There is an upside to the housing crisis : housing prices are declining and should revert to their historical norms.  That means more people will be able to afford housing.

Ultimately the people who bought into the mania and overpaid are to blame.  No one held a gun to their heads.  Most figured that they could ride 20% annual appreciation into getting rich quick.  If you got suckered into "gotta buy a house", well, then you're a sucker.

What a difference a housing bubble makes.  10 years ago people advocated that lenders needed to lend more to marginal borowers.  Well, they did and now it looks like a big mistake.

Sure, lending needs to be tightened. But that's already happened.  Banks aren't lending anymore except to people who can manage it.

Ultimately the borower needs to make a rational decision, read the fine print, and be confident that he can make the payments.

George Bush's ownership society was a mirage.  If you can't afford it, don't buy it.  Bulldozing farms and craming McMansions into small lots to "promote growth" has environmental costs is not the solution to our economic woes.  The government needs to get out of the subsidize housing business.  With 2.1 kids per couple, there's little need to build more housing.

Tightening your belt, paying off the credit cards and renting ain't so bad, folks.

But foreclosures on a mass scale like we have seen in some areas of the country and will see in more are always bad. They destroy not only equity, but neighborhoods. They erode the tax base, which ultimately has a negative effect on everyone.

While I can understand the urge to simply blame homeowners who took on mortgages too big, or counted on unrealistic price appreciation that couldn't continue, or didn't take the time to understand or think about what would happen to their ARM in a worst-case scenario, the real question is what is best for society as a whole.

The idea that falling home prices will make owning a home more affordable is probably true, but not as much as you think. Falling home prices won't occur in a vacuum, and will have various negative economic consequences, some predictable, others not, that will hurt virtually everyone in the short-term, other than a small class of vulture investors who profit from financial distress.

Reasonable steps to forestall foreclosures, on the other hand, benefit virtually everyone -- homeowners, banks, Investors -- everyone --  with the exception of a small class of predators who hope to make what cash they can in the short term and move on to the next scam.

But your problem is with the manner in which FICO scores are calculated, or on their use by credit companies.

Seeing others default may make you feel better to see less responsible people than yourself get their just desserts, but it doesn't benefit you financially.

Lastly, it's a crazy world we live in. In addition to being fiscally responsible, starting at an early age people should become financially responsible by being aware of their FICO stores and taking the proper steps to build their creditworthiness. Paying your bills on time is a part of that. Showing you can responsibly handle credit is also a part of that.  

On question I have is if it is deemed that many of these loans/mortgages were indeed proved to be predatory or misleading will not those individuals be able to challenge the placement of the foreclosure on credit files?? I think that would be huge for people in giving them the opportunity to get out from under going forward and not have that sit on the file for ten years IF it is proven the loans were misleading, especially subprime.

Probelm is I saw a study where it said that some 70% of the defaulted notes were from people who either lied or misled the lender on the documentation, either inflated incomes or the big one was people stated the use of the home would be for "primary" residence only for it really to be investment property which allowed them to lock in better financing. If this study is true that says volumes about the subprime mess and the maybe just maybe the lenders are NOT entirely to blame.

So just think about this, your hairdresser and  nail technician have more training than the average loan officer.
Virginia has some of the most lax lending laws in the country.

There are some very good loan officers out there who do look out for their customers. However, I feel that licensing would have prevented a lot of the mess we are seeing now.

GOVERNOR KAINE PROPOSES LEGISLATION TO PROTECT HOMEOWNERSHIP

~ Legislation aimed at subprime mortgage holders requires enhanced communication between lenders and borrowers ~

RICHMOND-Governor Timothy M. Kaine today announced proposed legislation designed to protect and preserve homeownership for Virginia's working families and communities in light of current foreclosure trends.

"Virginia's foreclosure rate has more than doubled from the first quarter of 2006, and many of our working families are facing significant difficulty keeping their homes," Governor Kaine said. "This bill would give homeowners extra time and access to counseling that might allow them to keep their homes,"

Subprime loans made up 28 percent of mortgages originated in the Commonwealth in 2005 and 30 percent of new loans in 2006. Because interest rates are now increasing on those loans, there is a significant risk that the foreclosure rate will continue to rise. In the third quarter of 2007, 9,200 homes were foreclosed, with 5,900 of them involving subprime loans. Subprime lending was heavily concentrated among minority borrowers. In 2005, 47 percent of loans to African Americans in Virginia were subprime; 38 percent of loans to Hispanics were subprime.

The Governor's bill would provide homeowners who have subprime loans on their homes with avenues to counseling information prior to receiving an acceleration notice.  It would also give them the option of pausing their foreclosure for 30 days while they attempt to work out ways to avoid foreclosure. The bill was drafted with input from the Virginia Foreclosure Prevention Task Force and a wide variety of bankers, lenders, realtors and homeowner advocates.

The bill requires:

   * Lenders and loan services to send borrowers who are in default a notice at least 10 business days before a final acceleration notice.

   * That if the borrower contacts the lender prior to the date specified in the notice, the lender shall provide the borrower at least 30 additional calendar days before sending the borrower a notice of acceleration.

   * That if the borrower fails to contact the lender by the specified date, the lender may send a notice of acceleration and require immediate repayment of all sums owed under the loan agreement.

The bill stems from the work of the Virginia Foreclosure Prevention Task Force, which the Governor formed last November to minimize the impact that rampant foreclosures have on the economies of other states. The Task Force, which is chaired by Virginia Secretary of Commerce and Trade Patrick Gottschalk, is pursuing additional measures to address foreclosure, including training for housing counselors.  Training will be conducted by the Virginia Housing Development Authority (VHDA) and NeighborWorks® America.

"Beginning in mid-March, housing counselors across Virginia will begin training in all facets of loss mitigation, a process to help those having trouble making their home loan payments," Secretary Gottschalk said. "This training will increase the number of housing counselors available to guide borrowers through the steps of foreclosure prevention, including contacting lenders quickly, establishing a budget, and identifying possible repayment plans."

Additional partners in this training will include the Federal Reserve Bank of Richmond, U.S. Dept. of Housing and Urban Development's Richmond Field Office and the U.S. Dept. of Agriculture's Rural Housing Service. Other partners assisting in the foreclosure prevention training initiative by providing materials or other support are Housing Opportunities Made Equal (HOME), Virginia Poverty Law Center, Arlington Home Ownership Made Easier (AHOME), Virginia Cooperative Extension of Prince William County, Catholic Charities of Eastern Virginia, Blue Ridge Housing Development Corp. and People Incorporated of Southwest Virginia.

The organizations will provide a comprehensive curriculum for the foreclosure prevention training that covers all facets of loss mitigation counseling, including:

·        Role of the Counselor
·        Steps in the Foreclosure Counseling Process
·        Work-Out Options for Government-Backed and Conventional Loans
·        Elements of a Loan Workout Package
·        Working with Loan Servicers
·        Recognizing Signs of Predatory Mortgage Loans
·        Foreclosure Scams
·        Case Studies

Training is to be provided to non-profits, local governments, and local housing agencies. Housing counselors completing the training will receive a VHDA Certificate of Completion for Loss Mitigation Counseling.

For more information about the VHDA foreclosure prevention initiative, contact VHDA at 1-877-VHDA-123.

It fails to address the two main problems. First is the cycle of declining home values followed by loan default followed by foreclosure followed by declining home values.

It's better than nothing, I suppose, in that it may slow down the cycle a bit.

Second is getting assistance to people who need it so they do not lose their homes, or creating a mechanism to force mortgage changes upon lenders that take unaffordable mortgages and turn them into affordable ones.

Education is a part of that, but not enough. All the education in the world won't change the fact that it doesn't really make economic sense to pay a loan that is greater than the value of your home.

EL GOBERNADOR KAINE PROPONE LEGISLACION PARA PROTEGER A LOS PROPIETARIOS DE VIVIENDAS

~ La legislación está dirigida a las personas con hipotecas "subprime" y exige que se mejore la comunicación entre los prestamistas y los deudores ~

RICHMOND- El gobernador Timothy M. Kaine anunció el día de hoy la propuesta de ley dirigida a proteger y preservar la propiedad de viviendas de las familias trabajadoras de Virginia y de las comunidades que están padeciendo el continuo embargo de las casas.

"El número de embargos de casas en Virginia se ha duplicado desde el primer cuatrimestre del 2006 y muchísimas familias trabajadoras están pasando grandes problemas para evitar la pérdida de sus casas" y el Gobernador Kaine expresó también "esta propuesta de ley les dará a los propietarios de viviendas tiempo extra y asesoría, lo que les permitirá quedarse en sus casas".

Los préstamos "subprime" se dieron en el 28 % de los préstamos hipotecarios otorgados en el estado de Virginia en el 2005 y se dieron en el 30% de los nuevos préstamos otorgados en el 2006. Debido a que los intereses están aumentando en estos préstamos, existe un fuerte riesgo que el número de embargos de casas continúe al alza. Durante el tercer cuatrimestre del 2007, se embargaron 9200 casas y 5900 de ellas tenían préstamos "subprime". Este tipo de préstamos estaba concentrado fuertemente con deudores minoritarios. En el año 2005, el 47% de préstamos otorgados a personas afro-americanas en Virginia fueron de este tipo y el 38% de préstamos otorgados a hispanos fueron "subprime".

La propuesta de ley del Gobernador Kaine le dará la oportunidad de recibir asesoría a los dueños de casas que las habitan ellos mismos y que tienen préstamos "subprime" antes de que reciban la notificación de aceleración del préstamo. También les brindara la opción de detener el embargo de la caso por 30 días mientras se hacen arreglos para evitar dicho embargo. Esta propuesta fue redactada con la ayuda del Grupo de Trabajo de Virginia para Prevenir los Embargos de Casas y de banqueros, prestamistas, agentes de bienes raíces y de los defensores de los dueños de viviendas.

La propuesta de ley requiere:

·        Que los prestamistas y los servicios de préstamos le envíen a los deudores quienes han dejado de pagar el préstamo hipotecario, la primera notificación por lo menos 10 días hábiles antes de enviarles la notificación final de aceleración del préstamo

·        Que si el deudor se pone en contacto con el prestamista antes de la fecha especificada en el aviso, el prestamista le dará al deudor por lo menos 30 días calendarios antes de mandarle una notificación de aceleración del préstamo.

·        Que si el deudor falla en contactar al prestamista en la fecha especificada, el prestamista pueda mandarle un aviso de aceleración del préstamo y exigir el pago inmediato de la cantidad adeuda bajo el contrato del préstamo.

El proyecto de ley proviene del Grupo de Trabajo de Virginia para Prevenir los Embargos de Casas, el cual fue creado por el Gobernador el pasado noviembre con el objeto de reducir el impacto desenfrenado que los embargos de casas tienen en las economías de otros estados. El Grupo de Trabajo, el cual es presidido por el Secretario de Comercio de Virginia, Patrick Gottschalk, está llevando a cabo una política de medidas adicionales para enfrentar los embargos de casas, incluyéndola capacitación para asesores de vivienda. La capacitación será organizada por el Virginia Housing Development Authority (VHDA) y NeighborWorks® America.

"A mediados de marzo, los asesores de vivienda en Virginia comenzarán el proceso para capacitar a personas que están teniendo dificultades en pagar sus préstamos de vivienda, en las diferentes fases de mitigación de perdidas." Dijo el Secretario Gottschalk. "Esta capacitación aumentara el número de asesores de vivienda disponibles para guiar a los deudores a través de los pasos de prevención de embargo de casas, incluyendo el contactar a los prestamistas lo más pronto posible, estableciendo un presupuesto e identificando planes de repago de deuda hipotecarias posibles.

Socios adicionales en esta capacitación incluyen al Banco de Reserva Federal de Richmond, la Oficina Regional de Richmond de Desarrollo Urbano y Vivienda del Departamento de Estados Unidos y el Servicio de Vivienda Rural del Departamento de Agricultura de Estados Unidos. Otros socios que están participando en esta iniciativa de capacitación de prevención de embargo de casas, proporcionando materiales y otro apoyo incluyen Housing Opportunities Made Equal (HOME), Virginia Poverty Law Center, Arlington Home Ownership Made Easier (AHOME), Virginia Cooperative Extension of Prince William County, Catholic Charities of Eastern Virginia, Blue Ridge Housing Development Corp. and People Incorporated of Southwest Virginia.

Las organizaciones proporcionaran un extensivo plan de estudios para la capacitación en la prevención de embargo de casas, la cual cubre las fases de asesoría de mitigación de perdidas, incluyendo:

·        El papel del Asesor
·        Pasos en el Proceso de Asesoría en la Embargo de casas
·        Opciones de Resolución para Préstamos Convencionales Apoyados por el Gobierno
·        Elementos del Paquete de Resolución de Prestamos
·        Trabajando con Servicios de Préstamos
·        Identificando las Señales de Préstamos Usureros de Hipotecas
·        Estafas en los Embargos de Casas
·        Estudio de Casos

La capacitación se ofrecerá a las organizaciones sin fines de lucro, los gobiernos locales, y las agencies de vivienda locales. Los asesores de vivienda que completen la capacitación recibirán un Certificado Final de Asesoría de Mitigación de Perdida VHDA.

Para más información sobre la iniciativa de prevención de embargo de casas, favor de llamar al VHDA al 1-877-8432 -123.