Govt introduces ailing commercial project support bill

The Federal Government has introduced a bill to Parliament to set up a special fund to help commercial property projects struggling to refinance their loans.

The $4 billion partnership between the Government and the four major banks aims to help projects with liquidity, if foreign banks will not refinance loans.

But Opposition Leader Malcolm Turnbull says the draft legislation is much more expansive than the Government led everyone to believe.

"It can refinance any commercial property syndicate and, I might add, it's not limited to commercial property," he said.

"It can extend to any other form of commercial finance that the banks and the Government agree.

"So what Mr Rudd has done has gone way beyond what was originally announced."

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Foreclosure rescue scams on the rise as economic crisis deepens

As if going into foreclosure isn’t bad enough, homeowners in distress now have something else to worry about: foreclosure rescue scams.  These scams are on the rise as the economy worsens and they target anyone in foreclosure.

“They have a subscription to a foreclosure filing list at the Daly Center and they know every day when a foreclosure has been filed and they mail out letters to anyone who has been foreclosed on,” said Michael Van Zalingen, director of Homeownership Services in Chicago.  “They don’t really care demographically who the person is,” he added.

Victims of these scams typically do not know what they are signing and more often than not end up losing ownership of their homes.  Attorneys in Chicago have seen a rise in clients in this situation.

“The most common is the refinance loan – that what they thought was a refinance loan was actually deeding away their property,” said Shabnam Faruki, an attorney at the Legal Assistance Foundation in Chicago.  “They think they are making monthly payments to a lender, so they are mortgage payments, but what they are actually paying are just rent payments,” she said.

Last year, the Illinois Attorney General’s office received a little more than 2,400 complaints related to residential lending fraud, including predatory loans, or loans made at very high interest rates, and mortgage rescue scams.

“There were really almost no actions a year ago,” Van Zalingen said.

In the past six months, the Illinois Attorney General filed suit against 11 different companies, but Faruki says these cases are not always easy to win.

“It’s often an uphill battle to convince a judge that there was fraud that took places because there are written documents or what looks like a document that two people have signed,” Faruki said.

That puts the onus on distressed homeowners to recognize these scams.  

Experts advise troubled homeowners never to respond to solicitation in the mail and be wary of companies that charge up-front service fees.  

We’ve all heard it a million times, but homeowners would do well to remember that if an offer sounds too good to be true, it probably is.

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U.S. MBA’s Mortgage Applications Index Increased 11% Last Week

March 11 (Bloomberg) -- Mortgage applications in the U.S. increased last week, led by a rebound in refinancing as borrowing costs dropped.The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 11 percent to 723.4 in the week ended March 6, from 649.7 the prior week.

 The group’s refinancing gauge jumped 13 percent and its purchase index gained 7.1 percent.Homeowners are seizing on the opportunity to lower monthly mortgage payments as the jobless rate climbs and financial markets slump. Still, record foreclosures are adding to the glut of properties on the market and depressingproperty values, indicating sales are likely to slow further as prospective buyers wait for cheaper home prices.“We’re not seeing any underlying pickup in demand for homes,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. 

Government efforts to stem foreclosures “may help cushion the housing slump, but they won’t yet spur a recovery.”The mortgage bankers’ purchase index increased to 253.3 last week from 236.4 a week earlier. The index reached an eight-year low of 235.9 in the first week of February. The refinancing gauge rose to 3470.7 from 3063.4.The average rate on a 30-year fixed-rate loan slid to 4.96 percent from 5.14 percent the prior week, the report showed. It reached a record-low 4.89 percent in early January.Lower PaymentsAt the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be about $534, or $89 less than the same week a year earlier, when the rate was 6.36 percent.

Today’s report also showed the average rate on a 15-year fixed mortgage decreased to 4.54 percent from 4.73 percent the prior week, while the rate on a one-year adjustable mortgage increased to 6.21 percent from 6.13 percent.The share of applicants seeking to refinance loans jumped to 67.9 percent of total applications last week, from 66.9 percent.

President Barack Obama’s administration has pledged $275 billion to keep as many as 9 million borrowers in their homes. Steps include a tax break of up to $8,000 for first-time homebuyers that wouldn’t require repayment.Builders continue to struggle.

 Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, yesterday reported its 10th consecutive quarterly loss as joblessness grew and prospective buyers waited for bargains.The Washington-based Mortgage Bankers Association’s loan survey, compiled every week since 1990, covers about half of all U.S. retail residential mortgage originations.

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