Foreclosures...Foreclosures!

Discussion in 'Financial Cents' started by Clyde, Dec 20, 2006.


  1. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <table border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td class="pr">Press Release</td><td class="ps" align="right">Source: Center for Responsible Lending, Raleigh, N.C.</td></tr></tbody></table> Report Reveals 2.2 Million Borrowers Face Foreclosure on Subprime Home Loans
    Tuesday December 19, 1:30 pm ET[own2] <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
    </td></tr></tbody></table>Billions of Home Ownership Wealth to be Lost by Minority Americans; Chart Contains Detailed MSA-Specific Projections of Home Foreclosure Impacts
    WASHINGTON, Dec. 19 /PRNewswire/ -- A new Center for Responsible Lending (CRL) study reveals that 2.2 million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market. Titled, "Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners," the CRL study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006.
    <table align="left" border="0" cellpadding="4" cellspacing="4"><tbody><tr><td><table border="0" cellpadding="0" cellspacing="0"><tbody><tr><td align="center">[SIZE=-2]ADVERTISEMENT[/SIZE]
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    <embed src="http://us.a2.yimg.com/us.yimg.com/a/sb/sbc3/20060922_1_77213_300x250_q4_acq_campaign_phase1_att_flash_lrec.swf" loop="false" wmode="opaque" quality="high" flashvars="clickTAG=javascript:lrec_window(1)" type="application/x-shockwave-flash" allowscriptaccess="always" height="250" width="300"></object> <noscript>[​IMG]</noscript> </td></tr></tbody></table><script type="text/javascript"> if (window.yzq_a == null) document.write("<scr" + "ipt type=text/javascript src=""http://us.js2.yimg.com/us.js.yimg.com/lib/bc/bc_1.7.3.js></scr" + "ipt>"); </script><script type="text/javascript"> if (window.yzq_a) { yzq_a('p', 'P=xmyycdhtfJAzHD0DRXgyIwQsz1vGAUWJNYgADTm5&T=1f6jibo40%2fX%3d1166620040%2fE%3d7811758%2fR%3dfin%2fK%3d5%2fV%3d1.1%2fW%3d8%2fY%3dYAHOO%2fF%3d3753671213%2fH%3dY29icmFuZD0iPGEgaHJlZj1odHRwOi8vdXMucmQueWFob28uY29tL2ZpbmFuY2UvbmV3cy9wcm5ld3MvU0lHPTExMnNsZTkzby8qaHR0cDovL3d3dy5wcm5ld3N3aXJlLmNvbS95YWhvby8.PGltZyBib3JkZXI9MCBzcmM9aHR0cDovL3VzLmkxLnlpbWcuY29tL3VzLnlpbWcuY29tL2kvdXMvZmkvZ3IvcGFydG5lcl9sb2dvcy9wcm5ld3N3aXJlXzE3MHgzM19sb2dvLmdpZiBhbHQ9UFJfTmV3c3dpcmU.PC9hPiIgY2FjaGVoaW50PSI3ODExNzU4IiBjYWNoZWhpbnQ9Ijc4MTE3NTgi%2fS%3d1%2fJ%3d8B7C6DD8'); yzq_a('a', '&U=139g1uf9k%2fN%3dwVcAANibyhU-%2fC%3d344794.6302042.8659953.1435155%2fD%3dLREC%2fB%3d4007275'); } </script><noscript>[​IMG]</noscript></td></tr></tbody></table>CRL's research suggests that risky lending practices have triggered the worst foreclosure crisis in the modern mortgage market, projecting that one out of five (19.4%) subprime loans issued during 2005-2006 will fail.</p>"In the subprime sector, the most vulnerable borrowers are sold the most dangerous loans," said Mike Calhoun, CRL president. "At $164 billion, the losses from foreclosures could pay for the college educations of four million kids. For families who lose their houses because their loans fail, savings and economic security will be way out of reach."
    The report discusses a number of factors that drive subprime foreclosures -- in the majority of cases, borrowers receive high-risk loan features, packed into an adjustable rate mortgage with a low start rate, that is approved without considering whether the homeowner can afford to pay the loan after the rate rises.
    Adjustable rate mortgages known as 2/28s (or "exploding ARMs") operate with an initial "teaser" rate for two years, followed by a steep payment increase. And, regardless of a borrower's credit history, the almost one- quarter of American families who get subprime loans find them crammed with other high-risk terms such as prepayment penalties, limited income documentation, and no escrow for property taxes and hazard insurance.
    In recent years, high appreciation in many areas has masked problems in the subprime market. CRL projects that the cooling housing market, will cause failure rates to rise sharply in many major markets. California, Arizona, Nevada, and greater Washington, D.C. will be especially hard hit. See a detailed metropolitan statistical area (MSA) chart at http://www.responsiblelending.org/pdfs/MSA-foreclosure-rates.pdf.
    "Foreclosures can be a disaster not only for the family but for the community as well," said Pat Vredevoogd Combs, president of National Association of Realtors. "When one home forecloses, the surrounding houses lose value, too. By threatening neighborhood stability, foreclosures hurt everyone."
    Trouble in the overall subprime market spells trouble for African American and Latino families across the country. Although white families receive more subprime loans overall, African Americans and Latinos receive a higher proportion of high-cost loans than any other group, a fact consistently verified annually by data lenders submit under the Home Mortgage Disclosure Act (HMDA). "Losing Ground" estimates that 8 to 10 percent of all African American and Latino families who received a home loan in 2005 will be affected by subprime foreclosures.
    "Homeownership rates for minorities are up but so, too, is the cost of that homeownership," said Wade Henderson, executive director of Leadership Conference on Civil Rights. "We need rules to curb predatory lenders, but we also need prime lenders to step up for this expanding market of borrowers."
    Policymakers and regulators can and must act to stem the tide of home failures in the subprime market. To accomplish this CRL recommends that:

    * Lenders ensure that every borrower is able to repay his or her loan
    without resorting to selling their property or refinancing under
    pressure.

    * All parties involved operate in good faith and fair dealing to ensure a
    successful outcome.

    * Lenders, local governments, and community groups implement strong
    programs to help troubled borrowers keep their homes.
    </pre>Homeowners work hard to provide the economic security and benefits of ownership to their families. Changes must be made in the subprime market so that owning a home is fair, affordable and -- most important -- sustainable.
    About the Center for Responsible Lending
    The Center for Responsible Lending (http://www.responsiblelending.org) is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help (http://www.self-help.org), one of the nation's largest community development financial institutions.
     
  2. Seacowboys

    Seacowboys Senior Member Founding Member

    indentured servants, one and all. They'll either give them housing or a war. Prisons are not cheaper than mortgages this time.
     
  3. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    Risky lending practices my dying arse. Predatory is more like it. Bankers and realestate agents are trying very hard to achieve the level of used car dealers and lawyers in the esteem of the population, and I think they'll make it pretty soon.
     
  4. Blackjack

    Blackjack Monkey+++


    My books already gottem on equal ground.
     
  5. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    I often consider the term "predatory lending" and wonder why the prey is so stupid. Remember it takes stupid people to make really stupid decisions.

    Predatory Lender:
    I can get you a loan, but you have awful credit. I am gonna chage your $8,000 to get your $100,000 loan and your rate will be at 14%.

    Lendee:
    Wow! $100,000. I can't believe I qualify for that for only $1,300 per month.

    Predatory Lender: (Thinks to himself.....sucker!)

    Lendee: (Thinks to himself....this is a good deal) Now I won't have to piss my money away renting a home or apartment. Now I can buy a home just like everyone else. If I can't afford it, I will just move out and give it back to the lender. I don't have any money for them to take anyway.

    Predatory Lender: I really don't care what you do after I get paid. That is between you and to whom this risky loan is sold.

    Lendee: Great! Lets close next week.


    The reality is stupid people make really stupid decisions. The real slime balls in the entire equation are the appraisers who fluff and lie about the value of the homes to make the loans meet their equity percentages. Trust me.....its the appraisers that are ****ing the entire system.
     
  6. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    :lol: damn Clyde you hit the nail on the head again
     
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