TBO.com - Tampa Bay Online
Owners Go Bankrupt To Keep Home
JASON BEHNKEN / The Tampa Tribune
Jane and Enrico Parsons believe bankruptcy is wrong. But they will file for Chapter 13 as a last resort to save their Riverview home.
ADVERTISEMENT
Published: November 13, 2007
Updated: 11/13/2007 06:00 am
Check Foreclosures In Your Neighborhood | Sound Off
TAMPA - Today, Jane and Enrico Parsons prepare to sit at a table in their attorney's office and sign a document that could keep their lives from crumbling.
In order to do it, though, they will have to ignore a core value: Bankruptcy, they have always believed, is wrong.
"This goes against my grain," said Jane Parsons, 54, manager of a pediatric medical office. "I cry every time I think about it. But I feel I have no choice."
That's because the Parsons' mortgage lender is set to auction off their three-bedroom Riverview home Thursday at the federal courthouse in Tampa. At this point, filing for Chapter 13 bankruptcy, which allows people to reorganize their debt, is the only way the couple can stop the sale.
The Parsons are among a growing number of homeowners in foreclosure turning to this kind of bankruptcy as a last resort to save their homes.
As Florida's foreclosure rate has soared to the second highest in the nation, Chapter 13 bankruptcies have followed, on pace to double last year's results.
The industry professionals who handle these bankruptcy cases say more people are filing solely to avoid foreclosure and don't have as much traditional debt, such as credit card and auto loans, as used to be typical.
Still, the vast majority of those in trouble with their mortgage lenders don't qualify for Chapter 13 because of financing deals in which mortgage payments adjust upward, beyond what they can afford even through bankruptcy.
A controversial bill now in Congress could change that and, if passed, would particularly help Florida homeowners.
Proponents say the bill, which would allow bankruptcy judges to modify the terms of mortgage loans, would open the door to Chapter 13 for roughly 600,000 more homeowners.
But critics say the bill would drastically change the lending industry and raise interest rates by as much as 2 percent on home loans for all future borrowers.
Even if lawmakers approve the bill, it could be too late for thousands of Florida residents whose adjustable rate loans are about to ratchet higher.
State's High Foreclosure Rate
Florida's troubled real estate market has pushed the state's foreclosure rate to among the highest. Lenders have filed more than 20,000 foreclosure filings in Hillsborough, Pasco and Pinellas counties through September. That's up nearly 131 percent when compared to the same period last year.
During the first nine months this year, 7,348 homeowners in the Middle District of Florida, which includes the Tampa Bay area, have filed for Chapter 13, court records show, 68 percent more than 4,361 who filed during the same period last year.
As more and more people fall behind on their mortgage payments, lenders are pushing homeowners to call early if they're in trouble.
Kurt Pfotenhauer, senior vice president for the Mortgage Bankers Association, said some lenders even call borrowers with adjustable rate mortgages before payments are scheduled to rise to make sure they can afford the new amount. There are things lenders can do to help homeowners from slipping into foreclosure, Pfotenhauer said.
But many homeowners say calls to their lenders have fallen on deaf ears.
The Parsons bought their Riverview home in March 2006. But that was when the real estate market was slowing, and they had trouble finding a buyer for their Atlanta home. They juggled two house payments for five months and then ran out of money.
The Parsons say they called months before they missed their first payment. They say their lender said nothing could be done until they missed three mortgage payments.
Enrico Parsons, a chef, got a new job in Florida and moved to the Riverview home in September 2006. Jane Parsons followed in October. They say the lender wouldn't accept any mortgage payments until April, when the lender offered a repayment plan.
That plan included their regular monthly mortgage payment of $1,600, plus $1,100 a month for a year to cover the late payments and fees.
They made the payments on time through July. On June 30, Enrico collapsed because of a blood clot on the brain. He has been out of work since then but expects to get a new job soon.
With one income, Jane said she could no longer make the extra $1,100 payments. She said she tried to continue making her regular mortgage payments, but the lender stopped accepting them, saying she violated their agreement. The lender again filed to foreclosure on the home.
"It just doesn't make sense," Parsons said. "It's going to take longer for the bank to get its money in foreclosure than it would if they'd just work something out with us."
Chapter 13 Stops Proceedings
Chapter 13 is attractive to those in foreclosure because it stops the proceedings immediately and requires lenders to accept mortgage payments.
The biggest incentive: It gives homeowners five years to pay their debt.
But Chapter 13, under the current bankruptcy code, won't help everyone in foreclosure. It's designed for people, such as the Parsons, who fell on hard times temporarily but can now make their regular monthly mortgage payments, said Catherine Peek McEwen, a U.S. bankruptcy judge in Tampa.
"This is a good fit if you're not making the same kind of money you used to," McEwen said.
Under Chapter 13, a person's monthly bills are consolidated into one payment. Payments on unsecured debt, such as credit cards, and automobile loans can be adjusted by the judge.
But many in foreclosure are in trouble because adjustable rates have pushed their payments out of reach. Those people don't qualify under the current Chapter 13 bankruptcy code.
Under the pending legislation, judges could modify mortgage terms.
For example, a judge could determine a home that sold for $250,000 is worth only $200,000 in today's market and require the homeowner to pay only the lower amount. Or a judge could lower a person's interest rate in order to come up with a new mortgage payment the homeowner could afford.
Henry Sommer, president of the National Association of Consumer Bankruptcy Attorneys, said the pending legislation would open the door to Chapter 13 for more than 600,000 homeowners who currently don't qualify.
"This legislation is really needed," Sommer said. "If it doesn't pass, so many more people will lose their homes."
The new rules could affect homeowners everywhere, but particularly those in states such as Florida, Nevada and California, where foreclosure rates are highest.
Home prices in Florida, Sommer said, shot up too high, and many people paid more for homes than they were worth.
The unusual financing that was readily available during the boom allowed many to buy homes they couldn't afford.
"Many were tricked into taking these loans by mortgage brokers who were making so much money on these types of loans," Sommer said. "A lot of these loans should have never been made."
But not everyone thinks the legislation is a good idea.
The Mortgage Bankers Association strongly opposes the bill and says it would end up causing rates for all future borrowers to shoot up.
"Lenders will no longer be able to count on quick recourse to secure a home loan," said Pfotenhauer, senior vice president at the association. "And lenders won't be able to count on the value of a home, because a judge will be able to change it later."
The Parsons came close to going through Chapter 13 bankruptcy once before, and Jane Parsons said she's humiliated that this time she can't work out of debt herself.
"I'm so embarrassed," she said. "I don't want to have to do this, but my lender left me no choice."
Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.
Post a comment
(Requires free registration.)
* Keep it clean
* Respect others
* Don't hate
* Don't use language you wouldn't use with your mom
* Use "Report Inappropriate Comments" link when necessary
* See Member Agreement for details
TBO.com - Tampa Bay Online Member Agreement | Privacy Statement | Work With Us
Reader Comments
Posted by ( dschardt ) on November 13, 2007 at 4:43 a.m. ( Suggest removal )
Look no further then the greed of the lenders themselves giving loans to those who should never have had them in the first place. The first step of forclosure, even before the process begins, is to force the lender, by law, into arbritation.
I am missing something here because the lenders are more than willing to go into foreclosure rather than negotiate.
Report Inappropriate Comments
Posted by ( CConrad ) on November 13, 2007 at 6:50 a.m. ( Suggest removal )
I was born and raised in Tampa. Lutz actually. I NEVER thought I'd have to move, much less out of state. But that's exactly what my husband and I had to do in order to afford a home. We saw this coming early last year. Praise God we sold our house in Lutz in Dec 06. Right after that, the housing market died. We had to move to Virginia. Although it was the hardest adjustment of my life, it was also the smartest. I can't BELIEVE Florida's big wigs have allowed this catastrophe to happen. I read TBO everyday, and it makes me so sad to see all these people, just like us, losing their homes. The first person to comment had it right.. greed. The banks just don't care. Nor do the real estate brokers, etc. Got to make that sale.. Between the taxes and insurance, how can anyone afford a home in Florida. I am devastated! Althoough Virginia is beautiful, I would have preferred to stay where I was raised, where all my family and friends are. Still can't believe this is happening, and it's just going to get worse! Congress better do something soon to help these poor people, or THEIR family is going to have to move, too. What a rotten mess. I pray God helps all thoses about to lose their homes, and to give our "leaders" a clue. If I sound mad, it's because I am. This should NEVER have happened. Where is Big Brother now???
Report Inappropriate Comments
Posted by ( RobKay ) on November 13, 2007 at 7:43 a.m. ( Suggest removal )
These problems were caused by the banks to start with. They offered the nothing down, interest only, adjustable rate loans to drum up business for themselves and played on the home buyer's greed and lack of financial knowledge to buy more than they could afford. The scary thing is that the banks still haven't learned a thing from the problems they've caused. The home market is screeching to a halt so they are switching their efforts to the automobile market instead (the next largest purchase after a home.) Have you seen the adds on TV? "No credit checks, nothing down, if you've got a job you've got credit with us, don't pay off your old car just buy a new one." This is going to cause the same problem in the car market in a year or two that its causing in the home market now. BANKS CANNOT BE TRUSTED TO REGULATE THEMSELVES! They have no one's interest at heart but their own, and they are greedy. The banker's anthem is still the same - "STSOB." The only way a bank can make a buck is by loaning money. When they give you a loan, they are not helping you, they are helping themselves - at your expense!
Report Inappropriate Comments
Posted by ( tolerantone ) on November 13, 2007 at 7:54 a.m. ( Suggest removal )
I lost my home. I am filing for bankruptcy. I prided myself in taking care of my own business and flying under the radar. The mortgage company would never speak with me and kept putting me off. It's like they wanted me to loose my home of 14 years. I blame the developers and investors/flippers for the inflated home values and then the tumble due to the glutton of homes / townhomes on the market. Greed - it's all about greed. I would leave Fl today if I could.
Report Inappropriate Comments
Posted by ( Jmac35 ) on November 13, 2007 at 8:16 a.m.
(This comment was removed by the site staff.)
Posted by ( CConrad ) on November 13, 2007 at 8:38 a.m.
(This comment was removed by the site staff.)
Posted by ( chipshot ) on November 13, 2007 at 8:47 a.m. ( Suggest removal )
Both lenders and borrowers made bad decisions and should share the losses. NO bailout! Lenders need to refinance distressed homeowners and provide them every chance to keep their houses, otherwise banks will become realtors in a down market.
Report Inappropriate Comments
Posted by ( Craig328 ) on November 13, 2007 at 8:56 a.m. ( Suggest removal )
jmt, tell me if you can see the obvious contradiction of these two sentences:
"This problem was not caused by the banks."
"It was caused by stupidity of people that could not afford a home in the first place."
Do you not see it in there? Here, lemme type it larger so you don't miss it:
BANKS LENT MONEY TO PEOPLE TO BUY SOMETHING THEY COULD NOT AFFORD.
Perhaps you don't recall all the hoops a lender makes you jump through to acquire a loan...amongst them, stating and verifying all income and disclosing your list of current debts. If that process isn't used to determine whether you can afford the loan you're applying for, what's it for then?
Seriously, yes, people ought not to borrow more money than they can afford to repay. But it IS substantially the fault of the lenders extending loans to people who truly don't have a means to pay for it later. The lenders have far more experience with the line between debt load and defaults...and yet they ignore it and keep lending money to people who shouldn't qualify.
Report Inappropriate Comments
Posted by ( dzeien ) on November 13, 2007 at 9:06 a.m. ( Suggest removal )
To CConrad: YOU and only YOU are responsible for all your financial decisions. Sad as it is I read where you did refinance. This was no one's decison but yours. Time changed everything as it always does and now the horror of your decision is upon you. You probably listened to a mortgage broker that showed you the mortgage that everyone was going with at the time and he/she made bigger money selling the instrument to you. All the while YOU made the decision and sorry it is not sugar coated they way you would like but it is called the HARD reality. Most all of us do learn the hard way and it hurts. Sorry for your loss. I hope you read your next mortgage and understand it fully prior to signing. That's where your fingers got you in trouble. YOU signed it!
Report Inappropriate Comments
Posted by ( kittysezmeow ) on November 13, 2007 at 9:25 a.m. ( Suggest removal )
i have a great deal of experience in the financial industry. mostly what i see are people who can afford their mortgage but not the taxes and insurance. the tax rates and the insurance are unreasonably high. there is no justification for the rates being so high. another responsibility must land on employers who pay below what would be a resonable rate for a job. their justification for paying at a artificially low rate is that the cost of living in florida is low so they pay a lower rate. nonsense. the cost of living here is as much, if not more, than most of the country. so why are the politicians forcing the employers to pay a higher wage? a wage that is equal to the cost of living?
Report Inappropriate Comments
Posted by ( MyOpinionCounts2 ) on November 13, 2007 at 9:36 a.m.
(This comment was removed by the site staff.)
Posted by ( 7297277 ) on November 13, 2007 at 9:36 a.m. ( Suggest removal )
Many of these "adults" complaining about the banks and their mortgage lending practices are just like their kids--blame everyone but themselves! Take responsibility for YOUR actions! If you don't understand the financial repercussions of an interest only loan or adjustable rate mortgage, DO NOT sign the paperwork. Do some due diligence on your part. Take some responsibility for your actions!!!
Report Inappropriate Comments
Posted by ( CConrad ) on November 13, 2007 at 9:39 a.m. ( Suggest removal )
To dzeien, your comments make me laugh. What a moron. As I stated, I could fully afford my mortgage. I DID read it, and I DID comply. And I did not refinance. It was the TAXES and INSURANCE that went bananas. I did not lose my house, pal. I sold it before the market dumped. How it is MY fault the T&I went so high that so many people couldn't afford them? And where in the world did you get that I refinanced my home? I am a responsible, intelligent person, and your suggesting otherwise was uncalled for. Floridians like you are in for a big surprise. There are certain things in life that are not in our control. One of them being this big mess... I suppose all these other people having a hard time paying their TAXES & INSURANCE are irresposible too? THINK before you write something so STUPID.
Report Inappropriate Comments
Posted by ( SailorFitz ) on November 13, 2007 at 9:56 a.m. ( Suggest removal )
In the Investment world if I sell an aggressive, risky investment to a 60 yr old and their portfolio tanks...I could very well lose my job/license...maybe even go to jail. I can not say "buyer beware"...it's my resposability to do right by the client. My world is commission based and very very regulated....maybe it's time the mortgage industry do the same. Every year I have to take an ethics course....maybe the mortgage industry should take note.
Report Inappropriate Comments
Posted by ( dzeien ) on November 13, 2007 at 10:03 a.m. ( Suggest removal )
To CConrad: This article is about lenders and foreclosures. Taxes and insurance is in another section. PS. name calling is the biggest sign of ignorance that there is. You show your own lack of intelligence well.
Report Inappropriate Comments
Posted by ( Jmac35 ) on November 13, 2007 at 10:16 a.m. ( Suggest removal )
Sailorfitz, the mortgage industry requires more disclosure than any other financial service. When was the last time you bought a car and knew exactly what the numbers meant? Mortgage brokers are required to go through coninuing education every year to retain their license. To the contrary, Loan Officers in banks and correspondent lenders are not required to have any training at all, nor are they required to be licensed. People like to blame brokers for their demise when infact, brokers are the more well educated and trained. They are also required to disclose more than a bank Loan Officer. I would trust a broker over a bank any day.
As for the ultimate responsibility, (other than the borrower), it lies with Wall Street. They offered a product that contained substantial risk. This last year is a result of them realizing that they were offering financial instruments that had a flawed design from the get go. Now they have shut off the cash and refuse to buy anymore of those loans.
Report Inappropriate Comments
Posted by ( Markinthemidwest ) on November 13, 2007 at 10:18 a.m.
(This comment was removed by the site staff.)
Posted by ( BornSouthern ) on November 13, 2007 at 10:45 a.m. ( Suggest removal )
I had a chance to buy a nice home 2 yrs ago. Low down payment, low monthly payment. Everything looked great....on paper.
But I stopped and thought....I would basically be living from paycheck to paycheck. I wouldn't be able to save much for emergencies, price increases (on insurance, taxes and everyday living..). We thought long and hard, we considered part-time jobs, selling the second car, but we couldn't rationalize working ourselves to death just for the "american dream".
We finally said "NO"...we walked away from a beautiful home, in a great neighborhood. We were sad....
But now....we are so glad we walked away.
We've been renting the same house for 2 yrs now, it's a beautiful house, in a great neighborhood. We may never "own" a home but we have money in the bank, all our bills are paid on time,we have money in savings, we've been traveling ....life is good.
Our landlord said he'll never sell, or raise our rent. We are good tenants, and he's a good landlord.
We are VERY HAPPY....but it's sad for those that made a hasty decision.
Report Inappropriate Comments
Posted by ( mwhite6 ) on November 13, 2007 at 10:56 a.m. ( Suggest removal )
Obviously all 4 are factors, and greed was the driver for 3 of them. Taxes have gone up. Insurance has gone up, while insurance companies report record earnings. Ain't right. Banks got greedy as the newer, relaxed mortgages created opportunities for home buyers (and refinancers), which created more demand for homes, which increased value - unnaturally and inflated. Many buyers and refinancers who opted for these new interest-only, adjustable rate, longer-term, and negative ammortization loans bought more than they could afford. As the rates adjusted, many sold (or tried to), creating a glut, and driving home prices down. Value drop in turn created negative equity. Vicious cycle that feeds on itself.
Good people have been burned. Idiots have been burned, too. Idiots and greedy lenders and insurance companies are the lion's share of the problem (IMO). Taxes? Complicated subject as to why they've increasd so much.
Now is not the time to sell your home.
Report Inappropriate Comments
Posted by ( IREADER ) on November 13, 2007 at 11:43 a.m. ( Suggest removal )
ATTENTION JMT......
You could not be more wrong! These forclosure rates ARE NOT caused by democratic initiatives. Democrats for years have helped folks buy homes when republicans would not help.
This problem is directly related to your BIG BUSINESS GREED politics. Unscrupulous loans by lenders have caused this problem. If lenders and builders maintained their morals instead of tricking people into bad loans, then we would not have this issue.
The Bush administration fully backed these practices. MANY times he cited the rising percentage of home ownership as a sign that the Bush/Cheny economy was going strong.
Don't fall for the brainwashing! Republicans are great practitioners of smear!
Your explanation does not hold water. That's like saying the party (Eisenhower/Republican) that started the funding and initiatives for a federal highway system are responsible for all the road deaths on them. Don't be rediculous.
Your kind of criticism wreaks of stinking politics! You automatically have to start playing the blame/smear game to deflect the reality of the problem.
Report Inappropriate Comments
Posted by ( captjim333 ) on November 13, 2007 at 11:59 a.m. ( Suggest removal )
Dang cry babies. You went in there crying you needed a loan. Taxes go up 3% a year max on a homestead. So no use blameing the taxes. You want those schools and the buses to take the kids to school and the free lunches as well as all the aminities you can think up for your family. Sidewalks, garbage pick up and don't forget the buses running by empity. All this cost MONEY and some one has to pay. Now that you are called on to pay you come crying like a baby. You didn't have to buy the high priced home in the first place but you did now your greed is the problem not the one who made you a LOAN, it was not a gift it was a loan to be paid back. Don't by a car if you can't write a check for it. If you ask some one to loan you money they have every right to ask you to keep your word and pay it back as promised. When we sigh that NOTE we swear to be honorable and do as we say. If you could not make the payments then put it up for sale. For every one of you who doesn't pay, those of us who do have to pay your share.
Report Inappropriate Comments
Posted by ( Paige ) on November 13, 2007 at 12:09 p.m. ( Suggest removal )
I knew if I kept on reading I would find a statement saying that it is President Bush's fault. I stubbed my toe earlier today...it was President Bush's fault.
Report Inappropriate Comments
Posted by ( sandspur ) on November 13, 2007 at 12:11 p.m. ( Suggest removal )
The mortgage lenders require PMI insurance on the majority of home loans. How does this figure into the current home loan debacle? Supposedly, the PMI insurance protects the lender should the buyer default on the loan.
Report Inappropriate Comments
Posted by ( nadams ) on November 13, 2007 at 12:13 p.m. ( Suggest removal )
I don't agree with bankruptcy no matter what your situation may be. If you go into contract you are giving your word to repay the loan. Even if you have to work more jobs to get it done. With that said I can sympathize with anyone that says that insurance and taxes have gone way to high. I seen a $350/month increase for insurance alone. How many can afford that increase in their budget?
Report Inappropriate Comments
Posted by ( shane_651 ) on November 13, 2007 at 12:30 p.m. ( Suggest removal )
It is not the people who can't afford mortgages when they get the loans, you have adjustable rate mortgages, and then all of these B.S. fees. Inflation is killing this country. Thank you, Bush, you know the republican's motto, keep the rich people rich, and nobody else matters. Well, he succeeded.
Report Inappropriate Comments
Posted by ( sandspur ) on November 13, 2007 at 12:46 p.m. ( Suggest removal )
Shane, the current rate of inflation in this country is 2.4%, hardly high enough to be "killing this country". I remember well when inflation was over 13% back when (Dem) Carter was President.
Mortgage rates fixed or adjustable are agreed to by the borrower. It's not like they don't know what's coming down the road. Taxes and insurance are a different matter.
Report Inappropriate Comments
Posted by ( kimmypooh ) on November 13, 2007 at 1:08 p.m. ( Suggest removal )
Well I am a single Mom and at the time I bought my home I(we) had 2 incomes. I have barely managed the last 8 years since my husband walked out out me and our 1 1/2 year old baby. I was left with all the debt that WE had created. The reason I am saying this is that situations change. What was on paper 10 years ago may not be as good as it is today. I am in the process of trying to refinance my home and consoldate my debt in order to stay in my home. My taxes went from $996.00 to $2495.00 a couple of years ago and I have been struggeling since to make it monthly. I feel for the people and know what a difficult decision it must be. I would take a part time job to make ends meet but it is not fesible as I am not only a single Mom but I have a mother with Alzheimers living with me also. Believe the thought has crossed my mind to file chapter 11.
Report Inappropriate Comments
Posted by ( 91stormvet ) on November 13, 2007 at 1:10 p.m. ( Suggest removal )
tolerantone,
1st sorry for any loss.I'm curious, after 14yrs in a home, you must have had a lot of equity built up. My questions is what did you do with that money? I have been in my house for 5yrs really good equity, only took what we needed and not the 125% loan to value offered.
Report Inappropriate Comments
Posted by ( shane_651 ) on November 13, 2007 at 1:20 p.m. ( Suggest removal )
sandspur,
How much did a gallon of gas cost 10 years ago? I remember it being about $1.50 a gallon. How much was an average priced home 10 years ago? Roughly $150K? The problem with this country is that the price of everything goes up, however, income does not. How much was your homeowner's insurance 10 years ago? The point I was trying to make about inflation is that in the past ten years, the price of everything has at least doubled. Look at all of the corporate greed and political corruption. Just like pastors driving a brand new Rolls Royce, that people who make an average of $35K a year paid for? How morally correct is that? Everybody is greedy.
Report Inappropriate Comments
Posted by ( Jmac35 ) on November 13, 2007 at 2:02 p.m. ( Suggest removal )
Sandspur, Mortgage insurance typically only covers 255 to 35% of the lender's exposure.
Report Inappropriate Comments
Posted by ( kimmypooh ) on November 13, 2007 at 2:06 p.m.
(This comment was removed by the site staff.)
Posted by ( willbx161 ) on November 13, 2007 at 2:13 p.m. ( Suggest removal )
Leave it up to people like JMT to make this into a racial issue. Come on, you really think this was caused by banks giving "Minorities" home loans? Or could it possibly be a bit deeper than that? Well, this is the South, as I am reminded everyday by ignorant people like your boy JMT. Why don't we stop pointing the finger around and open our eyes to what is going on. Human lives are being effected by Greed and Coruption at the upper levels of corporations and government. I wonder,JMT, how many of the decision makers that got us where OUR country is today are minorities?
Report Inappropriate Comments
Posted by ( Luckyone06 ) on November 13, 2007 at 3:04 p.m. ( Suggest removal )
Kimmypooh,
I work in an Insurance Agency. Im not sure which company you had originally, but I can probably help you!
As for others... Beware of your home insurance. There is a company out right now who hasn't dropped many policies and thats coming right around the corner. I am not at liberty to say who, but they're in the top 3.
As for everyone making rude comments... This isn't a fight between us. There is a couple who purchased a home, that
A: Had the money when they purchased the home.
B. Came into some mishap, and lost earnings.
C. Who have been homeowners longer than some of you have been alive.
The market is up and down... Sometimes you're making it big, and sometimes you're scraping pennies to make payments. All of us have gone through this and if you haven't you're lucky, and probably will someday.
As for the insurance and property taxes, I work in an insurance agency, and I can tell you that we had to cancel many policies. Those policies were anywhere from 300 a year to 900 a year. Those same policies with Citizens are anywhere from 1300-5000. Whether or not you have had that policy in force for 1 year or 75. Thats the way it works. I feel terrible for the older people who don't work and are on a fixed income, because there is NOTHING they can do, but lose their home.
Keep in mind, you are never guaranteed the money in your pocket... One day this could be you!!!
As for all those who have lost their homes already, or who are about to lose their home, you will be in my prayers. I hope you and your families make it through these times...
Report Inappropriate Comments
Posted by ( Luckyone06 ) on November 13, 2007 at 3:09 p.m. ( Suggest removal )
Jmac35,
If you were refering to force placed insurance from the Mortgagee;
Mortgage insurance only covers the building and their interest of the loan. This is not a percentage. It is force placed, extremely expensive and doesn't cover much at all. In fact, it doesn't cover any personal property, NOTHING just the loan.
Report Inappropriate Comments
Posted by ( nadams ) on November 13, 2007 at 3:40 p.m. ( Suggest removal )
kimmypooh,
A lot of people that have posted comments should envy people like you. I was once in a very similar situation as yours just last year. I felt the crunch of being dropped by my insurance company. I once paid $1500/yr but after I was dropped I had to pay $3600/yr. A single parent taking care of family and still managing to do what is right is a great person. Good luck to you.
Report Inappropriate Comments
Posted by ( Jmac35 ) on November 13, 2007 at 3:43 p.m. ( Suggest removal )
Luckyone06, you are talking about homeowner's insurance or hazard insurance. the question was asked earlier about mortgage insurance. Mortgage insurance or "MI" is insurance the lender has on the loan to mitigate some of their exposure to default on the loan. they get that coverage on any mortgage where the owner has less than 20% equity. They are only covered for 25% to 35% of their exposure. I have been in the lending industry for 20 years...
Report Inappropriate Comments
Posted by ( 91stormvet ) on November 13, 2007 at 4:20 p.m.
(This comment was removed by the site staff.)
Posted by ( 91stormvet ) on November 13, 2007 at 4:25 p.m. ( Suggest removal )
loutravieso
He wants to debate, cannot be Democrat, they refuse to debate unless on CNN or their moderator.
Report Inappropriate Comments
Posted by ( moman ) on November 13, 2007 at 4:46 p.m. ( Suggest removal )
I feel sorry for the Parsons, but bankruptcy is there for just this situation. Predatory lending does happen & those firms should be prosecuted, if they aren't already out of business. I learned a long time ago the danger of over-extending, be it for a home, car, vacation, etc. Unfortunately we have to learn our lessons over and over. I calculated that the government pays $2.6 billion a year in interest on Resolution Funding Corp bonds- bonds we issued to bail out the savings & loan industry in 1989-91. Beware government intervention, the government will only make it worse.
Report Inappropriate Comments
Posted by ( unappreciated ) on November 13, 2007 at 6:14 p.m. ( Suggest removal )
Bigwash: there isn't a problem with a buying a house right now. Be smart, read up on your options and make sure the home is within your budget, don't let a realtor talk you into buying a more expensive house. And, get a fixed rate mortgage!
Report Inappropriate Comments
Posted by ( Mary813 ) on November 14, 2007 at 8:17 a.m. ( Suggest removal )
Hello, why blame the banks?? Common sense in real estate is you do not sign a contract to purchase a home that does not clearly state contingent on the sale of their existing home. They made a bad and risky decision. It is not the banks fault. You don't let go of a branch until you have a firm grip on the new one. Everyone has a choice just like all those poor people who took out ARM loans. Why take a loan with an infinity rate increase? Don't blame the government or anyone else but yourselves. Their situation is differnt from most and I'm glad they can get protection. Not everyone should be able to.I could have lived outside my means like most referenced in the story but I didn't. As a tax payer I shouldn't have to pick up the pieces for those who did.
Report Inappropriate Comments
Posted by ( CConrad ) on November 14, 2007 at 8:43 a.m. ( Suggest removal )
JUST FOR THE RECORD, I did not have an A.R.M. This fine state allowed all the big insurance companies to bail, after they collected our premiums for years, with no claims. Then they give us the monopoly of having Citizens as our only choice. And of course, their rates were rediculously high. NOONE had a choice in that. Tell me it doesn't make a difference in your budget when you have an increase of $300 or more a month for your mortgage. Let's not forget the flood insurance, etc. Florida's insurance commissioner should have done something long ago. But no, your right. I'm an irresposible crybaby who didn't read the contract. You people know everything, huh? I'm over it.
Report Inappropriate Comments
Posted by ( MJackson ) on November 14, 2007 at 10:38 a.m. ( Suggest removal )
Because I work for a developer who sells condos, I agree with those that blame taxes and/or insurance to be the main cause of foreclosure. While it is true that some may have gotten in over their heads, they were not properly advised as to the possible consequences of rising property taxes. Some lenders purposely do not educate people about this because they want to make their money. Then when the tax and insurance bills arrive, the lender increases their payments, by as much as $200 to $800.
This happened to me as well when I purchased a home in 2006 after my divorce. My insurance went up $1000 and my property taxes $3500. Not only was I required to send $1500 to make up my escrow deficit, they increased my payment by $800. Fortunately, I have savings to fall back on, which will help me keep my home. However, we must put pressure on our government to come up with adequate tax reform to help the overburdened like myself and so many facing foreclosure. If you pay high taxes now, vote NO in January as you will still pay high taxes. Vote out all incumbents and send new guys in there to do it right next time.
Report Inappropriate Comments
Posted by ( beth ) on November 14, 2007 at 12:19 p.m. ( Suggest removal )
This is thanks to realtors, lenders and the property appraisers. Property appraisals have gotten out of control - as a result, people are having to take out larger loans (which the banks are more than happy to offer). Everything but wages are going up!
Report Inappropriate Comments
Posted by ( Scott ) on November 14, 2007 at 12:44 p.m. ( Suggest removal )
I am very fortunate to have been able to pay off my mortgage and own my home out right in 14 years. Though I no longer have a house payment, the taxes and insurance alone is making it difficult to stay in Florida. The irony is that my wife works for an insurance company but doesn't bring home enough money to be able to rent a 1 bedroom apartment on her own. There are a few things that should be done that may help folks in the future. 1) Do away with adjustable mortgages. You are enticed to buy a home with a low starting interest rate only to get bowled over as the rate increases. 2) The home loan companies have a max percentage of your total income that they will allow for home loans. That percentage is around 33% of your total income. That percentage is way too high and should be dropped to 20-25%. That will keep border line borrowers from being able to buy homes they truly can not afford. Finally, talk with a financial advisor who is not involved in the mortgage industry. Let a true neutral party advise you if you can really afford the house you want to buy. Don't rely on the bank's advisor because they just want to make the sale. This situation is not the fault of just one party or the other. It is a problem that has been created by banks trying to make as much money as they can with no regard to the borrower and it's also caused by borrowers with champagne taste and a beer budget.
Report Inappropriate Comments
Posted by ( cshultz110 ) on November 14, 2007 at 2:39 p.m.
(This comment was removed by the site staff.)
Posted by ( sandspur ) on November 15, 2007 at 9:54 a.m. ( Suggest removal )
JMAC35
Thanks for the info re: PMI.
I have wondered what, if any, effect it would have on the lenders.
Report Inappropriate Comments
Posted by ( sandspur ) on November 15, 2007 at 10:37 a.m.
(This comment was removed by the site staff.)