Michigan Third In Nation for Home Foreclosures

IRONWOOD, MI - Friday, February 29, 2008 - With nearly two percent of all households in the State at risk of foreclosure due to defaulted mortgages, Michigan ranked third in the nation for foreclosure filings in 2007.

According to the report from an Irvine, California-based company, RealtyTrac, 136,205 foreclosure notices were filed in Michigan last year, affecting 1.95 percent or 87,210 homes. Nevada leads the country with the most houses in foreclosure – 3.4 percent, followed by Florida, at 2 percent.

Michigan filings increased 68.3 percent over 2006, and an incredible 282.2 percent over 2005. In 2007, foreclosures on a national scale were up 75 percent over 2006. Michigan ranked among the top states in the country for the number of foreclosures during the entire year. Michigan's state-wide recession; it's massive manufacturing job losses; the nation's highest unemployment rate; and the number of subprime mortgages that went into default state-wide were all factors that lead to the state's ranking.

Subprime mortgages are loans that are granted to people with less than perfect credit or who wouldn't normally qualify for a home loan. They begin with initially low-rate adjustable interest rates that reset to higher rates over the life of the loan. When ARMS (adjustable rate mortgages) started adjusting higher, millions of homeowners across the United States found themselves locked into house payments they couldn't afford. That initiated foreclosures that continue to plague homeowners nation-wide.

According to James Saccacio, RealtyTrac's CEO, foreclosures are expected to continue to rise in 2008, with more than $500 billion worth of adjustable rate mortgages ready to reset for the first time.

If you are behind in your mortgage payments, and your lender has sent you a notice asking you to contact them, by all means do!

-- Pretending you never got the notice doesn't help.

-- You need to contact your lender immediately.

-- Also contact MSHDA at http://www.michigan.gov/mshda or call (517) 373-8370

-- Call toll FREE (800) 569-4287

-- If you are deaf or hearing impaired, call TTY (800) 877-8339

If you have fallen behind and you cannot make your mortgage payment:

1. Give the problem your immediate and undivided attention.

The more you fall behind, the harder it will be to rewrite your loan and the more likely it is that you will lose your home.

2. Contact your bank, credit union, or mortgage company as soon as you realize that you have a problem.

The people that lent you the money for your house do not want your house. They have options to help borrowers through difficult financial times.

3. Open all mail from your lender and respond to it immediately.

The lender will often offer good information in the first notices about foreclosure prevention options that can help you weather financial problems. Notices of pending legal action may appear in later mail from your lender. Failure to open the your mail will not be an excuse in foreclosure court.

4. Mortgagees have rights! Find them, study them and learn them!

Find and read your loan documents so you know what your lender may and cannot do if you can't make your payments. Learn about the foreclosure laws and time-frames in Michigan (every state is different) by contacting the State Government Housing Office at MSHDA.

5. Read, study and understand foreclosure prevention options.

Valuable information about loss mitigation options (foreclosure options) can be found on the internet at www.fha.gov/foreclosure/index.cfm.

6. Contact a MSHDA housing counselor or HUD agent.

HUD, the U.S. Department of Housing and Urban Development, offers free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options. They can organize your finances and represent you in negotiations with your lender. If you need this assistance, contact MSHDA online at http://www.michigan.gov/mshda by phone at (517) 3738370 or call HUD's National Hotline at (800) 569-4287 or TTY (800) 877-8339.

7. Control your spending.

Keeping your house should be your first priority, after healthcare. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses -- cable TV, memberships, entertainment -- that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets.

If you have assets -- a second car, jewelry, a whole life insurance policy -- that you can sell for cash to help reinstate your loan, do so! If anyone in your household can get an extra job to bring in additional income encourage them to do so. Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies.

You don't need to pay fees for foreclosure prevention help -- use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.

10. Don't lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

11. If you can, start paying half payments bi-weekly.

For many people it is easier to make half payments every two weeks. This demonstrates to the bank that you care about your home and your credit. There is an additional benefit to doing this as well. Splitting the payment actually reduces the interest and the term of the loan. Many times you can accelerate your mortgage by several years – saving thousands of dollars – just by paying half payments every two weeks.

Jim Albert