Some Virginia homeowners who have fallen behind in their mortgage payments may soon get a letter offering help. It won't be a ruse or a scam.
A change in state law Tuesday requires that lenders and mortgage-servicing companies send delinquent borrowers with high-interest loans the names of housing counselors who can provide foreclosure-prevention guidance.
The new law requires that lenders and companies that collect mortgage payments make available a 30-day grace period to borrowers who ask for help.
By slowing down the foreclosure process, the new regulations could buy time for homeowners seeking to work out arrangements with their lenders.
Virginia's relief effort comes at a time when the number of Hampton Roads homeowners at risk of losing their homes is climbing. After a decline in April, the number of homeowners in some stage of foreclosure jumped 34 percent during May to 399, according to
RealtyTrac Inc., a company that monitors foreclosures nationwide. That number was up 131 percent from the region's total for May 2007, RealtyTrac said.
The change in Virginia's mortgage-lending law is part of a broader effort by government agencies, lenders and consumer groups to provide counseling for homeowners who are struggling.
In June, a statewide foreclosure-prevention task force conducted five day-long clinics around Virginia. More than 600 people, including 95 who attended a clinic in Virginia Beach, talked with housing counselors about their situations, an existing mortgage for a less costly one.
That sort of downward spiral in home values already has occurred in some Northern Virginia localities and could threaten sections of Norfolk and Virginia Beach that have had an abundance of foreclosures, said Barry Merchant, senior policy analyst with the Virginia Housing Development Authority in Richmond.
In contrast to homeowners who can wait for conditions to improve before they sell, lenders that have taken back homes through foreclosure tend to set the prices of these properties at the current market level. If buyers fail to materialize, lenders steadily cut the prices, said James Moore, a Newport News real estate agent who markets lender-owned properties in Hampton Roads. Because of the cost of holding onto a foreclosed property, lenders "can't allow vacant property to sit there month after month," he said.
However, more rigorous lending standards and fears of a further decline in Hampton Roads' home values have kept many prospective buyers, including investors, on the sidelines, Moore said.
"Most of the seasoned investors are more cautious, and I don't think anybody has a good sense of whether the market has bottomed out yet," he said.
Consumer advocacy groups have lauded the resources that Virginia and other states are devoting to counseling for homeowners in trouble. Delinquent borrowers often lose their homes through foreclosure because they are too frightened or suspicious to contact their lenders, said Austin King, director of the financial justice center at consumer-advocacy group Association of Community Organizations for Reform Now, or ACORN, in New Orleans.
"Many people are making an irrational decision and walking away from their homes" because they aren't aware of ways to prevent foreclosure, King said. Still, guidance from housing counselors won't be enough to curb the rise in foreclosures, he and other consumer advocates say.
"Counseling is helpful, but things aren't happening quickly enough" to help the rising number of delinquent borrowers, said Sharon Reuss, a spokeswoman for the Center for Responsible Lending, a consumer advocacy group in Durham, N.C.
The center has campaigned for allowing bankruptcy judges to modify the terms of troubled borrowers' mortgages. Federal bankruptcy law, Reuss noted, already allows courts to modify debtors' loans for second homes and yachts.
Last year, a coalition of large mortgage lenders, mortgage-servicing companies, investors and consumer organizations came together to address the torrent of foreclosures.
The Hope Now coalition was endorsed by the Bush administration but attacked by some consumer advocacy groups for moving too slowly. Lenders and mortgage servicers in the coalition initially concentrated on having delinquent borrowers reschedule their payments. But many borrowers, especially those with costly subprime loans, stand little chance of avoiding foreclosure without a reduction in their monthly payments, according to the Center for Responsible Lending.
Since the beginning of the year, lenders and servicers in the Hope Now coalition have done much more to modify the terms of mortgages for delinquent borrowers.
Several states, including Virginia, decided not to wait for action at the national level and embarked on their own preventive measures.
The new Virginia law, a product of the statewide foreclosure-prevention task force, concentrates on delinquent borrowers who have subprime loans, the high-interest loans that routinely were made to borrowers with tarnished credit. These loans have much higher rates of default and foreclosure than conventional, fixed-rate mortgage loans.
One weakness in the new law, said ACORN's King, is the narrow definition of a high-risk loan. By defining a risky loan as one with a high interest rate or with high fees, the law doesn't help borrowers with other types of high-risk loans that often lead to foreclosure, he said. These include interest-only loans, option adjustable-rate mortgages that allowed a borrower to choose the size of the monthly payment, and Alternative-A loans that required little or no documentation of a borrower's income.
Another weakness is the law's lack of teeth. A lender or mortgage-servicing company that inadvertently fails to provide a 30-day grace period to a delinquent borrower seeking one won't be penalized.
Tom Shean, (757) 446-2379, tom.shean@pilotonline.com
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"I have lived in Norfolk for
"I have lived in Norfolk for almost 28 years and I can say over the last 5 years, I live in a duplex that would have rented for no more than 400.00 and I am paying 750.00 for 650 sq. ft."
Ask your landlord how much his taxes went up over the past 5 years before you complain about rent gouging.
Don't lose hope, foreclosure is not end of the world
Foreclosure can be prevented and has to be dealt immediately as time is of the essence when you are behind on house payments. Each day that passes makes it that much harder to get a work-out agreement with your lender that you can live with. Foreclosure victims need moral support, proper guidance, confidence from their family, friends & neighbors to plan for better future. There are several options to stop foreclosure and protect your credit history. Loan Modification, Forbearance Agreement, Deed in Lieu and a short sale are some of the techniques used to save your home.
As Ron White says...
You can't fix stupid.
Get a second or third job
If you cant live at your means get a second or third job if you cant make it then o well see you on the other side :/ no hand outs here I made my own bed and I like it because I can afford it on my own...I dont even fill sorry for those of you that bite off more than you can chew..I guess chocking is in order :/
Sickening
So much for a "free market" economy and survival of the fittest. Thank you politicians, bankers, oil companies, and realtors.
Why bail out the banks?
I am sure there are few that remember the Great Depression. Maybe you should do some research.
Why bail out the banks? Some say to let the banks fail. Let's think.....where do the banks get the money to lend to the people that default on their loans......OUR savings, checking and retirement accounts !!!!! When the banks fail WE fail. I am not one that believes in government bailing out someone that makes stupid decisions, but I think this may be one time where it may be needed.
Read this article in this link and see if this doesn't sound like the downward spiral that we are in today.
http://www.shambhala.org/business/goldocean/causdep.html
Your informed comments are welcomed.
So sad...
I read the comments and agree with most of them... then there are those of us who had GREAT incomes when we bought our homes, above 700 credit, purchased at a lower level then we were qualified for, but because of the JOB market stand to lose our homes. Savings practically gone, new job does not pay anywhere NEAR the old wages, mortgage is the same, income is lower, gas is more, income is lower, food costs more, income is lower. NO TO BAIL OUTS but DANG! Some readers have done the right things the right ways and STILL stand to lose. Two jobs still don't make up for the one... break even? HA... I wish!
Rental Prices
The amount that people are asking for rent in this local area is way to high. I am single working mom can afford, I would like to raise my son in an area that is not riddled by crime, but it is getting to the point that I can not afford to live anywhere other than those bad areas.
I have lived in Norfolk for almost 28 years and I can say over the last 5 years, I live in a duplex that would have rented for no more than 400.00 and I am paying 750.00 for 650 sq. ft.
someone needs to get landlord to lower the rental prices so single parents can afford to raise there child in an area that you do not have to be afraid of being shot.
OUR TAXES TO FEED THE LENDERS
So I understand that the new help from the government is to help with government money (our taxes) subprime mortgages "victims". Therefore when someone cannot pay, the governement steps in helping with the monthly payments.
Question: who ever invented these subprime mortgages?
Answer: Banks and Lending institutions.
Ahhhh!!! So people that have such great understanding of finances and such, did not know that this would cause a wreck in the economy!!
This is obvious to all of us but not them...hhmmm...so in their mind if you lend money to either people with no credit or to people that cannot afford houses beyond their real means, everything is magically going to be ok...hhmmm....then of course my tax dollars are going to help the Banks some more...
In other European Countries where this problem has surfaced such as Italy, legislator have forced the banks to convert the subprime loans t
Pointless
If someone is over their head in debt, absolutely nothing the government does to fiddle with the rules will help. They got themselves into that situation so they need to get themselves out. Those foreclosures need to happen to start freeing up credit for people that will use it wisely.
Politicians and the citizenry.
After reading the previous comments, I concluded that virtually everything that I was going to expound on had been well-covered by others.
Suffice to say, that I generally agree with you, and applaud the notes on this board.
I never cease to be amazed by the insight and intelligence of the citizenry.
Too bad that, because they refuse to sell their souls, they rarely become politicians.
Hence, the pandering to special interests shall continue unabated.
You guys give me hope!
It's great to see other people who can see this scam for what it is. Bailouts for the banks and wall street. Michelle - Don't forget that many people who had good credit also decided to jump in, and there are likely lots of investment places that were purchased by people with good credit, so they look like prime loans. But the people with good credit might be in industries that will be negatively effected by the RE downturn (I see lots of for sale by owner/agent type listings). So there is a high probability that many loans considered prime will also fall behind. You can see suckers trying to rent out homes they overpaid for... the listings show up at about twice the going rate of similar homes from other people. I mean, who buys a property and takes a monthly loss hoping for a market comeback? That's not an investor, that's a speculator.
Gasoline- The Other Second Mortgage
Bank every penny. Change vehicle oil every 5000 miles & inflate tires. Drive like feeding quarters into the dashboard. End buying life with all the options. If the bill in hand does not keep the roof overhead, gas in the tank, food on the table, get rid of it. Pay off debt and cancel services. Move MUCH closer to work. Discuss options for bankruptcy with a legitimate attorney while credit is still GOOD, so one knows where one stands. Stressed families in wealthy neighborhoods who can't get to the liquidity preference by selling off unpopular assets, are. Here on business in Morgantown WV, centrally located to within 500 miles of 55% of America's population, we drove past one of those million-dollar RV buses parked in a grocery store parking lot, tow-car parked beside it, huge "for sale" sign inside the windshield, tarp extended, the retired owners sitting in folding chairs..broke for dies
Same old story!
When is society going to restart responsibility for ones actions once you are an adult! I am sick that those of us who actually put an honest, calculated, responsible effort forth in this society must pay for those who do not.
Remember the old base guideline 2.5 x annual salary = mortgage amount.
350,000 / 2.5 = 140,000. Not sure what many in this area are earning but I bet this next calculation will be closer to reality for most with 1 income that is.
65,000 x 2.5 = 162,500.
'NO' to Bailouts
It sickens me to read this article. I, too, bought a home (in 2002) that I could AFFORD on a fixed 30 year rate. I had the pleasure of a real estate agent who gave me advice for MY benefit. Sure, on paper, I could have bought above what I was comfortable with 'no money down'- 'no payments for a year'- 'interest only' or whatever if I went with some scheister loan officer. Bottom line, the buyer has just as much responsibility for their situation. And, I, as someone who did things right and responsibly, should not have to indirectly be part of this bailout. Those stupid people should be culled by the market and there should also be stiffer penalties for walking away from a mortgage--- it shouldn't be that easy.
Against Bailouts
Okay, so there are four main types of risky mortgages out there. Let's take a look at them:
A) high interest sub-prime loans made to people with "tarnished credit"
B) interest-only loans
C) mortgages that let a borrower choose the size of the monthly payment
D) loans that required little or no documentation of a borrower's income
A - you have no business owning a home. Your credit stinks because you can't manage your money. Sub-prime lenders took on the risk and deserve the coming consequences.
B - file this under "duh." How does this benefit anyone but the lender? The borrower was duped or has no business trying to own a home.
C - Dream on! Your head is obviously in the clouds if you think "choose your monthly payment" is a path to anything but foreclosure.
D - This is my personal favorite. The lenders in this category are pure criminals. The borrowers here wholly deserve foreclosure and then some
no bailout
I live in a very modest house( which was way overvalued when we bought it) and paid no attention to my real estate agent who continually implored me to "max out" ( buy the biggest house I was qualified for) so now I have a manageable mortgage, save for our retirement, have money for vacations although we wish we did have more room.
If you fell into this housing trap you cannot claim complete ignorance and you must accept responsibility for your actions. I should not have to pay to keep you in a home you could never afford in the first place. I should not have to pay to keep the loan agency swindlers back in business and continuing corrupt practices.
The govt should not be using our money to support loan businesses who reaped record profits and now want a handout.
What can I say ?
I can not top what has already been said by the previous posts. You guys hit the nail on the head. The Media wants us, who bought a home we can afford, to feel sorry for these idiots. I DON'T !!
Help Me
Why dont you cut me a break government, the guy who pays every month on time, the guy who bought a house he could afford at a locked in rate. Why don't you help the middle class who are paying all of the bills on time, but break even very month because our taxes are ridiculous, gas is crazy, food is soaring, electricity is screaming up, HELP ME. I am the sole income for my house and its getting harder and harder to do it. I wish they would help the middle working class more. Subsidize gas. Pay 1 mortgage payment a year for me, or pay my taxes. Anything would help.
So sorry
It sickens me that our(?) government would consider bailing out these speculators, liars, cheats, and idiots. The economy is already in the dumps. So what if a few more lenders go broke due to greed? So what if a few people are reduced to renting an apartment? They couldn't afford an overpriced house in the first place? Helping these people will only justify the heavily over-inflated prices of all homes. No one has ever offered a helping hand($$$) to me. That's why I continue to live in a very modest home my family outgrew years ago. If the government wants to lend a hand then give it to those of us who chose wisely. These home owners(?) went in with little or nothing invested. Let they fail and the lenders too. Want reality? There's a small brick home on waterfront (separated by a feeder road) that was put on the market recently. I was curious about the selling price. Well, the realtor mailed out fly