Weathering the Storm of Home Foreclosure

Session II.12: Pre and Post-Investment Strategies for

Homeownership: Foreclosure Prevention

Foreclosure Statistics: Top Twenty Most Populous Counties

CountyNo. foreclosures filed

1998No. Foreclosures filed

2005% +/- from '98 to '05

Mecklenburg 1646 6429 290.6%

Wake 966 3511 263.5%

Guilford 1047 2766 164.2%

Forsyth 566 1785 215.4%

Cumberland 1581 1657 4.8%

Durham 518 1445 179.0%

.Buncombe County 275 653 137.5%

Gaston 384 1288 235.4%

New Hanover County 300 605 101.7%

Onslow County 355 358 25.4%

Davidson County 168 659 292.3%

Union 226 942 316.8%

Catawba County 194 754 288.7%

Cabarrus 180 919 410.6%

Johnston County 227 904 298.2%

Pitt County 262 544 107.6%

Alamance County 162 669 313.0%

Iredell County 220 833 278.6%

Randolph County 165 597 261.8%

Rowan County 163 761 366.9%

North Carolina 15282 42835 180.3%

(Source: Number of foreclosure filings taken from statistics provided by North Carolina Administrative Office of the Courts)

Threats to Homeownership:

• High Cost Mortgage• Too Much Home• Track Homes Offered by

One Builder• High Maintenance Homes• Home Equity Theft• Un-educated Home Buyer• Job/Income Loss & Poor

Health

High Cost Mortgage:• Adjustable/Variable Rates• Less Than 30 Years• High Interest Rates• Discount Points• Junk Fees• High Debt to Income Ratios• Pre-Payment Penalties• Insurance Packing• Unsigned Good Faith

Statements

Place Restrictions onthe 1st Mortgage

Product !

Soft-Second to Make HomeMore Affordable NOT to Buy

More Expensive Home

Know Your Supply & DemandToo Much Home

Problems with the Large Tract National and Regional Builders

• The Builder Controls all the Players•Realtor•Lender•Attorney

• Non-Sustainable Financing• Great Expectations• Bait & Switch• Early Homebuyers at Great Risk• Foreclosures Lead to Depressed Values• Renters Displace Homeowners• No or Weak Homeowners Association

Presents the Newest Mega Neighborhood “Large Tract Village”

Homes Starting at $99,999

Prices, terms, and offer are subject to change without notice and valid on select home sites with financing by Lotsof$ MortgageCompany only. See on site sales consultant for details builder paid closing cost. Designer kitchen appliance upgrade available for a limited time only, subject to change without notice. Actual appliances may vary from photos. * Must use LotsofLaw real estateAttorneys, must qualify for lowest rate and the 2.5% rate is for the 1st year, the second year it is 4.5% and caps at 6.5% the third year. The APR is 7.75% Must also use LotsofRealty Real Estate Company. No outside Realtors welcome.

Be sure to visit our award winning Home Design Studio

Prices, terms, and offer are subject to change without notice and valid on select home sites with financing by Lotsof$ Mortgage Company only. See on site sales consultant for details builder paid closing cost. Designer kitchen appliance upgrade available for a limited time only, subject to change without notice. Actual appliances may vary from photos. * Must use LotsofLaw real estateAttorneys, must qualify for lowest rate and the 2.5% rate is for the 1st year, the second year it is 4.5% and caps at 6.5% the third year. The APR is 7.75% Must also use LotsofRealty Real Estate Company. No outside Realtors welcome.

Beware of the Fixer UpperAvoid High Maintenance Homes

•Professional Home Inspections•Lead Awareness (Pre 1978)•Beyond Minimum Standards•Home Warranties•Mold/Radon/Asbestos•New vs. Existing•Energy Efficient

The HomeEquity Thief

Protection Through Long TermSoft Second Mortgages

Grants Provide No Protection

Loans Requires Loan Subordination Or

Loan Payoff

Educating the Homebuyer

• The Role of Realtors & Lenders• Seriousness of Offers to Purchase• What I Qualify For, I Cannot Afford• Why they call it a “Good Faith Estimate”• Understanding the Closing Documents• How to operate items in the home• The Basics of Home Maintenance• Who to call when You can’t make the Monthly

Payment• Pre Homeownership Training• Post Homeownership Training

Post HomeownershipEscrow Incentive Program

• $300 Escrow Account at Closing from Buyer• Meet with Counselor 6-12 Months after Purchase• Pull and Review Credit Report• Inspect Home for Maintenance Issues• If Homeowner participates in one on one session with

Counselor and Home Maintenance is Acceptable the Homeowner receives $250 of $300 back. The balance of $50 is retained by Center for Home Ownership.

• Homeowner has up to 18 months to come into compliance• If compliance is not met within 18 month period the entire $300

is kept by the Center for Homeownership

The Foreclosure Tornado:

Obstacles to Helping Homebuyers:

• Psychological Factors:– Denial– Fear– Shame

• Re-Active as Opposed to Pro-Active

• Scam Mortgage/We Buy Homes/Companies

• No Early Warning System

Loss Mitigation

• NCHFA Pilot Home Foreclosure Protection Program

• NCHFA Mortgage Assistance Program under MRB Program

• FHA Programs