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Foreclosures - Economic Ethnic Cleansing or Poor Lending Practices

March 17, 2009

Analysis of:Rise in foreclosures 'a shock' | money.cnn.com

The higher default and foreclosure rates are coming from the African American and Hispanic American intensively populated states. Moratoriums can't overcome the last hired, first fired trend in the unemployment. In this case, reduced lending and underwriting standards spurred on by Community Redevelopment Act (CRA) banking requirements are now revealing their flawed logic. Seasonal hiring practices leave these vulnerable borrowers subject to layoffs followed by the inevitable default and foreclosure time table of 5-6 months from first notice to foreclosure sale.

Avoid Creating REO Properties - Logical to Wait for Inevitable Return of Economy

March 13, 2009

Analysis of:Citi: Mortgage break to unemployed | money.cnn.com

Citi offers a win-win solution to keep their borrowers in their homes while they find employment. Sound thinking to provide a workout solution that gives the bank and the borrower time for the economy to finish its corrections. When jobs return, the bank has a solid paying customer relationship and they have avoided the costly scenario of increasing their Real Estate Owned REO portfolio. Nothing is really gained from foreclosure when price corrections continue to devalue the REO properties and the bank isn't receiving any debt service. Best to take half a loaf and wait out the crisis. It serves all involved with a solution that doesn't add to the problems of the bank and borrower.

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