Foreclosure Crisis Hits Hard in Brooklyn

By Andrew Cho



News clip talking about how the housing crisis is affecting Brooklyn, NY.

Real Estate Tips

Posted By C. Brown

Real Estate is a major issue today in 2009. I have found numerous tips for buyers and sellers for 2009 when it comes to foreclosures and your real estate investment. Another thing homeowners and home buyers should be careful of is buying real estate in California at this time. Real Estate in California has declined over 25% and Florida as well. Now is the great time to buy in these areas because your real estate should appreciate, but it is still very risky.

Tips:

1. 1. Cash is your friend. The more money you can set aside and save for your down payment, the better. You will have smaller monthly payments and you will be charged less interest.
2. Negotiate!!! The real estate market is a mess, so be sure to negotiate on your terms whether you want extras to come in your house like appliances.
3. Make sure you have good credit. Start repaying debt and building better credit.
4. Look at why the real estate is the price it is.
5. Look at many opportunities.
6. Look for foreclosed real estate

• Is this foreclosed property owned by the bank or by the seller? Can you get a discount from the lender for paying off the property? Is there anything wrong with the real estate?

7. Last but not least, RESEARCH! Know what you are talking about and know what you are looking for and what you want. Knowledge is power and power is key if you want to buy a home and keep it.

References:

http://www.bankrate.com/brm/news/real-estate/20081229-9-real-estate-tips-for-2009-a1.asp
http://finance.yahoo.com/real-estate/article/106346/10-Worst-Real-Estate-Markets-for-2009
http://www.foreclosureuniversity.com/

Mortgage Plan Targets Up to Four Million Homeowners

By Andrew Cho


It seems as though the mortgage crisis has been talked about for months on end, but little has been done to try and fix the situation. That is until now. On March 3, 2009, the Obama administration detailed its plan to help homeowners at risk of losing their houses. A program that officials say could help three million to four million families avoid foreclosure. A program that is expected to cost $75 billion over the next several years.

As part of the plan, both Fannie Mae and Freddie Mac (government controlled mortgage-finance companies) must refinance homeowners at today's low market rates. The participation of the aforementioned companies is expected to help as many as five million homeowners.

The program is designed so that a mortgage lender would first receive cash incentives to modify a borrower's loan so that the monthly payment declines to no more than 38 percent of the household's gross monthly income. Followed by the government matching the lender's cost in reducing payments to as low as 31 percent of monthly income. This could allow for some borrowers to reduce their interest rates to as low as 2 percent.

Rather than injecting billions upon billions of dollars into financial and auto institutions, I believe this is the clear cut path to recovery. It is trying to fix the problem at its core.

References:
http://www.nytimes.com/2009/03/05/business/economy/05loan.html?hp
http://online.wsj.com/article/SB123566276620183361.html
http://www.npr.org/templates/story/story.php?storyId=100831129

Capitalize On Foreclosures

By: Alcides Hoy Jr.

What are Subprime Mortgages?

By Jin Zheng

Subprime mortgages are loans given to individuals with bad credit. For the first couple of years, the interest rates will be low but after that, the interest rate gets raised to a higher percentage. Financial institutions began to use these subprime mortgage loans as financial products and manipulated its value to convince investors to invest it in their pension funds and hedge funds.

The financial product compiled of subprime mortgage loans follow the idea of asset-backed securities. The way it works is that home mortgages were grouped together into one package that collects individual mortgage payments. The money will used to pay investors a coupon on the investment. This creates asset-backed securities with the homes that individual own being collateral. Credit rating agencies gave these securities 'AAA' and 'A+’ ratings, informing investors that it is safe to invest in these asset-backed securities. This became so profitable that mortgage lenders began to overlook basic qualifications for mortgages such as proof of income and down payment. The fact that the real estate market was booming only encouraged this to frequently occur because the value of real estate was increasing at a rapid rate.

As the value of the homes kept going up, the average American’s income stayed the same therefore it became too expensive for them to afford the high prices. This led to people defaulting on their mortgage payments. As more people default on their mortgage payments, it increased the supply of available houses on the market. The over supply and under demand of housing caused housing prices to drop.

Soon, mortgage companies began to file for bankruptcy because individuals and big financial institutions who brought the AAA rated mortgage securities thought that these securities were equivalent to putting money into saving accounts. Banks demanded cash from financial institutions. This caused the institutions to sell stocks and bonds to raise capital. This resulted in the decline of the stock market as the pressure to sell was increasing. The risk of the securities came out and its value decreased substantially causing investors and financial institutions, such as Lehman Brothers, to lose a lot of money and end up filing for bankruptcy.

Foreclosures increased because the mortgages were pooled together into securities, sold and resold to investors. It became difficult to find out who owned the mortgages so it was difficult to prevent the foreclosures from occurring. As a result, banks were unable to work with individuals to derive at a method for them to pay back the loans.


http://www.responsiblelending.org/issues/mortgage/subprime-mortgage-crisis.html

http://www.investopedia.com/articles/07/subprime-overview.asp

http://www.stock-market-investors.com/stock-investment-risk/the-subprime-mortgage-crisis-explained.html

Flood of foreclosures

By: Xavier Guerrero

The United States is currently facing many problems: the sub prime problem, mortgaging problems, and as of late, one problem has been underestimated and under measured: Foreclosures. In 2008, banks took back around 860,000 homes, which was more than twice than 2007, and the number of homes that are currently filing for foreclosure has hit a high of 3.1 million. This flood of foreclosures may be positive for those who have taken advantage of the current housing prices for their personal benefits, but the amount of houses under bank possessions only helps to increment the problem of there being more supply than demand in the housing market. To worsen the situation, new reports are informing that one third of the houses that are filing for foreclosures aren’t listed in foreclosure databases. In conclusion, the housing market will only see a greater supply of houses being foreclosured, which will inevitably lower the price of the other houses already owned by banks, not helping to stimulate the economy and only creating a larger deficit, and since banks are being slow at listing the repossessed homes in their databases, the whole scope of the problem will only be able to be seen entirely in the grim future that is to come for the housing market.


For more information on the problem of delay time on houses appearing in databases, click on the link: