"Counselors Seek Ideas to Slow Foreclosures"

This article popped up this morning in some of the morning articles I read with regards to real estate. I found it interesting. With the number of foreclosures on the rise, I think education is an excellent idea.

Wisconsin Dells Events (08/01/07) Krejci, Anna

A recent Wisconsin Collaborative for Affordable Housing conference featured a brainstorming session in which financial counselors, representatives of various state government organizations and other professionals discussed ways to prevent foreclosures. According to ForeclosuresWI.com, the number of foreclosures in the state has risen 23 percent since the first of the year. In Columbia County alone, there have been 124 foreclosures filed so far in 2007. Dialogue at the conference centered on offering post-purchase programs for new homeowners, along with recognizing and developing future funding sources to help in preventing foreclosures. Some even suggested rewards or coupons for Home Depot and other home improvement retailers as incentives for new buyers to attend post-purchase programs. Among those in attendance at the conference were Morris Reece, director of Fair Housing for the city of Racine; Noel Halvorsen, executive director of NeighborWorks Green Bay; and Diane Schobert of the Wisconsin Housing and Economic Development Authority. Reece blamed the recent rash of foreclosures in Wisconsin on first-time buyers being rushed into making a purchase. Halvorsen, meanwhile, supported the idea of ad campaigns designed to educate the public on the demands of homeownership.

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I think there are a lot of home buyers who don't realize what they're getting themselves in to when they purchase a home. Unfortunately, there are also a lot of home OWNERS who don't understand how to effectively manage their money either. . . . .which is a factor contributing to the growing number of foreclosures as well.

People take second mortgages, home equity loans, lines of credit & the like from the equity in their house with the feeling that it's "free money". What they fail to understand is that there is no such thing as FREE money. Suddenly they can't pay that money back and the bank comes looking to collect on the loan. . . . .to take their house.

In this article the director of fair housing for Racine blames the up rise in foreclosures in Wisconsin on first time home buyers being "rushed" into a purchase. Again, education is needed. The first time home buyers I've worked with lately tend to take what the bank has to say they can afford at full value. They don't factor in the costs of owning a home. . . . they just see the dollar amount they're told they can afford, what that price point of a house looks like, and they go for it. After all, it's an "investment" right? "Rushing" has nothing to do with it. . . . . . .they're simply not educated on the bottome line, what it's going to cost down the line.

I think education starting with the lending industry is a must. Again, not all these foreclosures we're seeing are "first time home buyers", but most of them are "uneducated" from the standpoint that they don't understand the mistakes they made in order to get where they are. Perhaps it's time we do something to help solve that problem before we're ALL paying.

7 Tips for Foreclosure Property Investing

So many people ask me about foreclosures, if they're a smart investment, how they find "good deals", how to invest in them. I thought this article might be of interest with regards to those questions.

Daily Real Estate News June 29, 2007

With foreclosures rising nationwide, prices falling, and inventories swelling to historic levels, investors with a discerning eye and knowledge of the foreclosure process can build a profitable portfolio of distressed properties, says James Saccacio, CEO of RealtyTrac, which tracks foreclosure data.

Saccacio offers this basic advice to foreclosure investors:

Know your market. The most important tool in your real estate investing toolbox is knowledge of the area where you plan to invest.

Develop an appropriate investment strategy. Find an investment strategy that will work in your market, and then do what it takes to implement that strategy.

Make the foreclosure process work for you. Decide what foreclosure buying technique works best with your investment strategy and your strengths as a person.

Scrutinize each deal. Many real estate investors wrongly assume that if a home is in foreclosure it's a good deal.

Rely on a trustworthy team. You'll be in over your head if you try to do all the work involved in foreclosure investing on your own.

Network with banks and lenders. In a slow real estate market, banks and other lenders are saddled with larger inventories of foreclosed properties and will be more motivated to sell those properties at bargain prices.

Act quickly, but don't be in a hurry. A slow real estate market gives you the upper hand as a buyer, but you'll still need to act quickly to get the best deals.

— REALTOR® Magazine Online

Congress Takes on Lending Industry

Daily Real Estate News April 17, 2007

Congress is targeting the rising tide of home foreclosures and the sagging subprime loan business, and its efforts are likely to result in changes in the way the home finance industry does business.

Here are some key proposals on the table:

Impose a six-month national moratorium on foreclosures.

Increase federal support for local foreclosure prevention programs.

Strengthen the Federal Housing Authority and give it a "rescue fund" that would allow it to buy failed mortgages and restore credit on the loans.

Increase penalties on banks that violate federal lending laws.

Extend federal regulations to mortgage brokers and other loan officers who are now only regulated by state laws.

Create a federal anti-predatory lending law.

Establish a federal standard for a borrower's ability to pay.

Source: Gannett News Service, Ana Radelat (04/13/07)

It will be interesting to see if anything actually IS done with the rising number of foreclosures. From my experience lenders have been very closed minded to working with borrowers who are in jeopardy of defaulting on their mortgages.

I've had more than one seller who have been unable to make their payment, due to the loss of a job or some other significant issue. These people were told by their mortgage companies that there wasn't anything that could be done for them, even though they could no longer make their payments. . . . . .because they had a good credit history with no late payments.

In these instances, instead of having the mortgage companies work with these sellers, they actually told them they NEEDED to stop making payments, go into default, and let the foreclosure process start.

No wonder the foreclosure rate is so high right now. Even people who WANT to find a way out, can't.

Teaser Mortgage Rates Expire. . . . .Foreclosures Go Up

"Regional Spotlight: As Wisconsin Teaser Mortgage Rates Expire,

Some Unable to Pay"

RisMedia.com (03/13/07)

ForeclosuresWI.com President Robert A. Jansen reports that foreclosure filings in Wisconsin increased 27 percent during the first two months of this year, after increasing 34 percent in 2006. The latest trend is mainly due to such common problems as job loss and financial mismanagement. However, Jansen says a new ingredient has entered the mix, stating, "Much of the increase in foreclosures is the result of individuals stretching to buy more expensive houses than they could afford." He pointed to increases in the number of adjustable-rate mortgages (ARMs) that have made it possible for many Wisconsin residents to purchase residences beyond their means. When teaser-rate terms expire, though, borrowers' monthly mortgage payments routinely soar and foreclosure looms for some. To help ease the problem, the Wisconsin REALTORS® Association (WRA) is partnering with the Wisconsin Mortgage Bankers Association to launch a consumer awareness program this spring that will detail to the public the risks associated with some loan terms. New and existing mortgage customers are expected to be the biggest beneficiaries. WRA President Bill Malkasian states, "We have credible lenders and good laws. What we need is better education."