A timeout for foreclosures? Vote in our poll.
By Burt Hubbard, Rocky Mountain News (Contact)
Published April 14, 2008 at 12:05 a.m.
POLL: Are you worried that you may come up short in paying your mortgage?
Photo by Judy DeHaas © The Rocky
Silvia Miranda, left, who leases a house in Thornton to the Ray family, right -Michelle Ray, Kaden Ray, 3, Ronnie Ray, and Karlie Ray, 6 - says she is a victim of an overzealous lender after she fell behind in her payments because of an illness.
State judges would be given the power to halt foreclosure proceedings for 90 days to give mortgage companies and homeowners time to try to work out plans to avoid foreclosure under a bill unveiled Sunday by two state lawmakers.
"We all know foreclosures are skyrocketing," said state Rep. Sara Gagliardi, D-Arvada. "We must find a way to help the families and help the communities."
Gagliardi and state Rep. Mark Ferrandino, D-Denver, announced their legislation while standing in front of a foreclosed home in southwest Denver's Athmar neighborhood.
The area has been one of the hardest hit by foreclosures, said Denver City Councilman Paul Lopez.
"People in this neighborhood struggle every day to fill a gallon of milk or a gallon of gas," Lopez said. "The last thing they should be worried about is their mortgages."
Colorado saw a record 39,915 foreclosures last year, a rate that was ranked fifth-highest in the nation by one real estate service.
Ferrandino said the bill he will introduce Monday would allow judges to grant a foreclosure
timeout if the lender has not made a good-faith effort to negotiate with the homeowner and the homeowner has shown that he or she is working to hang onto the house.
"Banks are better off when people are allowed to stay in their homes," Ferrandino said. "And homeowners are better off."
The bill also will require lenders, before they foreclose, to directly contact homeowners about mortgage counseling assistance and to make efforts to resolve the problem before the owner loses the home, Ferrandino said.
"This is not a bailout bill," he said.
Silvia Miranda said such a bill could have helped her with her struggles with a California bank over foreclosure proceedings against her Thornton home, which she rents to another family.
Last year, Miranda fell behind on her payments because of medical problems, she said. She worked out what is known as a forbearance agreement with the lender to catch up on back payments.
She said she paid the company $6,500 and made double payments for six months.
However, when she went to resume her normal $800-a- month payments in November, the lender wanted her to pay several thousand dollars more, she said.
That amount is now up to more than $8,000, and the bank won't accept her normal monthly payments until she pays the amount, Miranda said.
"They refuse to take the payments," she said at the news conference.
Linda Medlock said she faced similar problems when the payments on her adjustable-rate mortgage in Denver rose from $1,400 to $1,800 a month. The lender told her the payments would continue to go up each year.
"I was very upset," Medlock said.
She said she finally resolved the problem with the help of a nonprofit agency.
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April 14, 2008
6:34 a.m.
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vudumom writes:
I don't want to seem heartless here but where in a contract of any kind does it say if you get sick or something happens to interupt your life ,you don't have to pay? Why did she not know here that before you buy a major purchase you need to have something in the bank to cover you? I realize most people don't do this,but my husband and I have a 3 month reserve fund,just in case. We have had to dip into it a few times but put the money back in.
As far as the Athmar neighborhood. If you struggle to buy a gallon of milk, you shouldn't have a mortgage.
What we need in a 1-2 year timeout on giving mortgages away like candy. If the people took any equity out of the property for vacations,cars or bought stupid stuff like that,let them go bankrupt. They are clearly not smart enough to know you don't put you house on the line for a cruise or a new Lexus.
For the ones that just bought too much house with a teaser rate of like 1-3%,there is nothing you can do they will never be able to afford that house anyway. Why should they get a permanent interest rate of 3% reserved for people with great credit?
As for the people who can pay a reasonably priced fixed mortgage of about 7-9%,let them work something out make their payments catch up if it looks like they can and help them out.
Anyone who gets helped out should have to go to money management counseling classes at their expense within 3 months of saving their butts.A reasonable fee should be charged and it should be made mandatory.
April 14, 2008
8:11 a.m.
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TonyB writes:
I beg to differ, Denver City Councilman Paul Lopez. Mortgages are NOT the "last thing people who own homes should be worried about." Wide screen TV, cable television, cell phones, internet access, a new car, and a six pack of beer . . . . THOSE are "the LAST things" people who own homes should be worried about.
April 14, 2008
8:20 a.m.
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KelcyCo writes:
First, the market has to fall, and fall far to bring home prices, or rather payments, into line with real life median incomes. We need to get back to the notion that you have a starter home which is small, compact, no luxury add-ons or gourmet kitchens because that is what you can afford. If over a long period of time your income changes then hey, you can move up.
Second, people are not stupid but they are trusting. They rely on the ``experts`` to tell them the bottom line facts and give them understanding. They read through the paperwork but what they read is colored by what they were told. Experiments have shown you read what you expect to see. We had an ARM for one house and I nit-picked through the documents and felt confident I knew all there was to know, the rate growth, what it was tied to, etc. I was wrong and misinformed as well. It did grow and unexpectedly so. However, we had bought the house based on the worst payment and not the first payment so we were okay until we moved on from that location. My point is, two college educated, master degreed, math oriented people still got it wrong.
Third, let`s not forget that some ``experts`` out there were in it to get rich quick. They were willing to lie, cheat or steal to do it and without checks and balances in the system they got away with it. Only because of this crash does anyone care about the issue and I don`t believe anyone will really put the necessary fixes in place to stop it. And it isn`t just the ``common folks`` that got caught out either. Look at the banking and investment executives who had absolutely no clue what the products their companies were using and selling. They testified before Congress to that effect. The Emperor had no clothes but they were willing to believe he did because the experts told them so.
Lastly, the banks are not going to work with the mortgagee as should be evident after months of this going on. It`s just lipservice. Yep, they will work with them to ensure they get their payments up to date but not to reduce them and possibly tack on the missing payments at the end. They are not going to change the contracts come h**l or high water though to bring the monthly payment down to an affordable level. They are not going to renegotiate the mortgage down to the current housing price either. Why should they really. It does bring to mind a question I`ve yet to see addressed in the Press anywhere. What happened to mortgage insurance? Everyone is ringing their hands about banks and mortgage investors losing money on these high risk loans. When we have put less than twenty percent down on a house we had to pay for mortgage insurance in that monthly payment. That is protection for the bank. Did that go by the wayside in all this mess, does anyone know? Are they collecting on the insurance payouts which make them push to put people in foreclosure so they can get that insurance money?
April 14, 2008
8:28 a.m.
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george writes:
This whole mortgage crisis is happening because you have unaccountable 3rd party loan originators. They have operated in both illegal & unethical fashions.
Do you really think we would have a nationwide explosion of foreclosures if there weren't some non-standard business practices involved?
When the originator was the entity that would actually hold the mortgage to term they had a natural selfish interest in making sure they used legal, ethical and sound practices determining who & how they lent money.
These 3rd party mortgage originators screwed both the borrowers by misleading and lying to them & then misleading investors they bundled up these dubious, unsound mortgage packages to.
Some of these mortgages were designed to mousetrap on unsuspecting buyers with wildly sharp interest hikes. The borrower was either lulled by the term 'you can refinance in a year' or lied to about how long the introductory zero or low rate interest would last.
These 3rd party originators even lied about applicants qualifications or in some cases encouraged borrowers to lie to get the loan.
Some of these borrowers could never have handled these [perhaps any] mortgage even under ideal conditions & AN ETHICAL LENDER would have NEVER lent them money, but these 3rd party originators didn't care, because they wouldn't & aren't holding the bag.
That doesn't mean we should guarantee anyone a mortgage though.
Some of these people need to forget about home ownership until some future date when they can financially soundly buy one,
but that doesn't mean they should be hammered like this is really their doing.
They should be eased out of this & only made responsible for any knowing fraud they committed.
The real criminals are these criminal & unethical 3rd party originators who should be taken to task.
The long term solution is either state or federal requirements about lending & mortgage origination.
Just how out of touch with the reality of what has gone are you people?
April 14, 2008
8:42 a.m.
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Francesca writes:
"People in this neighborhood struggle every day to fill a gallon of milk or a gallon of gas," Lopez said. "The last thing they should be worried about is their mortgages." WTF? The last thing Lopez? Honestly? What turnip truck did you fall off of?!
A mortgage is the foremost financial responsibility a person who is buying their own home has... the primary bill to pay attention to, as the largest investment most people with average income make... so maybe better to let it go if you cannot raise enough money to buy milk for the family fer Chrissake.
As far as people being lied to about being led down a rosy path... I can see where some folks might get stuck. But how could any reasonable and clear-thinking individual go into an adjustable rate mortgate without knowing that it would change, key word here... ADJUST? You're right about the lip service KelcyCo.
April 14, 2008
9:20 a.m.
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MDACO writes:
Rep Farrandino is absolutely incorrect in assuming that homeowners are better off staying in a home, especially one that they obviously cannot afford. Many economic studies show that renting is a better option than owning. Farrandino is selling a myth propagated by social engineers who aren't studying the facts.
While foreclosures have risen dramatically, they still impact a small fraction of all homeowners. Better than 94% of all homeowners are weathering the depreciation in the housing market.
The current downturn in housing is the free market’s way of separating those who should own homes from those that should not. Let the market proceed unimpeded and everyone will be better off in the long run, especially those who lose a house they cannot afford.
While well meaning, temporarily delaying foreclosures or interfering with existing contracts between mortgage lenders and homeowners will create a “moral hazard” that will cost all future homebuyers thousands of dollars. The lenders will resort to higher interest rates and possibly additional closing fees in the future to offset the impact of legislation similar to that proposed by Rep Ferrandino. Do not jeopardize the future to delay the inevitable!
April 14, 2008
9:25 a.m.
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Stella_merc writes:
I don't understand why the taxpayer has to bail out people who signed up for loans that they couldn't afford and companies that were stupid enough to make loans that they shouldn't have. I have no sympathy for either group.
I had to delay buying a house for 4 years while I scraped and saved for the down payment. then I bought a small house that I knew I could afford and had a plan. it's not a dream house, not really close, but I have made every payment on time. now I hear of people trashing their houses on the way out because they want to stick it to the bank. it's your OWN fault. let this be a lesson in responsibility, don't take what you can't pay for and don't expect me to care when you have to suffer the consequences of your own actions!
April 14, 2008
9:36 a.m.
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CWW writes:
I'm still saving to buy a house. A few years ago I had a realtor calling me all the time, saying she could get me into a loft or condo, etc. I told her I couldn't afford it but she kept pressuring me. I suppose if I was younger and stupider, I might have believed her and bought something. Now I'd be in deep trouble.
The problem is people aren't willing to wait and work toward a goal. They want (and expect) everything now. They got sucked in and are being chewed up. It will be an expensive lesson.
April 14, 2008
9:46 a.m.
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xeeian writes:
yeah, it's hard being dumb and getting into some complex mortgage that you didn't understand. the funny thing about it all, is that even the people issuing and funding those complex mortgages didn't understand them.
those people that did the issuing, Bear Stearns, their investors, other investment banks, and the builders are all going to get bailed out by the Bush Administration (funded by the US tax payer).
but hey, let's heap scorn on the poor schulb that these mortgages got peddled to. who wanted to be part of the 'ownership society' and listened to the Objectivist Alan Greenspan about the wonders of ARMs.
yeah, those schulbs have a lesson to learn.
April 14, 2008
10:58 a.m.
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timeandagain writes:
This is truly astounding but don't worry too much about this becoming a reality. This is being introduced by imbecile legislators that are merely pandering to their trashy districts and low-brow constituents.
Their constituents have plenty of money for their flat screens, cable bills, soda pop and junk food but can't pay the mortgage. Boo Hoo.
April 14, 2008
12:54 p.m.
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Coco writes:
What's this "we" need to help them? By "we" I guess you mean me - I need to chip in. I think not. I'll pay the bills I took on, thank you very much. And Mr. Lopez, what do you mean a mortgage is the last thing they should have to worry about? Who pray tell, should worry about it then? Me??????????
April 14, 2008
12:59 p.m.
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Ztliano writes:
I wish moving to Canada was easier.
April 14, 2008
1:46 p.m.
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jonnyrotten writes:
It sure is easy for the “I told you so” crowd to simply lay the blame on the “idiots” who clearly got in over their heads. Don’t get me wrong… anyone who lied, or cheated their way into a mortgage deserves their fate, but many people were sold on these products by unscrupulous mortgage brokers and realtors eager to make a quick buck. How about a little blame for idiot lenders and investors who looked the other way when handing over hundreds of thousands of dollars on inflated or even fabricated appraisals to borrowers with no skin in the game? In 2004 and 2005, 43% of first time home buyers put NO MONEY DOWN on their home purchases. Zero down deals, piggyback plans (90% firsts and 10% seconds), “down payment assistance” schemes and “builder kickbacks” all contributed to a mortgage feeding frenzy where greedy loan services handed out loans like candy, skimmed their profit and quickly sold these inflated and inequitable loans to greedy investors. If lenders simply required a REAL down payment and put responsible limitations on so called home equity loans then the majority of borrowers would still be in an equitable position on their homes should hard times.
April 14, 2008
1:48 p.m.
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KarlCheney writes:
Where were you guys hammering on Bears Sterns with responsibility and accountability when Bush and Co. decided to bail them out with your and my tax money? No posts at all claiming let them fall, they got in over their heads, they need to learn a lesson, It's all about personal responsibility. Sasquatch says todays foreclosures are tomorrows affordable housing and that makes him happy! How about todays bankrupt financial institutions are tomorrows affordable financial institutions. Why no outrage on the bailouts of these mismanaged financial institutions. Just the little guy is responsible huh? Hypocrites...
April 14, 2008
2:27 p.m.
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Coco writes:
Karl & jonny - I don't think its so much a matter of hypocrisy as it is a matter of understanding. We all know what a mortagage payment is, and how much we need to work to pay it. We also understand that what Lopez et al are talking about is a very slippery slope and probably not a good idea for the country. As posted earlier, where does loan forgivness end?
Not all of us a full understanding of investment banking and whether it is or is not in the best interest of the country to "bail out" Bear Stearns. I know I don't understand the mechanics of the process at all.
April 14, 2008
2:49 p.m.
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xeeian writes:
Yeah, the Republican mantra is hundreds of billions of dollars to Home Builders, Bear Stearns & their investors, the investment banks and all of the well heeled participants in these affairs, but not a single day of leniency for the poor suckers that bought into this.
Yeah, that'll teach them.
Oh, by the way, let's not regulate the investment finance industry, cuz that would just stifle innovation! All they need government for is to bail them out.
Go Team BUSH!!! Go corporate responsibility!!!
April 14, 2008
3:08 p.m.
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a_watcher writes:
How about go US Constitution?
Article I, Section 10, Clause 1 Clause 1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
This whole discussion is a total waste of time. The legislature lacks the power to pass any such law.
April 14, 2008
3:13 p.m.
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bilco writes:
Boy some of you people are COLD! I'm a 60 year old guy with two houses, that just lost my job (thanks BUSH) do to financialcutbacks by our company. I am unable to find work and yes, do have enough money put away to make both my mortgage payments until July. One house is in Reno, and two years ago it was worth $350k, I doubt if I could get $250k out of it today.
The big problem is this administration and George W Bush...say what you will about Bill Clinton, but when he was in the White House we didn't have a pointless war going on that is sucking the economy dry, we weren't on the verge of $4.00 a gallon gasoline, we actually had a surplus in the budget, we didn't have a MORAN that promised a stimulus package to get America on it's feet by borrowing from China and paying them back $1.89 for each dollar borrowed!!! Who the hell is going to pay for that? You and Me my friends.
So instead of 100,000's of thousands of Americans losing their houses, maybe this no brain President needs to lose his job. Why am I hearing "If I Only Had A Brain" everytime I see Bush on TV???
Instead of innocent people losing their houses, there's a moron in Washington that needs to lose his job!
April 14, 2008
3:52 p.m.
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KalHali writes:
I remember when I just turned 18 years old, and this mortgage sales person (whatever they are called) was trying to convince me to take a lone out on a house or condo. Lucky for me I was smart enough to reject the offer as I realized that I was not ready for that kind of commitment, but that is the kind of dirty tactits that these people use. Offering an 18 year old, just out of high school, a mortgage loan is just rediculous.
April 14, 2008
4:11 p.m.
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forwhatitis writes:
"Posted by bilco on April 14, 2008 at 3:13 p.m. (Suggest removal)
Boy some of you people are COLD! I'm a 60 year old guy with two houses, that just lost my job (thanks BUSH) do to financialcutbacks by our company. I am unable to find work and yes, do have enough money put away to make both my mortgage payments until July. One house is in Reno, and two years ago it was worth $350k, I doubt if I could get $250k out of it today.
The big problem is this administration and George W Bush...say what you will about Bill Clinton, but when he was in the White House we didn't have a pointless war going on that is sucking the economy dry, we weren't on the verge of $4.00 a gallon gasoline, we actually had a surplus in the budget, we didn't have a MORAN that promised a stimulus package to get America on it's feet by borrowing from China and paying them back $1.89 for each dollar borrowed!!! Who the hell is going to pay for that? You and Me my friends.
So instead of 100,000's of thousands of Americans losing their houses, maybe this no brain President needs to lose his job. Why am I hearing "If I Only Had A Brain" everytime I see Bush on TV???
Instead of innocent people losing their houses, there's a moron in Washington that needs to lose his job!"
Gee, I wonder if you idiots that keep pointing the finger a Bush realize that he is going to be gone in January or not. If you realized that for a minute, then you would also realize that you are not going to have anyone else to blame for your problems. That's going to be interesting.
As for these borrowers, they make up such a small percentage of the overall population that any politician foolish enough to consider bailing them out, should also consider the landslide of responsible consumers who should be voting against them next term.
April 14, 2008
4:23 p.m.
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forwhatitis writes:
One more thing. One of the biggest manipulations by the media and the like is the number of homes affected. Here's the juice:
"Colorado saw a record 39,915 foreclosures last year..." Well, the record is because there was a record number of homes owned, at well over 1.7 Million homes!!! So, that comes out to a number just above 2% of the homes going into foreclosure.
April 14, 2008
4:39 p.m.
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DougV writes:
What disturbs me is that the first person, Ms. Miranda, is renting the home in question to another family. Does that mean she has a primary residence that she is paying for, too? Does this proposed legislation also cover 2nd homes and income property? It says she fell behind when she had medical problems - was she taing the rental income to pay her primary home's mortgage? Also, both Ms. Miranda and Ms. Medlock worked with either their lender or a third party to help resolve their issues. Without the "help" of this legislation! The reporter doesn't answer the questions of why he's using the rental house owner as an example , or why, if these two both worked with the lenders, why this legislation is necessary.
April 14, 2008
5:47 p.m.
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RG2008 writes:
My mother always told me there are only two types of people.
The "haves" and the "have nots". If you work real hard you can be one of the "haves"
But in this new century I find there is a new type of person.
The "haven't paid for what I have yet"
Which are you? and Why?
April 14, 2008
5:54 p.m.
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gwats writes:
There are a lot of missing facts in this story....like where the woman with the rented house lives and how she pays for it.
Since only 2% of all homes in Colorado are in foreclosure, any efforts to help these homeowners should be tied to some new rules and stipulations....the first being a trip to Bankruptcy Court, agreeing not to take on new debt, a class on budget management, and Monthly meetings with a certified money manager to review the entire family budget. Failure to live up to these rules should result in immediate foreclosure.
These people played 'you bet your life' with risky loans and LOST.
These people are careless with their dollars and I see no reason the other 98% of us should suffer for their stupidity and lack of basic math skills.
Home ownership is advanced Citizenship. Not all will qualify.
April 14, 2008
5:57 p.m.
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happymike44 writes:
To the sixty year old gentleman who wrote his feeling about bush.There are many of us who are feeling the same way you are feeling.The other thing I would like to point out is the amount of illegal aliens there are in the country are also taking our jobs and using our resources and not paying into the system.So the first thing we need to do is deport these parasites on our economy.Then remove the jobs for them as well 12 million americans are not working because of them.The other thing is if you are illegal you should go back to your country thers is no room at the inn for you.My ancestors fought and died for this country and I see people with no patriotism sucking the life out of it.I know the illegal aleins are not happy about this but my family came here and had no money.They worked for a man in virginia for seven years of their lives and fought in the war of 1776.This is what makes me a patriotic american.I just want america to be the america it was for me to be there for my nieces and nephews.Call me fed up with feeding the stray dogs of the world.
April 14, 2008
8:13 p.m.
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Brain writes:
DougV; "why this legislation is necessary?? that is a great question; most if not almost all mortgage companies already do what this proposal would "require"; “will require lenders, before they foreclose, to directly contact homeowners about mortgage counseling assistance” also “if the lender has not made a good-faith effort.....”; which party would know first that the payment isn’t going to be made? The lender?! When does the 90 days start after you already missed 3 payments and have the lenders attention? Oh, that’s right it’s the lenders responsibility to.....
Lopez said. "The last thing they should be worried about is their mortgages." ???
Priority of bills in my household:
#1 house payment
#2 food
#3 water
#4 heat/electricity
When I was in my early 20’s I remember trying to make a decision on the car I WANTED and the car I “needed” the decision was based on whether the loan company would loan me the money for the car I WANTED; my thinking was “ if they think I can afford then I’ll do it”. Boy was I an idiot!
April 14, 2008
8:15 p.m.
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Brain writes:
The answer to "why this legislation is necessary" is POLITICIAN GRANDSTANDING.
April 14, 2008
9:21 p.m.
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LostInAmerica writes:
3rd party originators = unregulated thieves
Those individuals that mention mandatory bankruptcy, how does this help us? I know two different families that filed for bankruptcy and within months they were back on vacation and owned new cars (not kidding). This allows individuals to 'start all over again' with a couple higher interest rate credit cards and do the same thing all over again - this does not stop people from spending too much or teach them a lesson.
The biggest issue here is that the lenders provided a free ticket to become a homeowner to a society that wants more than it can afford. The second things go bad....ask for help, if that doesn't work, file for bankruptcy and/or walk out on your mortgage. I know a lot of intelligent and affluent individuals that have made the exact same mistakes. When times are good – spend everything you have, when times go bad – complain about how they got a bad deal in life.
Save your money, stop using credit cards – if you want that new big screen TV…buy it with cash that you have in the bank. I started out ‘extremely’ poor, bought a house at 23 years of age and had ‘no’ furniture for 3 years, but I paid my mortgage – turned out well for me.
Last comment - bailing someone out on their 'second home', is this a joke??