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Jerry Aragon Ph.D (Phunny humor Doctor)

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American Dream...OR.. American Nightmare?
by Jerry Aragon Ph.D (Phunny humor Doctor)   
Rated "G" by the Author.
Last edited: Saturday, February 18, 2012
Posted: Thursday, November 18, 2010

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FORECLOSURES: In the year 2010, who is responsible for this housing mess American's find themselves in? I think there's plenty of blame to go around...starting with the homeowner; the banks; the real estate people and the government! In the end, I think it will be the homeowner who will get the short end of the 2"x4"

When I started writing seriously in August, 2006, I have written about 210 articles as of the end of 2010.  During that time, I have quoted about 20 articles from the newspaper or magazines to get the information correct.  I have only done this, because the article was important enough, to spread the word on what I had read.  It's important for me to share information with others, etc. 

This is what I have done with the following piece, which was written by Carole Fleck for the AARP Bulletin (American Association of Retired Persons)  The piece is entitled;

"Foreclosures Through the Roof"

The article reads as follows: (written November 18, 2010)

"Rodney Barber got laid off from his job at a television station in September (2010), on the same date he was hired 26 years ago.  He collects unemployment, but it doesn't cover his daily living expenses.  Now, the 50 year old broadcast technician, who's trying to get his fixed-mortgage modified, worries that he is just months away from losing his three-bedroom home in suburban Atlanta. 

Across the country in Visalia, California, 81 year old Dorothy Lotenero fears she'll be thrown out of her home of 38 years, the place where she raised her family.  The soft-spoken retiree, who lives on $1,600 a month, can't afford the $2,200 payment that her interest-only mortgage will soon rise to.  She's now waiting to hear if the bank will go through with a threat to foreclose. 

Troubled homeowners like Barber and Lotenero may benefit from a foreclosure freeze that many lenders put in place this fall following discovery of widespread irregularities in legal paperwork.  But the relief is unlikely to last.  When it comes to foreclosures, 'it doesn't change the overall prognosis,' says Rick Sharga, a senior vice president at Realty Trac, a California listing firm.  By his projections, it may well be 2014 before the foreclosure inventory is cleared out and home prices start rising again. 

Meanwhile, bank reposessions are running at a record high.  Nearly 100,000 homes were seized in August alone as the foreclosure crisis continued its assault on American neighborhoods. 

The economic downturn, with its staggering loss of jobs and income, is the primary cause of the latest round of homeowner anguish.  By the end of December, the 2010 toll of foreclosures could be more than 1 million homes, experts predict.  That's in addition to the 2.5 million foreclosures since the start of the recession in December 2007. 

The second wave is engulfing a different type of homeowner.  In the first round, 'we saw exotic loans and people overextending themselves, buying expensive homes,' says Sharga.  'Now, we're seeing fixed loans in default by people who simply don't have a job.  And, there could be a third wave coming, which is the frightening part.' 

By next year, he says, about $300 billion in adjustable-rate loans will reset to higher payments and interest rates that many borrowers won't be able to afford.  

More homes underwater... 

The economic conditions contributing to the housing collapse show few signs of improving.  Unemployment remains stubbornly high, at more than 9 percent; consumer confidence is low, and property values will likely continue to depreciate as more foreclosures add to the housing glut. 

According to First American CoreLogic, a Santa Ana, California research firm, declining home values have pushed nearly 25 percent of all mortgaged properties 'underwater,' meaning that they are worth less than the amount owed on them. 

For near-retirees who have been depending on the appreciation of their homes to plump up their nest egg, the situation may be even worse.  Of mortgaged households headed by people ages 45 to 54, about 30 percent would have to bring money to the table if they sold their home, according to a 2009 study by the Center for Economic and Policy Research.  About 15 percent of households headed by 55 to 64 were in the same boat. 

Some owners of underwater homes are doing what was once unthinkable.  Even though they can afford their payments...they are walking away.  These so-called strategic defaults are likely to become a growing problem in states with rapidly falling property values lake Nevade, where 68% of mortgaged properties are underwater; Arizona with 50%; and Florida with 46%. 

'Strategic defaults are something we've never had to deal with historically.  People have always done everything possible to hang onto their homes,' Sharga says.  'I suspect we'll have people looking to strategic defaults if they're a few years away from retirement age, their home value is down by, say, 40%.'  and they won't have enough time for the home to regain its value. 

New help for borrowers...

To help underwater homeowners, the Obama administration in September rolled out a new initiative to encourage mortgage holders to provide refinanced loans that would forgive at least 10% of the original mortgage amount. 

Although the government's main mortgage relief program offers loan modification to people who meet certain financial criteria, Ira Rheingold, executive director of the National
Association of Consumer Advocates in Washington, calls it 'a dismal failure.' 
'It was not comprehensive enough...and it depended on the good faith and goodwill of the mortgage servicing industry...and that's not something that will win you great success,' he says.  'People really have not gotten the help they've needed.' 

The foreclosure system also has pushed people through the process at breakneck speed, with reports of shoddy paperwork; fuzzy details and 'robo-signing' of documents by bankers and other officials.  'Servicers have been racing through to foreclosures, and the law be damned,' says Rheingold.  'Now they have to find the original paperwork and how much people woe, so it may actually be more cost-efficient to modify these loans. 

The government needs to step in and stop foreclosures until servicers prove they're complying with the law.'  The goal of the mortgage modification program is to reduce participants' housing debt-to-income ratio to 31%, says Celia Chen, senior director at Moody's Analytics in West Chester, Pa.  'But when you factor in all the other debt the homeowner has to pay...the credit cards, other bills...the debt-to-income ratio is over 60%.  People are just giving up.' 

Indeed, nearly half of the 1.2 million homeowners given temporary loan modifications had fallen out of the program in the last year, government data show.  Sandi Neilson, 58, is trying to persuade her lender to modify her mortgage and avert foreclosure on her upstate New York home.  The former nursing supervisor got into trouble when her husband's terminal illness resulted in $125,000 in out-of-pocket medical expenses. 

She refinanced to incorporate that debt, but in 2008 she monthly payment rose from $1,400 to $1,900.  She missed a few payments, and her lender moved to foreclosure.  'I pray about the mortgage every day,' says Neilson, who expects to learn her fate in the next few months.  'It's beeen a rough haul, but I feel it'll be okay...I'm hopeful.'" 

END OF ARTICLE;

At the age of 60...with 28 cents on the night stand; heart problems; hospitalized for over three months; lost all my possessions; discharged to live in a homeless shelter and eat in a soup line for over six weeks...and it all started with SIX job layoffs in a little over a decade...so I know what it's like to be down on your luck...at the bottom looking up! 

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