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 The Real Estate market has been in a state of frenzy over the last few months as delinquencies in the sub-prime loan sector have soared. In Los Angeles County alone, more than 2,500 properties went into foreclosure in the second quarter of 2007, an increase of 799%.
The Real Estate “boom” of the past few years encouraged overly optimistic lenders to increase the number of “sub-prime” loans, which are loans made to persons with poor credit, little credit or no credit at all. Several factors including a sharp increase in interest rates on these loans have made it almost impossible for homeowners to keep up with their monthly mortgage payments which, in turn, has forced thousands of people out of their homes and threatens to do the same for many more.
Residents who have lost or are on the verge of losing their homes are not the only ones devastated by the crisis. Lehman Brothers, a leader in packaging sub-prime mortgages into securities, announced recently that it is shutting down one of its home lending units and laying off 1,200 employees.
And just last week, the country’s four biggest banks – Citigroup, Bank of America, JPMorgan, and Wachovia – announced that they had each borrowed $500 million from the Federal Reserve Bank of New York, an unusual move that underscores the extent of the sub-prime loan sector crisis.
Predatory lending practices by unscrupulous mortgage brokers is partly to blame for the crisis, according to some. Cases have been reported of mortgages that start off with low interest rates, but quickly become high-cost loans that borrowers can no longer afford. What to do if you are facing foreclosure:
If you are facing foreclosure and you believe you have worked with an unscrupulous mortgage broker, you can file a complaint by visiting the State of California’s Consumer Home Mortgage Web page www.sucasa.ca.gov
The Federal Housing Administration (FHA) recommends that you do the following if you have been notified that your mortgage is in default (the first step toward foreclosure): - Contact your lender as soon as you have a problem.This is understandably a difficult step, but you might be able to re-work a new and affordable payment plan. To find your lender, check your monthly mortgage billing statement or your payment coupon book. When you call, make sure you have on hand your loan account number, a brief explanation of circumstances, and recent income documents. The sooner you call, the sooner help is available.
- Talk to a housing counselor.To find a HUD-approved housing counselor call (800) 569-4287, M-F, 6am – 2pm PST.
Below are a few departments that can offer you more information and assistance:
California Department of Real Estate
(213) 620-2022 (Los Angeles Office)
http://www.dre.cahwnet.gov
Federal Housing Administration (FHA)
1-800-225-5342
http://www.fha.gov
Información Hipotecaria Para el uso del Consumidor
Proveido por el estado de California
www.sucasa.ca.gov
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BUYING YOUR HOME 