| Troubled year for housing in Valley
But that might not help her, Hauger said. "She still won't be paying principal on her loan, and home values aren't going to climb enough in two years for her to refinance or sell without taking a loss," she said. 'Foreclosure mess' By late fall, Hauger's group began to see more lenders willing to work with it on foreclosures. But, she said, so far it hasn't been able to stop a foreclosure and get a bad loan restructured. Hauger said she needs another counselor just to work with the agency's foreclosure clients, but there is no money for it. Her group might have been facing layoffs now if it weren't for a $200,000 housing grant it received a few years ago. Earlier this month, national mortgage figures showed foreclosures at a record high. The same day, the White House announced a plan for a five-year freeze on interest rates for certain struggling homeowners with subprime loans.
The Subprime Blame Game: Where Were the Realtors?
You can always refinance in two years,'" she said. "He never told them their payment would jump 30% in month 25, or how hard it may be to refinance.... And in two years, the borrower blames the lender for their fix, not the agent who steered them to a higher priced home and a 2/28 loan." Many subprime borrowers are now finding they cannot refinance to escape their rising payments. In some cases, their homes have fallen in value so they cannot borrow enough to pay off the older loans. Others cannot qualify for the fixed-rate "prime" loans they need, or they are prohibited from refinancing by prepayment penalties meant to assure the lender that the borrower's high payments would continue for a minimum number of years. Running Afoul of the Code Real estate agents typically spend much more time with home buyers than mortgage brokers and lenders do, and presumably could issue warnings about risky loan products.
Agency loses hope after area renewal
Usually, Project Renew would help residents find loans with traditional banks, but sometimes the group would handle the loans itself. Clients would make their house payment to Project Renew, where staff would take care of escrow items such as insurance and property taxes, then use the rest to pay the loan Project Renew had obtained to write the mortgage. But by 2001, the organization was starting to struggle financially. "We should have said we've got to cut expenses or raise revenue or both," Vaughan said. Instead, staff hid the problem, he said. Another collapse When a client refinanced a loan on May 10, 2001, Vaughan said, instead of using the money from the new lender to pay off Project Renew's loan, staff used it for operating expenses, and continued to make payments on the old loan as if the refinancing never happened.
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