With more than 91,000 New Yorkers in danger of losing their homes to foreclosure by the end of 2008, Sen. Charles Schumer (D-N.Y.) is looking to put an end to the subprime loans that are causing the problems, according to a recent article on NYDailyNews.com.

In fact, an analysis by his office revealed that an estimated 1.8 million American families — including nearly 23,000 in New York City and 19,000 in Nassau and Suffolk counties — could face foreclosure within the next two years when their subprime loan rates increase.

Here’s a snip from Chuck:

“For thousands, the American dream of homeownership has turned into an un-American nightmare. Thousands of middle-income and lower-income New Yorkers were tricked into borrowing these loans, and they are loans designed to fail. The first step is making sure that borrowers are protected from these usurious lenders. It’s long past time that we ensure that American families are protected from loans that promise them the world and then bury them in debt.”

To address the problem, Schumer recommends a response on the federal level that includes:

• establishing a national regulatory system to target “rogue” mortgage lenders and brokers;
• eliminating “liar loans” by creating a suitability standard for borrowers;
• prohibiting prepayment penalties, stated-income loans and “pick a payment” gimmicks that coerce borrowers into signing higher loans than they cannot afford; and
• creating a state foreclosure prevention task force.

It’s important to note that bad loans are not the only factors that contribute to foreclosure increases. Illness, divorce, job loss and other personal issues often affect distressed homeowners and cause them to fall behind on mortgage payments.

Furthermore, not all subprime loans result in foreclosure.

Therefore, it’ll be interesting to see how the interests of homebuyers and lenders are both represented if and when tighter restrictions are implemented.

Stay tuned.

Carol Gilbert from the Goldseker Foundation has some great advice for distressed homeowners in Maryland, anywhere for that matter, in an article today in the Los Angeles Times.

Here’s a quote:

“Borrowers may think that they are delaying foreclosure by not calling the lender – the opposite is true. The longer a borrower waits, the faster foreclosure will proceed and the fewer options there are to slow or reverse it from happening.

Too often, homeowners who default on their mortgages wait until the last minute to seek foreclosure assistance. It’s a decision that in the long run comes back to haunt them.

In most cases, lenders, states and nonprofit organizations have programs in place that can stop foreclosure. That’s because no one, aside from opportunistic investors, ever really wins in foreclosure situations.

According to the article, one of the first steps to take is contacting a housing counselor. Reaching out to the lender to discuss possible options is also an important initial step.

The article offers a few resources for Maryland residents, including:

• Dial 311 (in Baltimore) to be connected to a free counselor at a HUD-approved nonprofit
• Call 888-995-HOPE (4673).
• Visit the St. Ambrose Housing Aid Center ((410) 366-8550) for free counseling

Whether it’s refinancing, deferring payments or relocating, options abound when it comes to avoiding bank repossession.

Inaction, however, should not be one of them.

Foreclosures in Detroit, Michigan ”primarily in Wayne County” are consistently among the tops in the nation.

It’s a slice of the real estate market that did not experience the highs of the real estate boom during the last few years, which is perhaps the reason distressed homes in the Motor City are now selling for less than cars, according to a recent Reuters article on FOXNews.com.

Here’s a snip:

… With bidding stalled on some of the least desirable residences in Detroit’s collapsing housing market, even the fast-talking auctioneer was feeling the stress.

‘Folks, the ground underneath the house goes with it. You do know that, right?’ he offered.

After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: ‘The lumber in the house is worth more than that!’

Clearly, the foreclosure situation is bad news for affected homeowners. However, it also represents tremendous opportunities for investors to swoop in and purchase properties at rock bottom prices.

Not all properties, however, come dirt cheap. In fact, Mayor Kwame Kilpatrick recently announced that two condominiums in the city’s revitalizing downtown sold for more than $1 million each.

The key to success in a reeling city like Detroit, where the only way to go is up, is being able to weather the storm and hold onto the property long enough to realize a profit.

It could be months or years. Regardless, it’s a decision that could pay huge dividends if and when the situation sorts itself out down the line.

Bad — or unaffordable — home loans are no longer affecting unfortunate homeowners and lenders.

As the trend of more homeowners defaulting on their mortgages continues to increase, stock market investors are growing concerned with a possible “crisis in regard to subprime loans, according to U.S. News & World Report.

In fact, the Dow Jones industrial average tumbled more than 100 points yesterday, underscoring the impact the situation could have on the broader economy.

Here’s a snip:

“It’s stomach-turning time on Wall Street again. After plummeting more than 242 points Tuesday–and 416 points on February 27–the market began another downward march Wednesday on growing fears that the troubles in the subprime mortgage sector are turning into a full-blown financial crisis. And if there’s anything that Wall Street hates, it’s an unexpected crisis with unknown consequences.”

According to the article, an across-the-board rise in defaults and foreclosures means two things:

1. Consumers stop spending
2. Home prices could dip

And, according Merrill Lynch economist David Rosenberg, tightening lending standards might not be the silver-bullet solution.

Here’s a snip:

“Our biggest concern is that any tightening of lending standards in the mortgage market — even if confined to lower-quality borrowers — is going to constrain overall housing demand and make it more difficult for home sales and prices to stage a recovery.

We’ll continue to provide updates on this evolving issue … stay tuned.

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