Distressed Properties Sale Articles

Bank foreclosure list rescue firms sprouted across the country as foreclosures continue to spread unabated.

The increasing number of companies offering distressed homeowners a way out of bank foreclosure list has prompted state and federal regulators to call for oversight and regulation of the loan modification industry to save troubled homeowners from losing their money and properties to fraud.

Last April, the U.S. Federal Trade Commission said that law enforcement efforts should put a stop on the proliferation of fraudulent mortgage rescue schemes in the country, adding that fraudsters are targeting distressed homeowners who are desperate to save their properties from foreclosures but ended up losing their money and not getting the help that they needed.

New York Governor David A. Paterson has prepared a bill which would require companies offering loan modification services to register with the state. The bill would also regulate upfront fees which could reach 1 percent of the homeowner’s total mortgage.

According to Paterson’s counsel Gurav Visisht, some companies offering loan modification service are asking upfront fees as much as $3,000. The fraudulent scheme has also caught the attention of the state attorney general and the Banking Department.

Rholda Ricketts, deputy superintendent at the Banking Department, said that excessive upfront fees paid by distressed homeowners would be better placed on troubled loans.

Meanwhile, companies offering bank foreclosure list rescue service argue that what they are doing is perfectly legal. They do, however, welcome more oversight but do not want the whole industry to be put into a bad light.

Many industry experts believed that troubled homeowners, who are facing financial difficulties, should not be made to pay for something that they could get for free in the first place.

They added that marketing techniques of some loan modification firms deserve to be scrutinized. For example, some foreclosure rescue companies send letters of offer to distressed homeowners and they make them look like they come from lenders.

Others would call distressed homeowners whose properties are on bank foreclosure list. FTC Chairman Jon Leibowitz said that unscrupulous people do not hesitate to take advantage of distressed homeowners who are in a difficult situation.

National Modification Group Attorney Adam Kitzen said that not everybody in the loan modification business is bad. But he believed that the bank foreclosure list rescue industry will not last long because of the growing negativity attached on the business.

The apparent successes of the Obama administration with its bank stress tests and stimulus programs will not carry the nation to economic recovery if the government foreclosures programs are not radically enhanced to stop the impending foreclosure of more and more homes.

If the government foreclosures programs are not able to help troubled homeowners, mortgage loan delinquencies will increase to an overwhelming 4 million by the end of 2009. Foreclosures are expected to increase this summer as various foreclosure moratoriums implemented by states and by mortgage lenders have already been lifted.

Most foreclosure filings are not reversed and they go on to become foreclosures properties, inflating foreclosure inventories and pushing home values further down. Since the housing peak in 2006, an estimated $6 trillion in home equity has been lost.

Foreclosures have also downed financial institutions. Bank losses on subprime loans, jumbo loans and Alt-A loans originated during the real estate boom are expected to reach $1 trillion.

As foreclosures push down home prices, more home loans become underwater loans, more foreclosures occur, and the cycle continues. According to the latest foreclosure data, there are about 15.4 million borrowers, representing 1 in every 5 homeowners with mortgage loans, who are underwater, with the value of their homes falling further and further down, away from the level of their loans.

The current government foreclosures programs are to be lauded for their efforts to encourage more loan modifications through incentives both to lenders and borrowers. But many lenders have not taken advantage of the programs either because of lack of systems or because of plain refusal to work out loans.

Another problem with the government foreclosures programs is their limitation of lower monthly loan payments to only five years. For underwater borrowers, it makes more sense for them to walk away and simply see their homes added to foreclosures.

A bolder government foreclosures program is needed. One recommendation is for the Obama administration to simplify the loan modification process and rules by including in the rescue program all mortgage loans taken out from 2005 through 2008 which were inherently unaffordable – they were more than 90 percent of the value of the homes and their loan-to-income ratio surpassed 31 percent.

These loans are then modified, reducing the loan principal to approximate the current home value appraisal.

If the loans were already unaffordable at the time of the origination, they should have not been allowed. This argument will answer the question of using taxpayer money to rescue troubled American homeowners under government foreclosures programs.

The rising number of houses purchased through online foreclosure listing services is prompting concerns about the job security of real estate agents. More and more prospective home buyers are using foreclosure listing services for their home search because of the thousands they expect to save on sales commission.

Debris from houses and construction work sites on bank foreclosure list littered Southwest Florida’s landscape and may cause danger to everyone, especially during hurricane season. Southwest Florida officials and residents are concerned that debris from these properties on bank foreclosure list could fly during a hurricane and cause great damage.

One of the largest mortgage providers in the United States, Chase Bank is planning to hire nearly 200 employees to deal with the increasing number of loan modification requests from troubled homeowners who want to prevent distressed properties.

The end to the repossessed home crisis is being awaited by everyone hoping that it will bring with it the much-hoped economic recovery. Billionaire Warren Buffet and former Federal Reserve Chairman Alan Greenspan claimed that the foreclosure crisis is nearing its bottom.

A study of home market prices in 20 metropolitan areas last March showed a moderate decline in figures despite an increase in the number of repossessed homes. Economists agreed that the slow pace of home price decline is indicating towards a moderate housing crisis.

The viability of many small banks nationwide is increasingly put in doubt as the banks experience decimation of capital due to massive loan losses from commercial foreclosure properties.

Homeowners who want to find cheap foreclosed properties to buy use the Internet to search for potential homes on repo homes listing. Today, homeowners have discovered another use for the Internet: home swapping.

The number of mortgage loss mitigations and loan modifications completed under Citigroup Inc.’s program of reducing repo property inventories in the first quarter declined by 12 percent, compared to last year’s fourth quarter.