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Thursday, March 20, 2008

Leery lenders demand more from borrowers

By ALAN ZIBEL and J.W. ELPHINSTONE, AP Business Writers
42 minutes ago

WASHINGTON - Just when consumers and the U.S. economy need banks to lend more freely, the mortgage industry is making it harder to borrow — even for those with good credit.

Mortgage insurers, whose backing is required for borrowers who can't afford the traditional 20 percent down payment on a home, have already flagged nearly a quarter of the nation's ZIP codes where they refuse to insure some home loans.

That encompasses a wide variety of neighborhoods: McMansions in Scottsdale, Ariz.; luxury Miami condos; 1960 ranch houses in Flint, Mich.; and early 20th century kit homes in Metuchen, N.J.
The entire states of California, Florida, Arizona, Michigan, Ohio and Nevada — which have seen the highest foreclosure rates and the worst price declines — are blackballed on some mortgage insurers' lists.

Banks that have lost billions because of bad bets during the housing boom are now reverting to strict lending standards not seen in nearly 20 years, according to industry data and interviews with lenders.
For new home buyers and those seeking to refinance, it can mean higher down payments and a higher bar for credit scores, among other requirements. The toughest restrictions are in markets where home prices are falling, though regions where property values are rising are not immune.
"We're in the midst of an epic, broad, sweeping change in the mortgage industry," said Chris Sipe, a loan officer with America East Mortgage in Frederick, Md.

The reluctance to extend credit comes despite a flurry of government initiatives, including steady interest rate cuts by the Federal Reserve, intended to make it easier for would-be borrowers and those facing interest-rate resets on their mortgages.

Lenders' growing leeriness threatens to dampen sellers' already soggy prospects for the spring home-buying season — and that means more pain for the already battered housing sector and the broader economy.

In recent weeks, mortgage insurers have flagged more than 9,600 ZIP codes in at least 34 states where they won't insure certain types of home loans — those for investment properties or second homes, those with riskier adjustable-rate or interest-only mortgages, or for buyers making down payments of less than 3 percent.

With banks and mortgage insurers pulling back, state and federal programs for first-time buyers and people with poor credit are attempting to fill the void.

Don Brekke, an equipment operator from Colorado Springs, Colo., tried to buy a bank-owned 1950s ranch home for $113,000. At first he couldn't get a loan because the house was in a potentially declining market, and lenders required a 10 percent down payment, more than he could afford.

Ultimately, he was able to qualify for a 100 percent loan from Colorado's state financing authority, and he plans to close in the coming days.

"It was a bunch of headaches — going around and around to get this done," Brekke said.
The combination of sinking home prices and tighter lending standards has been a major aggravation for Ron Broussard, a 38-year-old sales representative for a home builder.

Broussard took advantage of soaring Southern California property prices three years ago to refinance a loan on a house he had owned since the late 1990s. Today he's still stuck with a $720,000 mortgage and has been renting it out since moving with his family to Texas a year ago. Once appraised for $1.1 million, Broussard's lender now says it's worth about $300,000 less.
He does not yet owe more than the property is worth, but Broussard worries that is a possibility.
"The way the market's going, you know, who knows?" he said.

Click on Title of story for full link to complete article.

Tuesday, March 11, 2008

21 Lenders Sued for Causing Foreclosure Mess

CLEVELAND, OH - The city of Cleveland is suing 21 of the nation's top lenders saying they violated Ohio's public nuisance law. Mayor Frank Jackson along with his Law Director Robert Triozzi announced that the city is seeking damages from the wall street companies for their part in propagating the foreclosure crisis.

Jackson and Triozzi allege that unscrupulous lending practices have wreaked havoc on Cleveland's neighborhoods, thereby creating a public nuisance.

"Cities can rebound, however it is extremely costly to do so given that declining tax revenues are part of the fallout of foreclosures,” said Mayor Jackson in a released statement.

"There has been a national conversation about how the banks recover from the foreclosure crisis but no one is talking about what should be done to support Cities who have the challenge of managing this situation,” said Triozzi in a released statement.

The 21 defendants are as follows:
Ameriquest Mortgage Company
Bank of America Corporation
The Bear Stearns Companies
Citigroup, Inc.
Countrywide Financial Corp.
Credit Suisse (USA)
Deutsche Bank Trust Company
Fremont General Corporation
Goldman Sachs Group
Greenwich Capital Markets, Inc.
HSBC Holdings, PLC
Indymac Bancorp, Inc.
J.P. Morgan Chase Co.
Lehman Brothers Holdings, Inc.
Merrill Lynch & Co., Inc.
Morgan Stanley
Novastar Financial, Inc.
Option One Mortgage Corporation
Washington Mutual, Inc.
Wells Fargo & Company

This lawsuit is the second of its kind in less than a week. Earlier, the City of Baltimore announced they are suing Wells Fargo Bank, alleging that the lender engaged in "irresponsible subprime lending practices" that specifically targeted and harmed Baltimore's African American and minority communities and created the high rates of foreclosure in that city.

Friday, March 07, 2008

Foreclosure record set

4Q rate is worst in US;
60,000 homes in court proceedings


Ohio ended the last quarter of 2007 with the nation's worst foreclosure rate, data released Thursday by the Mortgage Bankers Association show.

Meanwhile, foreclosures hit a record of 83,230 in Ohio although they grew at a slower rate of 5.3 percent for 2007, according to new annual data from the state Supreme Court.

Foreclosures rose in 72 of the state's 88 counties. Hamilton County ranked third in the number of foreclosures with 6,277, behind Cuyahoga and Franklin counties.

Hamilton County, however, saw its 2007 foreclosures grow at a faster rate than in Ohio's other large counties.
Cuyahoga saw filings increase 4.8 percent in 2007; Franklin saw an increase of 0.6 percent; while both Montgomery and Summit counties saw slight declines.
In Southwest Ohio, Warren County saw the fastest rate of increase, with a 19.6 percent rise in foreclosures to 1,231.

The four-county region's 11,397 combined foreclosures grew faster than the rest of the state, rising 8.8 percent for the year.

The bankers association data showed the percentage of mortgaged Ohio homes in foreclosure climbed to almost 3.9 percent in the fourth quarter of 2007, up from 3.7 percent in the third quarter.
Ohio ended the fourth quarter with a growing pipeline of potential new foreclosures, the association's report showed. Total new delinquencies not yet in foreclosure also rose to almost 7.7 percent, up from 7.2 percent three months ago.

The new data suggest Ohio ended the fourth quarter with more than 60,000 homes in active foreclosure and almost 119,000 more behind on mortgage payments out of a pool of more than 1.5 million home loans. That compares with national figures of 938,000 foreclosures and 2.9 million households behind on payments out of almost 46 million active mortgages.

Kentucky, ranked ninth nationally, also saw the rate of its mortgaged homes in foreclosure inch higher to 2.3 percent at the end of 2007, up from 2.1 percent three months earlier. Total delinquent loans not yet in foreclosure also increased to 6.8 percent, up from 6.2 percent in the fall.