California Short Sales, Foreclosures, REOs Los Angeles, San Diego, Riverside & Orange County Short-Sales Listings

30 Nov 08 Home Foreclosures Hindering California Economy

In addition to the US Treasury Secretary’s policy reversals and changing rationales on how to stabilize the financial system, we now have further proof that Henry Paulson has no idea what he is doing. His statement yesterday that ‘Nothing is more important to getting through this housing correction than the availability of affordable home loan financing,’ is simply wrong. The problem is not that people can’t buy homes the problem is we can’t keep people in their homes. In other words, ‘It’s the foreclosures, stupid.’ Watch this video with California Governor Promoting Foreclosure Prevention Methods >

The colossal and continuing wave of home foreclosures caused the disintegration of numerous banks and financial institutions, destabilized the housing market, and have resulted in national and global financial chaos. In August of this year, California experienced 101,000 foreclosure filings, which equated to about one filing every thirty seconds. At the same time, our nation experienced about one foreclosure filing every ten seconds. Home loan defaults, short sales and all its consequences are causing the credit and liquidity crisis, not the other way around. Until we solve the foreclosure problem, we will continue to have credit and liquidity issues.

AIG, Citigroup, and numerous other financial institutions are collapsing because of defaults and loan modifications. Yet the Treasury Secretary continues to believe that a top-down approach where we continue to throw money at Wall Street will somehow solve the problem. Using hundreds of billions of dollars of taxpayer money to buy distressed mortgage securities from Wall Street firms does nothing to help distressed homeowners stay in their homes. None of the Treasury Secretary’s approaches are targeted at preventing foreclosures. That is a massive and unforgivable strategic and tactical error.

It is time to listen to FDIC Chair Sheila Bair, who since last year has repeatedly identified home foreclosures as the root cause of the economic crisis. Her foreclosure prevention policies of forcing Wall Street to accomplish home loan modifications to keep people in their homes is one of the few sensible solutions that will help our economic recovery begin.

27 Nov 08 San Diego Real Estate Market Update

According to California realtor, Suzanne Hefni-Pyle, the San Diego housing market is displaying signs of revival as home-buyer activity increases. Now in 2008, the markets have finally adjusted down in prices close to 2004. Price ranges under $400,000 are seeing multiple offers coming in, actually driving the sale price higher, in some cases as much as $20,000 over the original listed prices. They tend to be on bank-owned and short sale California properties. The standard listed properties are where Suzanne reported finding a tremendous savings negotiated down from the asking price for our buyer clients.

The high end market of $900,000 and up price ranges continue to soften, because the jumbo mortgage loan guidelines continue to worsen. It remains a “great buy” and likely has room for more negotiating, to attain a property that has adjusted down to 2004 prices. This current market has provided more inventories sitting on the market longer than ever, or recent years past, creating this great buyers market. Now, with the rising inventory of foreclosure homes, it is amazing some of the price reductions out there. If you would like a search to the MLS, you can do on your own anytime, change your search criteria anytime, search 24/7 or, contact me and I will get your account up and running today, to see for yourself, the abundance of home inventories to choose from right now in San Diego County.

Suzanne offers a free search customized by your needs: Search by, foreclosure, short sale and bank-owned properties, luxury Homes, ocean-front, ocean view homes, condos, townhomes, vacation homes, ranches, equestrian homes and more.


26 Nov 08 Home Sales and Short Sales Volumes Increase in California

California short sales continued to increase at a rapid pace as many homeowners look to short sales as an alternative to a foreclosure. Many of the California residents qualified for a loan modification from their lender, but since many believed their mortgage was higher than their property value was, they opted to sell their home. Unfortunately many California homeowners have lost their nest egg when their home equity evaporated amidst the housing crisis and credit crunch. Clearly mortgage refinancing is simply no longer an option for most borrowers.

California home sales soared 254.9% in the Riverside/San Bernardino area in October, compared with the same period a year ago, while the median home price fell 39.7% to $209,990, according to figures released Tuesday. According to the Los Angeles-based California Association of Realtors the Palm Springs/Lower Desert area, home sales jumped by 115% in October compared with the same month last year, and the median price fell 36.3% to $206,050.

Statewide, home sales increased 117.1% in October compared with the same period a year ago, while the median price of an existing home fell 39.9% to $311,060, CAR reported. “Statewide sales increased significantly in October to 552,750 homes on an annualized basis, the highest sales level since late 2005,” said CAR President James Liptak. “The record gain stemmed primarily from extremely large increases in regions with a high concentration of distressed sales. “Most October sales likely opened escrow prior to the beginning of the ongoing freeze in the financial markets,” he said. “We won’t have a clear picture of the full impact of the fallout until November and December sales are reported.”

The California cities and neighborhoods with the highest median home prices during October:

Newport Beach, $1,150,000

Los Gatos, $810,000

Redondo Beach, $727,500

Danville $883,250

Cupertino, $804,500

San Ramon, $710,500

Mountain View, $860,000

Santa Monica, $744,500

Santa Barbara, $835,000

San Mateo, $740,000

The cities and communities with the greatest median home price increases in October compared with the same period a year ago were: =

Mountain View, 18.6 %

Ridgecrest 6.2 %

Alhambra 13.4 %

Berkeley, 5.9 %

Economists forecast new home sales would drop to a 441,000 annual pace, according to the median estimate in a Bloomberg survey of 68 economists. Forecasts ranged from 380,000 to 470,000. Commerce revised the September sales pace down to 457,000 from an initially estimated 464,000 rate. “The new home market remains extremely weak,” said Steven Wood, president of Insight Economics in Danville, California. “A substantial inventory overhang still exists. This is pressuring home prices lower.”

24 Nov 08 Home Loan Defaults & Foreclosures Rise for Prime Rate Borrowers

Nationally, 3.07% of prime rate mortgage loans were in foreclosure or at least 60 days late in the 2nd quarter of this year, easily surpassing the previous record of 1.97% set in 1985. By this year, the bleeding housing market had drained the equity from Judy Jones’ home in Murrieta, but her life still seemed secure. She had a government job, after all, and a 30-year fixed-rate mortgage at 5.875%, unlike the shaky, variable-rate loans of many of her Inland Empire neighbors. Then her employer, the city of Corona, decided to deal with the economic slump by eliminating 112 positions, including Jones’ job as a code enforcer. Last month, at age 61, she joined a surge of once-solid borrowers who no longer could afford their mortgage loans. “Every week at church, somebody else is out of work,” Jones said. “I’ve been a homeowner a long time — the last 10 years as a single mother and I never missed a payment. Now look at me. And it could be you — any middle-class person who goes to work today could be walking out the door of a foreclosed house in a couple of months.” Jones’ concern is well-founded.

Although rise defaults on bad credit mortgage loans and other dicey mortgages are a well-known cause of the country’s financial crisis, delinquencies and foreclosures now are skyrocketing among “prime” borrowers — people with good credit histories who documented their incomes when applying for their relatively straightforward mortgages. Nationwide, 3.07% of prime home loans were in foreclosure or at least 60 days late in the second quarter of this year, the latest period for which the Mortgage Bankers Assn. has figures, easily topping the previous record of 1.97% set in 1985.

In California, with a jobless rate topping 8% and home prices down more than 40% from their peak and falling, the situation is significantly worse, with 4.15% of prime home loans seriously delinquent. That far exceeded peaks of about 2.6% reached in the recessions of the 1980s and 1990s. The epidemic of bad loans and lost homes among prime borrowers has only worsened since the second quarter ended, according to other, more recent data. By putting more foreclosed homes on the market, the trend is likely to further depress housing prices, intensify the mortgage-related news afflicting the financial system and exacerbate the recession most economists believe is already underway.

“We should be really worried,” said Stephen C. Levy, director of the Center for the Continuing Study of the California Economy, a private research firm in Palo Alto. And as home prices continue to fall, delinquent borrowers are more likely than ever to end up in foreclosure. “During the rising market, if you lost your job, got sick or your marriage failed you always had a parachute: Sell the house, pay off your mortgage and have something left to start again,” said consumer finance expert Elizabeth Warren, a professor at Harvard Law School. “Or sometimes you could use your home equity line of credit to get by.” But now, for most people, “that parachute has gone up in flames,” Warren said.

In California, foreclosures and delinquencies on prime rate mortgage loans could increase for years, said Christopher Thornberg, founder of consulting firm Beacon Economics in Los Angeles. One reason, he said, is that home lenders became so complacent during the housing boom that they did little to qualify borrowers besides having computers check a few facts. ” ‘Prime’ lost a lot of meaning in the insanity of the last few years,” said Thornberg, who was one of the first experts to foresee the housing downturn. To be sure, the damage has been greatest in sub-prime mortgage loans, the high-risk loans tapped heavily during the go-go years by borrowers with the worst credit, the heaviest debt loads or the lowest down payments (and sometimes all three of those).

In August, more than 43% of subprime loans nationally were in foreclosure or at least 60 days late in paying, a rate nearly double that of August 2007, according to First American CoreLogic’s LoanPerformance unit, which tracks 82% of all U.S. loans. But problems with prime loans are increasing as fast or faster. About 7.5% of prime jumbo mortgages — high-quality home loans too large to be sold to government-backed Fannie Mae and Freddie Mac — were at least 60 days late or in foreclosure, according to LoanPerformance. That was more than three times the level of a year earlier. As a result, prime loans account for a larger proportion of foreclosures than they did in August 2007.

Representatives of the mortgage lender called later that day with a better offer. Jones said late last week that she was working with Countrywide to finalize a deal that would lower her payments for three months — with an option for significant, longer-term loan modifications. Read complete article >


20 Nov 08 FDIC Regulators Close Banks in California and Texas

FDIC Regulators closed down California based Security Pacific located in Los Angeles and Houston-based Franklin Bank last Friday, which brings the total number of failed federally insured banks this year to nineteen. The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17. The co-founder and chairman of parent Franklin Bank Corp., Lewis Ranieri, is credited with inventing mortgage-backed securities two decades ago, but apparently was unable to save his own company from getting ensnared in the home-loan bust. The bank’s failure is a bitter irony because it is the mortgage securitization business of which Ranieri is known as a pioneer – the repackaging of home loans as bonds that are sold to investors – that was at the heart of the mortgage loan and credit crises. Last spring, the audit committee of the company’s board found in an investigation certain weaknesses in accounting, disclosure and other issues relating to residential real estate loans.

Franklin Bank Corp. just Sunday said it had received proposals for transactions to strengthen Franklin Bank’s capital position and was keeping regulators informed of the talks’ progress. The FDIC said all of Franklin Bank’s deposits will be assumed by Prosperity Bank of El Campo, Texas. Its 46 offices will reopen as branches of Prosperity Bank with their normal business hours, including those that open on Saturday. In addition to assuming Franklin Bank’s deposits, Prosperity Bank also will acquire about $850 million of the failed bank’s assets. Parent company Franklin Bank Corp. just Sunday said it had received proposals for transactions to strengthen Franklin Bank’s capital position and was keeping regulators informed of the talks’ progress.

Meanwhile, all of Security Pacific’s deposits will be assumed by Pacific Western Bank of Los Angeles. Its four offices will reopen Monday as branches of Pacific Western, a unit of PacWest Bancorp. (PACW) (PACW) In addition, Pacific Western will purchase around $51.8 million of Security Pacific’s assets. The FDIC will retain the remaining assets of the two banks for eventual sale. The agency said depositors of Franklin Bank and Security Pacific Bank will continue to have full access to their deposits, which will continue to be insured by the FDIC. The FDIC estimated that the resolution of Franklin Bank will cost the federal deposit insurance fund between $1.4 billion and $1.6 billion, while that of Security Pacific Bank will cost the fund $210 million. Regular deposit accounts are now insured up to $250,000 as part of the new financial rescue law enacted in early October. The limit on individual retirement accounts held in banks remains at $250,000. The 19 bank failures so far this year compare with three for all of 2007 and are more than in the previous five years combined. It’s expected that many more banks won’t survive the next year of economic tumult. The pressures of tumbling home prices, rising mortgage foreclosures and tighter credit have been battering many banks, large and small, across the nation.

The failures this year include that of Seattle-based thrift Washington Mutual Inc. in late September, the biggest bank collapse in history. It had $307 billion in assets. In July another big savings and loan, IndyMac Bank based in Pasadena, Calif., failed and was seized by regulators with about $32 billion in assets. The FDIC estimates that through 2013 there will be about $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank.

The FDIC remains a leading proponent for mortgage lenders to provide home loan modifications to distressed homeowners to prevent more foreclosures. The FDIC is raising insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $45.2 billion, below the minimum target level set by Congress and the lowest level since 2003. In addition, the FDIC may guarantee nearly $2 trillion in U.S. banks’ debt and deposit accounts in an effort to break the crippling logjam in bank-to-bank lending. Well over half of the roughly 8,500 federally-insured banks and savings and loans are expected to tap the FDIC’s temporary guarantees. The agency will provide as much as $1.4 trillion in insurance for more than three years for loans between banks, guaranteeing the new debt in the event the issuing bank fails or its holding company files for bankruptcy. Of the 8,500 FDIC-insured banks, 117 were considered to be in trouble in the second quarter – the highest level in about five years and up from 90 in the first quarter. The agency doesn’t disclose the banks’ names

19 Nov 08 Southern California Home Sale Prices Decline But Sales Level Increase from Foreclosures

With the median price of Southern California homes down more than 40% from its peak, the housing market has now slid further than most economists expected. The median sales price for homes in the region fell to $300,000 in October, a level not seen since 2003 and a 41% drop from the peak price set in the spring and summer of 2007, according to San Diego-based DataQuick. Los Angeles County’s median home sales price was $355,000, down 29% from a year ago. Home sales prices declined because of the California short sales and foreclosed homes that flooded the market. For the first time since the crisis began, repossessed properties in October accounted for more than half of residences sold. Low home prices did drive sales up 56% from a year ago.

In a recent article, Peter Y. Hong shows how the unemployment is rising and consumer spending is sputtering and of course this adds more to the foreclosure crisis equation because it becomes even more difficult to finance or refinance home loans. Just last year, several market analysts interviewed by The LA Times predicted that Southern California home prices would drop 15% to 25% from their peak. It took only until July for the median price to fall 25% below its 2007 peak of $505,000, and it has kept falling since.

The California governor continues to promote home foreclosure prevention by encourages lenders to offer better financing with loan modifications that enable the homeowners to keep the homes.

Barring a dramatic economic reversal, the median sales price is on track to slip below $300,000 when November sales are calculated next month. Thomas Davidoff, a UC Berkeley economist, said he and others underestimated the drop in value because it was tougher a year ago to know just how many people had mortgaged their homes for more than they could really afford. Those earlier forecasts proved off because “it was hard for people to get their arms around just how bad mortgage lending standards had gotten,” Davidoff said.

During the real estate bubble, banks and mortgage brokers offered mortgage loans that required little or no money down, minimal proof of income and “teaser” mortgage rates that lowered initial monthly payments but later jumped to a much higher rate. Last year, it was unclear how many of those loans would default. But much of that mystery has been solved by now, as massive numbers of homes have been repossessed. In October 2007, 16% of the homes sold in Southern California had been foreclosed, compared with 51% last month. Mounting foreclosures flooded the real estate market with discounted repossessed properties, further decreasing home values. The ripple effect from that put even more homeowners’ upside-down because in many cases their mortgage balances are greater than their home is actually worth. The declining house values continue to lead to more foreclosures. Now, “we’re probably seeing an over-correction” in the most depressed inland areas, Davidoff said. In communities overrun by foreclosures, “you couldn’t build a house for less than what [existing homes] are selling for,” he said.

Christopher Thornberg, principal of Los Angeles consulting firm Beacon Economics, is among those who predicted a 25% price decline last November, making him one of the more bearish forecasters at the time. By March, he was estimating a 40% decline. Now he predicts that prices will keep dropping throughout 2009, until they’ve fallen 55% from their peak. Owners of higher-priced homes may put off selling during the early phases of a downturn, causing more expensive homes to decline in value at a slower rate. But eventually many high-end owners have to sell at prices well below peak levels, Thornberg said. Last month’s Case-Shiller Home Price Index, which tracks home sales by price tiers, showed that Los Angeles-area homes priced in the bottom third of the market had fallen 42% from their peak prices by late last summer — but those in the top third had dropped 21%.

In Southern California, Orange County posted the smallest price decline, with October prices 27% below a year ago. San Bernardino County’s 39% decline in October from October 2007 was the largest price decline, MDA DataQuick reported. Nationwide, the National Assn. of Realtors reported Tuesday that home sales prices fell in 80% of U.S. metropolitan areas in the third quarter. Foreclosures accounted for 35% to 40% of homes sold in the quarter. The National Assn. of Home Builders also reported Tuesday that its index of builder confidence hit its lowest level since its 1985 creation. The index is based on a survey of builders’ views on sales conditions for new homes.


18 Nov 08 Short Sales Drive Thousands of San Diego Homes Below $200,000 announces October 2008 San Diego foreclosure numbers and a San Diego home deal list with single-family detached homes for less than $200,000 and condominiums for sale for under $100,000.  San Diego continues to have a large foreclosure inventory, giving potential San Diego homebuyers and investors great buying opportunities. As of November 10th, 2008, there are 5,862 San Diego bank-owned properties. Buyers have been taking advantage of low prices and distressed properties; the current number of 5,862 San Diego foreclosed homes has dropped from more than 7,000 foreclosed properties in October. With over 2,500 San Diego foreclosure properties actively for sale on the San Diego Multiple Listing Service (MLS), the remaining 3,362 bank-owned properties are being processed to be available for sale or are currently in escrow.  Needless to say, California short sales and loan modifications for homes in Southern California have affected the San Diego marketplace. 

As proof of these buying trends, the number of San Diego foreclosure properties for sale in the next 90 days has dropped by fifteen percent: 3,979 San Diego foreclosure properties are scheduled for auction in the next 90 days, down from 4,589 in October 2008. Currently, there are approximately 7,000 San Diego homes and properties in the pre-foreclosure phase, down from more than 10,000 at the end of September 2008. Owners of San Diego real estate properties that are in pre-foreclosure have received a Notice of Default to alert them that a foreclosure auction is pending. Overall, however, San Diego bank-owned properties are decreasing as investors are buying up many of the foreclosure properties.

Brian Yui, CEO of, states that “there are countless opportunities for investors to buy San Diego distressed properties and achieve positive cash flow with only 25% down. Opportunities of this kind have not occurred in San Diego for over a decade. Because home purchase prices have dropped back to 2003 price levels, but rents remain at 2008 levels, in some San Diego suburbs a single-family detached home can be purchased for $200,000 and still rent for $1600 per month.” Due to these money-making opportunities, many of bank-owned listings are seeing multiple offers as San Diego real estate investors bid against eager first-time homebuyers.

12 Nov 08 Another Foreclosure Rescue Plan Announced

Once again, the government has offered another mortgage restructuring plan to help troubled homeowners. This loan workout plan focuses on Fannie Mae and Freddie Mac owned home loans. Fannie and Freddie own or guarantee nearly 31 million U.S. mortgages, nearly six of every 10 outstanding. But they have far lower overall delinquency rates than other lenders — under 2 percent.


Sheila Bair, chairman of the Federal Deposit Insurance Corp. (FDIC), said the plan “falls short of what is needed to achieve wide-scale modifications of distressed mortgages.”


With the government spending billions to aid distressed banks, “we must also devote some of that money to fixing the front-end problem: too many unaffordable home mortgage loans,” Bair said in a statement.


Democrats on Capitol Hill aren’t satisfied, either. “When the home loan is chopped up into a million pieces and any investor can block a modification from happening, a program like this will only scratch the surface of the mortgage crisis,” said Sen. Charles Schumer, D-N.Y.


Deutsche Bank estimates more than 80 percent of the $1.8 trillion in outstanding troubled loans have been packaged and sold in slices to investors worldwide. Most of those loans won’t likely be helped by the new plan.


The rest are “whole loans,” which are easier to modify because they have only one owner.


The new mortgage assistance plan was announced by the Federal Housing Finance Agency, which seized control of Fannie and Freddie in September and other government and industry officials. It takes effect on December 15, 2008. FHA officials say they hope the new approach will become a model for loan servicing companies that collect mortgage payments and distribute them to investors. These loan companies have been roundly criticized for being slow to respond to a surge in defaults.


A Step in the Right Direction

After more than a year of slow and weak initiatives, there now seems to be a serious effort among major retail banks to get at the heart of the credit crisis: falling U.S. home prices and record foreclosures.


Citigroup said Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments.


JPMorgan Chase & Co. last month expanded its mortgage loan modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The bank already has modified about $40 billion in home loans, helping 250,000 customers since early 2007.  Bank of America Corp. plans to modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October.

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10 Nov 08 Short Sales Transactions Stimulate Real Estate Sales

As home foreclosures rates continue to climb in Florida and throughout the country, buyers increasingly look to non-traditional purchase methods. One of those that continue to draw interest is the “short sale” — an agreement by a lender to accept less than it is owed when a property is sold. Distressed homeowners seem to get a loan modification, sell the home in a short sale or let it go in foreclosure.

From the standpoint of the seller, the consumer convinces the lender to forgive a portion of the mortgage balance; the borrower avoids foreclosure — a more costly event for the bank, which with a short sale is able to minimize its losses. The buyer, in turn, purchases a home for substantial discount — 10 to 30 % off the previous sales price, though the property may be in need of repair. Nearly 2of every 5 homes sold today are the result of distressed situations, either with a short sale or foreclosure, according to the National Association of Realtors.

The short sale practice has been around for years but has increased significantly in recent months, especially as nearly 1 in 5 American home loan borrowers owe lenders more than their homes are worth, according to a recent report by First American CoreLogic. The housing report concludes that roughly 7.63 million homes had negative equity in September 2008 and more are headed that way if home prices fall another 5 %. Florida is among the seven hardest-hit states (including Arizona, California, Georgia, Michigan, Nevada and Ohio), accounting for nearly 2 of every 3 homeowners who owe more than the value of their house while accounting for only 2 of every 5 mortgage loans.

Further, U.S. home prices fell a record 16.6 % in August from a year earlier, with declines in all 20 major metropolitan areas measured by the S&P/Case-Shiller Home Price Indices. For home buyers interested in the short sales market, there are deals to be had, but only if the consumer expends the effort to understand the process. For example, the buyer should understand the property in question. Is the seller behind in payments and in default? These situations make for a short sale candidate and should be known before starting negotiations. > Read Complete Short Sale Article

10 Nov 08 California Brokers Get Caught up in Loan Modification Scheme

The Justice Department is gearing up to probe potential scams targeting distressed homeowners in San California.  Last week, Rep. Dennis Cardoza, D-Modesto, urged Attorney General Michael Mukasey to investigate mortgage-loan modification schemes now being marketed through the Valley. For an upfront fee, homeowners are being told, their monthly mortgage payments can be negotiated with loan modifications.  At best, the homeowners may end up paying for work that’s available for free. At worst, they’ll pay for work that isn’t done at all.  “People need to be very careful who they send their money to,” Cardoza cautioned Friday.  

The mortgage-reduction schemes are just one of the housing-related problems now confronting law enforcement officials. As the market melts down, the investigations are heating up. Two weeks ago, Modesto-based FBI agents assured Cardoza’s office they were forming a task force to zero in on mortgage-related frauds.  In his letter Friday, Cardoza told Mukasey that it was “imperative” that law enforcement authorities “crack down on these foreclosure scams quickly and comprehensively.” He called San Joaquin Valley residents “particularly vulnerable” because of the region’s foreclosure crisis.

The questionable solicitations come in different ways. Phone calls offering mortgage negotiation services have been ringing through the San Joaquin Valley for several months. Sonia Neal, a Realtor and volunteer counselor with the Community Housing Council of Fresno, added that sometimes “they will even just show up at the door.”  Official-looking letters are arriving in Valley mailboxes, some citing congressional bill numbers or phone numbers for a “loss mitigation department.” And on Thursday, in Modesto, some homeowners attended a workshop in which they were asked to pay $3,500 for getting their mortgage woes resolved.

Typically, the companies are offering to renegotiate the mortgage in exchange for an up-front fee amounting to one month’s mortgage payment, or more.  “We called some of these companies back; they don’t even have Web sites, and they seem fly-by-night,” Cardoza said. “When they found out we were a congressional office, they stopped responding.”

Even before Cardoza’s encouragement, federal investigators began pouring more resources into mortgage-related cases. The FBI reports having 1,569 pending mortgage fraud investigations open as of August; the number of new mortgage-fraud causes opened annually doubled between 2003 and 2007.  The FBI now has 42 separate mortgage fraud task forces and working groups currently established nationwide. A Justice Department official could not be reached to comment Friday afternoon.

For the scammers and investigators alike, the Valley is a target-rich environment. Stockton, Modesto and Merced top the foreclosure rankings among cities nationwide, and Fresno is not far behind. As house prices have dropped and adjustable-rate mortgages have risen, more homeowners have found themselves on thin ice.  Neal noted a number of companies offering so-called “loan modification” services have consequently popped up throughout California. While she acknowledged “there are some legitimate” companies offering the legal loan-modification services, she joined Cardoza in stressing caution.  “Some people will get desperate and pay the money,” Neal said, “and then nothing happens.”  Some of the scams appear to be an unexpected byproduct of the Hope for Homeowners Act passed by Congress earlier this year. The bill expands the ability of eligible borrowers to get better terms. For instance, homeowners must be spending more than 31 % of their monthly incomes on their mortgages. Distressed homeowners who heard about the bill, but don’t know its details, could be particularly vulnerable to fleecing.

The non-profit Community Housing Council of Fresno and the affiliated group No Homeowner Left Behind will do for free what the loan-modification companies do for money. The non-profit counselors will help homeowners prepare applications for modified mortgages; the lenders are not obliged to change the terms, but sometimes they do.  The foreclosure prevention counselors further advice consumers to be wary of businesses that call themselves a “mortgage consultant” or “foreclosure service,” or businesses that contact people whose homes are listed for foreclosure, or that collect a fee before providing any mortgage-related service.  A foreclosure-prevention workshop, co-sponsored by Cardoza’s office and No Homeowner Left Behind, will be held Saturday starting at 9 a.m. at the Stanislaus County Agriculture Center.

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