The number of foreclosure filings – from default notices to repossessions – continued to surge in March, increasing 47% from the same period a year earlier and 7% from February. The 149,150 filings represent a foreclosure rate of one in every 775 households, according to Irvine, Calif.-based RealtyTrac.

The March increase in foreclosures bucks the historical trend, lenders say. Typically, foreclosure activity declines in March, as more homeowners use tax refunds to bail themselves out of mortgage shortfalls caused by job loss, health problems or divorce.

But this year, industry insiders and economists expect it only to get worse, as more adjustable-rate mortgages reset and borrowers with risky loans continue to falter.

“I don’t think we’ve hit the bottom of the market yet,” says Rick Sharga, RealtyTrac vice president. “We should see at least one more short-term spike,” as more subprime loans continue to go into default.

Subprime loans add to problem

Subprime lending has grown rapidly in recent years. These loans accounted for 2.4% of all outstanding loans in 2000, according to the Mortgage Bankers Association. But by the end of last year, they accounted for 13.7%.

Nevada, which has had a lot of speculation and risky lending, had the highest foreclosure rate in March. The number of filings there increased 29% in the last month to 4,738, or one new filing for every 183 households. This was more than triple the amount reported the same time last year and four times the national average. Las Vegas had one of the nation’s highest metro foreclosure rates in March, second only to DetroitMelinda Fulmer

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Arizona Commerical Real Estate,
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A predatory loan is an unsuitable loan designed to exploit vulnerable and unsophisticated borrowers. Predatory loans are a subset of subprime loans, which are made to people with less-than-perfect credit. A predatory loan has one or more of the following features:

Charges more in interest and fees than is required to cover the added risk of lending to borrowers with credit imperfections;
Contains abusive terms and conditions that trap borrowers and lead to increased indebtedness;
Does not take into account the borrower’s ability to repay the loan; or
Violates fair-lending laws by targeting women, minorities and communities of color.
Some characteristics of predatory lending:

Marketing:

-Aggressive solicitations to targeted neighborhoods;
-Home improvement scams;
-Kickbacks to mortgage brokers (such as yield-spread premiums); and
-Racial steering to high-rate lenders.

Sales:

-Purposely structuring loans with payments the borrower can not afford;
-Falsifying loan applications (particularly income level);
-Adding insincere co-signers;
-Making loans to mentally incapacitated homeowners;
-Forging signatures on loan documents (i.e., required disclosure);
-Paying off lower income mortgages;
-Shifting unsecured debt into mortgages;
-Loans in excess of 100% LTV; and
-Changing the loan terms at closing.

The loan itself:

-High annual interest rates;
-High points or padded closing costs;
-Balloon payments;
-Negative amortization;
-Inflated appraisal costs;
-Padded recording fees;
-Bogus broker fees;

Unbundling (itemizing duplicate services and charging separately for them);
-Required credit insurance;
-Falsely identifying loans as lines of credit or open end mortgages; and
-Forced placed homeowners insurance.
-After closing:

Flipping (repeated refinancing, often after high-pressure sales);
-Daily interest when loan payments are late;
-Abusive collection practices;
-Excessive prepayment penalties;
-Foreclosure abuses;
-Failure to report good payment on borrower’s credit reports; and
-Failure to provide accurate loan balance and payoff amount.
-Predatory mechanisms:

Targeting property owners with substantial equity in their property and/or the ability to make a substantial payment at closing;
Misrepresenting loan terms;

-Establishing impossible repayment terms;
-Inducing borrowers to obtain loans that the lender or mortgage broker knows or should know that borrowers will be unable to repay;
-Charging undisclosed and/or improper fees;
-Failing to satisfy their obligations under loan agreements;
-Foreclosing on loans to obtain properties at a discount;
Rigging or manipulating auctions on foreclosed properties; and
-Selling foreclosed properties at a substantial profit.National Community Reinvestment Coalition

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Any questions please contact Manny Caballero at Encompass Realty

few years ago, the housing market was booming. Now that it’s slowed, homeowners and lenders are realizing they’re in a pickle. Bankruptcy and foreclosures are happening left and right. Do you have an adjustable-rate mortgage you’re looking to get out of? Wanting to tap into your equity to fix up the house?

To protect your home investment, now may or may not be the time to refinance. There are more options than when your parents bought their first home. What type of mortgage is best for your situation?

A home is a great investment. A mortgage can be the start of a great savings account. Before deciding on a mortgage, look at your options to see what best fits you, not only now but in the long run. Talk to several qualified lenders to help find the best fit.

Of course, the most popular type of mortgage is the 30-year fixed. You pay off the loan in 30 years, with a locked-in interest rate. No matter what the market does, your interest rate will not change. This also can be done as a 15-year. Although your monthly mortgage payment will be more, overall your interest expense is much lower.

Another type is the adjustable-rate mortgage, or ARM. The mortgage rate will not start adjusting until after a predetermined amount of time. When the term is up, your interest rate will adjust to the market value. The ARM rates are typically the lowest possible rates available, lower than a fixed rate, and come with more options, such as interest only. If you plan on being in your home for fewer than five years, an ARM can be beneficial, as long as there’s little risk of the value of your home depreciating.

It’s not always a good time to refinance, and a reputable lender will tell you that. For instance, closing costs for refinancing can be thousands of dollars. If you’re refinancing to get a better interest rate, it can take several years to break even, much less start saving money. If you’re planning on being in the home for only two or three years, it probably wouldn’t be worth it.

Tapping into your equity also can be tricky, and sometimes is risky. If you take out too much, and the housing market continues to slide, you can wind up owing more on your home than it’s worth. This can be a problem for homeowners not planning on staying in the home for an extended time. Remember, just like any other investment opportunity, there are smart and not-so-smart decisions. Weigh your options carefully before taking this leap.

Looking at buying your first home now? Here are tips to keep the experience successful:

• Stick within traditional funding parameters. Your mortgage should not be in excess of 30 percent of your gross monthly income; 25 percent is much better.

• Avoid “fixer-uppers” unless you are capable of doing the needed repairs. It can turn into a more frustrating and expensive endeavor.

• Avoid becoming a slave to your mortgage. It’s much better to underbuy what you might be prequalified for. This can help you avoid biting off more than you can chew.

• Foreclosure sales can be a great buy, but be careful. Was the home poorly maintained, too? Hidden deferred maintenance can become expensive.Rosie Romero

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