More Internet Mortgage Lawsuits

A while back, I wrote about a lawsuit brought by an
advertiser on Bankrate.com, one of the most popular
internet sites for mortgage rates. The advertiser sued
other advertisers for offering false and deceptive
rates that could not be honored. (Ultimately, Bankrate
was sued for allowing this practice. Just last week,
they announced a $3,000,0000 settlement, neither
admitting or denying wrongdoing.)

So here's a sequel to this lawsuit - Lending Tree was
just sued. Here's an excerpt from a mortgage industry
publication.

*************
A recent class action suit filed in Orange County,
California Superior Court alleges that LendingTree
diverts LendingTree.com leads to its subsidiary, which
conducts business under the name LendingTree Loans
without any competition.

The suit further claims that loans originated by
LendingTree Loans are originated at inflated prices,
based on the false representation that competition for
the business has occurred among lenders.

Here's a great article you'll want to read if you
suspect that your credit score is not as high as it
should be. The lower the score, the more expensive
everything is for you: mortgage rates, equity lines,
credit card interest rates, etc. Great job by one of
my favorite personal finance writers, Liz Pulliam
Weston!

Weird stuff that hurts your credit
Cards that don't report credit limits are just one of
the hidden threats to your credit score. Here are some
of the potential hits you might be taking, and how you
can fight back.
Liz Pulliam Weston

Accountant John Johnson of Springdale, Ark.,
painstakingly rebuilt his credit after some business
reversals several years ago. But the credit-card issuer
that initially helped him is now standing in his way.
Capital One <http://www.capitalone.com/> refuses to
report its customers' credit limits to the three major
credit bureaus. Instead, the bureaus use the highest
balance a customer has charged as a proxy for the
limit.
As a result, the customers' all-important "debt
utilization ratios" -- the portion of their available
credit these borrowers are actually using -- can appear
artificially high. That can depress borrowers' credit
scores, the three-digit numbers lenders use to help
determine creditworthiness.
Lower credit scores can mean higher interest rates on
mortgages, car loans and other borrowing, as well as
potentially higher insurance premiums, since many
insurers also use credit-scoring systems to help gauge
risk.
Hidden threats
Making on-time payments to Capital One cards over the
years has helped Johnson rebuild his credit scores, but
he says its policy on credit limits is hurting him now.
Capital One's practice makes Johnson appear to be using
more than 60% of his credit limit, when in fact he's
using less than 40%. He tried disputing the issue with
the credit bureaus, to no avail.
"I got pretty hostile after awhile," Johnson admits. "I
just don't understand why they (Capital One) would do
that."
Cards that don't report credit limits are just one of
the hidden threats to your credit. Here's what you need
to know about some of the potential hits you might be
taking, and how you can fight back:
Missing limits
Two basic types of issuers tend not to report limits:
Companies that offer cards with no preset spending
limit, like American Express
<https://www124.americanexpress.com/cards/cda/dynamic.j
sp?name=CCSGMultiCardLandingPage&type=intBenefitDetail>
, and companies, including Capital One, that have a
corporate policy to keep the information secret. Not
reporting the limits can prevent competitors from
spotting a company's more creditworthy customers, since
those tend to be the ones with higher limits. (A South
Carolina consumer, by the way, has filed lawsuits
against the three credit bureaus alleging this practice
violates federal fair credit reporting laws.)
As a proxy for the credit limit, card issuers may
report the highest recent balance, the highest balance
ever or some other number of its choosing. You're most
likely to be hurt by a missing or inaccurate credit
limit if you haven't had credit for very long, you have
a troubled credit history or the cards with missing
limits are the only ones you have

You can check which number your lenders are using by
viewing copies of your credit reports. By federal law,
you can get one copy free annually from each bureau;
the site to use is www.annualcreditreport.com
<http://www.annualcreditreport.com/> .
If your limits aren't being reported accurately, you
have a few options:
* Fight. Ask your issuer to report your correct
limit, or to at least use a more favorable number.
You're not likely to get Capital One to change its
policy, but another lender may be willing to substitute
your actual limit or your highest balance charged for
the lower number it's been reporting.
* Reset. If your lender reports the highest
balance charged, you can reset the number reported to
the bureaus by running up a big balance one month. Just
make sure you can pay this hefty number off in full
when the bill comes to avoid unnecessary finance
charges. And don't do this when you're in the market
for a loan, since you could sustain some short-term
damage to your credit scores.
* Switch. Use cards that properly report your
limits to the credit bureaus.
Switching scorecards
The FICO scoring system groups people with similar
histories together when rating them. These groups are
called "scorecards." If you have a bankruptcy on your
report, for example, you'll be grouped on a scorecard
with other bankrupts. Your credit habits may look
pretty good compared with theirs, but if the bankruptcy
were to disappear from your record you'd be lumped in
with people who have stronger histories. Your credit
behavior might not look so good compared with this new
group.
That's apparently what happened to Carmen Georgescu,
who had $51,000 of credit-card debt and a 710 FICO
score. After paying off $17,000 of debt in a few
months, her score rose to 726. A few weeks later,
though, her score suddenly plunged to 686.
Such abrupt drops can often be traced to a negative
item, like a delinquency or a bankruptcy, disappearing
from a borrower's credit report. In this case, though,
the change was even more subtle. Let's let a Fair Isaac
expert explain it:
"Carmen had opened a new account last year which, at
that time, put her in a different scoring group
consisting of consumers who had newly opened accounts
on their credit files," explained Barry Paperno,
manager of customer service for Fair Isaac. "Then when
this recently opened account had aged enough to take
her out of this scoring group and put her into one with
consumers who had not opened any accounts recently, her
score dropped."
Carmen's still-heavy debt load hurt her worse with this
new group than it had with her previous scorecard group

There's not much you can do about this weird quirk in
the scoring formula, other than brace for the potential
effect. The good news: If Carmen keeps paying down her
debt, she should see a pretty quick resuscitation of
her score, Paperno said, "as long as she holds off on
opening anything new for awhile."
Balance transfers
Lower interest rates are generally better when you're
trying to pay off debt, but taking advantage of a
balance-transfer offer can wallop your credit scores in
a number of ways.
Just opening a new credit card to take advantage of the
offer can ding your scores by 5 points or so. If you're
transferring your balance to a card with a lower limit,
that also can hurt your scores, as can consolidating
debt. The FICO formula typically would rather see
$1,000 balances on five cards than a $5,000 balance on
one card.
You can compound the damage by closing the old card,
since shutting down the account trims the amount of
available credit that's used in the credit-scoring
formula.
Typically, lenders won't tell you the credit limit on a
new card until after you've applied and agreed to
transfer the balance. If you're planning to take
advantage of a balance transfer offer, read all the
fine print and consider the following:
* Limit the number of new accounts you open. If
you want to improve your credit scores, don't keep
bouncing your balances from card to card.
* Pay down your debt. Use the lower rate as an
opportunity to reduce your debt load. Paying off debt
is good for your wallet and good for your credit
scores.
Settling debts
In the latest versions of the FICO formula, score
creator Fair Isaac Corp.
<http://www.fairisaac.com/fairisaac> fixed a glitch
that often penalized folks for paying old debts that
had been charged off and sent to collection agencies.
(See "When paying old bills can hurt your credit
<http://articles.moneycentral.msn.com/Banking/YourCredi
tRating/WhenPayingBillsCanHurtYourCredit.aspx> .")
But you can still do substantial damage to your scores
if you settle a current debt for less than you owe. If
an account hasn't been charged off and you're dealing
with the original creditor, Fair Isaac officials say, a
settlement can be worse than leaving the account open
and unpaid. Of course, leaving an account unpaid will
eventually result in a charge-off and a referral to a
collection agency, which isn't good for your scores,
either.

There's no easy solution if you haven't got the money
to pay your bills. Filing bankruptcy is an option,
although it's likely to have a far more devastating
effect on your credit than a settled account or two.
You also might investigate a debt repayment plan
through a legitimate credit-counseling agency (read
"The consumers' guide to credit counseling
<http://articles.moneycentral.msn.com/Banking/YourCredi
tRating/TheConsumersGuideToCreditCounseling.aspx> "
first).
Traffic tickets and library fines
I wrote about this issue in "New threats to your credit
score
<http://moneycentral.msn.com/content/Banking/Yourcredit
rating/P121551.asp> ," and the trend has gained
momentum since then. Local governments are determined
to recoup some of the $40 billion in unpaid debts
consumers owe, including unpaid library fines, parking
tickets and traffic penalties. So these governments
increasingly turn to private collection agencies, which
typically report the unpaid amounts to the credit
bureaus as part of their efforts to pressure consumers
into paying the fines. The collectors may add late fees
or other charges that increase the balance.
The bottom line:
* Pay your fines promptly. Don't wait for
follow-up notices, since they can easily go astray.
Many libraries allow you to review your library record,
including unpaid fines, online, while municipalities
typically have a Web site or a phone number allowing
you to check for traffic or parking fines.
* Don't let a dispute fall through the cracks. If
you're disputing a traffic or parking ticket, note the
applicable deadlines on your calendar and make sure the
issue has been resolved.
* Don't move away from a problem. If you plan to
move and believe you may have unpaid fines, contact the
relevant municipality or library and make sure you've
squared your account with them. Don't expect a
government agency to spend much energy tracking you
down; it's much easier to turn a delinquent account
over to a collection agency, and once that's happened,
your credit is at risk.

Andrew Lockwood, J.D.
Mortgage Expert

Blackacre Mortgage
Tel: 954-389-7011
Fax: 954-337-0916

www.FloridaLoanAdvice.com

Licensed Mortgage Brokerage

Shocking Debt-Collection Information

Here's a great piece by MSN.com columnist Liz Pulliam
Weston, one of my favorite personal finance writers. In my
mortgage practice, I've come across almost all of these
issues described in the article. If you're facing credit
issues please contact my office at 954-236-4500 ext. 202 for
a free 1/2 hour consultation. As of the date of this
writing, I have four spots left, so call today!
Sleazy new debt-collector tactics

It may not be your debt, but it could be your problem.
Collection agencies are bullying blameless consumers into
paying debts they never owed.

By Liz Pulliam Weston

Lisa Burk isn't Lisa Sterns, but Allied Interstate refused
to believe her.

The Minneapolis collection agency repeatedly called Lisa and
her husband, Michael, according to a lawsuit filed by the
Minnesota attorney general, and demanded that the couple pay
a debt owed by one Lisa Sterns. The couple, just as
repeatedly, told the collector they didn't know any Lisa
Sterns and asked the company to stop calling.

Allied ignored the couple's requests. At one point, the
collector insisted that the Burks were lying or, if Lisa
Burk were not Lisa Sterns, that she knew Sterns and could
tell Allied Interstate where to find her. It took
intervention by the attorney general's office for the calls
to finally stop.

The Burks' experience with abusive collection agency tactics
was annoying. Paul Alappat's encounter with a collector was
expensive.

Alappat said he was called two or three times by Buffalo,
N.Y., collection agency Capital Management Services about a
Chase Bank credit-card debt. Alappat told the collector he
had never possessed a Chase Bank card and asked them to stop
calling him.

When he applied for a home-equity loan two years later,
however, the collection showed up on his credit report. His
lender told him that if the $394.74 debt were not resolved,
the loan couldn't be made.

"Since I was in a hurry to get the loan approved," Alappat
said, "I paid the full amount, including the interest."

Bullying the innocent

Alappat's got company. Regulators say collection agencies
increasingly are harassing innocent people and badgering
consumers into paying money they don't owe. More people
complain to the Federal Trade Commission about debt
collectors than about any other industry, and consumer
attorneys say a booming trade in old, poorly documented
debts is fueling the problem.

Consider:

a.. The FTC charged that as much as 80% of the money
collected by Capital Acquisitions and Management (CAMCO), a
large debt-collection firm, came "from consumers who never
owed the original debt in the first place." These consumers
typically paid the company to stop its harassment of
themselves, their families, their friends and their
co-workers. CAMCO agreed to a $300,000 civil penalty in
March 2004, but in the ensuing eight months the problems
continued. The FTC received more than 2,000 additional
consumer complaints about the company -- three times more
than the agency received in the two years prior to the
settlement. The FTC eventually succeeded in shutting CAMCO
down.
a.. In July 2005, the FTC won a record $10.2 million court
judgment against National Check Control after accusing the
debt collector of illegally threatening consumers with
arrest and wage garnishment. Again, many of the consumers
targeted by National Check Control didn't owe the original
debt, the FTC said.
a.. Allied Interstate, the company that contacted the
Burks, was sued by the Minnesota attorney general for
repeatedly calling innocent consumers despite requests to
stop. Allied eventually agreed to a settlement that
prohibits it from contacting such consumers after being
orally told that they don't owe the debts in question.
a.. Applied Card Systems hassled relatives, neighbors and
employers with repeated phone calls in its efforts to track
down debtors, according to the FTC. The company ignored
requests to stop calling, and its representatives sometimes
used obscene language when its hapless targets protested
that they didn't know how to contact the debtors. The
company agreed to a consent decree that prohibits it from
harassing consumers.
Collectors cross the line

Debt collectors protest that most firms are ethical,
law-abiding and provide a needed service that helps reduce
borrowing costs for all consumers. But the new economics of
debt collection can encourage belligerent campaigns,
including dogged pursuit of innocent consumers.

As I discussed in "Zombie debt is hard to kill," there is
now a booming market in the pursuit of debts so ancient that
they used to be considered uncollectible. This year a
whopping $110 billion of such debt is expected to be sold to
collection agencies, up from virtually nothing 10 years ago.

Because the old liabilities cost collectors as little as 25
cents for each $100 in face value, companies can make a
profit if they can get debtors to repay even a tiny
fraction. Along the way, some collectors realized they also
could squeeze money from people who didn't even owe it.

Some consumers pay because their finances are so
disorganized they don't realize the debt isn't theirs.
Others are coerced into paying by illegal threats of
lawsuits or ruined credit. Some, like Alappat, pay rather
than risk losing a desired loan.

'Why are they allowed to do this?'

The collectors are nothing if not persistent. Mary Kitzmann
of Alexandria, Minn., endured four months of calls from
Allied Interstate over a debt she didn't owe before the
state attorney general's office succeeded in getting the
company to admit it had made a mistake. Five months after
that admission, Allied called Kitzmann again, trying to
collect the bogus debt.

Some consumers endure collection attempts from a string of
different companies as one collector sells its uncollectible
debts to another.

A collector tried to dun Phyllis Maurice of Whittier,
Calif., for more than $23,000, saying she owed the money in
advertising services for two businesses: a detective agency
and a psychic consultancy.

"I have been a preschool teacher for over 30 years and have
never owned (either business)," Maurice said.

Maurice enlisted the help of an attorney friend who wrote
the collector a strongly worded letter, demanding proof that
the debt was Maurice's. Maurice hasn't heard from that
collector, but later she got a call from another collection
agency about the same debt.

"Why are they allowed to do this?" Maurice fumed. "What can
we do to stop these scoundrels?"

Maurice was actually fortunate because she had access to an
attorney who could advise her of the law. Many consumers
have no idea of their rights in such situations, Cox said.

Your rights and how to use them

Under the Fair Debt Collection Practices Act, collectors are
supposed to advise consumers that they have a right to
dispute the debt, but that if consumers don't do so
promptly -- and in writing -- the collector can assume after
30 days that the debt is valid.

Once collectors are notified that they've contacted the
wrong party or that the consumer denies owing the debt, the
companies are supposed to provide proof of the debts'
validity. If they can't supply the proof, collections are
required by law to cease.

Of course, some collectors simply ignore laws designed to
protect consumers. But debt experts say your chances of
getting a collector to back off improve when you know your
rights and assert them forcefully.

If you're contacted about a debt you don't owe:

Know your rights. The Privacy Rights Clearinghouse has
prepared a fact sheet for consumers dealing with third-party
debt collectors.

Get the name of the collector, its address and a telephone
number. You can tell the collector on the phone to stop
calling, but that won't preserve your rights under federal
law.

Send a certified letter, return receipt requested. Make it
clear the collector has contacted the wrong party, that you
don't owe the debt and that you don't want to be called
again.

Contact regulators. If the collector continues to call, seek
help. Typically, your state's attorney general's office
handles complaints against collectors. You can also complain
to the Federal Trade Commission, which typically doesn't
intervene in individual cases but may act if it sees a
pattern of abuses.

Monitor your credit reports. If a collection agency posts a
bogus debt on your credit report, dispute the item
immediately with the credit bureaus. Include copies of the
certified letter you sent the collector and any complaints
you filed with regulators. Don't wait until you're about to
apply for a loan to check your credit report; you'll want at
least a few months' head start to dispute any errors.

Consider a lawsuit. Consumers can bring lawsuits against
collectors that violate the Fair Debt Collection Practices
Act, either on their own behalf or as part of a class
action. Contact the National Association of Consumer
Advocates for referrals to attorneys who handle such cases.

Liz Pulliam Weston's column appears every Monday and
Thursday, exclusively on MSN Money. She also answers reader
questions in the Your Money message board.

I hope you found this article to be helpful. Contact my
office today for a free 1/2 hour consultation that could
literally change your life by putting you on the path to
financial freedom - 954-236-4500 ext. 202!

Andrew Lockwood, JD.
Host - "The Best Damn Real Estate & Mortgage Show, Period!"

Blackacre Lending Corp.
Tel: 954.236.4500
Fax: 954.236.6878

Free Reports From a National Mortgage Expert:
www.FloridaLoanAdvice.com

1290 Weston Rd. Suite 300
Weston, FL 33326
*Licensed Correspondent Lender

CitiMortgage Settles RESPA Kickback Case

Here's an article I came across in an industry publication. It goes to show you that even one of the biggest names in banking was alleged to do the same unsavory things as the little, scummy bucket shops that give our industry a bad name.

 

Incidentially, that's why I founded and sit on the board of the National Association of Responsible Loan Officers, (www.NARLO.com), an organization of individual loan officers dedicated to making sure the mortgage consumer receives fair, open disclosure and education about the entire loan process.  For more information about how you can prevent being ripped off through excessive closing costs, check out my website, www.FloridaLoanAdvice.com and get my FREE, insider report on How to Avoid Closing Cost Surprises!

 

Here's the article.

 

CitiMortgage and Others Nailed For RESPA Violations Tuesday, July 18, 2006 -

WASHINGTON, D.C. - The Department of Housing and Urban Development announced $1.6 million in settlements under The Real Estate Settlement Procedures Act (RESPA) with a national mortgage lender and two major homebuilders that engaged in business practices involving captive title reinsurance. The agreements included a $650,000 settlement with CitiMortgage, Inc., and its captive title reinsurance company Chesapeake Reinsurance; a $675,000 settlement with M.D.C. Holdings, Inc., certain of its Richmond American Homes homebuilding subsidiaries and AHT Reinsurance; and, a $305,000 settlement with WL Homes, which does business as John Laing Homes, a California and Colorado builder. Captive title reinsurance is a practice whereby a title insurance company transfers a portion of the risk and title premium to a company owned by the builder, lender or real estate broker referring the title business. In HUD's view, any captive title reinsurance arrangements in which payments are not bona fide and exceed the value of the reinsurance are a violation of RESPA. There is particular concern when these arrangements involve an entity that is in a position to refer business to the primary title insurer. There is also strong evidence these arrangements are designed to generate referral fees when there is a history of few or no claims paid. "There is almost never any legitimate need or business purpose for title reinsurance on a single-family residence," said HUD Assistant Secretary for Housing Brian D. Montgomery. "HUD will continue to work with the states to investigate captive arrangements to make certain that they aren't created for the purpose of obscuring referral fees." The companies came forward and cooperated with HUD in reaching these settlements. In addition to the settlement payments, the companies agreed not to enter into any new captive title arrangements and to cease writing new captive title reinsurance business. These are the first settlements in the nation involving the recipients of payments made by title companies to captive companies for reinsurance. The settlements come in the wake of recent settlements states have obtained from title insurance companies who paid significant portions of the premiums they received to such captive companies. The Real Estate Settlement Procedures Act was enacted in 1974 to provide consumers advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the home buying process. Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.

Originator Times, a BEXT Inc. publication http://originatortimes.com/ Copyright 2006 BEXT Inc. All Rights Reserved

Andrew Lockwood, JD.
Host - "The Best Damn Real Estate & Mortgage Show, Period!"

 

Blackacre Lending Corp.
Tel:  954.236.4500
Fax: 954.236.6878

 

Free Reports From a National Mortgage Expert:
www.FloridaLoanAdvice.com

 

 

 

1290 Weston Rd. Suite 300
Weston, FL 33326
*Licensed Correspondent Lender

Bankrate Bait and Switch Lawsuit

The following piece appeared in a mortgage industry trade publication and confirmed the dark 'secrets' that many already knew about internet advertising.  (I've inserted my comments in bold).

But you may be surprised to learn about the inner workings of one of the internet's most popular mortgage sites!  And Kudos to American Interbanc Mortgage, the plaintiff and an ex-advertiser with Bankrate, to bringing this surprising issue out into the open!

Enjoy the article!

-Andy

***************

STUART, FL - A lawsuit against Bankrate Inc. claims that the popular website, intended to help borrowers, actually misleads them because some lenders posting rates don’t really honor those rates.  [Is anybody really shocked by this?]  The lawsuit alleges that this also puts honest advertisers on the website at a competitive disadvantage.

American Interbanc Mortgage LLC, an ex-Bankrate.com advertiser, is suing Bankrate and seeks $16.5 million in damages and a $33 million in punitive damages.  [Pretty soon, we're talking real money!]  The lawsuit began back in 2002 when American Interbanc Mortgage sued other Bankrate advertisers claiming their rates were unrealistic and put American Interbanc Mortgage at a disadvantage.  Later, American Interbanc Mortgage added Bankrate to the lawsuit, after Bankrate did not renew American Interbanc Mortgage’s advertising agreement. [I'm curious if American Interbanc really thought Bankrate would keep them after they sued the other advertisers - that's not exactly good for Bankrate's business!]

American Interbanc Mortgage alleges Bankrate knew what some dishonest advertisers were doing and let it happen.  Court documents indicate that Bankrate has had hundreds of compaints about advertisers’ posted rates.  The Wall Street Journal reports that one Bankrate advertiser confided to a Bankrate employee saying the borrower would require a “direct pipeline to God” to get the rate they had posted.  [Now THAT's funny!  I didn't know God was in the mortgage business....but here's a thought:  one of these days, I may put out my '10 Commandments of Mortgage Lending.'  Thou Shalt Not Bait and Switch.  Thou Shalt Honor Thy Good Faith Estimate. Thou Shalt Consider Neg. Am. Loans Only for Short Term Purposes. Etc.]

Bankrate’s reach is wide.  Their partnerships with Yahoo and AOL along with their newspaper presence allow their rate tables to be displayed to millions of people on a daily basis.

The case is expected to go to trial this fall.

**********************************

This article highlighted a serious issue in the mortgage business - false advertising by online lenders.  You need to guard yourself every day against 'bait and switch' tactics, both online and offline.

How can you do this?  Ask questions about every fee and cost.  Ask for a closing cost guarantee.  (If your loan officer looks at you like you have three heads, tell 'em that Blackacre Lending offers a "No B.S. $1,000 Closing Cost Guarantee", why don't you?)

And look into the reputation of your loan officer. Ask if he's a member of the National Association of Responsible Loan Officers (www.NARLO.com), a nation-wide association of individual loan officers who advocate the full and fair disclosure of and consumer education about the mortgage process.  I'm a founding member and head of the Florida Chapter.

If you have any questions about your mortgage, whether for purchase or refinance, call me at the office - 954-236-4500 or visit my website, www.FloridaLoanAdvice.com.  The first 3 clients to mention this blog each receive a $20 gift certificate to Starbucks!  And that's no bait and switch!

Sincerely,

Andrew Lockwood, JD.
Host - "The Best Damn Real Estate & Mortgage Show, Period!"

 

Blackacre Lending Corp.
Tel:  954.236.4500
Fax: 954.236.6878

 

Free Reports From a National Mortgage Expert:
www.FloridaLoanAdvice.com

 

 

 

1290 Weston Rd. Suite 300
Weston, FL 33326
*Licensed Correspondent Lender

Foreclosure Crisis Intensifies!

[Here's a recent story from the Sun-Sentinel about the increasing foreclosure crisis. I've written and spoken on the radio about it many times.  My comments are inserted throughout the column.  If you are behind on your mortgage payments or know someone who is, feel free to ready my Free Report, "Foreclosure Help" on my website, www.FloridaLoanAdvice.com.  Or you can contact me directly at the office (number below).]    
      
 

South Florida owners are losing their homes; foreclosures rates rise nationally

 

 
 
 
By Robin Benedick and Andy Reid
South Florida Sun-Sentinel

 

July 9, 2006

 

 

The number of foreclosures is ballooning as strapped homeowners can no longer make their mortgage payments or quickly unload properties in a cooling housing market.

 

Among those most at risk: owners who used creative financing to stretch their budgets in the 2000-2005 housing boom. Buyers who took out a five-year adjustable-rate mortgage in 2000 are seeing their house payments rise for the first time.

 

The new payments usually are much higher, and homeowners looking for a way out typically can no longer sell in a few days or weeks, as they could during the height of the market. Today, a large inventory, high prices and rising interest and insurance rates make selling difficult. Those who can't hang on often have their homes taken over by their lender.

 

"I'm seeing foreclosures in many areas where they just weren't prevalent before,'' said Rhonda Light, who operates Foreclosure Reporting Service, a Hollywood firm that annually tracks thousands of foreclosures in Broward and Palm Beach counties. "The foreclosures we're seeing now are all over the board and in all different price ranges.''

 

Nationally, foreclosures were up 72 percent in the first quarter of this year compared with the same period last year, according to RealtyTrac, a California firm that monitors the market.

 

The pace of foreclosures in South Florida seems to be accelerating. Almost a third of Florida's 29,636 foreclosures were in South Florida in the first quarter of 2006.

 

In Broward, foreclosures were up in the first quarter over the end of last year by 57 percent. In Palm Beach, they jumped 69 percent, and in Miami-Dade, they were up 17 percent.

 

Overall, South Florida had about 3,000 more foreclosures than at the end of 2005 -- a jump of 40 percent.

 

"We're seeing people who have overbought and their rates are going up now and they can't afford their houses,'' said Brad Geisen, president of foreclosure.com, an online foreclosure listing service based in Boca Raton.

 

For some, refinancing mortgages can prevent foreclosure.

 

That worked for Dalia Hartwig of Boynton Beach.

 

Hartwig said she and her husband fell behind on mortgage payments after injuries left them unable to work. When disability payments finally kicked in, they were too far behind to catch up. So they refinanced their loan to avoid the home being auctioned at the courthouse. Now, they can sell the house, pay off their debt and search for a smaller, more affordable house.

 

"We got behind on a couple of payments. ... It just got worse instead of getting better," said Hartwig, 53. "Thank God we were able to refinance."

 

Others aren't so fortunate.

 

Molly and Yvette Sealey of Miramar surrendered ownership of their home last year with the hope of being able to buy it back.

 

The mother and daughter had fallen $15,000 behind on their mortgage, and turned to investors to help them keep their 3 1/2-bedroom home of 20 years. They agreed to become tenants, receiving no credit for the equity in their house.

 

Meanwhile, they struggle to pay the rent, which is $1,500 a month. That's $425 more than they paid on the mortgage when they owned the home.

 

"This has caused me to cry every day,'' said Molly, 74, a retired nurse. "I wish I had never gotten behind in my mortgage. That was my biggest mistake.''

 

Some struggling homeowners have paid high fees to would-be rescuers, only to find they were scammed. Lawyers, financial counselors and government agencies report an explosion in such complaints as more homeowners find themselves unable to keep up with their payments.  [Andy's note - this is a serious problem.  Make sure you're dealing with a reputable firm and get a chance to review whatever's being offered you in writing. Make sure you understand exactly how the proposed terms work.  Consult an attorney if you can!]

 

"We've been warning people that this is coming,'' said Doug Duncan, senior vice president and chief economist at the Mortgage Bankers Association in Washington. He said more than half the loans on the books today are less than three years old, and the peak delinquency period for loans is when they are three to five years old.

 

In Miami, economists and real estate experts fear a glut of new condos hitting the market could cause a wave of foreclosures if investors can't sell their units or make the monthly payments.

 

Eventually, perhaps in two to five years, the tens of thousands of condos being built will sell, perhaps at lower prices, predicts economist Stan Geberer of Hank Fishkind & Associates in Orlando.

 

Stanley Gordon is in the foreclosure business, trying to make money off the homes other people couldn't afford to keep.

 

He shops for bargains at foreclosure auctions held twice a week at the Palm Beach County Courthouse in West Palm Beach. He said he buys about one home a month and either fixes it up for a quick resale or holds onto it as rental property. Investors have to pay the full cost of the home the day they bid on it and risk shouldering the cost of unforeseen repairs.

 

Gordon said he can't help but wonder why the previous owners of the homes he buys did not sell the properties before losing them.

 

"That is too emotional to think about," Gordon said. "It is just business. We did not cause it."[Andy's note - this is an important point.  If you're behind on your payments, don't be an 'ostrich' and stick your head in the sand...you've got to take immediate action to recognize your situation and do something about it!  Check out our Free Report, "Foreclosure Help" available for a limited time or call our office, 954-236-4500 ext. 202 to schedule a free 1/2 hour consultation with me.  This problem will NOT fix itself!]

 

 

 

I hope you found this article to be of interest. 

 

Sincerely,

 

-Andy 

Andrew Lockwood, JD.
Host - "The Best Damn Real Estate & Mortgage Show, Period!"

 

Blackacre Lending Corp.
Tel:  954.236.4500
Fax: 954.236.6878

 

Free Reports From a National Mortgage Expert:
www.FloridaLoanAdvice.com

 

 

 

1290 Weston Rd. Suite 300
Weston, FL 33326
*Licensed Correspondent Lender

How to Avoid "Bait and Switch" by the Big Banks

This week, the Atlanta District of the Federal Reserve heard testimony by the National Association of Mortgage Brokers on some items that were not exactly new.  Here's an exerpt from the testimony:

 

Kate Crawford, Chair of NAMB’s Consumer Protection and Affordable Housing Committee, represented the association and stated that one of the toughest hurdles in the home buying process is shopping for the right loan.

“Unfortunately, the approved disclosure documents for rate, fees, costs and points can be confusing and overburdened with legalese,” said Crawford. “In addition, only mortgage brokers disclose all costs to the consumer. Until there is a uniform way to disclose costs and everyone is fully transparent about their fees it will continue to be difficult for consumers to comparison shop in a meaningful way.”

So it's not exactly a newsflash that the mortgage process is confusing.  But most people don't understand that only mortgage brokers, not banks, are required to disclose all costs to borrowers!  That means that you're more likely to be bait and switched by the big banks than a little 'ol mortgage broker like yours truly.

But here's what you should be looking for.  My firm, Blackacre Lending, offers a 'No B.S., No Weasal Clauses $1,000 Closing Cost Guarantee' that gives our clients the comfort of knowing that what they applied for is what they get.  Details are available to all applicants.

In addition, I'm a founder and member of the board of the National Association of Responsible Loan Officers, an nation-wide organization of loan officers that advocates full and fair disclosure and education for persons obtaining mortgage financing.  (Check us out at www.NARLO.com).

So if you're nervous about understanding all rates, terms fees, etc., give me a call at 954-236-4500 or visit my website, www.FloridaLoanAdvice.com.  Mention this Blog and I'll waive my consultation fee (a $175 value).

-Andy

Andrew Lockwood, JD.
Host - "The Best Damn Real Estate & Mortgage Show, Period!"

 

Blackacre Lending Corp.
Tel:  954.236.4500
Fax: 954.236.6878

 

Free Reports From a National Mortgage Expert:
www.FloridaLoanAdvice.com

 

 

 

1290 Weston Rd. Suite 300
Weston, FL 33326
*Licensed Correspondent Lender