The Mortgage Crisis

By Doug Geed

   Ironically, Jean from Bethpage was on the phone with her mortgage company when she heard a knock at the front door just about a year ago. It was a processor -- delivering papers that told her she was in foreclosure and that she might lose her house. Her husband had lost his construction job and they fell behind in their mortgage payments.
    The story will probably have a happy ending for her family. After a year of draining, aggravating negotiations, it appears her lender has accepted a new deal and they'll be able to keep their house.
     But thousands of other Long Islanders may not be so lucky.

    Economists say Long Island was hit hard by the mortgage crisis -- harder than any other area of New York State and harder than most areas of the country.

    The problem is that house prices in Nassau and Suffolk sky-rocketed to artificially high levels. That's great news if you sold at the right time, but terrible news for those who bought -- and many people bought well over their heads with low, temporary "teaser" rates that have now jumped substantially.

   Dr. Pearl Kamer -- chief economist of the Long Island Association -- expects house prices here on the island to drop another 15-percent through next year. That's on top of the significant drop they've already gone through.

   She says that's bad in many ways because as house prices go down, a whole new crop of homeowners will have mortgages higher than what their homes are worth. But she -- and other economists -- say this is just a big "correction" to get prices back to where they should be. Most experts agree that prices on Long Island are STILL artificially high and need to go down.

    Of course that's of little comfort to you if you're struggling with a whopping monthly mortgage that you simply cannot pay. Experts urge anyone facing that situation to seek help. Here are some links below where you can find that help.

   They also say not to panic and budget very wisely. Carefully break down what you need and what you want and -- painful as it is, especially with the holidays right around the corner -- only go with things you need for now. CD's, Treasury Bills -- safe investments with not-so-great interest rates -- may not be a bad choice until things settle down, they say.

    Let's hope for everyone's sake this is temporary and good times wait ahead.

Long Island Housing Partnership

www.lihp.org

 http://www.mlsli.com/housingresources.cfm
 http://www.1-800-volunteer.org/1800Vol/long-island-volunteer-center/OpenAboutOrganizationAction.do?organizationId=235883
 http://www.co.suffolk.ny.us/webtemp5.cfm?dept=31&id=1677
 http://www.lifairhousing.org/home.htm
 http://www.volunteermatch.org/opps/opp273565.html

Comments

[John]

I'm a renter, and so I haven't tested or really analyzed this information. However, in addition to your advice, and in case it's helpful to somebody, it seems that a homeowner can often buy some time and force a negotiation with the bank by simply insisting that the bank prove ownership ("show the note") of the mortgage.

Apparently, the banks often do not have their paperwork straight, between all the reselling and packaging/insuring of the mortgage itself that they've been doing. The upshot is that, without the paper, they can't prove standing to sue for foreclosure.

Here's a good breakdown:

http://www.consumerwarningnetwork.com/2008/06/19/produce-the-note-how-to/

I certainly would not recommend using this to try to "get away" with anything, but it might give somebody like Jean some breathing room in an emergency and force the bank to treat you with a little more courtesy.