a year. Then she got pregnant and our lives really felt like it was going in the right direction. Then she got laid off. Uh Oh. Now money is running out quickly and in about a month our savings we be drained and we wont be able to make our house payment anymore. It is very hard to come up with the money to pay for a 00 house payment, 0 worth of car payments, plus credit cards and utilities. We have cut back on just about everything. No more cable or internet, 1 cell phone. I see advertisments everyday for mortgage help and they make it sound so easy. Our problem is we owe more on our house than it is worth. I cant seem to find a company that will help us refinance unless we owe less than it is worth. We even called our bank to talk to them about that new government project that helps people keep their homes, they wont even talk to us until we start missing payments. I would rather it not come to that. Our house is valued at 133K and we owe 140K. Does anyone have some ideas or know of a website or anyone in the Dallas / Fort Worth area that can help with our situation. By the way my wife has applied for over 40 jobs with not one single hit. We pray a lot and I do have faith that God is going to take care of us, but I would sure like to have a plan just in case. Thanks

My husband and I are trying to obtain a mortgage for our first home purchase. We have little to no money to put down and have low credit scores. Would either of these lenders help us even though our credit scores are low?

The individual & his partner that sold us the property carried the full purchase price amount (less the down payment), as a "Contract of Sale". Over the last couple of years both parties (buyers & sellers) have been faced with some kind of financial, real estate, health &/or family "issue(s)", one of which, is being us, the buyers. Thus causing our Mortgage payments to fall behind, drasticly. So in order to refinance, (with Benificial or another Mortgage / Lending Company), they would be paying off two individuals (the partners), not a actual "Mortgage Company". Does this create a problem? What if the property is in foreclosure, how would that effect the odds of getting refinanced with a new Mortgage Company?
Although, there’s at least one good thing in our favior…
Currently we have approx. 55k equity in the property.
Please advise. Thank You.

My husband’s work moved us to AZ in November, and so we put our house up for sale. We will now be 3 months behind on our house payment at the end of this month. The mortgage company is unwilling to work with us at all on anything! They want over ,000 by the end of the month to avoid foreclosure. We have already paid 40,000 (4 1/2 years paid on it) for this house and owe more now than when we financed it! We asked them if we could hold off on payments until the house sells, and the answer was no. We asked if they could take less than is owed for the house so that it would sell and they could have all the money (we owe 84,000 for a tax value 79,000 home), and the anwer was no. This company is VANDERBUILT MORTGAGE, and they are so AWFUL! They bought the mortgage from our company we financed with, and we are just stuck! Is there anything we can do legally to avoid foreclosure? I am just amazed how mortgage companies can abuse people so easily and get away with it
Thanks Skip but they won’t take any less than the 2,000, and we can’t afford to pay for 2 houses in 2 different states. We would love to ask less for the home, but we have to get enough to pay the mortgage off when we sell it, hence the reason for asking the mortgage company if they would take less than what was owed.

My boyfriend and I would like to buy a house. We have no money down. We are looking between 130k-190k. We want to roll this into obviously a 100% financing mortgage, including closing costs. I am not sure for this finance amount how much PMI would be. I would like to avoid PMI and maybe get an 80/20 loan. The thing is…in 3 years my boyfriend will have his bosses job, which ups his salary quite a bit. I was thinking if we took the 80/20, once he got that job we could pay the 20% part off rather quickly, then be left with the 80%. Is this a good idea? Or is the PMI a much simpler way? How much does doing the 80/20 up the rate? I need some suggestions!
thank you to those of you who understood what i meant by 2 loans (80/20). And though i do appreciate the concern about buying a house with a boyfriend and not a husband, the question was about mortgages, not my personal life.
thanks for all your help everyone….we did get pre-approved already for much over what we are looking for, and we both have excellent credit scores……so i think the 80/20 is the way to go! THANKS!

My husband and I found our dream home. But trying to buy it has been a nightmare. This home is a foreclosed home in great condition and a fairly descent price. However, we made an offer on it and next thing we know another offer had been made at the same time. The house had been on the market for a long time but recently with a reduced price. The bank has upped the price because two offers were made. We already paid the earnest $$ and now we are fighting for the house. Now the mortgage company wants us to finance through them instead of our bank. Their apr is 12% while our bank is 5.6%. Now I think the mortgage lenders are going to give the house to the person who borrows from them.
Is this legal?

he over stated our income to qualify us for more than we could afford,and got caught so now we dont qualify and lose fees for inspections and earnest deposit now he wants to wash his hands of us and tell us sorry better luck next time and we are out 00 thru no faught of our own? I think that’s crap? anyone have any real exp. with such a thing please help!!!

I’m trying to discover the # of US home mortgages and auto loans financed by banks in the US and the average value of each type of loan. It’s for a school project.