It’s funny, a few weeks ago I was talking to a friend of mine who is a realtor. She also happens to be an investor and landlord.

Upside Down Real Estate Investor Considers Voluntary Foreclosure

She’s upside down on a few of her homes and many a time has entertained the idea of throwing in the towel – eg, doing a voluntary foreclosure on a few of her properties. But, each time she’s “come back to her senses” (her words, not mine) and decided to soldier on and wait for the housing market to rebound.

Anyway, as we were discussing how crowded both of us had noticed how the retail outlets have been (eg, WalMart, Starbucks coffee shops and movie theatres), she said:

It’s because a lot of people have let go of these expensive-a** mortgages. Now they can afford to spend some money.

As I said, this was a few weeks ago. And, I’ll be damned if it looks like she wasn’t right. Financial/economic experts are saying that the current economic rebound can, at least in part, be attributed to the fact that many homeowners have simply stopped paying their mortgages.

Oh, they’ve continued to pay other bills, but not paying the biggest expense each month has apparently freed up some cash and many are doing a little retail therapy (ie, shopping, eating out, going to movies, etc.). You can view the finance expert in video of the BusinessInsider.com post, Meredith Whitney: The Rebound In Consumer Spending Is Just The Result Of People Not Paying Their Mortgages.

Home Foreclosure & Other News Made by Wall Street Finance Expert on CNBC

Now that government is out of the picture, we seem to getting a clear picture of not only the home foreclosure market, but the credit market and job markets as well. And people, it ain’t pretty. Here’s a roundup of what Wall Street finance expert Meredith Whitney had to say in the video in the link above.

States Are Missing Revenue Homeowners Provide in Property Taxes

States are under water by 200 billion and the government has only offered $50 billion to help. This has led many to cut jobs (at least 2 million nationwide). Programs that affect the poor and the well-to-do alike are being cut.

CA, FL, AZ, NV are states that are severely underwater — because of the housing crisis.

On Consumers NOT Paying Their Mortgages

Consumers not paying mortgages, they’re only paying quote “necessary” bills. This gives consumers more cash because they’re not paying the biggest expense that most of us have (our mortgages). And this is the reason retail spending is up.

Note: Four banks control 2/3 of the mortgages in this country (didn’t know that — surprised the heck out of me. Can someone say, “Monopoly!”). Maybe that’s why banks have been so slow to work with homeowners, ie, write down principal balances and do “realistic” home loan modifictaions).

On Banks, Foreclosure Programs & Home Housing Prices

Banks are accelerating their short sale and foreclosure programs. This means that those who aren’t paying mortgages now will start to have to pay rent – somewhere! FYI, the price of a home usually drops some 20% when a bank does a short sale on it.

Housing prices are going down again – they’ve gone down in the last 8 quarters. Banks have a lot of “rotten assets” (ie, bad mortgages) on their balance sheets.

In 2009, Fannie Mae and Freddie Mac provided more than 95% of all mortgages issued. They’ve in fact kept the mortgage market afloat. What does this mean for the housing market in general? Basically that the activity we’ve seen has been “government induced.” How? 45% of the new mortgages generated in 2009 were under the first-time homebuyer program where buyers got an $8,000 tax credit to purchase.

Corporate America Seems to Have Rebounded (On the Backs of “The Average Joe”)

Large corporations are doing really well (surprise, surprise). But guess what, they’ve fired 3 million workers in this credit cycle. Small businesses have also had a firing spree – firing 5 million workers.

What Happens Now – To the Housing Market, the Credit Markets, the Future for Homeowners

The bottom line is – and I feel like such a broken record here, until the job market comes back strong, it’s going to be tough going. More homeowners are going to lose their homes – and go into a rental market. Many will struggle get (hence, be able to use) credit because your credit takes a hit when you lose your home. And it can take years to rebuild.

And not for nothing, states and local municipalities will be hitting the pockets of those who manage to hang onto their homes harder – because they’re facing record deficits (ie, when there are less homeowners paying property taxes, there’s less money in local government coffers). So what do they do to make up for it? Raise the property taxes on existing homeowners.

Why Many Homeowners Have Stopped Paying Their Mortgages & Are Doing Voluntary Foreclosures

And this is why, in my opinion, many homeowners have looked at the long-term picture and just decided to ditch their homes and start over – maybe buy in 3, 5 or 7 years (and get a better deal) instead of holding onto an underwater cash sucker now.

Home Foreclosure Revenge: Why the Average Joe Is Fed Up . . . and Many Aren’t Taking It Anymore

Until banks and other mortgage holders get realistic and start writing down the principals on mortgages of homeowners who are underwater – and give them realistic monthly payments that reflect the housing, job and credit markets we’re in — THEY’RE going to be the ones holding the bag because you know what, the “average Joe” is friggin’ fed up with getting stuck holding the bag.

And, they’re not taking it any more and are walking away from their homes.

P.S.: Finally, an easier way to get foreclosure cleanup work is here. The Property Preservation & Real Estate Industry Contracting & Subcontracting Directory includes over 1,500 industry contacts to help you get more work – quicker and easier.

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Finally, an easier way to get foreclosure cleanup work is here. The Property Preservation & Real Estate Industry Contracting & Subcontracting Directory includes over 1,500 industry contacts to help you get more work – quicker and easier.

The Guide to HUD Contracting; and

HUD’s Updated M&M Contractors Contact List

It’s like putting your marketing on autopilot. Learn more.

P.S.: Read how one foreclosure cleaning business owner makes up to $40,000/wk.

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Home foreclosure scams have contineud to grow as the home foreclosure crisis — which began roughly in the fall of 2007 — continues to rage on. And, the more desperate homeowners become, the more they seem to fall, unfortunately, for these scams.

Attorney General Cracking Down: Sends “Cease and Desist Notices” to More Than 180 Companies

Lawmakers are getting tougher though. On June 23, 2010, The Attorney General’s Office sent “Cease and Desist” letters to over 180 companies offering “prevent foreclosure help” to New York residents.

Many of these companies offer to help homeowners facing foreclosure get a home loan modification, and/or other types of stop foreclosure services. The problem is, the vast majority of them charge up-front fees to homeowners — which can run in the thousands of dollars. And in the end, the homeowner is still not able to get any type of help. Many go on to lose their homes.

Sadly, the money spent with the home foreclosure scam artists could have been put to better use, ie, paying on their mortgage, getting resettled in another place, paying down other debt, etc.

How Most Prevent Foreclosure Scams Work

Learn how many prevent foreclosure scams. Then, get some concrete, honest advice on how to avoid home foreclosure scams.   

Prevent Foreclosure Scams: Have You Been Contacted by One of These Companies?

If so, don’t do business with them. They have either been sued and/or are in the process of being sued by the Attorney General’s office for running home foreclosure scams on desperate homeowners.

American Modification Agency, a.k.a. Amerimod

Infinity Mitigation Services

National Modification Service

ABM Mitigation Corporation (“ABM”)

Global Modification Services, Inc.,

Raymond, Louis & Fitch (“RLF”)

Stop Foreclosure: Learn the #1 secret your lender won’t tell you that can prevent foreclosure.

P.S.: Read how one foreclosure cleaning business owner makes up to $40,000/wk.

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

In today’s financial publication, MarketWatch.com, it was reported that home loan modifications via the government’s “prevent foreclosure” program, HAMP, helped to keep many homeowners out of foreclosure.

But considering the post we did here yesterday on HAMP’s efforts in this area (home loan modification), one has to wonder:

How long will these homeowners who got their loans modified via HAMP be able to stay in their homes?

Today’s Report on Home Loan Modifications via HAMP

Following are some fast stats from the MarketWatch.com article, Modifications rise sharply on some mortgage loans.

Home loan modifications tripled in the first quarter of this year, compared to the fourth quarter of last year.

Loans 60 days late or more fell for the first time in two years.

2/3 of home loans modifed in the 4th quarter of last year reduced homeowners’ monthly paymens by more than 20 percent.

Over 6 million homeowners are still in the foreclosure process, or about to go into it (ie, are delinquent).

And it’s this last stat that’s worrisome, especially in light of yesterday’s post, in which we discussed that housing experts predict that up to 75% of those who have had their home loans modified will default at some point in the future. This is because most homeowners are burdened with debt.

And with the economy being what many economic experts call a “jobless recovery,” it doesn’t bode well for many.

Of course, the housing market will recover . . . as will the job market. But, how many more have to lose their homes before it happens?

Only time will tell.

Read the full MarketWatch.com article on how HAMP and it’s home loan modification ”success”.

Buy a Foreclosure Cheap & Enjoy Instant Equity

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author

Many homeowners facing foreclosure are desperate to modify their existing mortgages. But, if recent statistics are anything to go by, even this won’t save them from losing their homes.

Why Up to 75% of Those Who Get Home Loan Modifications via HAMP are Likely to Default

According to the recent CNNMoney.com article, up to 75% of modified home loans will default, the biggest reason is . .  surprise, surprise . . . debt.

Americans are not afraid to go into debt. And it’s one of the reasons, one could argue, that we got into this home foreclosure crisis to begin with.

Most of us spend more than we make. Proof? According to the aforementioned article:

On average, HAMP-modified borrowers . . . have 64% of their monthly pretax income spent before they even buy a quart of milk. [Hence] If even a small emergency arises — an unexpected car repair, a medical bill or a loss of overtime income — they’re in trouble.

Are Americans Contributing to Their Own Financial Ruin?

Countries like Canada and Japan have high rates of savings among their citizens. For example, the savings rate for Japanese younger than 30 is some 20%. That’s an astounding amount, when you consider that Americans only save between 1% and 4%, according to statistics as of late 2009.

A History of Savings by Americans

It used not to be this way. Americans used to save much more. Proof?

In the first month that the BEA (Bureau of Economic Analysis) provided us with data (January 1959), the personal savings rate in the United States was 8.3%. So, this means that, on average, Americans were able to save 8.3% of their disposable incomes. . . . it would end up falling below 1.0% multiple times between 2000 and 2010. [Source: DaveManual.com]

So we are, in essence, contributing to our own demise.

We drive cars that we can’t afford, buy houses that we can’t afford and overall, live lives we can’t afford.

How We Can Clean Up the Home Foreclosure Mess – And a Host of Other Financial Ills

Many of us need to start living on a lot less than what we make. Most financial experts advise living on 75 to 80% of what you make.

And most housing experts say that your mortgage (and all related expenses like homeowners insurance, HOA fees, property taxes, etc.) shouldn’t be more than 25-33% of your take home pay (not your gross pay).

Most conservative home mortgage experts and financial advisors like for you to stick to the 25% limit.

So if your net pay – after taxes, savings, retirement investments, etc, is $2,000 per month — that means that theoretically, your mortgage and related expenses shouldn’t be more than $500 per month.

How many Americans wouldn’t face foreclosure trouble if they had lived by this formula – and had a habit of saving 20 to 20% of their incomes.

Not only would they have had manageable mortgages, they would have  had nest eggs to get them through hard times like job losses and other unexpected financially troubling times.

So while we can point the finger at bankers, Wall Street and our government all we want, a lot of us need to look at “the man in the mirror,” to quote the Michael Jackson song, to see where fault lies.

Read the full story on how HAMP is failing when it comes to home loan modifications.

P.S.: Start a Reputable Business Cleaning Foreclosed Properties. While the foreclosure crisis has been a nightmare for many, it has presented a perfect small business opportunity for others. Learn how to start a foreclosure clean up business. Read how one foreclosure cleaning business owner rakes in $40,000/wk (not a typo).

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

It seens that even being the President doesn’t inoculate a homeowner against the foreclosure crisis.

According to the recent MSN.com article, Presidential homes hit by housing crash, the President’s home in Chicago, which he and wife Michelle purchase in 2005 for $1.65 million, has decreased in value by anywhere from 5% to 20% (real estate experts disagree on the exact amount).

That said, that’s still better than a lot of Chicagoans have fared. The foreclosure crisis  has brought prices in the Windy City down an average of 25% to 30% from peak levels.

And, they’re not the only ones.

The article goes on to assess the value of other Presidential digs, eg, the Cape Cod compound owned by the family of late President John F. Kennedy; Bill and Hillary Clinton’s home in Chappaqua, N.Y; Ronald Reagan’s home in Pacific Palisades, Los Angeles; etc.

View a dozen Presidential homes affected by the home foreclosure crisis on Forbes.com.

Looking for a Home? Buy a Foreclosure Cheap & Enjoy Instant Equity

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Last week here, we discussed Errors & Omissions (E&O) insurance. As a foreclosure cleanup business owner, another type you’re likely to hear a lot about is General Liability insurance.

Here, we’re going to discuss what this is and how it differs from E&O insurance. Insurance is an important part of every business. And, it’s vitally important in services businesses like this one (ie, dealing with properties) where accidents, theft and a host of other problems can occur.

Hence, knowing what you need and why is critical to landing jobs. No insurance, no job. Proof? Read this Advice from a Banker Who Handles Foreclosed Properties.

What Exactly is Errors and Omissions (E&O) Insurance?

This type of insurance is commonly referred to as professional liability insurance. Professionals like realtors, brokers, financial advisors, etc. are required to carry it. It’s akin to malpractice insurance, for it covers errors and/or omissions (mistakes/mishaps) that these types of professionals make that cause financial harm to another party.

E&O insurance protects/covers those who carry it from lawsuits that relate to an error they may have made while providing their particular type of service.

Note: E&O insurance DOES NOT replace liability insurance. It must be carried separate and apart from standard general liability insurance.

In last week’s post, we explained why foreclosure cleaning businesses, for the most part, DO NOT need Errors & Omissions Insurance.

What is General Liability Insurance?

General liability insurance for the most part covers claims against bodily injury, personal injury, advertising injury and property damage. Now as a foreclosure clean up business owner, you DO need this type of insurance – for obvious reasons.

Note: Most are not familiar with “advertising injury.” This covers the policy holder in case they are sued for something like slander or false advertising.

The Primary Difference between Errors & Omissions and General Liability Insurance

Just in case you didn’t catch it, E&O insurance covers claims that result in a “financial loss” another party may have suffered because of your negligence (mistake, mishap, error).

General Liability insurance covers claims that result in personal injury, bodily injury, advertising, or property damage.

Foreclosure Cleanup Business Owners: What to Do If You’re Asked for an Insurance You Don’t Have

Many times, the company requesting the insurance may not know why it’s necessary for you to have it – especially in the case of E&O insurance. It is NOT an insurance the vast majority of foreclosure cleanup businesses need.

Impress upon the company requesting the insurance exactly what you do and exactly what type of coverage you have (and how much of it); also offer to send them proof.

If they persist in asking you for, for example, E&O insurance, ask they why you need it. Refer back to the June 4^th post on Errors & Omissions insurance for further clarification (ie, the portion that explains that you’re not a realtor or broker and therefore, are not required to have this type of insurance as a contractor/subcontractor).

Learn more about what types of coverage and how much of each you’ll need in this detailed booklet on foreclosure cleanup business insurance.

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Well, the great elected leaders in Ohio have shown just how much they care about homeowners facing foreclosure — and it ain’t a hellvua lot!!

What have they gone and done? How about taking their summer recess without voting on a measure that would have  ”put a six-month moratorium on home foreclosures, requires notification to renters when an owner files for foreclosure, and mandates registration of home loan servicers.” [Source, Homeowners ignored, ToledoBlade.com]

Looking for a Home? Buy a Foreclosure Cheap & Enjoy Instant Equity

It’s no wonder the home foreclosure crisis is not getting solved. If this is the way elected officials are acting, we could be stuck in this home foreclosure crisis a lot longer than is necessary.

According to the aforementioned article, Ohio had record filings of home foreclosures in the first quarter of this year. The average Joe is literally screaming for help — and what do our senators do – they take a friggin’ vacation!

And, when there’s a budget shortfall because fewer property taxes are being collected, who are they going to turn to — good ole Joe Schmoe. They’ll raise the property taxes on those who have managed to hang on to their homes, or raise sales taxes, or find some other way to stick it to the average citizen who’s just trying to get by.

But isn’t that always the case?

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

There’s a dark side to foreclosure cleaning that is starting to come to the forefront. The home foreclosure crisis has been going on since roughly the fall of 2007. And, as with any type of business, there will always be an unsavory element.

In the foreclosure cleanup business, this takes many forms, as discussed in the Detroit Free Press article, Foreclosures go wrong as lenders, cleanup crews cut legal corners.

Foreclosure Cleanup Companies Stealing Personal Property

A homeowner featured in the aforementioned article said that he had over $60,000 in personal property stolen from a home he’d managed to rescue from the brink of foreclosure.

Note: Some foreclosure cleanup companies sell the property they take from foreclosed homes. One could surmise that there’s an inbuilt incentive for disreputable firms. Hence, be sure to deal with a reputable foreclosure cleaning business — ie, one that’s licensed and insured.

It was a home that never should have been trashed out in the beginning, as the homeowner featured borrowed the money from a family member and paid off the loan in cash.

So what exactly happened? The article states:

His home had been trashed out . . . by an unlicensed crew sent there by his lender, who had been told by the law firm that handled the pre-foreclosure paperwork that the house had not been redeemed and had been foreclosed upon.

The homeowner is suing – the lender, several trashout companies and the debt collecting law firm that was assigned to collect from him.

Overzealous Lenders & Debt Collection Firms to Blame for a Lot of This Dark Side of the Foreclosure Cleaning Business

This homeowner’s property was wrongly taken because of an error made by the debt collection law firm (presumably acting on behalf of the lender).

As there are so many foreclosures nowadays, lenders are overwhelmed to the point where one hand doesn’t know what the other is doing, as was discussed here in the article on how Chase bank has been mishandling its foreclosed properties.

Read more about his this suit by this homeowner is seeking to become a class-action suit [foreclosure cleanup class action suit coming?], which means that the lawyers can sue on behalf of many plaintiffs at once. Many who deal with foreclosures say this is a necessary measure, as it’s more common than many think.

As one lawyer in the article put it:

It’s [foreclosed properties being mishandled] like the Wild West out there.

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Some foreclosure cleaning business owners report being asked to prove that they have up Errors & Omissions insurance by larger contractors before they can be considered for subcontracting opportunities.

Here’s the real deal on this type of insurance.

ANSWER TO QUESTION ABOUT ERRORS & OMISSIONS INSURANCE FOR FORECLOSURE CLEANUP BUSINESSES

The answer is, you really don’t need errors and omissions insurance to handle simple trashout jobs.

Many of the larger companies probably ask potential subcontractors for it because they use the same application process as real estate agents and others who handle foreclosed properties. FYI, realtors are required – as part of their trade – to have E&O insurance.  Hence, it’s a box that must be checked on many forms for realtors.

If larger companies use the same form, many assume that if the box isn’t checked, then you are “missing” something – when indeed it is not required at all.

Simply inform those who request it that you are NOT a realtor (ie, you do not handle foreclosed properties). Impress upon them that you are a foreclosure cleanup business – and you are not required to carry Errors and Omissions insurance as part of your trade. Read more on the type of insurance you need for your foreclosure cleanup business.

Learn more about what types of coverage and how much of each you’ll need in this detailed booklet on foreclosure cleanup business insurance.

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Copyright © 2010 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.