Boomer’s Blog

As the economy, troubled job markets and the credit crunch push a growing number of homeowners towards foreclosure, pressure has mounted for policymakers to implement home loan modification programs and policies to curb the foreclosure epidemic’s spread. So far, top-level efforts to help homeowners avoid foreclosure appear to be failing, but bad news for homeowners and banks may trigger a short sale renaissance for real estate investors in the New Year.

Is “Hope for Homeowners” Hopeless?
In July, Congress passed a $300 billion Hope for Homeowners program which was supposed to help an estimated 300,000 homeowners avoid foreclosure when it took effect in October. Fortune reports that only 321 applications to the “Hope for Homeowners” program have been completed. And the Department of Housing and Urban Development says that the costly program has so far produced zero loan workouts. Some say that the heavy stakes for banks has crippled the plan.

Loan Modifications Lead Homeowners to Speedy Re-Defaults
Although a lot of folks are saying that reworking mortgage terms is the silver bullet in stemming the foreclosure tide, but prevailing evidence to the contrary shoots that idea down with a vengeance.  If loan modifications are anything in today’s rough and tumble real estate markets, they’re a boon to pre-foreclosure and short sale investing.

U.S. Currency Comptroller John Dugan announced in December some interesting data from the latest quarterly Mortgage Metrics report from the U.S. Office of Thrift Supervision which tracks mortgages and modifications for Nearly 35 million loans worth more than $6 trillion, or about 60 percent of all first-lien mortgages including prime, Alt-A, and subprime mortgages, and using standardized definitions for loan modifications.

Here are some remarkable data from the U.S. Office of Thrift Supervision’s 2008 Mortgage Metrics reports:

• More than half of the mortgages that were modified in Q1 2008 again became delinquent within six months.
• Three months after individual loan modifications, nearly 40 percent of the borrowers’ mortgages were more than 30 days past due.
• Within six months of modification, the re-default rate hit 53 percent.
  Eight months following mortgage modification, the number of re-defaults rose to nearly 60 percent.

Policymakers Continue to Target Foreclosure Epidemic in 2009
State and federal lawmakers — and other officials convening in the New Year are gearing up to take action to slow the foreclosure process. These efforts, combined with a heightened sense of cooperation from banks who’ve been hard-hit in the economic crisis will shine a new light on pre-foreclosure and short sale deals as we move into the new year.

Massive Profit Potential for Short Sale Investors
Amid so much shifting activity in other real estate market segments in 2008, popular investor focus strayed briefly from pre-foreclosure and short sale deals. But with the current national trend towards slowing and perhaps suspending foreclosures, all levels of pre-foreclosure and short sale deals are likely to generate millions of dollars for savvy real estate entrepreneurs in 2009.

Don’t Be a Sucker: Get the Facts Before you Invest
To get the lowdown on safe strategies for investing in short sale and pre-foreclosure real estate, join GaryBoomershine.com using the yellow fields on the right side of this page or on the main page of GaryBoomershine.com.

Amid more gory details emerging about California Congresswoman Laura Richardson’s habitual failure to pay her debts, Washington Mutual (WaMu) filed a notice of rescission on her Sacramento home that was sold to real estate investor James York at a foreclosure auction.

Broker Takes a Bath
York, who owns Calif.-based Red Rock Mortgage,recently acquired Richardson’s Sacramento home at a foreclosure auction for $388,000. At that time, the lawmaker had failed to make payments on that property for almost a year and owed $9,000 in unpaid property taxes. She paid $535,000 for the home, which she bought in Jan. 2007, shortly after being elected to the California General Assembly. Soon after, she sank into default on her other homes in Long Beach and San Pedro, Calif.

While Richardson has been filing statements denying the foreclosure and a lengthy history of default and unpaid debts, York, also a broker, has been busy cleaning and repairing her house for sale. He told the Daily Breeze that he plans to file a lawsuit against Richardson and WaMu this week, because he believes that the lawmaker has received preferential treatment from her lender, and that he is the rightful owner of the home.

Richardson, a Long Beach Democrat, has said throughout her foreclosure scandal that her Sacramento home should never have gone to foreclosure auction and claims that she had worked out a loan modification agreement and had begun making payments to WaMu. The Daily Breeze also reports that the lender has declined to comment on the details surrounding Richardson’s case because she has not waived her rights to privacy.

In Richardson’s case, it appears that WaMu already has lost nearly $200,000 on the Sacramento home deal. If the foreclosure were overturned, the lender may have an opportunity to recoup some of that loss - but only if Richardson can manage paying for her three homes and an apartment rental in Washington, D.C., on her $169,300 annual congressional wages. This week, the Sacramento Bee revealed more details surrounding Richardson’s eight-year history of failing to pay her debts.

Richardson Defaults on Mother’s Home
Since 2000, the homes Richardson still owns in San Pedro (where her mother lives) and Long Beach have gone into default six times. The amounts she’s owed on these properties has ranged from $5,742 to almost $20,000, according to documents on file with Los Angeles County.

Lawmaker Racks Up Defaults, Votes
In the past few months however, the defaults have hit the lawmaker with rapid fire: Five defaults in that time period have racked up nearly $71,000 in debt, the LA Times reports. During the same period, Richardson lent nearly $200,000 to her political campaigns, which propelled her meteoric rise from Long Beach City Councilwoman, to California Legislator, and finally to the U.S. Congress.

More Unpaid Debts, Abuses Reported
Richardson also has been under scrutiny for failing to pay her utility bills, for car repairs, and for abusing her vehicle privileges beyond her reign as a city councilwoman. The Press-Telegram reports that the lawmaker promised to pay a mechanic $735 in 2005 for repairing her BMW and never followed through. Later that year she wrecked that car and abandoned it with another mechanic.

Rather than paying for the repairs, the Press-Telegram reports that Richardson checked out a Toyota Prius from the city for official “City Council business.” Thirty thousand miles later — and after she left the City Council, Richardson returned the Prius.

In the year that Richardson used the city’s Prius, she drove it 30,920 miles, city officials report. That amounts to an average greater than 80 miles daily, or about 2,400 miles per month, for Richardson’s part-time council job in a 50-square-mile city, the Sacramento Bee reports. City policy prohibits the personal use of vehicles from its fleet. City records also show that only other two council members who used city vehicles during the same period averaged 900 miles per month and less than 400 miles per month, respectively.

In 2001 and 2002, Richardson reportedly had the highest vehicle expenses of any council member, in part by putting nearly 7,000 personal miles on her car in 2002. At the time, Richardson told reporters that she was unaware of rule prohibiting personal use of a city vehicle.

While Richardson failed to returned the Press-Telegram’s calls for comment on these issues, she did manage to finally pay her debts with the auto shops and sweep the electorate. Last week, Richardson won her Democratic primary for reelection by a whopping 75 percent of the vote.

Doess anyone else out there find this story to be totally outrageous?