Mortgage Mess "Hitting Home Early"

The Early Show's Ray Martin, Other Experts Try To Help Desperate Homeowners

(CBS)  With hard times getting harder and more and more people facing the prospect of losing their homes, The Early Show is taking action.

In a special series, "Hitting Home Early," our resident financial expert, Ray Martin, and other expert, try to help people facing foreclosure.

Martin profiles and advises homeowners across the country.

He and the others also look at different aspects of the every-changing real estate market.

To see videos of all parts of the series, click here.

April 26, 2008

WITH TIMES TOUGH, PEOPLE PILING ON DEBT

They're turning more and more to credit cards and home equity loans to get by, but Ray Martin pointed to the pitfalls of such strategies. To read the full story, click here.

April 7, 2008

EXPLODING MORTGAGES

In California, when home prices soared, many homeowners had been able to live very nicely on their equity.

But falling prices have caused an epidemic of foreclosures and threatened foreclosures, leaving over-extended homeowners in dire straits.

CBS News correspondent John Blackstone reported about one such couple in one of the hardest-hit areas, Livermore, Calif. The payment on their home was about to go through the roof, from $2,800 a month to $8,000. Even though their lender was willing to work with them, and reduce their increased payment to $6,000 -- but that's apparently still not low enough.

After Blackstone's report, Martin offered his take on their predicament, and that of others in their shoes. It wasn't pretty.

To see the segment, click here.

April 5, 2007

Q-AND-A WITH RAY

"Hitting Home Early" is drawing a huge response from viewers. They're flooding The Early Show's in-box with questions for Ray Martin.

He answered some Saturday -- on foreclosure procedures, where to turn for help if you're in over your head, and whether this is a good time to buy.

To see the questions and Martin's detailed responses, click here.

March 29, 2007

THE FORECLOSURE HOME TOUR

Real estate agents usually avoid foreclosed homes like the plague, but not Tess Langevin of Dallas, Texas. Instead of running away, she drives directly to them, taking potential househunters on a foreclosure home tour.

At her office, Langevin and her colleagues comb through the lists of Dallas' growing inventory of foreclosed homes, selecting the best of the bunch.

Then potential homeowners board Langevin's office on wheels - a converted church bus decked out with her picture.

In three hours, they cover 8 to 10 homes in different price ranges. Interior tours are quick, but enough to size up the property.

At one stop, a home where someone's dream went bust. "It's really tragic," said David Jones, "but life goes on."

You don't have to look far to find a foreclosed home in Texas. In January, more than 14,600 went on the foreclosure list, giving the Lone Star State the dubious distinction of being number three in the nation in foreclosures, right behind California and Florida.

After six months of declining sales, there's been a slight turnaround: sales of existing homes, including foreclosures, averaged a 3 percent increase nationally last month. The main lure? Falling prices. Last month, median home prices dropped 8.2 percent, motivating buyers like Marty Ballard and Becky Woodland to dive in. "It's like the homes are all on sale," Ballard told CBS News correspondent Randall Pinkston.

Still, experts say there are many reasons buyers should exercise caution with foreclosed properties:

"There's additional paperwork involved, there's also a longer time period and the purchaser needs to be a little more flexible," said Brian Block.

And realtors have to be flexible, too - they make a lower commission. "I don't like it but I do have to make a living," Langevin said, "and that's what people are looking for."

For now, Langevin has found a way to be in the driver's seat - in one month, four people have snapped up foreclosed homes.

To watch this segment, click here.

March 25, 2008

BEGINNING OF BEGINNING OF MARKET BOTTOM?

Three real estate brokers in different parts of the country interviewed by Harry Smith indicated things may finally, finally be starting to stabilize. One said, "Buyers are waking up and saying, 'Hey, there are bargains out there!'" But the real estate editor of the Associated Press cautioned that experts point to the second half of the year for the potential beginning of a turnaround, or at least, an end to the market's freefall. To see that segment, click here.

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WHAT DO YOU TELL THE KIDS ABOUT YOUR MONEY WOES?

Child psychologist Lisa Boesky discussed it with Maggie Rodriguez. To watch the discussion, click here.

March 22, 2008

Ever since we started our Hitting Home Early series, Ray has received a flood of e-mails from viewers, including comments, pleas for help, and a whole lot of questions. Ray will answer three of these. To watch the segment, click here.

March 21, 2008

WHEN YOUR COMPANY GOES BELLY-UP, OR CLOSE TO IT

Many workers have to face the sudden, harsh reality of their company going out of business or suffering another hard fate. And those companies can include big names -- such as Bear Stearns and Enron. CBS News correspondent Randall Pinkston looked at what happens to the employees -- the bitterness and anger they tend to feel as they face their uncertain future. And Early Show co-anchor Maggie Rodriguez spoke with someone who lived through a corporate collapse -- Sherron Watkins, an Enron whistleblower. She worked at troubled Arthur Andersen from 1981-1990, and at Enron from 1993-2002. To watch the segment, click here.

March 20, 2008

WILL FED MOVES HELP? WHAT CAN HOMEOWNERS DO?

The Federal Reserve Board has taken drastic steps lately to try to shore up the economy, but Martin doesn't think they'll work. He points to Lori Nicholson's situation (see stories below from March 17 and before) as a prime example of why. And he offers advice to homeowners in similar shape. The key, he says, is to ACT NOW, contact your bank, and let it know about the dire straits you're in. To see the segment, click here.

March 18, 2008

SURVIVING ROUGH ECONOMIC RIDE

The continuing turmoil on Wall Street has given Joe Main Street the jitters. Martin put it all in perspective, explained how it's affecting our wallets, and offered advice on steering through these uncertain financial times, on The Early Show. To see the segment, click here.

March 17, 2008

LORI NICHOLSON (Part Three)

Nicholson has asked her bank to restructure her loan, and is awaiting a response in the mail.

Nicholson points out that she's not the only homeowner in trouble in her neighborhood. Several others are, and a house similar to hers is on the market for $215,000. Nicolson's home was appraised at more than $400,000 when she took out her loan.

The $215,000 price tag "tells me we've got a problem," Nicholson says. "It tells me this government has a problem, because this isn't the only town that's suffering, and this is a pretty small town."

On Friday, Martin suggested Nicholson seek a "short sale" of her home, saying, "If Lori could hang in there and pay something on the mortgage while they try to sell the property ... she could negotiate with them not to put a derogatory on her credit report."

On Monday, Martin didn't beat around the bush, saying Nicolson's situation "is going to end badly. She will lose this home." The idea now, he explains, is to have it happen in as painless a way for her and to her credit score as possible.

Foreclosure, he says, it "the ultimate negative" on a credit report. There are alternatives, he stresses, including the "short sale" possibility. It results in "your turning over your home instead of going to foreclosure with the lender."

You must alert your bank that you're having financial difficulties, Martin says, and work with it for an orderly transition of your home to the lender.

As Nicholson awaits the home's fate, she should put it up for sale, Martin says, because a homeowner has to formally, legally prove to a bank that the house it worth less than you owe. A home has to be listed for 90 days before the deed can be transferred to a bank in lieu of foreclosure.

Nicholson recently bought a car, because she drives to and from work and her old one is in disrepair. Her thinking was to get one while her credit would still enable her to, a strategy Martin says he understands. Still, he stresses, such a route isn't for everyone, because it entails adding yet more debt to an already-jeopardized personal balance sheet.

March 15, 2008

LORI NICHOLSON (Part Two)

Some American now own homes worth less than their mortgages. Sometimes, there's nothing to do but walk away, and that's what Lori Nicholson thinks she has to consider.

The foreclosure crisis is hitting her hard. She told Early Show correspondent Hattie Kaufmann the bank is closing in: "Today's mail, I got the first notice, the collection notice for the month-and-a-half I have been behind on the payment," she said.

She owes $2,841.

"I do not have that money," she said. And what is she going to do? "I don't know. I am just going to wait for the bank to send me another letter."

Lori is on the road to eviction, after missing two mortgage payments. She has lived for 23 years in the Oakley, Calif. home were she raised her children.

After her divorce six years ago, she qualified for a loan that made it possible for her to hold onto the home, even remodel it. But the loan for $339,000 had hidden pitfalls. It was an interest-only mortgage and, instead of going down with each payment, the balance went up, and up, and up.

Today, that loan has made it impossible to stay, Nicholson says. So, she's packing up and looking for a room somewhere:

"That's my goal, to rent a room. I don't know what to do. I feel like I am treading backwards. My hands are tied. The bank won, I guess."

Friday, March 14, 2008

LORI NICHOLSON (Part One)

Nicholson has owned her Oakley, Calif. home for 23 years, but can't afford the mortgage payments anymore. To make matters worse, the value of her home has fallen dramatically, and she now owes the bank more than the home is worth.

So, selling the home wouldn't help her situation -- she would still owe the bank money, even after the sale.

Yet, she can't just ride out the downturn and wait for the home value to spike, because she can't make the monthly payments. In short, she's stuck between a rock and a hard place.

She used her savings to continue paying the bank regularly, but those funds are exhausted. She didn't make a payment in February, and is about to miss her March payment, too. If she goes on to miss her April payment as well, the bank would be able to foreclose on the home.

"When I refinanced the house about six years ago, when I got divorced, it started then," Nicholson told CBS News, "I could only qualify for a certain loan. ... I didn't realize the balance kept going up and up and up and up. Every time I'd make a payment, it's interest-only, so the balance goes up.

" ... I don't want to leave this house. I told the guy at the bank I'm not willing to walk away from a house I've been in so long. I see my neighbors leaving in the middle of the night. ... I told the banker that I'm not willing to do that. I'm willing to stay here and be worked with and (have) somebody help me, but they basically wouldn't talk to me.

" ... If they would work with me and I could accomplish the payment, I would do it. I would do it in a heartbeat.

" ...Twenty-three years this year, my son -- I actually brought him home from the hospital in this house. My daughter is just a year older, she's 24. It's tough, it's very tough to move, it's very tough to leave."

Nicholson spoke to The Early Show Friday from her home, and Martin was on from West Newton, Mass.

To see her making additional comments, and get Martin's take on her situation, click here.

Martin says a mortgage adviser pointed Nicholson toward an "unsuitable" loan, an interest-only option adjustable rate mortgage, "the most toxic of all sub-prime mortgage products." The minimum payment was $1,000, but the monthly interest charges, not even including any principal paydown, are $2,400 a month. The $1,400 in interest she wasn't paying were added back onto the principal and, as a result, the principal has RISEN from $334,000 to $355,421, some $100,000 more than the house is probably worth.

Nicholson told co-anchor Maggie Rodriguez she cried when she realized what she'd gotten herself into.

Nicholson says she and Martin called her bank together Thursday, and she was offered a loan that was called the best the bank could do, with a monthly payment of $2,800. "That's just not an option for me," she says. "I can't afford that."

Now, she says, she's "pretty sad, again." She was on the verge of crying on the air, but was trying to be strong, because she knows many others are going through what she is.

Martin said he'd call the bank with Nicholson again, but doesn't expect to get very far. He expects to be told the only options are foreclosure or a "short sale," which might not harm Nicholson's credit rating as much as a foreclosure.

Both said they'd report back to The Early Show.

[wv_chci]

My husband & I were asked to talk with his friend - a retired friend who went to work for some great company that did loans/mortgages - I told my husband, that common sense tells ya if it sounds too good too be true, then it is. We cancelled our "talk" and have stayed with our original mortgage (since 1990) and couldn''t be happier-I''m sorry, I just can''t feel anything but ticked off at the greed of lenders and the ignorance of borrowers

[pierson98]

I would just like to say that my husband and I have gotten into a mortgage that we now can''''t afford because of promises made by a lender. we are now struggling to pay back a forbearance that was ALL MY LENDER would allow for or have my home forclosed on. So instead of 1000$ a month they want $2000 for seven months. I can''''t make that because my husband is a trucker and we have been HIT HARD by the fuel prices. we barley make enough money for food every month on top of other bills and mortgage. We have never had it so hard for so long. I have been putting every extra dime towards mortgage forbearance but am finding as the months tick by it is getting less and less and PLEASE DO NOT judge me. We all have had problems and my husband is working SOOOOOOO hard to make money not coming home to see us for weeks at a time. I don''''t know what else to do. It saddens me to see people blaming people like us for getting into this mess and saying we should have been more responsible. It is easy for people who are not struggling to say this!! don''''t judge until you have walked a mile in my shoes!!!!

Posted by Wavin2Ya at 09:33 AM : Mar 29, 2008
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I am judging you. You bought a house that you could not afford to make payments on. You signed a contract that imposed obligations on you, which you either did not understand or did not care about.

And I will not have to walk a mile in your shoes, because I don''t have to. I didn''t poor decisions like you did.

[restew]

I do not have sympathy for the couple from CA and their mortgage problems. She is a professional REA with 6 yrs of experience. She, presumbably, knows the ins/outs and types of mortgage loans/risks assumed, etc. Now she cries fowl and wants a 2 or 3% loan?! I just re-fin''d with a 5.625% because I built an excellent credit record over the yrs. Am retired now, reduced income and living expenses keep rising (especially gas, food, and property taxes). Why should she who knows the ropes of mtg financing be rescued from foolish greed with a 2/3% loan when I worked over 30 yrs to be granted a 5.6%??? My sympathies lie with those who were ignorant of mtg financing and were led into an inappropriate type of loan; yet, even those have a "common sense" obligation to take care of their responsibilities. Pay bills before entertainment, even food (in the sense of dining out constantly).
Thank you.

[wavin2ya]

I would just like to say that my husband and I have gotten into a mortgage that we now can''t afford because of promises made by a lender. we are now struggling to pay back a forbearance that was ALL MY LENDER would allow for or have my home forclosed on. So instead of 1000$ a month they want $2000 for seven months. I can''t make that because my husband is a trucker and we have been HIT HARD by the fuel prices. we barley make enough money for food every month on top of other bills and mortgage. We have never had it so hard for so long. I have been putting every extra dime towards mortgage forbearance but am finding as the months tick by it is getting less and less and PLEASE DO NOT judge me. We all have had problems and my husband is working SOOOOOOO hard to make money not coming home to see us for weeks at a time. I don''t know what else to do. It saddens me to see people blaming people like us for getting into this mess and saying we should have been more responsible. It is easy for people who are not struggling to say this!! don''t judge until you have walked a mile in my shoes!!!!

[kennedy7955]

I wonder how many people are going into foreclosure simply because their homes are worth less than they owe. It may be all this publicity gives some the comfort and excuse to walk away from their obligations.

You can''t give a house back as I heard one supposed expert call a foreclosure. The bank never had the house, they only financed it. It is time to get real on this topic as well as many others in this land of confusion.

[forthepeopl1]

MR POTATO-HEAD LOOKS A LITTLE SCARD...

But its effort will have little effect on the ability of the average American to get a cheap loan for a new home, car or college education even as it has a large effect on U.S. banks'''' ability to fix their balance sheets by racking up fat profits.

If that sounds unfair, welcome to the latest episode of a brutal new American business ethic, in which the government bails out bad bets by risk-taking banking executives in New York with money that it borrows from middle-class families and foreign investors. The effort is gilded with fancy financial language and cloaked in the guise of a rescue that helps all citizens, but the reality is that Washington is essentially robbing the poor to help the rich.
In just the past few weeks, it has broken all of its own rules by providing hundreds of billions of taxpayer funds to brokerages at special auctions, opening a bigger "discount" window to permit a wider range of financial institutions to beg at the government till and accepting weaker-than-normal collateral such as iffy mortgage-backed securities. The Fed has put the government in the position of being the payday lender of last resort.

[toddspfld1]

People need to be informed on foreclosure process from start to finish. Each state preforms this process differntly. Some states are judicial states. Some are non judicial states. Some states are both judicial and non judicial. Some states use mortgages, some use Deeds of trust. People should contact a HUD certified counselor. These can be found on the HUD websight. They should have gone thru the Home steps program. Please be aware that some people are out to take advantage of people. Call about them. Get referances of people that they have helped. Get the word out. Homeowners in crisis are not out of options. If worked on early (within the first two months)most foreclosures can be stopped.

[11141971]

yes i want to now when some one askes for help no one wants to help them out im a father with a wife three boy''s and we cant get help to get a new house because no one wants to go after are mortgage company for what they did wroung to us by putting us in a loan that we cant aford any more they have bring home over four thousand dollars and we only bring home one thousand eight hundred this company did even pay off are van so we lost it they wouldnt refinance are loan they said they couldnt touch us for two years.

clifton cousens
[e-mail]

[pattisaid]

I am a fan of Theresa Parks. You can read about her in Yahoo News. Nick Carey wrote the article. She gets it.

[studentgirl]

sorry guys, my laptop went nuts ...the first one i sent is the one intended.

[studentgirl]

AGAIN you people amaze me. Yes, Lori was naive to think that something that appeared too good to be true, wasn''t exactly that, too good to be true. however, can we stay focused people, there are millions of families in the same or a similar position as Lori. So if Lori is sooo dumb, what does that say about the rest of them. ARE YOU SUGGESTING THAT 25% OF THE AMERICAN POPULATION ARE IDIOTS? OR would it be closer to the truth to say 25% of the American population believed what they heard, trusted the wrong people, and ended up in trouble.But thats NEVER happened to any of you, RIGHT??!!?

[studentgirl]

AGAIN you people amaze me. Yes, Lori was naive to think that something that appeared too good to be true, wasn''t exactly that, too good to be true. however, can we stay focused people, there are millions of families in the same or a similar position as Lori. So if Lori is sooo dumb, what does that say about the rest of them. ARE YOU SUGGESTING THAT 25% OF THE AMERICAN POPULATION ARE IDIOTS? OR would it be closer to the truth to say 25% of the American population believed what they heard, trusted the wrong people, and ended up in trouble.But thats NEVER happened to any of you, RIGHT??!!? If this was a case of a few people getting screwed by a few real estate professional then I would say "that was stupid, bet they''ll be more careful next time!!" But this is a nationwide problem of catastrophic proportions.

[studentgirl]

AGAIN you people amaze me. Yes, Lori was naive to think that something that appeared too good to be true, wasn''t exactly that, too good to be true. however, can we stay focused people, there are millions of families in the same or a similar position as Lori. So if Lori is sooo dumb, what does that say about the rest of them. ARE YOU SUGGESTING THAT 25% OF THE AMERICAN POPULATION ARE IDIOTS? OR would it be closer to the truth to say 25% of the American population believed what they heard, trusted the wrong people, and ended up in trouble.But thats NEVER happened to any of you, RIGHT??!!? If this was a case of a few people getting screwed by a few real estate professional then I would say "that was stupid, bet they''ll be more careful next time!!" But this is a nationwide problem of catastrophic proportions. You can sit in judgment because you''re not in the same position if you so choose, HOWEVER, with 1 in 4 American homes being in foreclosure don''t think for a second that this is EVERYONE ELSE''S problem. THIS IS EVERYONE''S PROBLEM!!! It would be well within our best interests, as a country, to rally together and help these families through this crisis.

[studentgirl]

AGAIN you people amaze me. Yes, Lori was naive to think that something that appeared too good to be true, wasn''t exactly that, too good to be true. however, can we stay focused people, there are millions of families in the same or a similar position as Lori. So if Lori is sooo dumb, what does that say about the rest of them. ARE YOU SUGGESTING THAT 25% OF THE AMERICAN POPULATION ARE IDIOTS? OR would it be closer to the truth to say 25% of the American population believed what they heard, trusted the wrong people, and ended up in trouble.But thats NEVER happened to any of you, RIGHT??!!? If this was a case of a few people getting screwed by a few real estate professional then I would say "that was stupid, bet they''ll be more careful next time!!" But this is a nationwide problem of catastrophic proportions. You can sit in judgment because you''re not in the same position if you so choose, HOWEVER, with 1 in 4 American homes being in foreclosure don''t think for a second that this is EVERYONE ELSE''S problem. THIS IS EVERYONE''S PROBLEM!!! It would be well within our best interests, as a country, to rally together and help these families through this crisis. If you stand in judgment and turn your backs on these people because of their errors in judgment, then you have NO RIGHT TO EVER EXPECT ANY FORGIVENESS FOR ANYTHING AND NO RIGHT TO TRY TO CORRECT YOUR MISTAKES OR MAKE THINGS RIGHT. whats good for the goose, is good for the gander.

[nj2008-2009]

I have to admit that I have been looking at these stories in the paper and on TV and want to identify with them. But I have yet to see a story that I go, "Wow that person really did get a raw deal." The stories that I see are people who wanted what they wanted even though their brain told them hey you can''t afford that. They are experiencing delayed consequences. Lori should have moved out of her house when she couldn''t afford it. And she would have been much better off for it.

[nj2008-2009]

What I don''t understand is what happened to if it sounds too good to be true it is?

About 10 years ago I went through a divorce. While supporting my two young children and with credit card debt, a financial advisor told me that I could afford to buy a house. I looked at what he was telling me to do and it didn''t make sense to me. So I waited until I could try and save the money for the down payment. I worked harder and earned promotions at work. With the increased income, I lived less than my means so I could get myself out of debt. I worked to improve my credit rating. I watched as housing prices went up 20-25% year over year. I thought %u201CHow will I ever be able to afford this? How can other people be able to afford this?%u201D

Now I know; they couldn''t afford it. Just this past year, we moved into our house. I have a 30 year fixed rate mortgage that I can afford, even if the value of my house drops.

We couldn''t afford to buy a new car. We are hoping to get one next year. We have a 10 year old car with no air conditioning or heat but it runs. I understand that she needed a reliable car to get to work. But did it have to be SUCH a nice car? And was it an SUV? I think her story would definitely have been more sympathetic if she hadn%u2019t gotten a new car. She could have leased or gotten a reliable used car?

[pattisaid]

I still don''t feel bad. I saw too many credit reports. So much debt. How many times did they think they could do this? I only feel bad for that woman who would not go with me because she said the nice man who was helping her could get her a 1% loan. She was disabled and could not see too well and her fingers were bad... and was on a fixed income...But he was soooo nice. She did not qualify for that loan but I''m sure he helped her. These two are perfect for each other. They will go where they hear what they want to hear. Still no sympathy.

[tommy_tunes]

When a builder builds homes in a development they are held to the least stringent building codes. When you or I put an addition on a home we are held to more stringent codes. Why is this. Those picking up for big corporations don''t see the big picture. The rich get richer and who pays for it the small person.
Now that the home sales market dried up, the builders are begging for assistance from the Federal Governemt. Don''t think for a minute the FEDS are doing this for the little guy. Any help for the little guy I am all for it as long as it is not abused.
Just look at the fiasco with the NY Governor. If the police, or Feds really wanted to take a bite out of prostitution they would not only be going after the $20 prostitutes and the people who solicit them, but the big fish that solicit the expensive call girls. I wonder if it is only because they may find too many politicians and other big wigs who because they have money, aren''t on the same playing field.
Why do you think the Wall Street personnel cheered when he got caught? Because he played with their jobs and lively hood.
I know I am off the subject but not everyone who is losing a home is perhaps as knowledgeable as some of these emailers who have no sympathy.

[tommy_tunes]

No one is placing blame on all banks and or lending institutions but there are some shady ones out there particularly when they are associated with the builder. And again, I am sure not all of these types are shady.
The bottom line is we are only asking for help. Everyone makes mistakes and you hope they never are as big as this type.

[tommy_tunes]

I jsut spoke to 3 or 4 different law firms and I specifically asked what is all the discussions about obtaining federal help with getting these adjustable rate mortgages recalcualted and they all said that is a bunch of hog wash. The feds have done nothing to date but talk about coming up with a solution. No lawyer, when asked, said he could request that the ARM be readjusted. President Bush will not allow it or is unable to do it based on whatever.
For those of you who haven''t had this or any similar situation occur to them then God bless you, but for those whose entire families are in disarray we simply wnat help with answers to questions. Most are not very knowledgeable about these situations and just want to know what recourse or plan of action they need to take to forego ruining their lives for many years to come. Most were not greedy looking or quick cash but only wanted a good life in a nice home, in a good community, with good schools.