From the Atlanta Journal-Constitution:

With the arrival of spring and a deepening recession, shelters already bulging with pets that have lost their humans and homes through foreclosure now have the added strain of new litters of puppies and kittens.

Euthanization figures at shelters in two of metro Atlanta's largest counties are proof they have reached their limit.

"This," said animal rescuer Stacey Hall, "is as bad as I've ever seen it."

Bad all over, too. A national organization that charts animal issues reports that across the country shelters have overflowing inventories. Adding to rescue societies' problems: the escalating price of gas continues to cut into their budgets.

Chicagoland's Southtown Star recently wrote about the South Suburban Humane Society, which provides free pet food to needy owners fourth Thursday of each month. They've added the second Thursday of each month due to increased demand.

"We used to hand out food from noon to about 3:30 (p.m.), until supplies were gone," said Emily Gruszka, executive director of the Chicago Heights facility. "But the last two months, we've opened up to find 10 to 15 people already waiting in line. And we've had to close by 12:30 (p.m.) because we'd run out of food already."

Gruszka says that with energy prices and the economy in the state that they are, people consider pets and the $1,000 or so they cost per year, to be a luxury. "Few families can look at the economy now and think, 'I have an extra $1,000 to spend,' " she said.

Need for donated pet food rising [Southtown Star]
Dogs, cats feel the bite of home foreclosures [A J-C](Thanks, j!)
(Photo: Bob Andres)

"When we were trying to sell the house one time, there were about 100 paparazzi there," Davis, the real estate agent who holds the listing, told the AP.

McMahon's spokesperson says that Ed's been unable to work since breaking his neck 18 months ago.

"There are plenty of people affected by the weak economy, bad housing market or bad health," Bragman told the AP.

He also said that McMahon and his wife are negotiating with Countrywide, but it's unclear whether or not they will be able to stay in the home.

Countrywide declined to comment. Um, does anyone want to show up at Ed McMahon's door with a giant check? Save Ed!

Ed McMahon fighting foreclosure on his Beverly Hills home [AP]
(AP Photo/Matt Sayles, FILE)

From Marketplace Money:

Jagow: So how did you get to the point where you're having to sell your most prized things?

Ron: Basically, I hit a negative cash flow when the real estate market crashed about two years. I'm a residential mortgage banker. I've worked for banks like Washington Mutual and World Savings, but the last lender I worked for was Washington Mutual which was for a good five years. I'm used to making six-figure income without really any effort at all to be honest with you. If I applied myself, I'd make a good quarter of a million a year and that's pretty much been the flow of things since 1999.

Jagow: So it's been good times?

Ron: Yeah, so I loaded up, was able to buy every dream amplifier I ever wanted and I started a collection. I started buying real estate as well. I bought a rental and some land.

Jagow: Right, so you've got land, you've got a great collection of guitars and amps, but what happened? Where did things go wrong?

Ron: Well, slowly, the real estate market just started deteriorating — the mortgage meltdown, they call it. It got to the point where lenders just didn't want to lend anymore. Even when I brought loans in that met all the requirements that even their pickiness required, they still wouldn't do it. You know, they starved us to the point where they eventually laid us off and closed all the offices.

Jagow: And obviously, this decimated your personal finances?

Ron: Oh yeah. I was forced to live on my savings and when you have a mortgage of $5,000 a month and I had about $50,000 in credit cards at the time, you've got a lot of bills. Bottom line is my savings deteriorated pretty quickly, you know, having no income.

Jagow: Well I know that you've been liquidating savings, 401(k), stocks, things like that.

Ron: Yeah.

Jagow: How far down the line did you go before you got to the guitars and amps?

Ron: Well, once everything was gone as far as paper money like stocks, bonds, IRAs, now I'm having to resort to my physical collateral, which is my possessions really.

Ron says he's trying to find a new career but the job market is flooded with people from the shipwrecked mortgage industry. Marketplace Money says the number of sale listings on Craigslist doubled in March compared to last year. You can listen to Ron's interview here.

Using the Internet to make ends meet [Marketplace]

"He made a mathematical decision and just let it go," said Gregory Emerson, Mr. Canseco's lawyer.

Mr. Canseco bought the 7,300-square-foot home in Encino, Calif., for nearly $2.8 million in 2005, according to public records. He transferred partial ownership to a trust last year, according to Mr. Emerson. That trust defaulted on mortgage payments in October, and foreclosure was recorded in February, public records show.

The house already had at least one lien placed on it, from the Internal Revenue Service, and a judgment stemming from a 2005 court ruling in which Mr. Canseco and his brother Ozzie were found liable for a 2001 brawl in a Miami Beach nightclub. Together, the liens and judgment totaled some $1.3 million, according to Mr. Emerson and Tina Cameron, Mr. Canseco's real-estate agent.

"Given that there were liens on the house and the market had gone down, he made the decision to let it go," Mr. Emerson said. He said that the decline in property values alone meant that Mr. Canseco's equity in the house had fallen by about $1 million.

Mr. Canseco is currently promoting his second tell-all about steroid-use in Major League Baseball, and continues to assist federal agents who are investigating Roger Clemens for perjury, etc. Canseco told Inside Edition:

“I do have a judgment on my home and it to me is very strange because it didn’t make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else."

“I decided to just let it go, but in most cases and most families, they have nowhere else to go,” he said

Home Run: Canseco Lets House Go Into Foreclosure [WSJ]
Jose Canseco: Walking Away from His Mortgage ‘Not Difficult Emotionally’ [WSJ]
(AP Photo/Luis M. Alvarez)

According to Ireland's commentary, only Obama has a real plan. He would increase penalties for fraudulent lending, create a foreclosure-prevention fund, create a standardized scoring system for rating borrowers' obligations, and more. (Although Obama does not mention it, I hope he would also earmark funding to prosecute the frauds, who are pretty much going unpunished.)

Ireland says Clinton wants to offer shelter to the mortgage servicers who helped create the problem, while McCain's "proposal" is basically to do nothing.

The Issues: Housing [NYT]

Clinton, Obama, McCain On Foreclosure Crisis [Consumer Rights Watch]

(photo: The Joy Of The Mundane)

The study, compiled by the State Foreclosure Prevention Working Group, made up of banking regulators and attorneys general in 11 states, found that seven out of 10 borrowers who are seriously delinquent on their mortgages aren't on track to receive any kind of help with their payment problems.

The number of delinquent borrowers working with their lenders has increased, the report found, but overall increases in the number of delinquent loans have outstripped those gains. The proportion of borrowers who weren't engaged in any sort of loan workout was unchanged from the group's previous report in February.

"While there's been a lot of effort put in by mortgage servicers and government officials, there has been little change in outcomes for homeowners," said Mark Pearce, deputy banking commissioner for North Carolina. "We're still treading water."

"If loan mitigation and modification don't produce fruitful results for homeowners, I, for one, would be inclined to look at litigation possibilities to secure help for homeowners," he said.

States Fault Effort to Stanch Foreclosures [Wall Street Journal]
(Photo:gruntzooki)

From the Star-Tribune:

The couple and their three children, ages 2, 3 and 5, were living in a crowded trailer park in Blaine, when Bradley saw a newspaper advertisement touting real estate as the next quick way to make money.

"I didn't want to paint the rest of my life, and the trailer park scene was about as bad as parts of north Minneapolis," Bradley said.

Over a steak dinner at a Perkins restaurant, the couple met with two salesmen from Executive Premier Management Inc., a firm in Wayzata that described itself as a "property management company."

With no money down, they could buy properties in a fast-growing new subdivision in Otsego known as Otsego Preserve, near Interstate 94 and the Albertville outlet mall. They would get $5,000 in upfront cash for each house they purchased.

The Collins were also told that home values in Wright County were appreciating at 8 percent a year, much faster than the national average. At that rate, the Collins could make $24,000 a year for every $300,0000 house they bought in the county. They were told that rental income would cover their mortgage payments until the houses were sold.

Collin said the management company helped him apply for four mortgages within days of each other. The firm used a different lender each time, a way to hide from the banks the debt he was taking on and wouldn't be able to afford on his net income as a contractor, which averages about $60,000 a year. The "no documentation" and "no down payment" loans carried a much higher interest rate than conventional mortgages.

The couple purchased four houses — each for about $300,000 — hoping to quadruple their profits. The Collins received a $5,000 check after each closing. The cash payments were not disclosed on the mortgage statements sent to the bank, which Collin says he has since learned is illegal.

Executive Premier Management is not registered with the state, and the telephone number given to Collin no longer works. The two salespeople, Nathan Nordvik and Jonathan Matheson, do not have listed telephone numbers and could not be reached for comment.

Housing Bets Gone Bad [Star-Tribune] (Thanks, Rob!)
(Photo:Glen Stubbe, Star Tribune )

Tess Vigeland from Marketplace Money found one of these mythical towns and interviewed some of the residents. With so many houses standing empty, one of the few remaining families has decided to stop paying their mortgage. You might expect tears, but the Sinclairs say it feels "great" to be living rent free with a "bank full of money":

Sinclair: If they reduced our interest rate back to 4.25, we might be able to make the payments, but I don't think we're going to.

Vigeland: Now, why not?

Sinclair: We would do it if the equity was there, but in a case where we're already so behind... Imagine that for five years, say, we're gonna pay four grand a month and then we're just gonna be back up at what we bought the house for. We feel like we're throwing away money.

The Sinclairs say they want to take responsibility for their debts, but right now it makes more financial sense not to.

Sinclair: I mean, you ask a good question. Is it really the right thing to do to let the mortgage companies take up the difference? That's a really tough ethical question.

Dan says he experienced the various stages of grief, including denial and anger. Now he's just relieved.

Sinclair: We went through months of being skinflints, because we knew that we were going into the red, so we didn't buy anything. All the sudden, we had a bank full of money and we're living rent-free, but we know that's not really our money.

Vigeland: How does that feel?

Esmeralda Sinclair: Great! Like he said, we were so tight with money...

Dan: It does feel great, because all the sudden, we feel like we have a little margin now where we can go out to dinner, get a babysitter...

Vigeland: But you're not paying your mortgage. You're not paying the biggest obligation you have. How does that feel good?

Esmeralda: We already went through the guilt. This is really what we need to do, not what we wanted to do, but what we need to do.

Ghost Town USA [Marketplace Money]
(Photo:Tess Vigeland)

It seems that adjustable rate mortgages are changing the way people look at homeownership—and foreclosure:

"I think I could make a case that some borrowers were 'renting' (with risk), rather than owning," Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University, said in an e-mail message.

For some people, then, foreclosure becomes something akin to eviction — a traumatic event, and a blow to one's credit record, but not one that involves loss of life savings or of years spent scrimping to buy the home.

"There certainly appears to be more willingness on the part of borrowers to walk away from mortgages," said John Mechem, spokesman for the Mortgage Bankers Association, who noted that in the past, many would try to save their homes.

In recent months top executives from Bank of America, JPMorgan Chase and Wachovia have all described a new willingness by borrowers to walk away from mortgages.

Carrie Newhouse, a real estate agent who also works as a loss mitigation consultant for mortgage lenders in Minneapolis-St. Paul, said she saw many homeowners who looked at foreclosure as a first option, preferable to dealing with their lender. "I've had people say to me, 'My house isn't worth what I owe, why should I continue to make payments on it?' " Mrs. Newhouse said.

"You bought an adjustable rate mortgage and you're mad the bank is adjusting the rate," she said. "And sometimes the bank people who call these consumers aren't really nice. Not that the bank has the responsibility to be your friend, but a lot are just so uncooperative."

The same sorts of loans that drove the real estate boom now change the nature of foreclosure, giving borrowers incentives to walk away, said Todd Sinai, an associate professor of real estate at the Wharton School of Business at the University of Pennsylvania.

"There's a whole lot of people who would've been stuck as renters without these exotic loan products," Professor Sinai said. "Now it's like they can do their renting from the bank, and if house values go up, they become the owner. If they go down, you have the choice to give the house back to the bank. You aren't any worse off than renting, and you got a chance to do extremely well. If it's heads I win, tails the bank loses, it's worth the gamble."

Could you too be eligible for this amazing offer? Probably not! Like the Administration's past efforts, this plan is voluntary and only a handful of lenders have signed up. That won't stop anyone from trumpeting their false charity.

The mortgage lenders are hailing the extra 30 days as "stopping foreclosures" and giving time to negotiate new loans. But there are no commitments in that rhetoric. Indeed, this is described as valuable for people who are already 90 days in default—and with whom the mortgage servicer didn't work something out during that time.

The mortgage industry has been ferociously lobbying against changes in the bankruptcy law that would help an estimated 600,000 families refinance their mortgages at 100% of the current market value of the home. This is a solution that will be painful for many families, forcing them into bankruptcy to get some relief. But it is the only game in town right now to help families negotiate a permanent solution without rewarding the high-risk lenders.

Let Them Eat Crumbs [Credit Slips]
(Photo: Getty)

Tax laws consider forgiven debt as income, which can leave those of you with foreclosed homes with some unexpected tax bills this year. Let's say I loan you a million bazillion dollars. Now I go, "Oh, wait. Never mind. You can keep it." The IRS considers that income. You would have to pay the taxes on your million bazillion dollars.

The tricky part comes in when I'm not just loaning you a million bazillion dollars. I'm loaning you money to buy an overpriced home that you can't afford and I can't sell for as much as you owe me once I take it back from you.

Enter the Mortgage Forgiveness Debt Relief Act of 2007. Bankrate sums it up for us:

Under the Mortgage Debt Forgiveness Act of 2007, some homeowners granted forgiveness of mortgage debt won't have to pay taxes on that amount. But there are some restrictions:

1. There is a limit on the forgiven debt: up to $2 million or $1 million for a married person filing a separate return.
2. The tax break also has a time limit. It only applies to mortgage debt discharged by a lender in 2007, 2008 or 2009.
3. The loan also must have been taken out to buy or build a primary residence, not a second or vacation home. If debt is forgiven on those additional properties, the owner will owe cancellation of debt income as usual.

10 Tax Laws You Just Gotta Know [Bankrate]
IRS Form 982 (PDF) [IRS]
March 3: The latest tax-filing deadline [Don't Mess With Taxes]
(Photo:Chad Beckerman)

Misery is defined as a state of great unhappiness and emotional distress. The economic indicator most often used to measure misery is the Misery Index. The index, created by economist Arthur Okun, adds the unemployment rate to the inflation rate. It has been in the narrow 7-to-9 range for most of the past decade, but was over 20 during the late 1970s.

Forbes has collected America's 10 Most Miserable Cities. True, it may suck to live in these cities, but at least you can take pride in knowing that you're tough enough. Flex those muscles.

America's Most Miserable Cities:

10. Providence, R.I.
Rhode Island loves your tax money, baby. Only NYC is worse. Maybe that's why everyone is leaving?

9 Charlotte, NC
Bank of America and Wachovia call this city home, which doesn't bode well for its unemployment rates.

8.Modesto, California
If you don't have a job, move to Modesto! You'll fit right in.

7.Los Angeles
Do you like driving, paying taxes and breathing pollution? Los Angeles is for you!

6.Chicago
If you like disappointing sports teams, wasting the best part of every day sitting in mind-bending traffic jams and freezing your ass off—move to my hometown—Chicago! If you're not sure you can take it, google "Gaper's Block" before you make any decisions.

5.Philadelphia
What do you get when you add long commutes, toxic waste, and violent crime? Sports fans who boo Santa Claus.

4. New York City
High income taxes, stupidly expensive housing, "the costs can make all but the super-wealthy miserable."

3. Flint, Michigan
You can buy a house for $104,000... but where will you work?

2.Stockton, California
Stockton is the epicenter of the subprime meltdown. What more do you need to say?

1. Detroit
The Motor City has high unemployment and tops the country when it comes to violent crime. As if that wasn't bad enough—Detroit is toxic. It's near the top of the list of cities that require the most Superfund dollars to clean up toxic waste sites. Congratulations, Detroit! You're the most miserable people in the U.S.!

Guess it really is time to move to Pittsburgh. Do they allow Bears fans there?

America's Most Miserable Cities [Forbes]
(Photo:Jason Lujan)

RealtyTrac says traffic to its site has tripled to about 3 million unique visitors every month from 1 million just two years ago. It estimates as many as 40 percent of visits come from first-time home buyers rather than investors or brokers.

Yahoo Real Estate saw a fivefold increase in traffic to its foreclosure listings since it expanded the site last year.

"There are a lot of people who have been priced out of the market and they're seeing their rents go up," said Rick Sharga, vice president of marketing at RealtyTrac. "Probably until next year, the level of foreclosure activity will remain at historically high levels."

From Kiplinger's:

"The homeowner just assumes, well the bank's going to take my house, but the bank can make the economic decision not to take the house," said Cindy Cooper, a Housing Court prosecutor in Buffalo. "Then that leaves two parties walking away, each one thinking that the other is going to take care of the house."

Pianka still lives in the neighborhood where he grew up and knows firsthand the blight of houses with boarded-up windows.

"The scrappers are taking the jewelry off the corpses that are left," he said from his 13th-floor office which overlooks frozen Lake Erie.

He's well regarded among members of the Warsaw Neighborhood Block Watch Club, who have spent time in his courtroom, determined to see something done about open, vandalized homes in their Slavic Village neighborhood.

Vacant houses, some stripped bare of aluminum siding, dot the streets, casting a gloom on their well-maintained neighbors.

"It scares people," said Joyce Porozynski, a block watch member who has lived in the neighborhood most of her life. "Many people have given up."

Across the street from Charles Gliha's cozy 120-year-old home stand three vacant houses, including one with the first-floor windows broken out. Another is being repaired, and a sign in the window warns would-be thieves that there are no copper pipes inside.

"If the house is not in a terrible state, a lot of times the bank will discharge the mortgage so that the property can be donated either to a neighbor to be demolished or a nonprofit organization for rehabilitation," Cooper said. Other times, each side pays a share.

Cities Fight Glut of Vacant Houses [Kiplinger]
Cleveland Land Bank [City of Cleveland]
(Photo:gwdexter)

Here's the messed up part... 57% is an improvement.

That percentage was down from the 61% reported in the first Freddie Mac/Roper survey in 2005.

"Efforts to get borrowers to call lenders and counselors are starting to work," said Ingrid Beckles, Freddie Mac's VP of Servicing and Asset Management.

But, she added, "Too many at-risk borrowers are still unaware their servicers routinely provide alternatives."

Many unaware of mortgage help: Freddie Mac [CNNMoney]
(Photo:Getty)

Some people think so. From the LA Times:

"I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.

"Despite all this, I would be willing to stay if the bank would refi the loans to a 30 year fixed, but since I'm not a 'hardship' case they'd apparently rather foreclose. I guess the only way I could qualify for loan mitigation is to get my boss to fire me, stop making payments, and wreck my credit. In fact, my bank won't even talk to me until I miss a couple of payments.

"I have purchased a cheaper place in a nearby area now, while my credit is good, and will stop making payments on house #1 after house #2 closes. I know the foreclosure will be on my credit for 7 years, but I will have saved a lot of money.

"I realize I agreed to the deal when I signed the mortgage papers, but I am within my rights to walk away from a bad deal and suffer the consequences, just as many corporations write down billions of dollars of debt, lose money for their shareholders, and lay off people as a result of their bad decisions.

"I don't really understand why people view a business decision by a homeowner as a terrible moral lapse. However, when large lending institutions, with access to more sophisticated information than any consumer could imagine, make mistakes affecting thousands of people worldwide, they are not excoriated and vilified with the same righteous zeal."

A tipping point? "Foreclose me ... I'll save money" [LA Times] (Thanks, Stephen!)
(Photo:Meghann Marco)

The judge said the foreclosure lawsuit was filed before Wells Fargo owned the mortgage - thus, the suit was premature.

The ruling - the first of its kind by a state court judge in Ohio since the subprime mortgage crisis erupted this year - could have profound implications on how foreclosures are handled in Ohio, which leads the nation in the percentage of mortgages in foreclosure. The local ruling comes as three federal court judges - in Cleveland, Dayton and Columbus - have issued similar opinions in foreclosure cases in the last month.

In other cases, however, especially when the original lender has gone bankrupt or otherwise imploded, it may be difficult or impossible to get the necessary signatures, and the necessary documents, to complete a legal transfer of the mortgage that was not completed before the foreclosure. There is no reliable way to estimate the percentage of cases where ownership paperwork will be unavailable, but it will be significant. Hopefully, while the servicers search frantically for the missing paperwork, they can focus more time and attention on making reasonable modifications of loan principal and interest to allow homeowners to stay in their homes, and mitigate losses to investors.

Judge halts foreclosures [Enquirer via CL&P]
(Photo:Getty)

Counselors have tried to keep up with the increasing demand for their services—Neighborworks, one prominent organization, trained 1,678 counselors in 2007 compared to 143 in 2004. More counselors are asking for foreclosure prevention training, and the organization is now offering stress management training as well. But the total number of financial housing counseling has remained about the same in the past several years due to limited government funding. And now, with a drastically increasing workload, organizations are worried that they won't be able to offer competitive salaries to retain counselors at a time when they're most needed.

"Counselors stressed out by desperate clients" [CNN Money]
(Photo: Getty)

While other lenders are refinancing troubled borrowers into fixed rate mortgages, critics say Countrywide is funneling customers into yet another risky ARM loan.

From CNNMoney:

ACORN Housing Director Michael Shea said that while his group is "often able to get workouts" from Countrywide, his team is "very frustrated" with the company because "it takes a long time - months" to deal with a case.

And, Shea said, the company relies heavily on "repayment plans" for its workouts. Such a plan may stave off foreclosure by letting delinquent borrowers pay off what's past-due over 12 months in addition to their regular mortgage payment. While the servicer is making a concession by not demanding payment all at once, delinquent borrowers have to pay substantially more than their regular monthly payment. And if they fail to pay in full and on time, the lender can reinstate foreclosure proceedings.

One of the biggest complaints from NTIC counselors is that what loan workouts Countrywide does provide serve more as foreclosure postponement than real prevention. "They refuse to make ARMs fixed for the remainder of the loan. Instead, they are only agreeing to do so for 12-24 months, if at all," said Mark Seifert, executive director of the Cleveland-based NTIC affiliate, The East Side Organizing Project (ESOP), in an e-mail.

Countrywide's alleged preference for shorter-term loan modifications in Siefert's experience "is very different from what we see from our lender/servicer partners where EVERY mod includes making the ARM a fixed rate going forward."

NTIC and its affiliates have partnerships with four servicers: Chase, Citi, Ocwen and Select Portfolio Servicing (SPS). "They're showing absolute diligent effort to help homeowners stay in their home, not band-aid solutions," said Michele Rodriguez Taylor, who heads NTIC's foreclosure-prevention program.

It also reminded CNNMoney that it "received the highest ranking for its workout programs from both Freddie Mac and the Department of Housing and Urban Development (HUD), which evaluates servicers based on their use of workouts to avoid foreclosures." We find this hilarious because Freddie Mac deals exclusively with "prime" loans. Way to change the subject.

Countrywide's 'workouts' fall short, critics say[CNNMoney]
(Photo:Jodi Hilton for The New York Times)

Even with an 8% decline in foreclosures from August's truly mind boggling numbers, September still managed to see 223,538 foreclosure filings.

From Bloomberg:

Foreclosures are deepening the U.S. housing recession by pushing more homes onto a market where sales and prices are dropping. There's a 10-month supply of unsold homes, the highest in at least eight years. As many as half of the 450,000 subprime borrowers whose mortgages will re-set through November may lose their homes because they can't afford the higher payments, according to a report by Credit Suisse Group.

``The truth of the matter is that borrowers are going into default as soon as they hit their adjustments,'' said Rick Sharga, executive vice president of marketing at Irvine, California-based RealtyTrac. The company sells foreclosure information and has a database of more than 1 million properties from 2,500 U.S. counties.

California has the dubious honor of having the most actual bank repossessions (in which the property is unsellable and must be surrendered to the bank), with 7,853.

October is expected to be an exciting month for the subprime meltdown, with $50 billion in ARMs set to reset.

Foreclosures Doubled in September as Loan Rates Rise (Update5) [Bloomberg] (Thanks, Chris!)
(Photo:Getty)

Some 5 million adjustable-rate mortgages are slated to reset over the next 18 months, and loan modifications are still "few and far between," Miller said in an interview. "Everyone will know what will happen in bankruptcy, so the fact that bankruptcy is an option would lead to negotations" between the borrower and lender ahead of that event, he said.

"House bill would let courts alter mortgages" [Reuters]
(Photo: Getty)

You still have to deal with the IRS.

The IRS considers canceled debt as income, according to the New York Times:

Foreclosure is one way that beleaguered homeowners can fall into this tax trap. The other is when homeowners are forced to sell their homes for less than the value of the mortgage. If the lender forgives that difference, they are liable for income taxes on that amount.

The 1099 shortfall, as it is called, stems from an Internal Revenue Service policy that treats forgiven debt of all types as income even if the taxpayer has nothing tangible to show for it, unless the debt is canceled through bankruptcy.

The Center for Responsible Lending expects that 20 percent of the home loans made in 2005 and 2006 to people with weak credit, commonly called subprime loans, will end in foreclosure. Because so little money was required as a down payment during the boom, the value of many of these houses may be less than what is owed.

Some people in this predicament are fighting the I.R.S. and winning. Sometimes, lower payments can be negotiated with the I.R.S., tax experts say.

"Your home has declined in value and you lose it," Mr. Eggert said. "Then the I.R.S. says you owe tens of thousands in taxes because you got a windfall when the debt was forgiven."

After Foreclosure, a Big Tax Bill From the I.R.S.[NYT]
(Photo:Michael Stravato)

Among the big cities: New York came in #82, with 1 foreclosure in 305 households, an increase of 47% from last year. Chicago was ranked #30 on the list, with 1 in 88 households in foreclosure, up 45% from 2006. LA was #29, with 1 in 87 and an increase of 125%.

You can read the full report at RealityTrac's website and see how your neighbors are doing. If you live in Richmond, VA you can relax. Your area has only 1 in 2,319 households in foreclosure, dead last on the list. Congrats!

STOCKTON, DETROIT, LAS VEGAS POST TOP METRO FORECLOSURE RATES [RealtyTrac]
Las Vegas, Detroit foreclosure rates double-report [Reuters]
(Photo:Jim_W)

As I started looking for places, I noticed everything that used to be for rent was now for sale due to the same foreclosure effect that happened to my landlord.

It also appeared that the rents were going up..... but... were the really? or am I just paranoid and bitter?

Since I was waiting to get my research published, I figured I could waste ample amounts of time coding perl scripts and learning google maps.

This project was born out of boredom.

CraigStatsSF [via BoingBoing]

From CNNMoney:

"In October alone more than $50 billion in ARMs will reset," according to Mark Zandi, chief economist and co-founder of Moody's Economy.com. That's a record, according to Zandi.

A buyer in 2005 with poor credit and limited means might have signed on for a $200,000 2/28 hybrid ARM, locking in a fixed rate of 4 percent for two years. After paying $955 a month, his bill would now be set to spike to $1,331, a 39 percent increase.

"There were increasingly poor quality loans made starting in the spring of 2005," he said, "with the poorest of all made during the fall of 2006."

Lenders approved many borrowers who had little chance of being able to afford the payments two and three years out. They approved applications without any proof of income or assets ("liar loans") and others that barely could make the low teaser-rate payments. Some borrowers chose interest-only ARMs, which left the principal of the loan untouched

Scary, scary stuff.

Mortgage resets: Record bill coming due [CNNMoney]
(Photo: mbostock)
PREVIOUSLY: Ameriquest Employees Confess: Lying To Customers, Forging Papers

Jessica Attie, co-director of the foreclosure prevention project at South Brooklyn Legal Services and the lawyer for the Johnsons, said her office was overwhelmed with homeowners who had handed over their deeds to people pretending to help "save" their homes.

New Scheme Preys on Desperate Homeowners [NYT]
(Photo:Oscar Hidalgo, NYT)

The company reported losing $85.5 million, or 26 cents per share, during the February-April period, which is when the nation's largest tax preparer sees the majority of its revenue. By comparison, the company earned $587.5 million, or $1.79, during the same period a year ago.

Yikes. Other than the subprime lending, H&R Block is doing well. The rest of the company earned $591.2 million. —MEGHANN MARCO

H&R Block reports $85.5 million 4Q loss [BusinessWeek]
(Photo: Maulleigh)

During the month of May, there was one foreclosure filing for every 656 households in the US.—MEGHANN MARCO

May foreclosure filings soar 90%; more housing woes likely [Boston Globe]
May home foreclosures up 19 percent: RealtyTrac [Reuters]
(Photo: rappensuncle)

Casey Serin, the 24 year old who bought 8 homes in an attempt to fix n' flip, and then started a blog about his ridiculous schemes to get out of $170,000 in debt without having to do any real work, has stopped blogging.

A note on his site now reads:

IamFacingForeclosure.com is over. It will never return.

Advertisers: Feel free to cancel your PayPal subscription. I will be issuing pro-rated refunds this week.

Everybody: I'm very sorry to end like this.

Thanks to all the supporterz, haterz and everyone who wrote about me. You guys made the last 9 crazy months of blogging possible.

You may contact me or join my mailing list here.

—
Casey Serin
May 31, 2007

Thousand Bucks Kitchen Table! and The Real Estate Investor Manbag [Casey's photostream]
IamFacingForeclosure.com [Official Site] (Thanks to Aaron!)

PREVIOUSLY:
When Will Casey Serin Pay For Embodying The Worst Of The Housing Bubble Burst?
Posterboy For The Housing Bust

We first checked in on him in October '06, and he seems to have only gotten worse. Two of his properties sold, the other 6 foreclosed. He doesn't have a job, he recently borrowed $600 to buy a video camera to help with his blogging, and took a trip to Lake Tahoe for a "brainstorming session." He keeps reaching for more quick-rich schemes, like trying to find a buyer for a Las Vegas Casino, or referring students to a shady investment strategy school. Book deals are said to be in the works, he's received national and international press coverage, and appeared on Suze Orman's and Robert Kiyosaki's advice shows. Hundreds of comments are left on each post.

Let's not forget that he committed mortgage fraud, lied on his loan applications, and lied about owner intent, that is, said he was planning on living in the place when he really wasn't.

Why doesn't he get a job? Declare bankruptcy? Stop being a schmuck? We know why. He's addicted to blogging about his financial improprieties. The attention feeds continued bad behavior. If he actually fixed his problems, the source of his current notoriety might dissipate. In time, however, Casey will find his fame just as fleeting as his bank account. — BEN POPKEN

I Am Facing Foreclosure [Casey's Blog]
Casey Serin: The world's most hated blogger? [Cnet]

The big idea is that its a better deal for the bank if they can work something out with you, because with so many vacant homes on the market these days... foreclosing just isn't what it used to be —MEGHANN MARCO.

Fighting to Keep the Roof [Washington Post]
(Photo: Spidra Webster)

NACA requires that people who ask for its help attend intensive housing counseling workshops. It also assesses the person's ability to own and maintain a home. It then helps the person obtain a mortgage with one of its partner lending institutions, the biggest ones being CitiGroup and Bank of America.

In 2003, Citigroup made available $3 billion in mortgage loans to NACA through 2013. Bank of America, which has worked with NACA since 1995, committed at least $6 billion through 2015.

The group traditionally found the money was best used to finance new home loans for low- and moderate-income buyers.But with the mortgage crisis unfolding, it decided that $1 billion should be used to refinance the loans of people preyed upon by abusive lenders. The group expects to refinance about 7,000 mortgages — a small number, given estimates that more than 1 million homeowners nationwide could be at risk of foreclosure.

Credit counselors are bracing for the continuing fallout from the expected 1-3 million foreclosures during 2007.

"Oh Lord, there is no way we can keep up with these calls," said Kaye Britton, a foreclosure counselor at the downtown nonprofit group that promotes home ownership to minority Americans, among others.

Really, the heart of the problem, as some have pointed out in the comments, is that banks should have known better. But the market was hot, they got carried away, and borrowers just followed the advice of their mortgage brokers. Things steamrolled, and here we are. The subprime lending fiasco is costing everyone money except the mortgage brokers who originally wrote the loans so they could walk away with a quick broker fee. What isn't quite clear is why the banks haven't sued the brokerage firms who knew exactly what they were doing when they engineered this mess by "helping" borrowers into loans they couldn't afford by misstating incomes and fudging numbers. — SAM GLOVER

(Photo: klannert)

Serin's trying to get out from under 6 money-losing properties. He's not going to cut bait, file for bankruptcy and get a job.

Nope, he's started a tell-all blog. SFGate's Carol Llyod writes:

Here's a flyer he put up recently.

"A would-be real estate mogul follows boom tips straight to bust" [SFGate] (Thanks to Philip!)