George and Barbara Dawson purchased their home “subject to” a [tag]first mortgage[/tag] with Great Western Bank, a predecessor of Washington Mutual Bank (WaMu), one of the nation’s largest home loan lenders. The loan fell into [tag]default for nonpayment[/tag]. WaMu held its foreclosure sale on Feb. 8 by submitting a “credit bid” for the mortgage balance. No bidders showed up so WaMu took title to the home.

But, unknown to WaMu, borrower George Dawson filed Chapter 7 bankruptcy on Feb. 6. WaMu was therefore in violation of the [tag]bankruptcy[/tag] “automatic stay” prohibiting further foreclosure proceedings.

On Feb. 20, WaMu served a “Notice to Quit” on the Dawsons, claiming ownership of the house. On March 1, WaMu was notified that George Dawson had filed Chapter 7 bankruptcy on Feb. 6. On March 14, WaMu dismissed its unlawful-detainer eviction proceedings against the Dawsons.

However, WaMu did not rescind the foreclosure sale until Aug. 8. On June 2, the Dawsons brought a lawsuit against WaMu seeking damages for willful violation of the bankruptcy automatic stay by holding the foreclosure sale. (more…)

As the number of foreclosures rises, homeowners unable to make their [tag]mortgage payments[/tag] are facing another growing threat: “[tag]foreclosure rescue[/tag]” scams. State and federal authorities say they are investigating an increasing number of homeowner complaints about fraud and deception by companies that engage in lending to financially distressed borrowers seeking to avoid foreclosure. Several states have recently passed or are contemplating new laws to provide more protection against dishonest businesses trying to take advantage of already vulnerable homeowners.

The problem centers on foreclosure-rescue companies, which target homeowners behind on their mortgage payments through newspaper ads or fliers claiming services such as “fast cash,” “equity funding” and “no credit check.” According to some recent cases filed by consumers and regulators, the companies mislead borrowers into believing they can save their homes from foreclosure in exchange for a transfer of the title for a year or two. The companies promise borrowers they can stay in their homes by paying rent for that period, giving them time to catch up financially until they can buy back their property. (more…)

You already know the current home “[tag]buyer’s market[/tag]” (with more homes listed for sale than there are active buyers searching for residences) in most cities is a great time to purchase a home. There is little competition from other buyers. Motivated sellers are setting realistic asking prices. In other words, it’s a more normal home sale market as compared to the record-breaking volume of the last few years.

Especially if you are a “cash challenged” or “credit challenged” home buyer, you will love this finance source. Not every resale home can be financed using this source, but all you need is one. This under-used [tag]home mortgage finance[/tag] source is the home seller. With more than 50 percent of U.S. homes owned free and clear with no mortgage, those homes are the best candidates for [tag]seller financing[/tag]. Smart home purchasers ask their buyer’s agents to search the local MLS (multiple listing service) listings for homes listed with no existing mortgage. Those sellers are the best prospects for seller carryback mortgage financing. (more…)

America’s housing market has started to slow down a bit, but southeastern North Carolina is still going strong. CNNMoney.com recently named [tag]Wilmington NC[/tag] as one of the [tag]top 10 cities to buy a home[/tag]. It ranked seventh nationally for potential real estate appreciation over the next five years.

Over the past five years home sales had hit record highs as low mortgage rates lured buyers. But the housing sector has lost steam this year as would-be buyers have grown more cautious amid high energy prices and [tag]rising interest rates[/tag]. When asked what happens when mortgage rates and interest rates go up mortgage broker Karen Davis said, “Typically the market slows down somewhat. It takes a little longer to sell a house than it was 12 months ago.” One place realtors and [tag]mortgage brokers[/tag] are not seeing a slowdown is in second-home sales. People are still buying vacation homes here. But unlike a year ago when many were buying purely as an investment, second home buyers now plan on living in their vacation home. (more…)

Conflicting data this week showed that the housing market, like a bull in the ring, is wounded yet still powerful. It takes an experienced toreador to discern whether the beast will succumb to the knife or come charging back. The course it takes may hinge on which matters more to buyers: falling interest rates [a big positive] or fear of falling prices [a big negative].

For now, at least, housing construction is clearly in a localized recession. The freshest evidence came on Nov. 17 from the Census Bureau, which announced that starts on construction of single-family homes plunged 14.6% in October, to the lowest level since July, 2000. On top of that, permits fell 6.3%, to the lowest level since December, 1997, indicating that construction could dip even further in the months ahead [see BusinessWeek.com, 11/17/06, "An Awful October for Housing Starts"]. (more…)

Everyone is entitled to one free credit report each year from each of the three major credit reporting agencies, which are: [tag]Equifax[/tag] Information Services, P.O. Box 740241, Atlanta, Ga. 30374, 800-685-1111, www.equifax.com. [tag]Experian[/tag], P.O. Box 2104, Allen, Texas 75013, 888-397-3642, www.experian.com. [tag]TransUnion[/tag] Corp., P.O. Box 390, Springfield, Pa. 19064, 800-916-8800, www.transunion.com.

A [tag]credit report[/tag] is a sort of fiscal fitness statement of your credit habits. It names your credit accounts, identifies them by type and tracks balances, credit limits, payments, available credit, open-or-closed status and other information that reveals how well or how poorly you pay each account. The report also documents credit requests and notices of liens, judgments and other “derogatory” remarks, remarks from the consumer, and other information. (more…)

I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it’s the key to the global economic outlook. Setting the Scene House prices in recent years have leaped well beyond their normal relationships to the CPI.

We’re referring here to interest-only [tag]Adjustable Rate Mortgages[/tag] as well as option ARMs that allow borrowers to make even lower monthly payments that result in a rising mortgage principle, or “negative amortization.” Then there are unrealistically high property appraisals to justify oversized loans and the lack of full documentation that allows borrowers to overstate their ability to make mortgage payments. Lenders also accommodate financially-weak borrowers with high loan-to-value ratio and piggyback loans, which in effect finance more than 100% of the houses’ prices. (more…)

A law requiring servicers to provide [tag]monthly mortgage statements[/tag] that update the account and explain all changes in it will not eliminate servicing abuses, but it will help alert borrowers protect themselves. It won’t help borrowers who sleep at the switch; they need other legal protections, which will be the subject of another column. Here are a few things that can happen to borrowers, which, in the absence of monthly statements, they might not find out about in time to prevent irreparable financial damage:

Monthly statements must include everything the borrower needs to know. This includes notice that taxes and insurance premiums were paid, and when. If a borrower does not make the full escrow payment and the lender raids his mortgage payment, this should appear on the statement. If the borrower is charged for a late payment, the statement should show when the payment was credited (the borrower knows when it was paid). If the lender purchases insurance for a borrower who already has insurance, the premium should appear on the statement, as should any other fees billed to the borrower. If the borrower makes an extra principal payment sometime during the month, the statement should disclose when exactly it was credited to his balance. If the borrower’s account goes to collections, all the related fees should appear on the statement. (more…)