In the past a consumer with a good payment record and solid financial history would be just the person large financial institutions love to work with. If you paid more than the minimum on revolving charge accounts, paid on time and had a good rating with the credit bureaus, card issuers competed for your business.

Reducing credit limits for consumers is the first of a one-two punch being broadly applied by large credit card issuers. The reduced credit limit is quickly followed by a huge increase in the interest rate of the credit account. The bank who reduced the credit line thereby placing that consumer in a higher risk category (through no fault of the consumer’s) now demands higher interest payments.

In the space of 60 days, a consumer with $25k in credit available and a $10 balance may see his interest rate go from 11-12% to over 30% on all the revolving credit accounts he carries. This can double or even triple the minimum payments due each month on those accounts. That’s another problem as making only the minimum payment due on revolving accounts can lower your credit rating even more.

If you cannot pay the larger payments being demanded and you do not have the ability to pay off at least some of the accounts quickly with your income or savings, you might consider defaulting on your credit card balances by filing for Chapter 7 bankruptcy.

It is preferable to default on credit card debt than to damage your family’s financial well-being. Personal bankruptcy filings have risen in recent months and predatory credit card companies are one of the biggest reasons for the increased numbers.

Though bankruptcy may stay on your credit report for ten years, it does not mean you cannot regain your ability to obtain credit. Books, seminars and resources are available with practical help for returning consumers to creditworthiness. The dramatic increase in filings for personal bankruptcy will only increase resources available to help those affected.

It takes some effort to re-establish yourself financially but there is life after bankruptcy and for many faced with soaring credit card assessments, it’s the only logical option open to them.

For more information please visit: http://www.floridalawattorney.com

Overinflated job markets and overinflated housing markets went together during the real estate boom years of the 2000s. But too many companies believed in the Federal Reserve’s illusion of low interest rates fueling investment and too many homeowners believed in the same illusion of constantly rising home prices. Now all of that has changed.

Whether is has changed for the better or for the worse in the long run is yet to be determined, but during the current economic recession, the world seems to be becoming a much more dangerous place. And neighborhoods hit hardest by the foreclosure crisis are experiencing the most serious erosion of public safety and rising crime related to abandoned properties.

By pumping up the housing market with inflated dollars and below market interest rates, the Federal Reserve and the banks have turned communities across the country into ghost towns and best and crime-ridden slums at worst. Homeowners left in these towns and cities are facing more risk than ever before.

The risks from foreclosure-related property crimes are just the beginning. Squatting in abandoned, bank-owned properties is becoming more widespread as formerly employed workers take advantage of the overproduction of homes to stay off the streets. Community organization groups have even taken to breaking back into foreclosed homes and putting the former owners back into properties they no longer own.

During an economic recession, crime rates generally rise, but the current depression will be far greater than any before it. Vast amounts of resources are being directed away from job-producing companies through government agencies to help bail out bankrupt private corporations or bankrupt local and state governments. Unemployment will remain high and climb even higher as a result.

Thus, the number of people unemployed will continue climbing and those unable to find jobs will become increasingly desperate to find food, shelter, and other resources for their own families. While abandoned and foreclosed properties can provide shelter, current homeowners should also consider their own safety against home invasion and robberies.

Unfortunately, foreclosed homes are not the only targets of criminals and vandals. While these types of properties are a target for those who can strip them of their valuable assets (pipes, wires, siding, and so on), they are typically not full of food, cash, or people to take advantage of. Only occupied properties offer these rewards for the violently inclined.

And even more worrisome for many homeowners is the real possibility that public safety may break down during the recession. With so much of the growth of the economy fueled by rising property values, local governments were able to keep growing by capturing more property tax revenue from citizens. With rising foreclosures and more empty homes, revenues have fallen dramatically.

This means that there will be fewer people employed as police officers or firemen, as cities and counties that relied on property tax revenue and subsidies can no longer pay for them. In case of an emergency such as vandalism, arson, squatting in a property, or even a home invasion, homeowners may have to rely on their own abilities to survive or protect their families.

During the coming years, people will be learning more self sufficiency and survival tactics in order to deal with a breakdown of the current order. A financial and economic system that once engendered trust from all over the world is now being forced to reveal one disaster or fraud after another. And the little remaining trust is quickly evaporating.

People now realize that their 401k plans and their homes are not ATM machines and have begun saving more money and taking more precautions in terms of their money and assets. What homeowner can trust in the same companies and individuals that set up the market for destruction in the hopes they would be bailed out by the very homeowners and investors they were impoverishing?

The deepness of the recession has caused an erosion of trust and an erosion of responsibility. We are all criminals now, it seems. If corporations are not going to the government for bailouts, criminals are going to corporate and private owned properties for shelter and easy targets. For the remaining homeowners and people with integrity, though, now is long past the time to begin preparing.

For more information please visit: http://www.floridalawattorney.com

If you have a foreclosure looming you need to find out if a loan modification is a solution to stay in your home.  When you work with your lender to modify the terms of your loan so that you can afford the payments, a foreclosure can be avoided.  The federal plan, Home Affordable modification, is available to qualified homeowners and features aggressive options that result in a low affordable payment.  Could you qualify for help under this program?  If the foreclosure clock is ticking, you need to find out about your options now.  Here is some information to help you.

Even if you have applied previously or been turned down for a loan modification, you may be eligible for Obama’s plan.  You are entitled to apply and must be considered for eligibility if your lender is participating.  How do you find out if your bank offers this program?  You can either visit their website or call the Loss Mitigation department.  If you qualify, the foreclosure will be stopped and get to stay in your home with a new affordable payment.  Here are the basic requirements for loan modification approval:

• You must live in the home as your primary residence
• Your loan must have been taken out prior to January 1, 2009
• The loan balance must be less than $729,750
• Your current house payment (including taxes, insurance and homeowners association dues) must equal more than 31% of your gross monthly income

If you can meet those requirements, you may be able to stop foreclosure with a loan modification.  Your interest rate could be reduced to as low as 2%, and your missed payments could be included in the new loan.  The first step is to contact  your lender and ask to be considered for the Home Affordable Plan.  Be sure that you are prepared to complete the application forms correctly and can provide the required documents to your lender so that your answer is not delayed.  When you prepare a correct and complete loan modification application you are giving yourself the best chance of success. 

For more information please visit: http://www.floridalawattorney.com

People who fall behind on their mortgage payments face foreclosure and consequently loose their valuable property in that proceeding. After foreclosure you can walk away from big property payment, but not from potential tax on the forgiven debt.

If the lender of mortgage sells your home for less than the amount left on your mortgage, any pardoned debt can be treated as taxable income. The tax can be assessed on what is called cancellation of debt income. This can occur when either the bank forecloses or you negotiate for a short sale.

A short sale is when the bank agrees to let you sell your home for less than what is owed. A short sale keeps a foreclosure from showing up in your credit report, but the shortfall will appear due to neglectful payment of loan. In both instances if you are obliged to pay more than what the lender receives as repayment of the loan, the remainder is cancellation of the debt that is considered as taxable as ordinary income by the IRS (Internal Revenue service is the US agency that collects taxes and enforces revenue laws).They can and probable issue a 1099 to you for the amount that they “credit” you in short sale.

If the landowner fails to meet the financial obligation to the IRS, then the IRS may charge surplus interest and of course there are penalties. There is a possible way out of part or the entire tax obligation by filling form 982. Form 982 requires proof that you are bankrupt and you must provide all documents and bank claim to support your claim of bankruptcy. Whatever may be situation it is best to consult your attorney who specializes in foreclosure procedure.

For more information please visit: http://www.floridalawattorney.com

Showing tremendous initiative, President Obama hosted a function at the White House on Thursday to drum up support for his $275 billion Making Home Affordable program. Making Home Affordable is an program designed to stop foreclosure, and help homeowners save their homes through a Government endorsed Loan Modification Program.

Obama stated that between seven and nine million homeowners can benefit from the program, through refinancing to low fixed rates, or by modifying their existing mortgages, however analysts believe the number of homeowners that could be helped may in fact be higher.

Three of the largest lenders in the United States, Wells Fargo, JP Morgan Chase, and Bank of America are on board with the new initiative, with multifarious other lenders following suit.

While the Making Home Affordable program can help homeowners to save their homes and prevent foreclosure, as well as lower their interest rates and payments, not everyone can qualify, hence it is important to establish other possible solutions to achieving an affordable mortgage payment and financial stability.

In years past, refinancing has been one of the most used solutions to lowering one’s interest rate and mortgage payment. A refinance involves being qualified for a new loan to pay off the old loan. Benefits of refinancing ones mortgage include the ability to take cash out of the home for a variety of purposes, the ability to achieve a lower rate, and the ability to change the terms (duration) of the loan. Refinancing can result in more cash on hand for the borrower, lower payments, and a lower amount paid over the life of the loan.

Recently, many homeowners have taken on roommates or boarders in return for monthly rent to pay towards their mortgage. It is important to speak with State and Local Government prior to considering taking on a tenant as legally they may have rights that will make it difficult to evict them if they are not working out. If you consider having a renter, make sure that on a personal as well as financial level, things will run smoothly.

It is also important to note that many other loss mitigation services are available to those who do not qualify for the Making Home Affordable program. A loan modification may still be achieved through many different means, including a net cash-flow / hardship based approach, through legal pressure by finding significant violations of RESPA, TILA, or applicable State and Federal Laws and Statutes, or through the general guidelines published under FDIC’s “Mod-in-a-Box”. Additionally, a short-sale may be the best option for a homeowner that simply wants to leave the property free and clear, provided the lender is willing to allow the payoff of the mortgage to be “short” in return for being able to avoid foreclosure and the necessary legal and other applicable fees.

For more information please visit: http://www.floridalawattorney.com

If you plan ahead you can keep you home from going into foreclosure. The quickest way to get into trouble is when you do not pay your mortgage and the bank sends you a foreclosure letter. What happens next is that your bank will take control of your house and sell it at auction to the highest bidder. You do not want this to happen in the best way to avoid this is to contact your bank and work out a payment option that is acceptable for you and the lender. Do not ever feel that it is too late to save your house when you have an open line of communication with your bank you can avoid foreclosure.

With unemployment being so high it is very common for people to not be able to keep up with their mortgage payment and the risk a foreclosure. During these tough economic times most banks and lenders understand that it can be difficult to make your payments on time. If you reach out to them they would be willing to work out some content payment plan so you do not have to lose your house. It is important to remember that your bank does not want to own your home and sell it for less than is owed.

Remember that it is up to you if you want to avoid having a foreclosure with your home. The best way to do this is to have an open line of communication with your lender. They will understand if you are having tough financial times and will work out some kind of payment plan that is acceptable for you and them. The one thing you do not want to do is ignore your monthly payment because this will guarantee your home will end up in foreclosure

For more information please visit: http://www.floridalawattorney.com

Foreclosure numbers released for March reveal another drastic upward turn in the number of foreclosures being filed by lenders.  What’s going on?   Wasn’t this problem addressed with the mortgage bailout announced in February?

The government bailout was meant to help 8-9 million homeowners refinance or modify their loans to avoid foreclosure action.  When the plan was announced, many major mortgage lenders put a freeze on filing new foreclosures to give them time to see how the bailout was implemented.

The mortgage bailout seems to have fallen through the bureaucratic cracks.  There have been no official reports of how it is working – or whether it is working at all.  Homeowners calling their lenders for help report being told to visit the government site about the mortgage bailout – while that official site tells them to contact their lender.

The bailout plan announced was viewed as flawed by both economists and consumers as it seemed to be targeted at those home buyers who took risky loans, falsified information, or bought homes they clearly could not afford to pay for.

Truth is, many foreclosures currently taking place are on properties with standard fixed rate loans that families could afford – before the rising rate of unemployment crippled them financially.

The outcry about “entitlement” resulted in a plan that was presented, funded and then apparently abandoned.  Participation in the plan appears to be voluntary even though that was not the original announcement.   Lenders show little interest with working with this plan.  One simple reason may be lenders who have received billions in government bailouts themselves may not be worried about the cost of carrying high numbers of foreclosed properties.

The message to troubled homeowners is clear.  Don’t wait for someone else to solve the problems with your loan.  If you have received foreclosure notices, don’t ignore them waiting for a miracle to happen.  Find storage for your possessions; find a rental where your family can live.   If you are not yet in foreclosure, take whatever steps needed to pay your monthly mortgage obligation.  

For more information please visit: http://www.floridalawattorney.com

The Boston Federal Reserve Bank has examined a couple of the leading causes of foreclosures across the country, and neither of these causes are the often-cited “unaffordable mortgage payments” due to adjustable rate loans. The two main causes of the high foreclosure rate and failure of loan modification programs are declines in property values and unemployment.

The housing market bubble encouraged speculation and buying of properties (or second and third homes) as investments. Now that values have fallen in the most overheated markets, homeowners are more than willing to give up on a losing investment than to keep making payments, whether they can afford them or not.

The fall in prices has always been a drawback of government plans to address the foreclosure crisis. Many of these plans have required lenders to mark down mortgages to be in line with current fair market values, forcing the banks to recognize enormous losses just to unload a home that may face foreclosure. But the banks have been unwilling to acknowledge these falls in value, opting for foreclosure and bailouts instead.

Also, the government plans to help borrowers fail to address the problem of speculators who took out mortgages hoping for 20 or 30% price increases in a year who never had any intention of living in or improving the property. Homes were viewed as little more than expensive, low risk, high reward stocks, and now these investors are just walking away from losers.

Without the huge appreciation rates experienced during the bubble, these homeowners do not want to keep paying for their properties. A loan modification to a lower monthly payment will not change the fact that the value of the property has fallen and that it will be difficult, if not impossible, to sell it for a realistic price. Walking away is seen as a better, easier option.

The issue of job losses due to the economic recession is also a change in a family’s financial situation that may lead to a delinquency that loan modification will not fix. Banks are notoriously difficult to work with for a reasonable modification, and a significant change in income is almost a guaranteed way to get turned down without professional assistance.

Unfortunately, the redefault rate on government assisted modification programs is disturbingly high. This may be due to the fact that the programs are meant to address “unaffordable mortgages,” but are being used by borrowers to stay in their properties for a few extra months before falling behind again or deciding to walk away.

Real estate speculators may be able to qualify for a modification from their bank in the hopes of the market improving over the next few months. When property values remain stable or decline even further, continuing to pay for the overvalued property (even with the payment lowered) is still a losing option for investors.

For homeowners who have experienced a job loss but qualify to modify their loan, they may discover that they can not keep up with the plan because their income has dropped too far. In fact, selling the home at a short sale and renting may be a better option at this point, instead of throwing scarce resources at an expensive negotiation plan.

While rate adjustments have caused serious damage to homeowners, it is not the main cause of the foreclosure crisis. The fall in housing values and the recession are taking more out of borrowers than a subprime mortgage. Thus, the plan to fix the foreclosure rate by modifying “unaffordable” loans will not be nearly as effective as politicians seem to believe.

For more information please visit: http://www.floridalawattorney.com

This nation, the greatest nation on earth is facing a countrywide foreclosure melt down. Citizens from boarder to boarder and coast to coast are facing the threat of foreclosure, or going through foreclosure process.

That means that one out of 194 households was a part of the mortgage foreclosure process in the first quarter of 2008. About 1 million homes went into foreclosure in 2008.

Of all the countrywide foreclosure the hardest hit are those where the real estate bubble is bursting. (Did you hear that bang the other day? I thought it was the real estate bubble going boom.)

President Barack Obama wants to commit $275 billion to halt sky rocketing foreclosure mortgages. Financial Agency Credit Suisse is predicting countrywide foreclosure on 6.5 million loans within five years. If that is correct over 8 percent of American homes will be affected.

It may interest you to know there is some good news out there. Neither the banks or the government want to own your home. They do not want to be accused of setting up a nation of homeless bankrupt debtors because of home foreclosures. It is not the kind of market banks are looking to take over your home. How very kind of them.

In case you have not noticed, banks are in the money business, not the real estate business. Money for themselves, not you. Supposedly, when banks repo a home they almost always lose money. I don’t believe it, but that is topic for another time.

The basic foreclosure scenario is: 

• banks have to go through all the expense of foreclosing on the house – which takes months and in some states, YEARS -
• the odds are good the bank will not be able to sell the house for the amount lent the homeowner
• the house is going to be in need extensive repairs necessary, all of which costs the bank even more money (isn’t that a shame?)
• then there will be the cost of evicting the home owner-YOU

The homeowner facing foreclosure has most likely tried for months and months to sell the house, slashing the price until it would only bring what is owing against it – and they STILL can not sell it. The banks are aware of this.

Banks do not like being landlords. They are not into property management. It is simply not good business to be stuck with a basket full of empty houses getting the windows and doors kicked in and all the plumbing and electrical being pulled out.

With a sour market, houses do not sell well at auction either. All this simply means good news for you and bad news for the banksters if you are in trouble with your home loan. The lending institutions are under more pressure than ever to find a way to keep you, the homeowner, in your home if at all possible.

All of this adds up to a thing called mortgage loss mitigation. A little bit of something is worth more than a lot of nothing. There are several ways of getting the bank to work with you if you can show a win-win situation. The bank is running a business and businesses are out to make a profit, even if it is a small one.

The bank would much rather keep getting a monthly mortgage check of some kind from you instead of no mortgage check – and these days, if you want to work with them, then they want to work with you, to make sure it happens.

We are going into an economic meltdown not known since the Great Depression. The government would like to avoid that at all costs and it is obvious by the amount if money they are throwing at it. Because of this many banks are developing new programs to assist struggling homeowners. What this really means, you maybe able to stop or halt or avoid the mortgage foreclosure process all together.

For more information please visit: http://www.floridalawattorney.com