Posts Tagged ‘foreclosure’

Frugal Living: Survival Mode

Most personal finance blogs are filled with wonderful advice, provided that you’ve got a stable source of income that is adequate to support yourself and your family and enable you to save money at the same time.  While this advice is great for those in stable financial shape, it doesn’t work quite so well for those who are struggling to survive day by day. To that end, I would like to write a post aimed at those of you who are barely getting by.

Let me start off by saying that the advice herein comes from the school of hard knocks. I was there as recently as a few months ago and I can readily empathize with how you feel and your day to day struggles. I know what it is like to spend a day on the phone making payment arrangements with the utility companies for this month’s payment because I had just made last month’s payment a few days ago. I know what it is like to receive call after call from collection agencies hounding me for money I just don’t have. I know what it is like to be at the brink of foreclosure and that sick, sinking feeling you get when you know you’ve given all you can and there is nothing left inside you to give. And yet, you must go on. You must spend your hours figuring out how best to parcel out what little bit of money you have to keep a roof over your family and keep the lights on.

The first step is to figure out how much income you currently have coming in. Once you have that, then you can prioritize your expenses and debts.

Obviously, the most important expense is your rent or mortgage. If you can keep paying it, even if it takes a huge chunk out of your available money, then that is payment number 1. If you can’t make your rent, be sure to let your landlord know. How understanding your landlord is depends on him or her. If you’re only renting, you can also always find cheaper accommodations. If you have a mortgage that you can no longer afford, then that is a stickier issue. If you intend on keeping the house, then contact your lender right away and ask for a loan modification. The earlier you get started on this, the better, because, let me tell you, it can take a year or more to get into a successful loan modification!

Next are the utilities. Most utility companies are very good at working with you on payment arrangements. Just explain that you are having financial difficulties and they will be willing to work with you. Sometimes you get a representative on the line who won’t cooperate. If this happens to you, ask for a supervisor and more often than not, that does the trick. As a shout out, the Verizon folks were always pretty good with me, barring a few individuals, as was Southern California Edison.

Following that is food. There are some tricks here to help you get by with less, and many of you probably already know them, but I am going to share them here anyway:

1: Check the mail for your weekly circulars. These will have the sales that are happening that week. The basic idea here is to look for items that you use that may be on sale. Many times you can get decent cuts of meat like london broil (top round in Canada) for as little as $1.77 a pound. Similar sales will be on for ground beef and chicken. You can shave off a good $20-50 off your weekly grocery bill by hitting up all the grocery stores with the best sale prices.

2: Chicken is your friend because it  is pretty cheap. It is also healthy, and eating healthy will be quite challenging on a limited budget. You will probably find yourself eating a lot of it. To help with the boredom of eating the same foods week in and week out, search for recipes on line or try different marinades. (These will often be on sale for cheap as well.)

Next, this is a no brainer, but cut out any unnecessary expenses such as cable or satellite tv. You don’t have to cut it out all together, but you can drop down to the basic package to cut costs.

Finally, consider moving away from your current location. Even in the States, there are regions that have not been as hard hit as some other areas have. The northern central region of the country is doing ok, and so are some southern states. Both coasts have been buried by the economy as well as the sunbelt region. You may have better luck finding work in areas where the ratio of workers looking for work and available jobs is a better percentage.

Renting After Foreclosure

Losing your home to foreclosure is a terrible event. Not only is it stressful and demeaning, it ruins your credit score, which can make it harder for you to rent an apartment. Here are some tips to help you find a rental:

Stay away from big corporate owned apartment complexes as these have strict guidelines and will most definitely do a credit check.  Instead, focus on smaller apartment buildings or homes owned by  private landlords as they are less likely to run your credit. You can find these listings most often on Craigslist or your local newspaper. Stay away from rental guides, as most of the apartments advertised there will be run by huge corporate owned property management firms.

Network with friends and family to see if they know anyone who has an apartment or house to rent and is willing to forego a credit check or who will be willing to rent to you despite your damaged credit

Stay in your home as long as possible and save as much money as you can during that time.  While the foreclosure process, from the formal filing of the “Notice of default” to the foreclosure sale can take four months, the average foreclosure today is taking more than 15 months from the date of the first missed payment to the date of the auction.  Use this time to your advantage to save as much cash as you can.

Be prepared to pay up to three months rent in advance, plus the typical security deposit and first and last month’s rent. Have this in cash. Most landlords will be happy to rent to you if you have cash in hand.

If  there is no way you can avoid a credit check, have someone available with good credit to be your co-signer. Family should be first and then friends. 

Get references. Ask your employer and the manager of your local bank branch to write you a reference letter. Keep this in reserve if a prospective landlord asks for it.

Don’t lie, but don’t volunteer information, either. If you’re asked about something, be honest, but never offer up unasked for information. For example, don’t walk into the rental manager’s office and present him or her with your reference letter or offer up any long explanations. Doing so will only raise unnecessary alarm bells with the landlord.

While renting after foreclosure may be a little harder, it is not impossible. With the number of foreclosures going into the millions by the end of this year and continuing apace for the next number of years, foreclosure is no longer the black mark it used to be. Most landlords are understanding, and if you can demonstrate your ability to pay, having a foreclosure on your record will not prevent them from renting to you.

Kondaur Capital and Jon Daurio In Foreclosure News Again

vulture

 

I wrote about the debt buyer, Kondaur Capital, back in May. Remember those guys, the company that’s headed by former Ameriquest executive Jon Daurio?  They buy “scratch and dent” mortgages for pennies on the dollar, then get the homeowners out as quickly as possible and sell the home for a profit.  The Wall Street Journal just did another piece on them.

Apparently, one Baltimore homeowner, Eddie Patrick, was talked into dropping his lawsuit against Kondaur when it promised to “work with him” on a loan modification. They foreclosed on him anyway and then offered to sell the house back to him for $140k, which Mr, Patrick, not being made of money like these Wall Street scum, can’t afford.  Mr Patrick’s six year old son is battling brain cancer and recently had two operations. Kondaur has since generously offered Mr. Patrick $8,100 to move by the end of August and has lowered the sales price on the home to $130k.

This Daurio guy is a virtual font of insane and inane comments, especially since the fellow used to originate subprime loans that he knew full well the borrowers could never repay:

We help borrowers understand they have a house they can’t afford.

Except that they probably CAN afford the home with a decent mortgage on it. Most of the people who were sold “subprime” loans could have qualified for cheaper and safer conventional mortgages, as I noted here

The vast majority of these people knew the risk they were taking. Like so many of the borrowers I dealt with when I was originating loans, they thought housing prices were going up.

Actually, it was guys like Daurio who sold borrowers the bill of goods that prices would always go up and they could always refinance at a later date to get a better deal.  I’m going to get a little nasty here, but I can’t stand people like this Daurio, the architects of the current depression. No, Daurio, you ass, the borrowers weren’t aware of the risks, but you sure were, and you convinced them that home prices never fall. You and your Wall Street magic made it seem like they could afford these loans, when in fact, they could not.

Attributed to him, but paraphrased by the author of the WSJ article  is this little gem:

It is no surprise that some borrowers are unhappy when Kondaur forces them to face the music, Mr. Daurio says, but it isn’t his fault that borrowers got themselves into houses they can’t afford.

At the risk of repeating myself, actually, it is your fault, Daurio. You and your Wall Street brethren created these toxic mortgages and foisted them off on people. And now you want to profit off of the mess you made? Really? And this is being allowed?

Ok, enough excoriating of our pal, Daurio.  The real story here is that the regulators don’t know how to treat debt buyers like Kondaur. Are they debt collectors or mortgage lenders?  North Carolina’s chief deputy banking commissioner, Mark Pearce says:

I have concerns that some of these activities fall through the cracks of the regulatory structure.

For the first time, debt buyers, those denizens of the debt collection underworld, are entering the mortgage market, and our current laws aren’t clear on how to deal with them.  This doesn’t meant that current law won’t protect you from these predators, it just means it’s going to be a tougher fight.

Show Me The Note Rule Slowing Foreclosure Filings In Florida

“Show me the note” has become a foreclosure process rule in the state of Florida.  The new rule, handed down by the Florida Supreme Court, requires that lenders prove that they own the mortgage, and therefore have the right to foreclose, before starting the process.

During the housing boom, when mortgages were being issued left and right and later bundled together and securitized for sale on Wall Street,  it became an all too common practice to lose track of the original note, which is evidence of the debt that the borrower is required to repay. 

The problem with this is that without the note, lenders really have no way to prove that they are owed the money and have the right to foreclose on the property. This is important because if a lender were allowed to foreclose on a property without proving their legal claim, the true holder of the note could initiate a new foreclosure proceeding and leave the borrower on the hook for the money a second time, and with no home to forfeit.

As a result of this new rule, the rapid pace of foreclosure filings has slowed somewhat. This can only be a good thing for beleaguered homeowners as they try to save their homes from foreclosure.

HAMP Loan Modification Program Results Continue To Be Underwhelming

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The Treasury released its latest set of numbers today for the Home Affordable Modification Program (HAMP) through April, 2010.  According to the Treasury, 300,000 American homeowners have received permanent loan modifications under HAMP. This number has grown in recent months and that is good news. However, in light of the fact that foreclosures have continued at a rate that exceeds 300,000 for the 14th month and counting, the number of homeowners who have received help remains miniscule when compared to the number of homeowners who have lost their homes.

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More People Are Returning Home To Live With Mom and Dad

A Mortgage Bankers Association study of 80 metropolitan areas across the United States revealed that 1.2 million households were lost between 2005 and 2008. A household is defined as a single person, couple, or family renting or owning a home. At the same time, populations in those areas increased by 3.4 million. More disturbingly, the study also found that the percentage of homes with more than one person per room grew from 2 percent to 10 percent among U.S. born residents.  Read the entire report here.

The implications of the data in this study are clear: as more families lose their homes to foreclosure and as unemployment remains high,  previously independent adults are forced to return home to live with their parents or are living with other family members or friends.

The study, conducted by Gary Painter of the University of Southern California, forecasts that the number of households will not increase until 2012, when unemployment is expected to decline. However, Painter cautions that even then, a complete recovery will not occur for many years.

Should You Walk Away From Your Mortgage?

underwater mortgages This is a question that many homeowners are facing today as mortgage delinquencies rise and as many people find themselves saddled with homes that are worth less than the mortgage note. Even people who can afford their mortgage payment are considering giving up their home because of negative equity.

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