Top officials of the biggest banks in America said on Friday 27th March that they feel good about the plans the Obama administration is taking to solve the foreclosure related crisis. They are waiting to get more specific details from White House.

While talking to CBS News, President Obama underlined the need for the lending lobby to show more restraint and to let others know that the crisis is affecting all and that “everybody has to make sacrifices.” Obama said that the banking group agreed to it and recognized its grave implications. But “now the proof in the pudding is in the eating,” concluded Obama.

The bankers said that the government wants them to kick off lending quickly. It is this that is at the heart of the problem. Johan Mack of Morgan Stanley said, “People are looking at that. It\’s positive. We think it\’s the right thing to do and now we just need to get the details.”

The government recently released a programme that would free the banks from the soured assets. These investments have blocked flow of capital and prevented banks from resuming the normal day-to-day work of lending and attending to the interests and businesses of consumers.

According to the plan the administration will form partnerships with private investors. The Federal Reserve and Federal Deposit Insurance Corporation plans to buy as much as $1 trillion worth of these soured assets from the banks. There is concern whether the private investors would come forth and whether the banks would be agreeable to sell the assets at the lowered prices that would be offered to them.

The bankers said that the meeting with the President was positive. They promised to work with the government so as to see to the improvement of the health of the economy. Robert Kelly of Bank of New York said, “We want to see the American recovery.”

Invitations to the meeting had been sent out the chief executives of 15 banks to come to the meeting at the White House. They were urged by the president to deal with the toxic assets. There were also talks about remedial measures to check the flow of increasing foreclosures. Among the issues were more stringent regulations, compensation to the executives, financial bail out and above all the understanding of what the American public are going through currently. Timothy Geithner, the secretary of the Treasury met the CEOs separately.

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Did you know you can purchase a car and other vehicles for $300 simply by attending a US local government auction (I’ll explain the other $39.95 later).

Here’s what’s up! At most government auctions if a vehicle does not sell during the auction, it will be sold at the end of that auction for $300.

I first discovered this when I was checking some car listings on the Government Auctions site and noticed that with car after car listed, there was a note saying ‘If vehicle does not sell at auction can be bought after auction for $300? in the not so noticeable ‘More Information’ area.

I did further research on this by calling a number of the auctions using the number provided on the Government Auctions site and to my surprise, because of the current recession, cars selling for $300 at these auctions has been increasing. In fact at some of the auctions there were actually more cars (in great condition) then people to buy them.

It does cost $39 at Government Auctions to get all the vehicle and auction listings plus all the other info that goes along with it. It’s worth it though as these auctions and cars are hard to locate (less competition), plus you’ll also find many items including car parts, foreclosed homes, jewelry, electronics, furniture, office equipment, etc. for pennies on the dollar.

So once you have selected the vehicle auctions you’ll be attending in your area from Government Auctions simply attend the auctions, check out, and bid on a vehicle or even better wait until the auction’s over and purchase any remaining vehicle for $300 (some auctions may have different policies on this).

You’ll find some really good deals there. I know, I bought my Beemer at one these auctions.

Foreclosure laws vary from state to state. Either foreclosures are judicial, which means they need court approval or non-judicial (private Trustee Sales). Once the homeowner falls behind in their monthly mortgage payments, the lender will institute some type of action against the homeowner to reclaim the property. Generally, the homeowner is behind at least three months in their mortgage payments. Because the lenders are so overwhelmed with defaulted loans, the process may take slightly longer before the lenders start the foreclosure proceedings these days.

The Beginning
The lender will send out written notices letting the homeowner know how much they owe and how far behind they are on their mortgage payment. At this point, the homeowner should contact the lender if they have not done so already and see if they can work out a payment plan such as a mortgage modification or refinance, reinstatement, etc. to catch up on the payments, or sign back the home to the lender with a deed in lieu of foreclosure. In some instances, the homeowner will decide to sell their home in a short sale, asking the lender to take a reduced amount on the mortgage balance. If the homeowner does have equity, then they will be able to sell the home and pay off the mortgage.

Where none of the above solutions can be negotiated, the lender will start foreclosure proceedings by either filing a notice of lis pendens with the court (judicial proceedings), or filing a notice of default (non-judicial proceedings), serving all parties, and publishing the required notices in the newspaper of general circulation in the county where the property is located.

Keep in mind though that lenders would rather resolve the default with the borrower then institute foreclosure proceedings because the average foreclosure costs the lender approximately $50,000.00.

Middle
During the time the proceeding is instituted, the borrower has a statutory period of time to respond and defend themselves against the foreclosure, and/or to redeem the property prior to the sale or reinstate the loan by paying the arrearages and any fees and costs. The redemption periods are based upon state statutory law.

In a judicial proceeding, the court will issue an order for the sale of the property. In a non-judicial proceeding, the trustee will record a notice of sale with the county recorder’s office. The notice of sale in both proceedings will be published in a newspaper of general circulation in the county where the property is located. A notice of the sale will also be posted at the courthouse and at the property with the information about the date of the sale and the contact person or if the sale has been postponed.

End
The last stage of the foreclosure process is the foreclosure auction sale, which is typically conducted at the courthouse steps or some other place designated by the sheriff or trustee. This again depends upon what type of foreclosure action is instituted and the laws of each state.

The highest bidder will be awarded the property. Generally the bidder is required to bring a cashier’s checking representing 10% of the purchase price in order to bid. Some states require the entire amount of the bid to be paid at the end of the auction. Title will then be transferred to the new buyer. The new buyer takes the property in an as is condition and will have to clear any title issues, evict any tenants or owners still remaining on the property, and will not be able to obtain title insurance.

Some states also allow the lender to file a deficiency judgment against the former homeowner/borrower for the difference in the amount the borrower owed on their mortgage and what the property sold for at the foreclosure auction.

If there are no successful bidders at the foreclosure sale auction then the bank acquires the property back and it becomes a bank owned property or real estate owned (REO). At this point, the title and back taxes and liens will be paid off by the bank. The time period between the sale and actually listing the property could be as long as a few months or more until the property is ready to be marketed. Sometimes the bank will make repairs to put the property in a condition that it can be sold, such as repainting and replacing carpet.

The property will then be listed with a Realtor who will market it through the local MLS and other resources to attract buyers to sell the bank owned property. Title insurance will be able to be obtained by the new buyer, and the buyer will be able to conduct an inspection of the property. REO properties are sold in an “as is” condition. Bank owned properties are usually priced at or slightly below market value.

As always, thanks for reading this post and if you enjoyed it be sure to comment below. Also, check out our FREE 2009 Loan Modification Guide: Saving Your Home From Foreclosure.

Avoiding foreclosure is the goal…Losing a family home through foreclosure can be the most distressing thing that can happen to you and your family. It doesn’t just put you and your family in a situation where you all don’t have a place to live in but it also forms a chain of negative thump on your credit record that can mark you for years.

On the other hand, there are some things that you can carry out to avoid foreclosure and keep that irritating blotch from making its way onto your credit record. Although it will not avert some damage from taking place, it can rather help to minimize the effect of the damage. Below are some things that you can do to avoid foreclosure:

1. A loan modification is one way to avoid foreclosure. These loans are designed to generate a sequence of creative financial options that will let you pay your loan at a lower rate or on another payment schedule. It may also lower the interest rates and payment dues, and payment schedules can be adjusted to weekly basis or every other week. Refinancing is an example of loan modification.

2. Get in touch with your lender at the soonest possible time before the issues get out of hand. And then by collaborating with them, come up with a plan that will help you prevent foreclosure from happening. Also, be sure to remain in good standing with your financial lender. Moreover, most lenders will be more willing to assist you when you come to them at the time where the problem is not yet very complicated or deep. This is so, because this action only shows that you are really serious and willing to stick with your commitment to pay off your debt along with them.

Many people are either losing their homes to foreclosure or walking away because it doesn’t make sense for them to keep making expensive mortgage payments, when the house is worth less then the remaining mortgage. Currently 50% of home sales across the US are foreclosed homes. Although the real estate crisis is worrisome for homeowners, it is providing opportunities for families and investors.

If you look at any successful real estate investor, they have accumulated much of their wealth by buying when there was a downturn in the market. Donald Trump is a good example of someone who was buying up real estate real when everyone else was selling as illustrated in the quote. “When I first started out in Manhattan, everyone was saying what a terrible market it was, and if I’d listened to them, I would not be where I am today. There are always opportunities.” Donald Trump.

Many of the most successful real estate investors currently see this as an opportune time to buy real estate (Mr. Trump is in this list) and see pre-foreclosures as the greatest means in which to negotiate the best deals.

The great thing about buying a pre-foreclosed home is that you are dealing one-on-one with the owner and have a chance to ask questions and inspect the house. Since the bank has time to evaluate the property there is a higher probability of being granted a mortgage.

It is important to understand the surrounding community or macro aspects when purchasing a pre-foreclosed home. Here are some macro aspects to consider:

- Look around the neighborhood to see how many homes are being foreclosed. It’s best that the house you’re considering for purchase is the only one facing foreclosure. Obviously the more homes in forced sale, the more likely the properties will depreciate.

- Check with the local tenants to see what the rent levels are and whether they have been increasing or decreasing over the last little while.

- How strong is the economy at the town and county levels? Is the current employment rate growing or stagnating?

- Check with the local government to see of any upcoming infrastructure projects that will be taking place within 2-3 years. Projects such as new shopping malls, highways, train/subways lines, building permits for new businesses being established, new parks near the property, etc.

- Consider the age of the majority of the population within the community. If the majority of the local population is seniors that own homes, that could translate into an excess of future housing as they move into elderly care facilities.

If you do your due diligence and find positive answers to these questions when considering a pre-foreclosure then you can feel secure that it is a good community in which to invest. Successful real estate investors buy discounted properties at the right location at the right time.

by Doug Smith

How would you like to buy a car, truck, or SUV for only 10% of its original worth?  How about a house?  Or perhaps jewellery?  Does it sound too good to be true?  Well, this time, it is true!  Government auctions provide excellent deals and savings on vehicles, electronics, homes, jewellery, and other expensive items that are obtained through foreclosures, repossessions, and seizures.

Imagine how nice it would be to purchase a decent car for as low as $100! Due to the current housing crisis in the United States, more homes than ever are being sold for very low prices at government auctions.  Just think for a moment; your dream home could be being sold at a government auction right this minute for as low as 90% off its original price!  If you’re a small business owner, you can find many office supplies at government auctions as well. You can even earn money yourself by purchasing these items at amazingly low prices and selling them for more!

These government auctions are held every day in every state, yet most people aren’t even aware of them.  For the most part, it’s usually car dealers and small business owners who show up at government auctions to find good deals.  Some are still open to the general public though, and if you can find out where they’re being held, you can show up to find a good deal yourself!

Or, if you prefer not to leave your seat, you can find government auction items on the Internet!  The government will oftentimes put government auction items on the Internet and will allow the general public to place their bids electronically. There are many, many government auction sites on the web that claim to offer repossessed and surplus items for very low costs. A google search for “government auctions” will bring nearly 2,500,000 hits!

If you decide to bid electronically, you must be careful and watch out for scams.  Many of these government auction sites are not legitimate at all. They may charge you a membership fee for nothing.  You will find that the so called “government auction items” are no longer available.  So many of these online government auction sites only offer expired auctions and outdated offers.

The question is how can you tell the difference between the legitimate online government auctions and the scams?  Fortunately there are government auction review sites that will sort out the good from the bad.  These sites offer unbiased government auction reviews.  Government auction review sites are run by experts who are very knowledgeable of government auctions and are good at keeping everyone up to date.

Web sites with government auction reviews obtain information about legitimate government auction items, dates, times, and locations.  The government auctions are evaluated by certain criteria:

-  the total listed and how current they are

-  the national, state, and local sources they provide

-  ease of use

-  the accuracy of the data

-  by how the membership fees are charged

The professionals running the government auction review sites have put a lot of time and effort in to their research.  You will get a head start over other government auction bidders by visiting a government auction review site to find out the best places to bid.  You won’t have to worry about being scammed and let down by the fraudulent sites thanks to the hard work others have put into their research.  It will make government auction bidding a lot easier on you by visiting and reading the information provided on government auction review sites!

One of the more pervasive pieces of conventional wisdom is that senior classes in non-agency RMBS (read AAA) are safe and sound even in a defaults due to their first money nature that isolates them from the potential loss problems of the lower tranched classes. An interesting tidbit that has arisen as a result of a close read into the HR 1106 Bill “Helping families save their homes act” indicates that many deals’ legal documents have a “bankruptcy carve-out”. In these instances, bankruptcy-related losses above a de-minimis amount become allocated on a pro-rata basis across the capital structure, regardless of subordination. The obvious impact is that AAA tranches which previously had seen themselves as immune to any losses, would suffer impairments.

This event is particularly an issue in the context of the proposed bankruptcy cramdowns by HR 1006. Additionally, the recent negative actions taking by many rating agencies could be predicated upon this particular often ignored feature, as rating downgrade could become much more prevalent not only for the junior classes, but for the AAA tranche as well.

According to recent studies, the loss provision is typically found in shifting interest rate transactions, rather than excess spread transactions, which means it would affect the prime and Alt-A markets more than the subprime market. Estimates put shifting interest deals as two-thirds of outstanding Prime and Alt-A transactions.

The table below presents a summary of vintages and shelves that possess this carve-out, which at a casual glance predominate the older vintage deals, which are considered relatively more insulated from overly aggressive underwriting and are estimated to have lower loss provisions.

So what are the potential loss implications? At the surface: likely not much in terms of absolute losses. Bank of America estimates that the total amount of affected securities would be at just under $500 billion, based on the above assumption that 2/3rds of Jumbo and Alt-A are “shifting interest” and further estimates a 50% for affected securitizations (as not all shelves are impacted as the table above denotes).

And based on Moody’s dated estimates for losses, which peak at 1.3%, suggests total losses of around roughly $7 billion, potentially rising to $10 billion in an aggressive scenario.

One corollary of the problem is the impact on CMO/CDO structures that are heavily levered against the AAA tranche, and for whom even a 1% impairment could be magnified up to 20x from leverage on what was considered a previously risk free asset class. However, the CMO/CDO impact is an issue we will consider at a later time, the most direct impact here is as pertains to life insurance companies who are holders of AAA RMBS tranches, as these are likely the ones who will be impacted the most from potential downgrade actions on AAA’s. Additionally, the administration’s decision yesterday to induct the Ins cos into the TARP hall of fame is likely a harbinger of the expectation for much larger upcoming capital needs, explaining the rush to provide preemptive guarantees for “contingent liabilties.”

As the downgrades ramp up, it will be very interesting to follow the announcements issued by insurance companies who, presumably alongside structured finance entities, may soon find themselves in a curious predicament where they experience losses due to not having read the fine print.