Fannie, Freddie Work on Mass Loan Modification Plan [WSJ]

A Town Drowns in Debt as Home Values Plunge [NYT]

The words painted on a wall near the front door are hard to make out but it appears to declare: "Brought to you by Deutsche Bank... Eat it."

Details are sketchy, but NBC says:

Williams said his financial troubles began when he got behind on his mortgage payments then signed a deal that promised to help him stay in his home. The deal failed.

Just last week, Williams said he found out that his home had been sold without his knowledge to a bank and he had to get out.

The front yard of Williams' home is strewn with boxes, furniture and trash cans. There's even some of the home's air conditioning duct work lying on the lawn. That's not the only part of the property left in shambles. The inside of the house is just as messy.

Obviously, we have no idea what really happened, but it sounds like Mr. Williams may have fallen victim to a foreclosure "rescue" scam. The FTC says:

Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage payments they collect from you, but do not pass on to the lender. Sometimes, they assume ownership of your property by deceiving you, the homeowner. Then, when it’s too late to save your home, they take the property or siphon off the equity. You’ve lost your home to foreclosure despite your best intentions.

Whatever the real story is, the house is in pretty bad shape.

If you're facing foreclosure, be sure to acquaint yourself with rescue scams and avoid them. If you've been taken in by such a scam, report it to the Federal Trade Commission and your state Attorney General. If you're looking for help with your mortgage, the FTC recommends first contacting your lender. If you need more assistance, they also recommend speaking with a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, personalized assistance to help at-risk homeowners avoid foreclosure.

Take This Home And Shove It [NBC Bay Area via Buzzfeed]

Cook County Sheriff Tom Dart said he understood he was flouting the law in refusing to have deputies carry out the rising number of eviction requests, but mortgage holders must be accountable.

"These mortgage companies only see pieces of paper, not people, and don't care who's in the building," Dart said.

By halting the evictions, he's preventing about 500 notices that were scheduled over the next 6 weeks.

Mortgage foreclosure cases filed in Cook County are likely to exceed 43,000 this year, compared to some 18,000 in 2006, the sheriff said.

The president of the Illinois Bankers Association, Linda Koch, points out that they have to have the ability to "take over collateral upon default" or they won't make loans—which of course is absolutely true, but may not be the most realistic, or humane, or in this case enforceable, position at this moment in our country's history.

Update: I have edited the headline to include a reference to renters, because my original post didn't explicitly mention this and it's important to the story.

"Sheriff in Chicago halts foreclosure evictions" [Reuters]
(Photo: Getty)

• Credit Repair The Times says that the FTC has taken action on 70% (!) of companies that promise to repair your credit and have not yet found one that can actually "fix" truthful information on your credit report.
• Foreclosure Rescue This is a nasty scam. The scammers advertise with messages like "We can save your home. Guaranteed." Then the scammer either tries to swindle you out of your mortgage payments in exchange for "negotiating with your lender" or they trick you into signing over the title to your home. Here's some more information about this scam and how to avoid it.
• Hidden Bankruptcy Bankruptcy is one option that is open to you, but it has serious consequences to your credit that you should consider before going ahead with it. Watch out for ads that claim to "Consolidate your bills into one monthly payment without borrowing." This is can be a secret code for bankruptcy.
• Free Lunch Anyone offering you a free lunch for attending an "information" session is probably full of crap. If their investments are so good... why are they selling them to you!? The Times says that an SEC report said that "about half the seminars it attended featured misleading claims, and 13% appeared to be engaging in outright fraud."
• Home-based Businesses Run. Away. Never pay a fee to start a home-based business, however wonderful it may sound. Scammers will tell you that doctors need sub-contractors to stuff envelopes or help process their accounts. They might try to tell you that you can make money starting a website, or assembling crafts. They'll charge a fee to set you up, and it's usually pretty hefty. After you've paid your money, you're on your own.
  
  "Few consumers," the FTC said in a warning statement, "are able to find clients, start a business and generate revenues."

  If you're interested in starting your own business, go to your local library and ask what educational resources they have for people like you. Brooklyn, for example, has an entire library dedicated to the needs of small businesses and entrepreneurs.

Money scams don't slow down in hard economic times [LA Times] (Thanks, Robert !)
(Photo: blue_j )

The company that auctioned the home wasn't available for comment, so we'll be curious to see whether they try to squirm out of the deal. Like, oh, maybe saying a bunch of Canadianized killer bees moved in.

"$1.75 eBay bid gets abandoned Michigan home" [MSNBC.com] (Thanks to Scott!)
(Photo: MSNBC)

Even at the low, low price of a double cheeseburger at McDonald's, it took 19 days to find a buyer for a gutted house on Detroit's east side, says the Detroit News. The house in question used to be the nicest house around. After foreclosure, however, vandals stripped the property of everything valuable from the wiring to the kitchen sink.

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."
...
"It about doesn't make sense to put the family out," Upshaw said. "Once people are gone, you're gonna lose the house in this neighborhood."

Empty houses are becoming more and more of a problem in Detroit and other cities hard hit by the foreclosure crisis. Banks are so desperate to rid themselves of these properties that they're willing to pay $10,000 to sell a house for $1.

So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.

"It doesn't make sense in some neighborhoods to keep paying costs and costs," Colpaert said. "It can make more financial sense to give it away."

While a $1 house is certainly unusual, even for Detroit, houses can be had for as little as a few hundred dollars these days.

"My 14-year-old son could buy a block of Detroit property," said Ann Laciura, senior servicing specialist for the Bearing Group.

Foreclosure Fallout: Houses Go For $1 [Detroit News]

Two More Extreme Makeover Home Edition Homes in Trouble [FreeMoneyFinance] (Photo: Newtownia)

"We take this very seriously, and we are working with EMC [a mortgage company JPMorgan Chase owns] and the family's attorney to make this right," said Tom Kelly, a JPMorgan spokesman.

After the Dickson's bought the house back in May, the foreclosure proceedings were supposed to have been stopped. They weren't. That's when the former owner's mortgage company (owned by JPMorgan Chase) hired "Field Asset Services Inc." to drill the locks and "empty the house," according to the Austin American-Statesmen. Field Asset Services claims that the Dickson's possessions were given to area thrift stores, but they have been unable to locate them.

Ordinarily, when personal possessions are left in a foreclosed home a court order is needed to remove the items and the owners are given the opportunity to reclaim them within 24 hours. JPMorgan Chase says its not sure if there was a court order in this case.

Elizabeth Bradburn, the Dicksons' real estate agent, is organizing an effort to collect donations for the family. She said gift cards to furniture and household goods stores are preferred and may be sent to the Dicksons' business address: 9800 N. Lamar Blvd.,

No. 315, Austin TX 78753.

"It's been awesome to see people mobilize and want to help out," Hance [Dicksons' attorney] said. "The Dicksons are, of course, very grateful and touched by the outpouring of support from the community."

Cedar Park couple sues Austin company in foreclosure mix-up [American-Statesmen](Thanks, Ron!)

One in every 483 U.S. households either lost the home to foreclosure, received a default notice or was warned of a pending auction, RealtyTrac said. That was the highest rate since the Irvine, California-based company began reporting in January 2005 and the 29th consecutive month of year-over-year increases. Nevada, California and Arizona posted the highest rates in the U.S. and New Jersey entered the top 10.

``It's definitely a different kind of market than what we got used to a couple years ago,'' said Devin Reiss, owner of Realty 500 Reiss Corp. in Las Vegas. ``We used to sell homes in a day. Now 50 percent of our sales are foreclosures.''

The vicious cycle of foreclosures depressing home prices and falling home prices leading to more foreclosures continues...

Right now, lenders are afraid to lend and buyers are afraid they'll be under water in a year, so unless something dramatic happens we're going to continue to see the trend go in the wrong direction,'' said Rick Sharga, RealtyTrac's vice president of marketing.

Foreclosures Rise 48% in May as Repossessions Double (Update2) [Bloomberg]
(Photo: amyadoyzie )

Dear Mr. Popken,

I recently read with great interest your article entitled Satisfaction Guaranteed in the recent May edition of the reader’s Digest.

Since November I have been living a nightmare in trying to contact someone in a position of authority at the Washington Mutual Bank in regard to my mortgage, to no avail. Apparently you can go into any of their branches and fill out paperwork to get a mortgage but if you run into a problem you are just out of luck.

Over the past six months I have been disconnected more times than I can count while navigating their 866 “customer service” number. No one in their company has the presence of character to sign a name to any form letter correspondence never mind give a direct phone number to personally speak to. I have written letters to the members of their Board of Directors without any response. I have contacted officials, Senator Frank Lautenberg and Congressman Rodney Frelinghuysen whose attempt to contact the bank on my behalf have also gone ignored. Correspondence I have received from Washington Mutual is sporadic and schizophrenic at best.

I received a request to inform them of any hardship I may be experiencing and promptly replied with an explanation and a proposal that would benefit us both only to receive a denial of my request (in a timeframe too short for them to have properly reviewed it) one day and literally another letter the next day asking for additional information because they want to work with me.

After six months, I recently received a phone message with a first name and extension to call. Upon calling the number (you STILL have to navigate the 866 “customer service” AND the probability of being disconnected is high) I reached an answering machine with a message that says you can ONLY leave one message and you will receive a call back within 24 hours...not so. I have found myself going back and forth waiting for a reply call to actually talk to a human only to receive another denial of the proposal I resent. This latest letter (received today, Friday) was dated BEFORE the recent phone call.

After finally getting through the "customer service" for Wa PU I spoke to a loan person who basically told me my file was closed in Feb. and everything I had sent after that was for nothing and oh by the way they are selling my house in June....... I guess that was supposed to be a surprise.....

I understand that Washington Mutual is on very shaky financial ground (AND SO IT SHOULD BE!) and it is my hope they receive NO outside financial support because their business practices are DEPLORABLE.

...I truly appreciate your help. I am at my wits end, it has been a VERY stressful six months...If it was just me to worry about it would be one thing but I do have three children who will also be affected.

If bombarding their board members has no results, I may type up my complaint and stand outside one of their busiest branch offices and bring my plight to their entering customers. How can they not want to work with people to find a solution?

Thank you for your article and some direction.

Here's the contact info we gave her:

Executive Response Team
Customer Relations Manager
Washington Mutual Bank
(800) 225-5497 Opt. 1 Ext. 467
Fax (206) 965-3082

There's also (206) 377-8196, (206) 461-2000, (206) 461-6414, or (206) 461-8779. Try asking for Ms Cindy Modica, VP of Quality Service Management.
Also check out this post for additional tips for dealing with executive customer service: http://consumerist.com/consumer/howto/be-a-customer-service-ninja-177811.php

(Photo: Getty)

From Bloomberg:

"We're seeing people give up even before they get to the reset because they couldn't afford the home in the first place,'' said Jay Brinkmann, vice president of research and economics for the Washington-based trade group."

It comes down to an overstretching of buyers to get into homes they couldn't afford and an overextending of credit by lenders who were more willing to take risk,'' Brinkmann said.

U.S. Mortgage Foreclosures Rise as Owners `Give Up' [Bloomberg]
(Photo:Getty)

You will immediately know the exact amount of days you have to live in your house payment free. We stay on top of your walk away plan and keep you up to date with weekly progress emails. We also will notify you if the lender is taking longer than expected subsequently giving you more time in your home payment free.

For $995, they'll give you half an hour of legal advice, and then file the necessary legal papers to get lenders to stop calling you. The site says it's not a scam, that they're not buying the house from you or anything like that. They will, however, enroll you in a "credit repair" service. Those kinds of companies are usually scams or have figured out some duplicitous way to trick the credit system.

Blogger Mish Shedlock called the company to ask what the deal was:

I spoke with John Maddux a "senior advocate" with You Walk Away (YWA) about the business. As one might expect it is booming. For $995 one receives a half hour of legal counsel where individual strategies are mapped out and all the laws pertaining to recourse vs. non-recourse loans as well as judicial procedures are explained to the customer. YWA also files the necessary legal papers to stop mortgage companies from calling and informs you immediately of how many days you will be able to stay in the house for free. Should the lender take longer to process the documents, YWA will keep you informed of any extra time.

Maddux informed me that YWA is currently operating in the state of California only, but Nevada and Florida will soon be coming online. Eventually they expect to be nationwide.

You Walk Away [via Caveat Emptor via Behind The Mortgage]

Pain goes through the roof [Los Angeles Times] (Thanks to Nicole!)

Faced with foreclosure on her Russellville, Indiana home, Christina Snyder allegedly concocted the kind of plan that now has insurance executives on edge.

According to the county prosecutor, the 31-year-old Snyder allegedly offered to pay a neighbor $5,000 to help her burn down her house and make it look like a botched rape attempt - all in order to claim $80,000 in insurance money. Snyder wanted the neighbor to bind her hands in duct tape, write "whore" on her shirt, and then help her escape once the blaze was set, the prosecutor says. The neighbor demurred, instead reporting Snyder to police.

With the national foreclosure rate zooming and the real estate market in a two-year funk, the insurance industry fears more homeowners will see arson as a way out of their financial woes. A recent report by the industry-funded Coalition Against Insurance Fraud notes that with "untold thousands of homeowners struggling with ballooning subprime mortgage payments, fraud fighters are watching closely for a spike in arsons by desperate homeowners who can no longer afford their home payments."

And just because we can, here's a clip from Harold & Kumar. (NSFW, audio) We hope this Burger Shack employee doesn't have a ARM.

Will foreclosures spark an arson boom? [CNNMoney] (Thanks, Robert!)
(Photo:The Joy of the Mundane)

You know Merrill and Morgan and Lehman and Citi
J.P. and Wamu and Bofa and Barclay's
But do you recall?
The most famous i-bank of all?

thumpety thump thump
thumpety thump thump
Give up your dirty dough

"Frosty the Goldman" and Other Odes to Subprime Profiteers [Village Voice] (Thanks to James!)

The foreclosure filing numbers include notices of default, pending lawsuits, auctions, and back repurchases or REOs. An increase in REOs is a troubling statistic because it means that banks are unable to sell properties at auction, and are being forced to keep them.

Here are some of the numbers for the month of November:

Notices of Default: 35,096
Auctions: 71,965
Bank Repurchases: 46,438

When comparing this year's numbers to 2006, one can see that the increase in foreclosure numbers comes mainly from auctions and repurchases. There were only 4,069 more notices of default served this November, but 81,616 more filings in all.

FORECLOSURE ACTIVITY DECREASES 10 PERCENT IN NOVEMBER [Realty Trac]
(Photo:mugley)

Stephen O'Brien wants to buy a foreclosed apartment building on Warwick Street in Roxbury. He wants to keep the ground-floor tenant, James Evans, 77, who is partially blind and living on Social Security.

But the company that is selling the foreclosed building told O'Brien it must be emptied of tenants before it can be resold, a standard industry practice.

"It's insane," said O'Brien, who lives near Evans and owns three apartment buildings in the neighborhood. "It's just obviously insane. And even if they're trying to manage it in a way that benefits them, then the problem is that they have absolutely no concern for the individual."

O'Brien called the law firm that handled the foreclosure for Deutsche Bank. He wanted to inspect the building so he could determine a fair price.

"The lawyer I spoke to said they wouldn't let anybody in until everybody is out and they've cleaned it," he said.

He said he received a similar response from New England Property Solutions. Then, he tried to contact Deutsche Bank directly. No response.

A spokesman for Deutsche told the Globe, "We're going to decline to comment for the piece. We just don't see an upside in explaining this stuff."

As foreclosures mount, tenants suffer [Boston Globe] (Thanks, Arthur!)
(Photo:Globe Staff / Mark Wilson)

PREVIOUSLY: What To Do When Rental Gets Foreclosed?

"Avoid Fraud" video [YouTube]
Official "Avoid Fraud" website [Freddie Mac]

RELATED
"Online video helps troubled borrowers spot fraud" [Reuters]

32 More Foreclosures Dismissed for Lack of "Documentation" [LoanWorkout] (Thanks to Bill!)

2 weeks ago both my wife and I got a summons, that let us know that our landlord was being sued by the bank he financed the house through, for not paying his mortgage since July of this year...

Now I'm a younger guy and haven't had much experience with matters such as this, I didn't know what to do, not to mention well stressed over the matter.

I was frantically asking advice from anyone and everyone I knew. Some said keep paying your rent and just make sure there is a paper trail, others stated don't pay it and save the rent money for the eventual move(if the house gets foreclosed they usually kick you out, or so I'm told, and its usually really really short notice, 24hours).

Eventually I spoke to a lawyer, mind you his specialty wasn't in this area of law, but his suggestion was not to pay the rent and save it for the move.

So we didn't pay rent and so far the landlord has not contacted us. My question is was this the right move to make and what are my obligations/risks in a situation such as this (specifically being a renter who's home is potentially getting foreclosed)?

-Eric

If you paid a security deposit, you're still entitled to get that back from the landlord.

Keep saving for the move, which will probably take first and last month's rent and a security deposit. Consider pre-packing up your non-essential items. Assuming your landlord doesn't discover a secret box full of gold coins and pays off his mortgage, you're going to have 24-72 hours from the inevitable eviction notice to get out of Dodge.

You really need to get familiar with Florida state laws for this, though. Consider contacting your local bar association and asking for a referral to a lawyer specializing in tenant rights.

RELATED: href="http://www.bankrate.com/brm/news/real-estate/20071109_foreclosure_eviction_renters_a1.asp#one">Foreclosure can leave renters homeless [Bankrate]
As Owners Feel Mortgage Pain, So Do Renters [NYT]

Part of the mortgage boom and bust was the mortgages getting chopped up, put into pools of thousands and then became investment vehicles that were sold to Wall Street. All of this financial three-card-monte means it's hard to prove who owns the mortgage note at what time...

"The institutions seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance. Finally put to the test, their weak legal arguments compel the court to stop them at the gate," wrote Judge Christopher A. Boyko in the decisive case.

If mortgage lawyers jump on this ruling and banks are forced to prove they actually own the note on the date of the foreclosure notice, a lot more people will get to keep sleeping under their own roofs.

Foreclosures Hit a Snag for Lenders [NYT] (Thanks to Brandon!)
(Photo: zeorb)

PREVIOUSLY: Dubious Fees For Homeowners Facing Foreclosure

From the NYT:

Bankruptcy specialists say lenders and loan servicers often do not comply with even the most basic legal requirements, like correctly computing the amount a borrower owes on a foreclosed loan or providing proof of holding the mortgage note in question.

"Regulators need to look beyond their current, myopic focus on loan origination and consider how servicers' calculation and collection practices leave families vulnerable to foreclosure," said Katherine M. Porter, associate professor of law at the University of Iowa.

In an analysis of foreclosures in Chapter 13 bankruptcy, the program intended to help troubled borrowers save their homes, Ms. Porter found that questionable fees had been added to almost half of the loans she examined, and many of the charges were identified only vaguely. Most of the fees were less than $200 each, but collectively they could raise millions of dollars for loan servicers at a time when the other side of the business, mortgage origination, has faltered.

In one example, Ms. Porter found that a lender had filed a claim stating that the borrower owed more than $1 million. But after the loan history was scrutinized, the balance turned out to be $60,000. And a judge in Louisiana is considering an award for sanctions against Wells Fargo in a case in which the bank assessed improper fees and charges that added more than $24,000 to a borrower's loan.

Dubious Fees Hit Borrowers in Foreclosures [NYT via Credit Slips]
(Photo:David Lienemann for The New York Times)

Overall, foreclosures are up 30% from last quarter and 100% from last year. Nationwide, there was 1 foreclosure filing for every 196 households.

Click the heat map to see what's going on in your area.

Foreclosure Activity Up 30% in Q3 [RealtyTrac]

From the WSJ:

The biggest hit was felt in WaMu's home-loans unit, which widened its quarterly loss to $348 million from a loss of $23 million a year ago. As has been the case with other lenders, most of the problems centered on mortgages to borrowers with subprime credit, as well as home-equity loans.

In remarks to analysts, Mr. Killinger said the housing-price correction was more dramatic and rapid than anticipated, and that forecasting what will happen next is difficult because conditions are changing so quickly. Still, he said, "I'm very pleased with how we've managed the company through this period of stress."

WaMu's third-quarter loan-loss provision, or funds set aside in anticipation of bad loans, was $967 million, compared with $166 million a year ago and $372 million in this year's second quarter.

WaMu Offers Tough Outlook [WSJ]

4 Things To Try Before Foreclosure
How To Save Your Home from Foreclosure
How To: Avoid Foreclosure
Facing Foreclosure? Take A Deep Breath And Don't Panic

(Photo: Sam Wilkinson)

When we got our second mortgage, our home appraised for almost $90k. We listed it several times at $42k (the break even point for us) and couldn't sell it. We relisted at $36k (which would have us in debt without a house) and couldn't sell it. The roof was literally caving in, the basement was flooding and the porch was crumbling.

Most of what the reality agent told us on the disclosure sheets turned out to be false, but we had no real recourse as we found out so long after the closing. One example was the roof was listed on the sheets as "newer", but the original 1910 slate shingles were still on there, topped with four layers of asphalt shingles (the building code allows for three, maximum). We were to naive to not get a home inspection before buying. We were stuck and couldn't afford two residences.

The reason our story is amusing was the bank foreclosed and tried to turn the property on auction quickly. They couldn't sell it either. They put a ton of work into the place. Our roof estimate alone was $14k, plus there were lots of things not up to code in that old place. They ended up selling it on their third attempt, for $19,000. There's no way that would have even covered their costs after we left.

Currently we're renting a friend's condo as we wait for the credit stain of bankruptcy to wane. I'm not sure I'd ever want to invest in real estate again. We were told over and over by family that real estate is the only safe investment, but speculation is just that and we lost our shirts in the process.

-Matt

• Always get a complete home inspection before buying new property.
• Real estate is an investment like any other, it carries risk. Risk means risk of losing all your money.

(Photo: DCvision2006)

Back in 2005, my wife and I bought our first condo. We live in the Central Coast of California, in San Luis Obispo, where the property values were skyrocketing, and were not supported by the wage base, similar to Monterey and Santa Barbara. It was the top of the market and I knew it, but we had a very slick mortgage broker who got us qualified (it wasn't a no-doc loan, but it was a 100% finance, 80/20 with a first and a second, the first was a 6.5% 2/28 ARM, the second a 9% fixed.) We were assured at the time and up to as recently as this Summer, that we would have no problem re-fi-ing that loan (and even paying off our lower-interest student loans by taking some cash out in the process=wtf???) by the same broker. Of course that didn't happen...

We came into some money in the time in between and paid off a bunch of student debt, credit cards, and car loans, and took some trips AND significantly, spend 60k improving that condo. We did not pay off the second or any principal on the first or re-fi it.

Then, this April, we bought a new house with more room and a yard. We bought it 100% financing zero-down, but FIXED, but also no-doc. (I also was able to get a no-doc loan for my sister's condo, bringing my mortgage total to $1.4M. Let's just say, I do ok, but that's INSANE.) We knew we were upside down on the first condo, but tried to rent it because everyone tells you that real estate here is such a good investment. Tried to re-fi, got tenants, tried to re-fi........ then we get the ARM readjustment. $1,000 more, on something we're already losing about $2k a month on even after the rent.

Long story short, I'm losing the condo, losing the $60k of improvements we put into it. Now I read (I think on your site) that I'm probably getting hosed by the IRS for it too. (Not sure since the deficiency is protected under California law—they have no option but to forgive it.) Plus, I've had to spend another $5k or so settling with my tenants who had a one year lease.

I'm a big boy. I can handle the ding on my credit. But I can't be an expert at everything. My irrationally exuberant broker made me believe I would always be able to get out of the ARM, and that it would let me get more house and rely on an income going up, and probably not need to worry about the adjustment much anyway. In this particular market, that was literally one of the 10 cheapest properties on the market at the time, and I needed voodoo financing to get into it????

If I gave a client that kind of advice, I probably wouldn't lose my license, but I would probably get sued for malpractice. I guess the Department of Real Estate doesn't have standards as high as other professions in this state.

Personally, I'd love to see a bailout for people (not like me) who are getting hosed by the ARM adjustment (how about just fixing them at prime at the time they were signed?). But that's "class war." It's only OK to bailout Wall Street hedge funds who borrow even more recklessly to invest in this paper that would be better used in toilets.

I'm not looking for sympathy, since I'm not losing my roof, but it still sheds light on the current crisis. I'm an attorney, and I arguably could have known better. But a law license doesn't make me omniscient, and real estate isn't my field. So, if this happened to me, imagine what happens to people who know even less!

-Jon

A quintessential tale from the epicenter of the housing bubble.... You can't get something for nothing.... No money down is an invitation to disaster. That's like deciding the best way to purchase a new couch is through a Rent-A-Center.... Irrational exuberance.... A broker is not your friend. He didn't get in the business to make dreams came true. He's there to make money. You gotta take full responsibility for your own decisions, past, present, and future, otherwise you'll be an easy mark for the next huckster that comes along. Own your actions and then you also completely own their positive outcomes, one of the highest ROIs around.

"The jump in foreclosure filings [in August] might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now," said RealtyTrac Chief Executive James J. Saccacio.

"Another significant factor in the increased level of foreclosure activity is that the number of REO filings (bank repossessions) is increasing dramatically, which means that a greater percentage of homes entering foreclosure are going back to the banks."

The states most affected in August were so-called "sun belt" states and Midwestern "rust belt" states that are reeling from the loss of manufacturing jobs. Nevada (one for every 165 households,) California (one in 224), Florida (one in 243), Georgia (one in 271), Ohio (one in 281), Michigan (one in 288),Arizona (one in 289), Colorado (one in 312), Texas (one in 532), and Indiana (one in 544).

When real estate markets were hot, borrowers in trouble were able to sell their homes for enough to pay off their loans. Now, with the markets flooded with foreclosures and prices dropping, borrowers in trouble may find out that they owe more than their house is worth.

August foreclosures zoom [CNNMoney]
Foreclosures more than double in past year [MarketWatch]
Foreclosures Surged 36% in August, Report Says [New York Times]
U.S. Foreclosures Continue to Surge [Wall Street Journal]
(Photo:Getty)