Debt Advizor

According to Steve Sailer’s website, the top ten states with the highest average consumer credit ratings are found among the people of:

South Dakota 710
Minnesota 707
North Dakota 706
Vermont 706
Massachusetts 703
New Hampshire 703
Montana 701
Iowa 700
Wisconsin 699
Maine 699

In contrast, the ten populations with the worst average consumer credit scores are:

Texas 651
Nevada 655
Arizona 659
New Mexico 663
Louisiana 663
South Carolina 665
Oklahoma 666
North Carolina 667
Arkansas 668
Mississippi 668

California (672) and Florida (673) are closer to the bottom than than the top.

Texas largely escaped the mortgage meltdown due to low land prices and high oil prices, but this suggests there might be trouble in Texas ahead if oil stays around $40 per barrel.

In great news for homeowners in peril, two groups of Florida lenders will voluntarily agree not to file new foreclosure petitions on primary homes for the next 45 days. The Florida Bankers Association and the Florida Credit Union League made the announcement Monday in a press conference with Gov. Charlie Crist. They also volunteered not to schedule foreclosure sales during that period.

Florida has the country’s third highest foreclosure rate, and the grace period is a recognition of tough economic times. It doesn’t affect foreclosure proceedings that have already begun and doesn’t apply to businesses or second homes. Florida Bankers Association President Alex Sanchez encouraged anyone who is having trouble paying their mortgage to meet with their banker to try to work out a repayment plan.

All across the USA, foreclosure sales are becoming an increasingly popular way of finding a bargain. Almost a third of properties on sale are now owned by banks, and as foreclosures continue, prices are being pushed down and driving an expansion in this niche market. In Long Island one real estate company has set up coach tours of foreclosed homes to bring in the buyers. Punters on the hunt for a bargain are ferried around in a little bus to various foreclosed properties.

The Long Island Foreclosure Tours started operating earlier this year. David Farrell is one of the partners. Foreclosed homes, you might say, are an economic change for some people and a benefit for other people “Every day you see an increase in the share of the market that is foreclosure business and that is why we started this and got involved,” he says. These are vacant houses that the banks need to sell and any buyer who is looking for a deal is looking for a foreclosure.”

This is a growing market, and there’s not many of those to be had in the present climate. As a result of the increase in foreclosures, the banks now own almost a third of the homes on sale in America. It’s a buyers market, if you have the money. One buyer on the bus sees this as an opportunity to move up in the world. “With foreclosures you can find an area better than the area you live in now, and you can upgrade. Taxes might be a little bit higher, but you might have a house that you wouldn’t be able to afford prior to this.”

One of the homes on the tour is a sprawling building with an outhouse. It’s set on an expensive road in the neighbourhood. Last year houses around here were worth over $1.2m. The bank bought this back for just over $1m. It’s now listed at $699,000,a drop of almost 50%. The bank has had to bear a considerable loss. That’s the irony; at the lower price, the former owners may have been able to afford the mortgage and stay in the property. Both the government and banks are working to staunch the flow of foreclosures, and keep owners in their homes, but critics say it’s too little too late.

In another part of New York, there’s a seminar in the Bronx to help owners stay in their homes. At the public library, organisations wait for people to turn up. No one comes. A local official explains advertising budgets have been cut because of the crisis, and there was no money to spread the news. Rebecca Gamez was there. She’s from the Neighbourhood Economic Development Advocacy Project (Nedap), a New York non profit organisation. “I think there definitely needs to be a push at the national level to make homeowners a priority, for those who are facing foreclosure to stay in their homes,” she says. “I think that at the national level the government should be pushing banks and lenders to work with home owners, and get them into affordable mortgages so they can stay in their homes for the long term.”

In the meantime, the tours continue around the houses. As winter approaches they’ve started doing after work tours in the dark, which means the properties are being viewed by flashlight. There are five properties on this list. The buyers shrug their shoulders and say they feels bad for those who lost their homes, but this is an opportunity. “Unfortunately due to the economy; foreclosed homes, you might say, are an economic change for some people and a benefit for other people,” a buyer said. “So we feel maybe we can get some good out of it for ourselves, some good comes out of the bad.” Last month half of the homes bought were foreclosures. That’s hardly enough to stabilize the market, but it does show that as prices fall, there is a market out there willing and able to buy. There are real estate bargains still available and with bargain.com new members can search foreclosures free with a trial membership Click here for Bargain.com.. And if you see something of interest there is a five step process to follow:

• 1, Check your credit score, there is a great new program here Equifax Credit Watch Gold 3-in-1.
• 2, If there are problems with your credit have them fixed with Lexington.
• 3, The key to financial power lies in your credit rating. If you plan to get a home loan, save money and get better credit starting now .
• 4, See what kind of home loan you can qualify for at LendingTree.com.
• 5, Find a good Real Estate Lawyer, and you’re off to the races!

So far, the mortgage meltdown hasn’t been as bad in Texas as in the four Sand States: California, Nevada, Arizona, and Florida. These are home to half of the country’s foreclosures and a large majority of the defaulted mortgage money. Why is that?

Partly this is due to the Oil Bubble, which now appears to be ending. Oil prices over $100 per barrel kept the Texas economy strong in 2008, allowing debtors to avoid foreclosure, and to keep employment levels high. Also, the enormous amount of land and the lack of environmental restrictions on home development in Texas means that when the federal government stimulates demand, the supply of housing increases quickly as well, keeping housing prices reasonable.

Texas seems to have a more established Hispanic community. Hardly surprising really!

Finally, what was most important was how different was Texas’s economic and immigration history over the last three decades relative to the seemingly similar Sand States. Due to OPEC’s oil price increases in the 1970s, Texas experienced a huge construction boom thirty years ago. That mostly attracted construction workers from the rest of the U.S. rather than from Mexico, because Mexico was simultaneously experiencing its own oil boom following massive new discoveries. When oil prices collapsed in 1982, the economies of Texas and Mexico slumped simultaneously. The big wave of post-1982 unemployed illegal aliens therefore headed for California rather than for Texas.

That’s why San Antonio had “surprisingly low levels” of immigration from 1965 to 2000, according to the important new book quantitatively comparing Mexican-Americans in San Antonio and Los Angeles in 1965 and 2000, Generations of Exclusion, by sociologists associated with the UCLA Chicano Studies Program. The 2000 Census found that California’s foreign-born population (26 percent of all residents) was almost twice as large as Texas’s (14 percent). As a result, unlike the other Sand States in 2000, Texas had a large but fairly well-rooted, stable, and assimilated Mexican-American population that had a reasonable potential to make enough money in resource-extraction or other blue-collar jobs to afford to buy Texas’s cheap houses.

In sharp contrast, California had a huge and mostly new, ill-educated, and unassimilated Mexican-American population that didn’t have even a chance of making enough money in Silicon Valley or Hollywood to afford California’s already expensive houses. And Nevada, Arizona, and Florida were more like California than they were like Texas.

So, who are the bad guys here: Texans or Californians? That’s what people always want to know: who’s the bad guy and who is the good guy? The point is that our country’s two biggest states are just very different, and much of that has its roots in their very different terrain. For example, everybody in California would prefer to live near the Pacific because the climate and scenery are so nice. In contrast, in Texas (and the other Gulf of Mexico coastal states), the threat of hurricanes means people tend to prefer to live inland. Galveston used to be the dominant port of Texas’s coast, until the hurricane of 1900 drowned 6000 people, after which Houston (45 miles inland and 45 feet above sea level) became the main metropolis. So, Affordable Family Formation works better in Texas than in California.

This doesn’t make Texans or Californians good or evil, it just makes them different. And because the two states between them account for 60 million people, it’s crucial that Americans get a better grip on the differences between the two states.

New Mexico and Florida are both in the United States but from the mountains of northern New Mexico, the contrasts with Southwest Florida can be startling. Taos itself is a small town, and kind of funky. The town is an art center. There are more galleries than churches. You can feed yourself pretty well on a weekend simply by going from one gallery opening to another and trolling on the hors d’oeuvres and wine they put out.

The social center of Taos is the local Wal-Mart. Everybody goes there and you hardly ever get through the store without bumping into friends and acquaintances. The corporation wanted to put in a huge, warehouse-sized super Wal-Mart, but the town’s merchants pressured the politicos to turn down the idea. It would wipe out the local stores, they feared. The same thing applies to banks. There are no branches of national banks, such as Bank of America, in Taos. The local banks have the town to themselves. They’re very good banks and the people working in them are uniformly friendly, helpful and knowledgeable.

Personally, I would rather retire to New Mexico than Florida...

Naples, Florida, used to be a small town, but it’s grown into quite a sizable city. Local residents urge the city to put in sidewalks; they don’t regard sidewalks as “uppity” affectations. People are much friendlier in Taos than in Naples. They smile at each other on the street and say hello. Cars stop to let pedestrians cross the street, even in the middle of a block. Naples was like that once, but the city’s growth has smothered most of that small-town warmth. Nowadays, when you smile and say hello to a stranger on the beach, the stranger looks startled and hurries away.

There are no high-rise buildings in Taos, nothing taller than three stories. But just north of town is Taos Mountain, which stands more than 10,000 feet high and gives me the feeling of a guardian spirit, somehow, protecting the town. You get mystical feelings like that in the mountains of New Mexico. It truly is a land of enchantment, as the state’s motto proclaims.

There are the Sangre de Cristo mountains to the east of town, and when sunset paints them red you understand where the name came from. The mountains almost seem alive: as you watch them during the course of a day they never look quite the same from one hour to the next. Clouds dapple their wooded flanks with shadow. During the “monsoon season,” when there are brief rain showers most afternoons, gray clouds can hide the peaks. In winter, snow covers the mountains, much to the delight of skiers and ski-resort workers and owners. Taos Ski Valley, Angel Fire and other ski resorts are all within a half-hour’s drive from downtown.

The beautiful Ghost Ranch in Northern New Mexico.

Florida, of course, is notoriously flat. I think the highest point in Collier County is an overpass on Interstate 75. We have water skiing in the Gulf, but winter sports in Naples consist mostly of watching football on television. There is tennis both in Naples and in Taos, and there are some differences between the two. At more than 7,000 feet, it’s sometimes hard to catch your breath, of course. But although the air is thin, it’s also clear almost every day (except for the “monsoon” showers). The ball goes faster and flies farther in Taos. When we get back to the Quail Creek Country Club in the Naples area, hitting a tennis ball feels like socking a wet brick, until we get acclimated to the thicker, wetter atmosphere.

In general, New Mexico is much poorer than Florida. Like Naples, Taos is heavily dependent on tourists. The town began as an Indian pueblo, but early in the 20th century it became an art center; everybody seems to be a painter, and art galleries line the main street. The current economic recession has hurt Taos. Galleries and restaurants are closing. Construction of new homes and condominiums has ground pretty much to a halt. But that will change, in time.

Meanwhile, there are spectacular sunsets almost every day: bold, strong reds and violets slash across the sky. Sunsets in Naples, over the Gulf, are just as beautiful, but in a softer, more pastel way. They are two very different places, but both are part of this vast nation of ours.

The seismic changes in the US economy are creating a real estate boom in New Mexico as large employers relocate and establish operations in the business-friendly state. While many areas of the country are suffering, some, where housing is employment driven are doing well. One such area of prosperity is New Mexico and there are real estate bargains still available. New members can search foreclosures free with a trial membership Click here for Bargain.com.
. And if you see something of interest there is a five step process to follow:

• 1, Check your credit score, there is a great new program here Equifax Credit Watch Gold 3-in-1.
• 2, If there are problems with your credit have them fixed with Lexington.
• 3, The key to financial power lies in your credit rating. If you plan to get a home loan, save money and get better credit starting now.
• 4, See what kind of home loan you can qualify for at LendingTree.com.
• 5, Find a good Real Estate Lawyer, and you’re off to the races!

Fannie Mae and Freddie Mac, otherwise known as the dead-beat duo, have announced that they are going to do a humongous loan modification program. The details are preliminary and we’ll give more depth in future but these are the details:

• (1) Modify mortgages for those 90 days late
• (2) Extend mortgages out to 40 years
• (3) Lower mortgage payment to 38% of the borrower’s annual income
• (4) Lower rates to as low as 3%
• (5) Need to make 3 consecutive payments in order to be permanent

This scheme is fraught with so many problems. First, it is geared to the beyond toxic mortgage markets of the sand states California, Nevada, Arizona and Florida that account for well over $300 billion of the $500 billion Pay Option ARM market. In addition, they mention that this money will come not from the $700 billion TARP program. Which means more money from taxpayers. Although most of the problem loans come from the Sand States, it looks like many loans will not qualify for this program. Of course Sheila Bair at the FDIC wants access to TARP cash to bailout toxic mortgages. Not subprime mortgages but Alt-A yuppie mortgages on California McMansions. Now lets not get too negative but don’t you think this is going to induce certain borrowers to purposely miss three payments? There are many people on the edge who are being prudent and making their home payments but barely. Now isn’t this a large enough incentive to stop paying and get this great deal? Who wouldn’t want to sign up and put their mortgages in here! Unfortunately, for the majority of prudent mortgage holders who pay on time your only parting gift is the good feeling that you are helping Wall Street banks and lenders stay afloat for making horrible mortgages.

The US Congress and the White House have spent months trying to ease the housing crisis by shoring up credit markets and creating foreclosure-prevention programs.

But for Americans overwhelmed by debt, trying to get help can be confusing and intimidating. Here are answers to some common questions.

Question: What kind of help is available?

Answer: In July, Congress approved help for homeowners who are “upside down” — that is, they owe more than their homes are worth because of plunging property values. The Housing and Economic Recovery Act of 2008 created the Hope for Homeowners loan “workout” program. It provides insurance, offered through the Federal Housing Administration, to help qualifying owner-occupants Refinance unaffordable loans with fixed-rate 30-year mortgages.

The rewritten loan would cover 90 percent of the home’s reappraised value, up to $550,440. Because of the FHA insurance, borrowers would be able to get lower interest rates than otherwise might be available. Also, because of the fixed terms, borrowers wouldn’t have to worry about a constantly rising adjustable rate.

Congress set up the three-year program to help Refinance up to $300 billion in mortgages, but it is voluntary. That means some lenders may refuse to alter the terms of old mortgages. But many do want to participate, hoping to curb the surge in defaults and to placate Congress before it cracks down even harder on lenders.

Question: Who is eligible for the Hope for Homeowners program?

Answer: It is designed for “upside-down” owner-occupiers who bought their homes before January 2008 and now have monthly payments exceeding 31 percent of their income.

Question: How can I get started seeking help? Whom do I contact?

Answer: The government offers counseling at 888.995-HOPE or by visiting www.hopenow.com. It also urges homeowners to call their lenders to ask for information specifically on the Hope for Homeowners program.

But don’t expect instant aid. Because the program was just approved by Congress in July, many lenders are still sorting out how they will implement it. For example, Countrywide, a huge mortgage lender that is now part of Bank of America, is gearing up to offer Hope for Homeowners, but isn’t ready to act yet, according to Bank of America spokesman Rick Simon. “We are still preparing the systems to put it into effect,” he said.

On Dec. 1, the company plans to roll out a comprehensive “home retention” initiative to steer struggling borrowers into Hope for Homeowners or other settlement programs. Simon said homeowners who already are 60 days late on their payments should call the company now to start exchanging information with people who will be doing the “workouts.” When Dec. 1 arrives, those borrowers will be able to move quickly to get new loan terms, he said. For information, check this Web site: my.countrywide.com/media/FinancialAssistanceEN.html.

Question: Would filing for bankruptcy help me hang on to my home?

Answer: It may not help save your house. Advocates for borrowers contend that the only way to help hundreds of thousands of Americans stay in their homes is to give bankruptcy judges the power to relax the terms of mortgage loans.

But lenders say that if a quick trip to bankruptcy court could tear up a mortgage agreement, huge numbers of people might try it. Industry experts say nearly 2 million mortgages are delinquent by 60 days or more, putting them on the edge of foreclosure. If bankruptcy judges were to start rewriting mortgage terms on a large scale, they would undermine confidence in mortgage securities and make it harder for everyone to get a loan. So far, Congress has sided with mortgage lenders.

Filing for bankruptcy might help you make your mortgage payments if it allows you to reduce your credit card debt and medical bills. But experts caution that filing for bankruptcy is a lot harder and more expensive than it used to be.

Question: The biggest problem for “upside-down” borrowers is the decline in home prices. Has government done enough to shore up home prices?

Answer: In recent months, Congress, the Bush administration and the Federal Reserve have taken many steps to bail out financial companies and loosen up “frozen” credit markets. Those steps should make mortgages more readily available than they otherwise would have been. They also have created incentives for lenders to Refinance the terms of old mortgages.

But mortgage rates have risen in recent days and home prices have not stabilized. Skeptics say the bad job market and economic uncertainty are discouraging people from buying homes. Until job creation picks up and wages rise, home prices will not appreciate, they argue.

So you can no longer pay the mortgage. What happens next?

Here is that process in plain English, from a non-lawyer.

In Florida, the process of the lender regaining possession of the property for non-payment is basically a lawsuit — they sue for possession, and that is foreclosure.

1. Pre-pre foreclosure. A lot of this depend on the lender. Some will wait for 60 days to go by, then send a demand letter, and then wait 30 days for a response to that. Then there will be some lag time before they actually send the file to an attorney for legal action. During this time is usually when the bank might try to work out some sort of a payment plan with the borrower. Again, different for every lender, but as you can see, at least 60 days will go by, and maybe as many as 120, and sometimes much more!
2. The bank sends the file to an attorney. The Real Estate Lawyer is preparing to do all the legal filing to initiate foreclosure proceedings. This can take from 1 week to several weeks.
3. Service. The bank wants to serve the borrower personally with notice of foreclosure (Lis Pendens) … they can serve by placing an advertisement in the newspaper, but they are required to prove that they also made a diligent effort to serve all defendants personally. Also, if they do not personally serve the defendants, they will not be able to get a deficiency judgement. We might have to come back to what that is, just a bit later on. Service will take at least a week, and maybe many times that if the defendants are hard to find!
4. Response. The defendant has 20 days to file a response after being served. The response could be as simple as, “I have the house listed for sale and hope to pay the lender in full.”
5. Motion for default is what the bank will file for if there is no response from the defendant  in 20 days. Assuming the motion is approved, we’re looking at 3-5 days.
6. Motion for summary final judgement. The bank will furnish the court with papers showing the amount owed including attorney fees and whatnot, and a hearing is scheduled. This whole process can take 30-50 days.
7. Judgement of foreclosure is the court’s approval that the foreclosure is proper and a sale date is set. The property is sold to the highest bidder (usually the bank) on the courthouse steps. This will be in about 30 days.

As you can see, foreclosure is not a swift process. In theory, if the foreclosure is uncontested and there are no scheduling backlogs anywhere in the  process, you could get one done in 90 days. But given how busy the banks and the attorneys and the courts are with foreclosures these days, 6 months is typical and much longer isn’t unusual.

And, in Florida, the borrower has the right of redemption, i.e., the right to pay all amounts due and stop the process, right up until the courthouse sale.

More to come soon.

Pre-foreclosure Period

A foreclosure in Florida begins when a lender files court action and records a notice of a pending lawsuit (Lis Pendens) against the borrower. The lender notifies the borrower and any other affected parties in person or in some cases by mail or publication. If the borrower does not respond to the court action within a specified amount of time, the county clerk can find the borrower in default and the lender can ask the court to make a final ruling. If the court rules against the borrower, the ruling will include the total amount owed to the lender and the foreclosure sale date.

The lender is not required by state law to notify the borrower before initiating the foreclosure process, but individual mortgages or deeds of trust might call for this. The borrower can stop the foreclosure up until the date of the sale by paying the total amount owed to the lender.

Notice of Sale / Auction

The sale date is typically 20-35 days after the court ruling, but this may vary depending on the individual court. The clerk of court issues a notice of sale containing the location, date, and time of the sale.  The notice is published once a week for two weeks, with the second notice appearing at least five days before the sale.

The clerk usually oversees the sale, which ordinarily occurs at the county courthouse at 11:00 a.m. on the sale date. The winning bidder must provide a 5-percent deposit and pay the remaining balance by the end of the day or a new sale is scheduled a minimum of 20 days later. After a successful sale, the clerk gives a certificate of sale to the winning bidder

Within 10 days of the sale, the clerk transfers ownership to the winning bidder if no one disputes the sale.  In most instances, a borrower has no right of redemption after the certificate of sale is issued.

If you’re at risk of having your home foreclosed on, you should read our section on foreclosure help. You might still be able to stop foreclosure. You will need to get a Qualified Real Estate Lawyer.