Housing Meltdown Hurts Minorities the Most

Minority Americans were the biggest losers in the subprime mortgage crisis, according to a study by an advocacy organization United for a Fair Economy.

The study concludes that African-Americans and Hispanics lost as much as $213 billion in wealth over the last eight years because of predatory lending. “This was “the most massive loss of wealth for African Americans in U.S. history,” the study said.

The study also pointed to data from the Home Mortgage Disclosure Act, which suggests that 40 percent of African-Americans given subprime housing loans could have qualified for cheaper mainstream mortgages.

Source: Electronic Urban Report 02/09/2009

Loan Company Tries Cutting Mortgage Principal

 At least one loan servicing company is retooling mortgages to lower the loan balance as well as the rate in order to keep borrowers in their homes. Reducing the principal on mortgages is “a last resort,” says Paul Koches, executive vice president at Ocwen Financial Corp., a West Palm Beach, Fla., loan servicer. Ocwen has reduced the amount owed on 10,884 delinquent mortgages as of Sept. 30. That’s about 25 percent of all loans modified by Ocwen this year. Dropping the principal has looked like a last resort to many lenders and servicers because they fear investor backlash. Ocwen says the writedowns are generally less than the company’s average loss of $122,000 on a foreclosure. Ocwen is the nation’s sixth-largest subprime-mortgage servicer, according to Inside Mortgage Finance, with about $45 billion of mortgages under management.

Source: The Wall Street Journal, Ruth Simon

Getting a Mortgage Tougher for Buyers

Difficulty in landing a mortgage is keeping many buyers out of the market.At the peak of the housing boom, about 20 percent of the mortgage market was subprime, and nearly 20 percent was “Alt-A loans” or “A-minus” loans, typically offered those with good credit but with high debt-to-loan ratios or little or no proof of income.Both categories are now nearly extinct. That means about 40 percent of the residential mortgage market has all but disappeared, according to David Olson of Wholesale Access Mortgage Research and Consulting.

“The underwriting has really tightened up,” Olson says, “Before, if you could fog a mirror, you got a loan. Now, that’s not the case.”

Nationwide, practitioners say they are encountering more potential buyers who can’t get financing.

“Buyers come in with confidence, and once they have talked with a lending practitioner, it’s like they’ve been hit over the head with a ton of bricks,” says Dean Moss, an agent at Keller Williams Fox and Associates Realty in Chicago.

A study conducted using data from a Reno, Nev., multiple listing service, found that about 30 percent of sales haven’t closed after 90 days. Practitioner Guy Johnson, who analyzed the data, suggests that buyers stay on top of their loans, checking in with their lender frequently to make sure the loan for which they’ve been approved is still the same.

“A loan commitment letter,” he adds, “isn’t really as solid as it once was.”

Source: USA Today, Anna Bahney (08/05/2008.

 

Mortgage Fraud Crackdown Continues

The FBI was instrumental in 206 convictions in 2007 for real estate securities and commodities fraud.

According to an FBI report released Thursday, the 1,204 mortgage fraud cases pursued in 2007 resulted in 321 indictments and court orders for $595.9 million in restitution.

The FBI, working in conjunction with the Securities and Exchange Commission, is investigating more than 1,300 mortgage-fraud cases and conducting 19 corporate investigations linked to the subprime lending crisis.

Source: The Associated Press, Marcy Gordon 05/22/08

Mortgage Crisis Has Big Impact on Kids

More than 2 million children will be directly impacted by the subprime mortgage crisis, as their families lose their homes to foreclosure, according to a new report from First Focus, a bipartisan children’s advocacy organization based in Washington, D.C.

“When families lose their homes, kids often lose their schools and access to services. Such changes not only impact their education but their physical and mental health as well,” says Bruce Lesley, president of the organization.

The report points out that parents who face foreclosure are less likely to have money available for health care or insurance, and speculates that children who are displaced will be less proficient in reading and more likely to drop out of school.

First Focus is calling for the government to make keeping children in their homes a priority in federal policy and budget decisions.

Source: First Focus (05/02/2008   .)

I JUST  had a discussion about this with a friend today…. The thought of how children were being affected throughtout  this mess had me up all night…Past experience, had me up all night.  I moved A LOT when I was younger, and never had the feeling of “home” and security .   I still find it hard to really allow myself to believe that “I WILL BE HERE FOR A WHILE” .   However, for my children, I am determined to provide them with some stability to allow them to grow freely without the worries of adapting to a new surrounding or  new people every other year …                                                                                                                                      I am always humbled and amazed when I look at life’s bigger picture, and I’m reminded that the decisions we make impact so many people…. generations we never consider. 

My prayers go up for those that are caught in this, especially for the children.

Real Estate News:Immigrants Often Targets of Subprime Scams

Immigrants Often Targets of Subprime Scams

Immigrants have long been victims of fraud, but the subprime mortgage boom has provided a particularly popular avenue for unethical lenders to take advantage of immigrants.

Housing counselors say they have seen predatory lending to immigrants across the U.S. Among the vulnerable groups: Latinos throughout California, Caribbean and African borrowers in the New York area, and Russian immigrants in Philadelphia.

Immigrants with limited English skills tend to be trusting, especially when people with roots in their own countries offer them what appear to be good opportunities and easy money, says Katrina Vizinau, a counselor at Community Housing Development Corp. in New York City.

Source: The Wall Street Journal, Jonathan Karp, Miriam Jordan (12/06/2007)