Archive for the 'Foreclosure Crisis' Category

The growing number of repo properties in Arizona has wreaked havoc not only on the lives of homeowners but also on their pets that are often left behind when their owners lose their properties to foreclosures.

Volunteers and workers of pet rescue nonprofit organizations in Arizona are seeing an increasing number of abandoned pets in foreclosure houses. They tried to find space for the growing number of abandoned pets in shelters or foster homes. Adding to the problem of nonprofits is the significant decline in donations.

The no-kill animal rescue group, Lost Our Home Pet Foundation received an increase in the number of reports of abandoned pets. The group is serving real estate people who discovered and reported abandoned pets in foreclosure houses.

Similarly, the Arizona Humane Society noted a 100 percent rise in calls reporting animal abandonment for the past two years. According to the nonprofit organization, the number of animal abandonment calls is set to match the figures of last year.

Other nonprofit organizations, such as Paws and Claws Animal Rescue based in Phoenix and Friends for Life Animal Sanctuary in Gilbert have also reported a dramatic decline in pet-food and cash contributions. The organizations attributed the decline in donations to the economic downturn and rising unemployment rate.

Pet rescue groups have scheduled several fundraisers to help boost their financial coffers. Industry experts said that many people are refraining from shelling out cash. They noted a big difference in the amount of donations they received last year, blaming the languishing economy which forced many companies around the state to cut back. They also blamed the worsening repo properties crisis on the growing number of abandoned pets.

The Lost Our Home has been spending an average of $6,000 monthly on the health care of animals. The nonprofit pointed out that the costs of veterinary care have steadily risen every month. It also noted that many pets have arrived on the shelter sicker and in immediate need of medical attention. Many of these pets have been abandoned and deprived of food and water for a long period of time.

To cope with the drop in donations, Friends For Life cut back on some of its expenses, such as health care and training. But as more pets are being abandoned on repo properties, the nonprofit is worried that it needs to cut back more to accommodate all of them.

Tax foreclosures are threatening to spread across a Texas city as its officials decided to raise property taxes to compensate for revenue losses.

The Forest Hill city was once considered as the place to be in Texas. Home for about 13,000 people, the city was once a picture of growth and opportunities. But the city has taken a beating from the current economic downturn, rising unemployment and foreclosures, low property and sales tax revenues.

Some residents said that so far, the city is not deteriorating, but neither it is growing. The city has been experiencing a dramatic decline in revenues. To compensate for revenue losses, the Forest Hill government adopted a reduced budget of $6.1 million. The figures mean that there will be no hiring to fill up vacant positions in the departments of public works, police and fire.

And to compensate for revenue losses, avoid layoffs and cuts on city services, the local government raised property taxes by almost 11.6 percent from 95 cents to $1.06 for every $100 assessed value.

Industry experts are concerned that the increase in property taxes would drive up tax foreclosures in the area as the current development is another burden for the many struggling homeowners in Forest Hills.

City Manager David Miller said that the current economic situation in Forest Hill is the worst he has ever seen. One of the hardest hit areas in the city is the north side which has a high concentration of foreclosure and rental properties.

Citywide, the foreclosure problem is serious. Data from the Tarrant Appraisal District showed that the city experienced a 9.3 percent drop in property values this year compared with the previous year. The decline in property values was the largest compared with other school districts and cities in Tarrant County.

Forest Hills officials blamed the burgeoning foreclosure problem for the decline of property values. About 80 foreclosed houses have been posted since July and 20 were sold at foreclosure auctions.

Industry experts said that foreclosure is a harbinger of more troubles for the community, including neglect, code-enforcement problems and crime.

Meanwhile, Forest Hill has been chosen as one of the cities in Tarrant County to receive grants under the Housing and Economic Recovery Act of 2008. The city is currently developing a revitalization plan to help neighborhoods severely affected by the foreclosure problem and to prevent more tax foreclosures.

Consumers can still find good home loans despite tight lending due to large numbers of bank repo homes, according to David Reed, founder of Integrity Home Mortgage and one of the past presidents of the Austin Mortgage Bankers Association.

Reed reiterated that despite negative national news about foreclosures, unemployment and lack of loans, the average American can still find a good home loan. He said that any American who has a job, average credit score and have some money for down payment can get a good home loan.

Reed also said that now is the best time to buy because mortgage rates will not go down further.

He is also advising potential first-time home buyers who have a stable source of income and have good credit not to believe news items about banks implementing very tight screening standards. What has changed, he said, is the reduction of the types of home loans offered.

Reed further explained that the market for home loans is now homogenized – focusing generally on one type of home loan, which is the conventional loan.

Before the housing market collapsed, Reed explained, subprime loans and other alternative loans comprised 40 percent of all home loans. After these types of loans put the entire nation into the worst economic condition since the Great Depression, lenders have eliminated these loans. They no longer offer subprime, alternative documentation or stated loans.

Now banks are going back to the conventional way of lending, requiring prospective home buyers to have a stable job, good credit and money for down payment.

Home loans choices have gone down to only a few – conventional loans requiring compliance to the standards set by Fannie Mae, Freddie Mac, VA, USDA and FHA.

Reed explained that fewer home loan choices will make it easier for homebuyers to compare loan rates, as the home loans are almost the same in structure.

Mortgage rates will likely remain low – between 4 and 5 percent – until the end of the year, Reed said. He explained that mortgage rates need to stay lower to keep attracting investors.

But he warned that prospective homebuyers need to buy now because when the rates go up, they will climb up to the 7 percent range quickly. He also said that jumbo loan rates are now becoming more attractive. Rates for jumbo fixed 30-year home loans are now just above the 5 percent range.

The default rate on mortgage loans across the U.S. reached a record level in the second quarter, based on a report from credit reporting firm Trans Union.

Banks have been advised by the Federal Deposit Insurance Corporation to increase their reserves for losses on home-equity loans as repossessed homes continue to drive down home prices from their peak prices in 2006.

California Real Estate Commissioner Jeff Davi has announced that the Department of Real Estate (DRE) issued a consumer alert warning homeowners about fraudulent repossessed home rescue services.

The ever-growing joblessness and the unabated number of repo homes in Rhode Island have caused some experts to predict that the state’s economic recovery will not happen anytime soon.

The increasing number of repossessed house and unemployment in the country has severely affected the economy, particularly low-income, minority families. According to data from the National Low Income Housing Coalition, some of the victims of the foreclosure crisis do not even own the foreclosed homes were they lived.

The National Housing Conference’s research affiliate, the Center for Housing Policy, has released the study, titled “Paycheck to paycheck: Wages and the cost of housing in America,” which showed a correlation between job stability and the capability to avoid house repossession.

The United States economy will get worse before it gets better is how Warren Buffet, the second richest man according to the October 2008 issue of the “Forbes” magazine, viewed the current economic scenario. He cited as indications of the worsening economic situation the declining business activity, increasing foreclosure homes and rising unemployment.