Crime woes grow with foreclosures

The foreclosure crisis is taking a toll on local communities, as the problem breaks down past the economic level and in to the area of crime.

“Foreclosure is a nationwide phenomenon that’s starting to hit Winston-Salem. We’re looking at over 50 foreclosures a week in Forsyth County,” explained Tom Keith, Forsyth Co. district attorney. “That means, maybe 200 people will be out on the street if there’s two children in a family.”

Experts say there is a direct link between increased foreclosure rates and increases in violent crime. Members of the legal community in Winston-Salem are calling on their colleagues to help stop crime before it starts by keeping people in their homes.

Keith says for each 1 percent increase in foreclosure, there’s a 2.3 percent increase in the violent crime rate within an 0.8 mile radius of that location.

Keith says legal help gives people the advantage they need to wade through the financial terms and keep their home.

“It’s of tremendously important [that] this community and the bar association step up to the plate and we’re trying to get attorneys to come forward and represent these poor people in foreclosure so they can renegotiate, not litigate their way out of this sub-prime mess,” said Keith.

“Talking with the people in the clerk’s office, we’re looking at all income levels — half-a-million-dollar homes, small home owners, everybody, white, black, Hispanic — it cuts across all parts of our society,” said Keith.

Police in the Mecklenburg County town of Matthews are also taking steps to prevent criminal fallout in the wake of foreclosures. Last month they started tracking the houses people have had to give up.

Officials say empty homes can sometimes be a haven for criminal activity. They enter foreclosed houses into their database and keep an extra eye on them on patrol.

How Not to Prevent Foreclosures

With foreclosures surging, the last thing the nation needs is another government-hosted meeting where mortgage lenders pledge once again to do their utmost to help distressed borrowers stay in their homes — and then go back to the business of foreclosure.

Mr. McCain’s talk therapy will not ease, let alone end, the worst foreclosure crisis since the Depression or the financial crisis that has erupted in its wake. But worse yet is what it says about the presumptive Republican nominee’s view of the economy and the government’s responsibility to protect and help its citizens.

Yet, a meeting and a round of pledges is exactly what Senator John McCain called for on Tuesday, as if the country had not been down that fruitless road already. The real core of his speech was his argument against government action to help dig distressed homeowners — or the country — out of the mortgage mess.

His suggestion that federal aid might wrongly reward “undeserving” homeowners sounded both mean-spirited and economically naïve. And then there is the double standard. He seemed less concerned about the government helping reckless bankers, endorsing its role in preventing the bankruptcy of Bear Stearns.

The question now is not whether the government should intervene, but how. The two Democratic candidates clearly understand that better than the White House or Senator McCain. Senators Hillary Rodham Clinton and Barack Obama have called for a bigger role for the Federal Housing Administration that would allow it to restructure or refinance more troubled loans.

No one has ever proposed helping real estate speculators. And the senator’s language obscures the reality that most troubled homeowners did not get into trouble by themselves. Lenders, aided and abetted by bankers and do-nothing regulators, lured many borrowers into overly complex, ultimately unaffordable loans. Mr. McCain also failed to grasp that the foreclosure problem has gone far beyond the issue of the deserving and undeserving. What is on the line now is the health of the economy, including the viability of the financial system: Helping troubled borrowers stay in their homes would help the banks by reducing defaults and foreclosures.

Mr. Obama has endorsed the best idea currently on the table to prevent foreclosure: amending the law so that troubled borrowers can have their mortgages modified in bankruptcy court. That would give lenders a big incentive to work with borrowers — reducing interest or lowering principal balances — before they opted for bankruptcy protection. Mrs. Clinton has not endorsed bankruptcy reform. She has called for $30 billion in federal funds to bolster state and local foreclosure-prevention efforts and has proposed a 90-day moratorium on foreclosures and a rate freeze on subprime adjustable mortgages. Those measures also could help, but as the crisis has developed, the problem has become less one of resetting interest rates and more one of borrowers owing more than their homes are worth. Bankruptcy reform is a better way to deal with that problem.

The country, of course, cannot wait for the next president to be inaugurated to seriously address the foreclosure problem — although we fear that Mr. Bush still doesn’t see the urgency or the full dangers of inaction. The candidates’ prescriptions for the mortgage mess are an important guide to what sort of leader he or she would be. After eight years of Mr. Bush’s serial failures, what the country needs is a president who is willing to recognize when the government’s help is essential — and who is ready to use government power wisely.

Top 10 List. Nashville on Best Places to Buy Foreclosures

Forbes has ranked the Nashville metro area the number three best place in the nation to buy foreclosed properties. Check out the whole article here.

This is actually a good thing for all of Middle Tennessee, including Rutherford County for several reasons.

Also, “only cities on Forbes’ best places list, which measures criteria such as quality of life and the local economy (labor and energy costs, the regulatory environment, taxes) to find markets … where foreclosures aren’t symptomatic of local economic ruin, were measured.”

Forbes says distressed properties are a strong investment here because the real estate market is stable with the average home price rising 3.88% from 2006 to 2007. Additionally, the foreclosure rate is below one percent (0.86%) meaning the marketplace is not being overrun with foreclosed properties like some other areas of the country.

This article confirms what we’ve been saying for a long time: residential real estate in Rutherford County is a strong investment.

How to Buy Foreclosures for New Investor. 3 Tips

National home sales rose 2.9% in February giving hope to the nationwide slump in house sales. Savvy home buyers are beginning to realize that one man´s misfortune can be another man´s fortune. Foreclosed homes are the main force driving this welcome birth in new home sales. Some markets like Las Vegas are reporting that foreclosed homes make up as much as 40% of reported sales in the real estate market.

Many of these purchases are being made by investors large and small. If the housing market were a blue chip stock analyst would be screaming buy, buy, buy. House prices and property values are almost certain to come up in the future leaving those who bought homes today in very good financial shape. This being said, there are a few pitfalls that would-be investors need to look out for when attempting to buy foreclosures in today´s market.

• Location, Location, Location – We have all heard this before but it has never rang truer than it does today. Whether you are buying your home to “flip” or buying your home to keep as a rental property location is your first key consideration. With foreclosures looming in almost every neighborhood you need to look for neighborhoods with the least amount of foreclosures in them. These are the properties that will “heal” first as the market begins to turn around.

• These homes will tend to be in the middle to upper priced neighborhoods. You should choose your price range according to your intended use of the property. If your goal is to rent the property, be careful not to buy too much home because most people that can afford to rent higher priced homes can also afford to buy them. Look for lower priced homes in good neighborhoods and close to schools. Transversely, if your goal is to flip the house and you have the capital to hold the home for an extended amount of time larger houses will bring larger profits.

• Buying “Fixer uppers” – Most would-be new investors that I speak with are looking for this type of property to purchase. It is true that these properties offer a much higher reward when purchased correctly, but they also represent the largest reasons new investors fail. Unless you have “deep” pockets, meaning you can purchase the home out-right or put a substantial amount down new investors should stay away from homes that need a lot of repairs.

  Buying a home to fix-up and flip or rent can open up a can of worms that even the savviest investors have problems with. Contractors, inspectors and weather delays are all intangibles that you cannot foresee. Not to mention, if you have this home on a high interest ARM or hard money loan and you hit delays in repairs or renting the property you could lose planned profits for years to come. So it goes in the housing market, hard money loans are one step above a loan shark. They loan money on low loan to value homes and wait eagerly for the investor to fail. They follow the foreclosure laws in each state step by step and are extremely efficient at taking properties should the investor “slip”. My advice is to begin with a home in good shape that you can get at a bargain price to get your “feet wet” and move on to distressed property as you build your reserves and experience.

• Hard Money Lenders – If I had a nickel for every time a new investor asked me for a hard money loan I would be rich. Hard money loans are analogous to commodities in the stock market. Even the most experienced traders get burned with commodities every once in a while, and the inexperienced are almost certain to be burnt.

For new investors we suggest buying a home through traditional channels to begin with. Once you have ample reserves and some experience you can move to the bridge loans and hard money loans. However, in the defense of hard money lenders they do play an important role in the careers of many investors. If you have ample capital, good prospects for selling or renting the home they can be an indispensable asset to experienced investors. Experienced investors are prepared for and can even anticipate delays in construction, renovations and slow rental markets.

Building good relationships with builders, mortgage companies, and realtors can go a long way to helping the new investor survive in today´s real estate market. There are many other pitfalls to look out for but these three seem to be the top three I see new investors making. For fast mortgage closings and peace of mind we suggest that you find a good mortgage company that you trust and stay loyal.

Aubrey Clark is a syndicated writer on financial matters and the editor for Lendfast.com. He writes extensively on lending topics like finding the best Atlanta mortgage rates and how investors obtain Georgia low mortgage rates.

Group to offer assistance for those facing foreclosures

The Minnesota Home Ownership Center begins a series of free mortgage counseling workshops this week for families facing foreclosure.

Executive Director Julie Gugin said some consumers are too embarrassed to ask for help early in the process. Gugin said by the time they meet with her staff, it’s often too late to help them hang onto their homes.

The first workshop is Tuesday in St. Paul. The workshops are designed for homeowners who are worried about making mortgage payments or who are already on the brink of losing their homes.

“The sooner that people seek help when they’re facing mortgage crisis, the more options there are for them, and the more likely their lenders are going to be able to work with us,” Gugin said.

Those who attend tomorrow night’s workshop will be able to meet with foreclosure specialists and lending companies.

The event is from 4:30 to 8:30 at Arlington Hills Lutheran Church in St. Paul.

More workshops will take place next month in Brooklyn Park and Minneapolis.

Slam doors on pets, too. Foreclosures

They’re arriving by the thousands every month, homeless, hapless victims of foreclosure.

Family pets, their lives upended by the ravaged finances of their owners, are landing in animal shelters in large numbers in some parts of the country.

“The fate of people’s pets tracks with their own financial fate,” says the ASPCA’s Steve Zawistowski. He adds that although some shelters have been largely unaffected, “there are pockets” where so many homeowners are losing their homes that the number of pets relinquished to shelters, turned loose or abandoned is increasing dramatically. The pockets probably will spread with a deteriorating economy, he says.

The situation is sufficiently worrisome that the Humane Society of the United States (HSUS) just created a $15,000 seed-money fund (and is seeking public contributions to it) to help shelters and rescue groups accommodate in the short term their local surge in homeless pets. And many shelters in hard-hit areas are devising programs to respond. Among them:

• The Sacramento SPCA, which took in 100 more dogs and cats for “moving” reasons (176) in the past four months of 2007 as in the same period in 2006, has developed an early-assistance program to help people find ways to keep their pets or make temporary-care arrangements before they reach the out-of-options stage, says director Rick Johnson.

“We’ll visit with the animals and we can meet with prospective landlords” when it appears, for example, that additional discussion might help a family keep the pet in new quarters. And, he says, the staff is willing to take whatever time it takes to discuss with owners the possibilities for keeping their animals.

• The Pennsylvania SPCA is waiving for foreclosure victims the fees associated with its “good-home guarantee” program, which promises the shelter will keep the pet as long as it takes to find a new home. “With everything else they’re going through, (people who foreclose) should not have to worry that their animal will be euthanized,” CEO Howard Nelson says. At least 10 families have taken advantage of the program in less than three months.

The Pennsylvania program is addressing one of animal welfare experts’ greatest concerns: that pet owners, worried that their animals will be euthanized at the shelter, are setting them loose or leaving them in empty houses and garages with some food and water. Often the abandoned animals aren’t found for days or weeks and are dead or dying, they say. And ultimately the survivors wind up in a shelter anyway.

As for the ones set free: Most house pets don’t do well on their own and are often injured in fights with predators or other animals, hit by vehicles or infected with diseases, experts say.

Though acknowledging that many pets left at shelters are eventually euthanized if they aren’t adopted, “if the animal is put in a shelter, at least she will have a chance and won’t endure all that suffering,” Zawistowski says.

The SPCA of Erie County, N.Y., is experiencing only a bump — about two a month — in foreclosure pets, says executive director Barbara Carr. But each is heartbreaking. She tells of a man who arrived at the shelter this month saying he had to give up his cat and two small dogs. When an employee walked outside to help him get the animals into the shelter, “she discovered that he had arrived in a U-Haul loaded with boxes and furniture. He had lost his home and had no place to go. The very last thing he did was surrender his animals.”

All three now have new homes.

HSUS and ASPCA have sent out advisories imploring people to plan for their animals in case their finances nosedive. Also, “we’re trying to get the word out for people to take note of what’s happening in the economy, understand that animals are expensive, and if you don’t have much cushion, now may not be a good time to get a pet,” says Stephanie Shain of HSUS.

Zawistowski hopes the question of foreclosure pets will prompt a national discussion. Hurricane Katrina resulted in a recognition that after natural disasters pets must be managed, “and we have, as a nation, set up systems to do so,” he says. It’s important to see that when people are displaced by economic disaster, “we also need to manage the pets and should establish systems for that.”