Tag Archives: foreclosure

The Forgotten Ones

foreclosuresForeclosures were up 30% in February, but an important group of Americans remains sidelined in the current tug-of-war between the bailout cheerleaders and those fiscal conservatives ready for a new tea party. They aren’t the whiners standing on their homes refusing to leave after borrowing more than they could afford, and yet, they aren’t a part of the justifiably angry American mob forced to strap on a load for their shortsighted house-flipping neighbor.

 

They are the forgotten ones.

 

They are the lower deck passengers on the Titanic, who by no fault of their own, bought a ticket, er, a house, when destiny had set an iceberg in the name of Fannie, Freddie and Barney Frank in their road.

Homebuyers who purchased a house in 2002 or 2003, who’ve had to relocate for work or personal reasons, qualify. Perhaps they have been forced to default on their homes and blacken their credit for the very first time. And no journalist, action group or even the President has mentioned what will happen to them.

 

As the statistics continue to shock, regular Americans with good credit are facing an inescapable reality—ditch the house or keep the 763 credit score. At the end of last year, 12% of all mortgage holders were at least a month late on their house payments or in foreclosure. Just how many of those 5.4 million homeowners were formerly upstanding borrowers but simply caught in an impossible situation? They didn’t buy too much house and they didn’t do a $60,000 bathroom remodel with a sauna, Jacuzzi and a flat-screen overhead. They simply bought at the wrong time and were forced to move at the wrong time.

 

While Citi and Bank of America are considered to big to fail, everyday Americans who were unlucky enough to get caught in the crisis will be forced to pay for a very long time. Their credit score qualifies for used car lenders who scream ‘bad credit ok’ and little else, while Citi and BoA’s reckless decision making has garnered not a single negative consequence, apart from Uncle Sam approving which five star resort will hold their conferences. Maybe they’ll have to endure a four and a half star hotel without the private Sheryl Crow concert and forgo the private golf clinic with David Leadbetter. Poor things…

 

But what will become of those ’02, ’03 Titanic lower-deckers? Will their credit remain ruined, and if so, won’t these same irresponsible banks miss out on a large opportunity for profit?

 

 

No Mercy!

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Under normal circumstances I would be inclined to feel pity for the industry that has slowed the global economy and impacted thousands of families. Of course I’m talking about the mortgage companies. But in light of recent experiences, it is truly difficult to feel much sympathy.

A week ago, my mother, a real estate broker, showed a pre-foreclosure property, a two-year old townhouse located in a new development popular with presale flippers in Orlando, Florida. Aside from the few holes in the wall and rotten food left in the refrigerator by an angry foreclosee, the buyers loved it. They liked it so much that they instructed my mom to make an offer.

She called the listing agent and advised him that her clients were ready to make an offer on the townhouse.

 “Oh, it’s not in foreclosure yet and the lawyers for the bank don’t get paid unless it goes into foreclosure,” the agent responded.

“So, it’s useless they make an offer?” she asked.

“Pretty much”

If that weren’t bad enough…My next door neighbors are in the process of remodeling and is seeking out around 50k to make the improvements. They are half-way through their 30 year mortgage and their credit rating is in the high 800s which is phenomenal. Dawn, the one assigned to research their options, spoke with numerous brokers and none seem excited to give a fixed loan for a second mortgage. Instead, they are all trying to convince her to settle for an adjustable rate which is of course the type of mortgage that has greatly contributed to the crisis. They’ve also advised her to spend any excess money on a flat-screen TV or furniture, instead of paying back part of the principle. “It’s good for the economy” one agent told her.

The industry doesn’t seem humbled at all. They appear as greedy and foolish as ever.