Posts Tagged ‘america foreclosure crisis’

More Homeowners Paying Credit Card Bills Over Mortgage

Wednesday, April 6th, 2011

According to a new report by the credit management company TransUnion, more U.S. borrowers are choosing to pay their credit card bills over making a mortgage payment; no doubt due in part to the recession.

Prior to the economic downturn, Americans worked hard to stay current on their mortgages before they paid their other large bills like credit cards and student loans. But now that pattern seems to be changing.

In the last quarter of 2010, 7.24% of U.S. homeowners were delinquent on their mortgages, but current on their credit cards. While Sean Reardon, the author of the study and a consultant for TransUnion, notes there was a decrease of 7.40% since the third quarter, the number of homeowners behind on their mortgage payments remains “72% higher than it was at the beginning of the Great Recession.”

The TransUnion report compared three groups: homeowners 30-plus days delinquent on their mortgage but current on credit cards; those current on their mortgage but 30-plus days behind on credit cards; and those who are 30-plus days delinquent on both their credit cards and their mortgage.

While conducting the report Sean Reardon found there were two primary drivers in making the U.S. “less cash dependent and more credit dependent.” He found Americans first adjusted their “payment hierarchy” from mortgages to credit cards just months after the financial collapse in 2007, and that high unemployment and a suffering housing market left many owing more on their homes than they were worth.

By the final quarter of 2010, 23% of all U.S. homeowners owed more than their homes were worth, according to business information provider CoreLogic.

The inability for struggling Americans to make large mortgage payments, combined with the credit card industry’s decision to tighten lines of credit, has put pressure on consumers to stay current with their credit. It didn’t take long for people to realize missed mortgage payments may have dire consequences down the road, but good credit now is the road to keeping food on the table.

In the chart below, the red curve denotes delinquent mortgages, current credit cards. The green curve denotes current mortgages, delinquent credit cards. The purple curve denotes delinquency on both:

graph mortgage vs credit

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Houston Homeowner Says CitiMortgage Tricked Him Into Foreclosure

Wednesday, October 20th, 2010

Last March Ray Coleman, Jr. of Missouri City, TX lost his IT management job with BMC Software. He and his wife decided they would be able to still afford their mortgage payments with his unemployment and the income from her job as a counselor, if they could get a reduction in their monthly mortgage payment amount.

Ray Coleman, Jr. called his lender, CitiMortgage, and asked about how he could apply for the Federal Making Home Affordable program. Coleman says the bank told him he had to be at least 30 to 90 days behind in his payments.

Coleman and his wife fell behind on their payments and then applied for help. And that’s when, according to Coleman, things got shady. He said CitiMortgage repeatedly asked him for the same paperwork again and again.

“But then, just out of the clear-blue sky, I get a letter from them telling me they’re foreclosing on me Sept. 7,” said Coleman.

He said he was shocked because he believed he qualified for a loan modification and wonders if CitiMortgage ever really reviewed the documents he said he sent them.

Coleman decided to fight back and first contacted Mediation Centers of America in the Galleria area.

“Banks string them along so they won’t go to an attorney,“ said the Terry Parks, with Mediation Centers of America. His advice to Coleman was, in fact, to get a lawyer.

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Celebrities Face Bankruptcy And Foreclosure Too

Monday, October 18th, 2010

You’d think celebrities would be able to pay their bills, but alas, it seems hard times have even hit the rich and famous.

Below are five very well known, and seemingly very rich, people who have recently faced hard financial times including bankruptcy and foreclosure.

From GoBankingRates.com:

Mel Gibson
As of September 2010, the movie star best known for his roles in Braveheart and Lethal Weapons 1-4 reportedly owed $212,000 for three homes in Malibu, Calif., as well as his multimillion dollar Holy Family Catholic Church. Some say this is payback for initiating a child custody tug of war with his baby momma and ex-girlfriend Oksana Grigorieva.

Ed McMahon
The legendary Tonight Show sidekick faced a difficult foreclosure before his death in 2009, owing $4.8 million for his 7,000-square ft. mansion in Beverly Hills, Calif. Though Donald Trump offered to purchase McMahon’s home in 2008 to help him avoid foreclosure, McMahon was able to find a private buyer to relieve him of his near-$650k debt before he died.

Evander Holyfield
In 2009, former heavyweight champ Evander Holyfield was on the hook for back payments due on his 109-room mansion. In addition to the child support payments owed to the mother of one of his 11 children and being sued by a consulting company for not repaying a loan, Holyfield owed upwards of $10 million.

Michael Jackson
The King of Pop unfortunately faced one of the largest and most expensive foreclosures ever before his untimely passing in 2009. The incredible Neverland Ranch was part-mansion, part-amusement park, part-zoo and totally in debt. Worth millions, Jackson sold a portion of the ranch for $35 million. However, being the king that he was, he was able to keep some of the ranch in his name after the foreclosure.

Veronica Hearst
Veronica Hearst, the widow of publisher Randolph Hearst, lost her massive property in 2008 when she discovered she owed a whopping $45 million in unpaid mortgages. To bail herself out, she auctioned off her property for $22 million then later sold two of her New York apartments as well as some of her art and jewelry.

celebrity bankruptcy
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Bank of America Corp. Cutting More Loan Balances

Wednesday, March 24th, 2010

In an attempt to avoid more foreclosures, the Bank of America Corporation said it will be offering more borrowers reductions in their mortgage-loan balances.

This move enhances an agreement Bank of America reached 18 months ago with state attorney generals and is the mortgage industry’s boldest move yet in addressing the dilemma facing millions of homeowners across the country who owe more on their house than it’s currently worth.

The relief is available only to those Bank of America customers who are at least 60 days overdue on payments, whose loan balance is at least 120% of the estimated home value, can prove a financial hardship is preventing them from affording payments. The bank is estimating that 45,000 customers will qualify for the program.

Reductions of as much as 30% in loan principal will be offered to struggling borrowers who have subprime or so-called option adjustable-rate mortgages, known as option ARMs. (Option ARMs, no longer available, allow borrowers to start with minimal monthly payments and face steep increases later.) Also included will be certain loans that have a fixed interest rate for the first two years before starting to adjust annually.

…banks are finding that many deeply underwater borrowers aren’t willing to keep making even reduced payments because they believe they have little hope of ever having equity in their homes and would be better off renting and perhaps buying a cheaper home later. The Bank of America program is aimed to give such borrowers more hope by reducing their loan balances to current estimated home values.

Full Article Bank of America to Cut More Loan Balances By James R. Hagerty, Wall Street Journal


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