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Nov 27, 5:09 AM EST

Report: Foreclosures to Hit Metro Areas


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Report: Foreclosures to Hit Metro Areas

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DETROIT (AP) -- Rising foreclosures will lead to billions of dollars in lost economic activity next year in the nation's major metropolitan areas, but homeowners and financial institutions have the ability to work together to contain the effects, according to a report compiled for the U.S. Conference of Mayors.

The report was released Tuesday ahead of a meeting of mayors from across the country in Detroit, where they hope to create policy recommendations to help address the nation's housing crisis.

Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation's economic activity.

"The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods - and it's not over yet," the report said.

The biggest losses in economic activity are projected for some of the nation's largest metropolitan areas. New York is expected to lose $10.4 billion in economic activity in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion each, and Chicago at $3.9 billion.

The report estimates U.S. gross domestic product growth in 2008 will be 1.9 percent, coming in about $166 billion - or one percentage point - lower as a result of mortgage problems. GDP is the value of goods and services produced and is considered the best barometer of the country's economic fitness.

The report also projects property values will decline by $1.2 trillion in 2008, due in part to the foreclosure crisis, with drops in home prices across the U.S. averaging 7 percent. And it said the loss of property, sales and real estate transfer taxes will hurt local and state governments.

But homeowners, banks, holders of mortgage-backed securities and loan servicers can work together to ease the economic effects, the report said. Agreeing to new payment terms on some loans, for example, could make the difference between a family keeping a home and losing it in foreclosure.

"Such actions will help to lessen the number of foreclosures thereby avoiding the further negative effects on local housing markets and on the broader economy," according to the report, titled "The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas."

The National Forum on Homeownership Preservation and Foreclosures, organized by the Conference of Mayors, includes discussions about the state of the mortgage industry, ways homeowners can avoid foreclosure, and strategies to keep foreclosed properties from dragging down the quality of life in neighborhoods.

Recommendations developed at Tuesday's forum, which is closed to the media, are to be presented at a Conference of Mayors meeting in January.

"We're coming to Detroit with a dogged determination to fight for the families in our cities, our cities and the national economy," said Douglas Palmer, mayor of Trenton, N.J., and president of the mayors group. "We're optimistic that we're going to come up with models that will work."

In addition to Palmer and Detroit Mayor Kwame Kilpatrick, who is hosting the gathering, mayors expected to attend include Jerry Abramson from Louisville, Ky.; Michael Coleman from Columbus, Ohio; Richard Kaplan of Lauderhill, Fla.; Brenda Lawrence of Southfield, Mich.; and Elaine Walker of Bowling Green, Ky.

The housing market slump has made it harder for financially strapped home buyers to sell their homes and avoid missing payments or losing their homes in foreclosure. Increasingly, many borrowers who took out adjustable-rate mortgages and other loans with monthly payments that increase after an initial period also are finding they can't afford the higher payments.

Jim Diffley, managing director of Global Insight's regional services group, wrote the report with his team and was to discuss the forecasts during the mayors' meeting. He said the goal was to provide a broad look at the effect of foreclosures, a problem mayors are keenly aware of locally.

"This is not a new issue," Diffley said. "We've know about it. It's been swelling up."

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For Immediate Release Contact: Elena Temple (202) 861-6719

Monday, November 19, 2007 etemple@umayors.org

Karen Hinton (703) 798-3109

karen@hintoncommunications.com

THE NATION’S MAYORS TAKE ON THE MORTGAGE FORECLOSURE CRISIS

Washington, D.C. – The nation’s mayors are holding a special meeting in Detroit, Michigan on Tuesday,

November 27th to address the growing foreclosure crisis and its impact on American families, property

values, neighborhood blight and crime.

Under the leadership of Conference President Trenton Mayor Douglas H. Palmer and host Detroit Mayor

Kwame M. Kilpatrick, a select group of mayors will meet with leading non-profit counseling agencies, mortgage

providers, and financial institutions to discuss crisis intervention strategies, loan modification and rescue

programs and the maintenance and management of foreclosed properties to mitigate their negative effects on

neighborhoods.

During the meeting, mayors will also release a report highlighting the economic ripple impact of the

foreclosure crisis on U.S. cities/metros -- specifically cities in Arizona, California, Florida, Indiana,

Michigan, Nevada and Ohio where the effects of the crisis are most prominent.

This meeting will be closed to the press, but mayors will hold a press conference at 2:30 p.m. at the

MGM Grand Hotel in the Grand Salon #3.

With over 85% of people in the United States living in our nation’s cities and metro areas, mayors are on the

front lines as first responders on every issue that impacts American life, including housing. The Conference’s

legislative agenda, also known as the Mayors’ Ten Point Plan http://www.usmayors.org), highlights affordable

housing and access to homeownership as a priority.

WHO: Trenton, NJ Mayor Douglas H. Palmer, USCM President

Detroit, MI Mayor Kwame M. Kilpatrick, Host

Louisville, KY Mayor Jerry E. Abramson

Columbus, OH Mayor Michael B. Coleman

Bowling Green, KY Mayor Elaine N. Walker

Southfield, MI Mayor Brenda Lawrence

Lauderhill, FL Mayor Richard Kaplan

WHAT: Mayors Meet on Subprime Mortgage Crisis

WHEN: PRESS CONFERENCE

TUESDAY, NOVEMBER 27, 2007 at 2:30 P.M.

WHERE: MGM Grand Hotel – Grand Salon #3 Room

1777 Third Street

Detroit, MI 48226

The U.S. Conference of Mayors is the official nonpartisan organization of cities with populations of 30,000 or more. There are 1,139 such cities in the

country today, each represented in the Conference by its chief elected official, the Mayor.

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Babs

Here is an update from Detroit, Michigan

 

Mayors and lenders say joint effort is needed to ease nation's foreclosure crisis

 

Leading lenders promise financial counseling hotlines

November 27, 2007

 

By ZACHARY GORCHOW

FREE PRESS STAFF WRITER

Several of the nation’s mayors and leading lenders agreed today at a meeting in Detroit on the need to work together to address the foreclosure crisis, with lenders saying they would put money into financial counseling hotlines and online database of foreclosed properties while government officials heard their concerns about new regulations.

Meeting at the MGM Grand Detroit, the U.S. Conference of Mayors, lenders, banks and nonprofits that seek to aide people having trouble with their loans focused on how to convince people in financial trouble to get help.

The Mortgage Bankers Association announced it had posted today a database of many, though not necessarily all, foreclosed properties with the names of the lender in possession of the property and the entity, if there is one, contracted to perform maintenance of it.

The association also said it would make its studio in
Washington available to any mayor in the nation’s capital for the mayor’s conference’s annual January meeting to film a public service announcement about foreclosures.

Detroit Mayor Kwame Kilpatrick recently filmed a foreclosure public service announcement through the association.

Kilpatrick said the mayors were told that 72% of those in foreclosure have the wherewithal to remain in their homes if given proper help.

John Taylor, president and CEO of the National Community Reinvestment Coalition, said after a news conference that having the mayors team up could bring key pressure on
Washington and state capitals to put reforms in place to protect borrowers.

“A concerted effort with a team of mayors, I think could be very effective,” he said.

Earlier in the day, a small protest of the meeting with about 10 participants was held outside the hotel. They called for states to use laws on the books to put a moratorium on foreclosures.
 

Link to article: http://www.freep.com/apps/pbcs.dll/article?AID=/20071127/NEWS05/71127061#article_comments

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