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Foreclosure Help On The Way

Mortgage News

In addition to proposed legislation, a series of programs have recently emerged to combat a projected wave of foreclosures.

While the latest foreclosure listing data compiled by Bargain Network showed that the 140,711 properties that entered a phase of the foreclosure process last month numbered 10 percent less than in March, April still represented the second highest foreclosure listing activity month year to date, according to a recent announcement.

On average, the total number of households entering foreclosure in April was nearly 32 percent higher than the previous six months dating back to November 2006, Bargain said. Additionally, five states accounted for 55 percent of April’s foreclosure activity — with California leading the way, at 25,198 foreclosure filings, followed by Florida, Texas, Colorado and Illinois.

Among services designed to mitigate the foreclosure problem was one offered by a mortgage lead generation company. recently touted how its mortgage loan calculators, mortgage glossary and lender directory can assist delinquent borrowers. The company said 22 percent of homeowners are at least mildly concerned about foreclosures.

“If your mortgage lender sends you a foreclosure notice, start communicating,” read a LoanPage article about how to deal with increasing payments on adjustable-rate mortgages.

As part of an approach to address the increase in foreclosures in the Golden State, the California Business, Transportation and Housing Agency and the State and Consumer Services Agency will educate the public about mortgage issues through a new Web site and a series of town hall meetings statewide, in partnership with local legislators. In addition to borrower education efforts, the state said it is combating foreclosures through enforcement against unscrupulous licensees and new regulations to ensure consumers better understand available loan products, according to a press release.

The Consumer Home Mortgage Information site, which is also available in Spanish, provides links to various mortgage resources to help consumers make informed decisions when buying a home or deal with existing mortgages, and lists dates of town hall events. By visiting the site or attending one of the town hall meetings, “borrowers can obtain helpful information about the foreclosure process, tips on working with lenders to hopefully avoid foreclosure, and how to file a complaint with the appropriate regulatory agency, if a borrower believes a violation of the law occurred,” according to the California housing agency’s statement.

In Albany, N.Y., the New Yorkers for Responsible Lending coalition planned a news conference today to call on state lawmakers to end predatory lending practices and in which it will unveil model legislation that will create new affordability standards on loans, according to a press release.

Borrowers facing foreclosure as a result of abusive lending will attend the conference by the coalition, which consists of 131 civic, community, consumer and senior organizations. In addition to borrower testimonials, the event will display maps and charts showing foreclosure patterns and subprime lending statistics, and provide examples of predatory loan solicitations, the release indicated.

Meanwhile, Pinnacle Financial Corp. announced it is engaging in a community service program by providing free tools and resources to aid subprime borrowers in avoiding foreclosure. The program, “SOS: Solutions Out of Subprime,” includes a toll-free help line, free seminars and a booklet in both English and Spanish that helps borrowers determine when their rates will reset and by how much, and provides options for mortgages in delinquency or default.

Pinnacle, which does not originate subprime loans, said such loans account for 20 percent of the U.S. home loan market — up from 9 percent from 1996 through 2004 — and that an estimated $265 billion in loans are scheduled to reset upward to as much as 12 percent in 2007.

“The escalation of subprime mortgage defaults and foreclosures that began late last year shows no signs of ending,” Pinnacle said in the announcement.

“It is important for all borrowers, but especially those in subprime mortgages, to seek help at the first sign of trouble paying their loans,” Pinnacle Chief Executive Doug Long said in the written statement.

In an effort to combat scams that target troubled borrowers, Tom Donovan, a Democrat from New Hampshire, sponsored House Bill 365 to form a study commission to analyze foreclosures and foreclosure rescue scams. The House passed the bill and adopted an amendment and was scheduled to be debated in the Senate on Tuesday, according to the State of New Hampshire General Court. The amended version contains strong rules prohibiting unfair transactions and requiring disclosures to borrowers, according to the Concord Monitor.

U.S. Democratic senators Barack Obama and Dick Durbin, of Illinois, recently reintroduced the STOP Fraud Act to ultimately lessen foreclosure risk. The bill reportedly provided the “first federal definition of mortgage fraud,” authorized stiff criminal penalties against fraudsters, provides $25 million for housing counseling and technical assistance, and protects the borrowers’ rights to challenge lending practices in foreclosure proceedings, if they are in subprime loans with any of several high-risk characteristics targeted by the act.

But a mortgage fraud prevention executive said the bill’s supporters are confused.

Obama’s intentions are well-founded, but “the language of the bill clearly marks it as a predatory lending bill,” Ann Fulmer, a vice president for Interthinx, told in an e-mail statement.

Among the bill’s shortcomings noted by Fulmer — who has become an icon in the fight against mortgage fraud — are that “Only licensed mortgage professionals can commit ‘mortgage fraud,’ it applies only to fees, money or property obtained through fraud from a natural person and both the criminal and civil penalties apply only to licensed mortgage professionals.”

“There are some good ideas, but as written, it’s very problematic because it will reach the facilitators (the professionals), but not the real perpetrators,” Fulmer concluded.

The Coalition of Consumer Advocates was created by Dr. Lisa Rosenberger, president and CEO of American Mortgage Educators Inc., to demand stronger government regulation to combat predatory lending, mortgage fraud and ultimately foreclosures, according to a press release. Touted as the “most powerful” coalition of female consumer advocates ever assembled, the group has set an agenda to provide financial education to homeowners and borrowers and ethics courses and advanced technical training to mortgage brokers, loan officers and real estate agents.

“Greed is the root cause of the current lending crisis,” said Tawney Warren, a consumer advocate in the announcement. “We need to take a three pronged approach to solving this travesty by educating the public, industry professionals, and government officials. We need strict government regulations in all states for industry professionals and lenders.”

One mortgage banker’s delinquent borrowers with American Express cards can now stave off foreclosure proceedings an additional month or two.

The credit card company announced today that American Home Mortgage Corp. has become the first mortgage company to accept its card for mortgage payments. Qualifying borrowers pay a $395 upfront fee and earn rewards for payments made through the card.

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