Help and hope for the mortgage weary

Until recently the debts that threw many Floridians into credit counseling were the familiar ones: Big cars with big sticker prices, a fondness for designer labels and exotic vacations and unpaid college loans.

But Tampa Bay area credit-counseling agencies say another sort of client is turning up more often at their doors: Homeowners who can't afford their homes.

Easy credit enticed people to trade up to bigger homes. Now they're shelling out hundreds of dollars more a month to keep up with their adjustable rate mortgages. Higher insurance premiums and property taxes also lay in ambush.

Pinellas County bankruptcy lawyer Jay Weller runs affiliated credit-counseling agencies in Clearwater, Tampa and Port Richey. After handling close to 30,000 cases in his career, he insists home debt has never loomed so large.

"I've never had that many people walk away from their houses before," Weller said. "Real estate is playing a larger role in bankruptcy than in the 15 years I've been doing this."

Angel and Myranda Acosta are among the house owners desperate for financial advice. They moved to Pasco County from Oklahoma in 2004 near the height of the housing boom and paid $139,000 for a three-bedroom, two-bath house in the Moon Lake Estates neighborhood.

Angel made good money as a Verizon salesman but had bad credit. Myranda made less as an office receptionist but had good credit. They felt lucky to get a loan from Fremont Investment & Loan: 100 percent financing with an adjustable rate mortgage starting at 10 percent.

The $1,810-per-month payment is already a struggle for the 30-something couple and it's set to "bloom out" next year by an undetermined amount. Their income and credit preclude them from refinancing.

"No theme parks for us. We pretty much stay around the house. At least the weather's nice," Myranda Acosta said.

Two homeowning friends recently walked away from their mortgage and moved into apartments. Not the Acostas. They haven't missed a payment, but worry about what will happen next year.

Seeking counsel, the Acostas turned up at a recent workshop in Tampa hosted by the Neighborhood Assistance Corp. of America. The nonprofit offers refinancing to subprime borrowers facing foreclosure.

"This is our last hope," Myranda Acosta said.

They're far from alone. The national firm RealtyTrac lists 17,147 troubled properties in Pinellas, Hillsborough, Pasco and Hernando counties. They're properties in preforeclosure, scheduled for auction or seized by the bank.

Many have turned to Consumer Credit Counseling Services of Central Florida. Cities and counties outsource work to the nonprofit agency. Services are free for many people in Clearwater, Largo, Tampa and Pasco.

Making monster house payments on modest salaries has become a Florida ritual. Throw in piles of credit card debt and you have a recipe for financial misery, said CCCS vice president Linda Pichler. Fueled by the housing downturn, Consumer Credit Counseling served a record 8, 000 people last year, mostly in the Tampa Bay area and Orlando.

Most people wait too long - until their home is on the brink of foreclosure - before approaching a counselor, many of whom cut their teeth in banking, Pichler said. One of the biggest mistakes she sees: People who strain to pay off their credit cards but blow off the home loan.

"The mortgage companies are not yelling, so they often get paid last," Pichler said. "Maybe people are still current on their credit card but they're losing their homes."

Horace Morgan, in addition to his realty and mortgage business in Brandon, also dispenses credit counseling for free. Morgan notes that rising home values masked a variety of financial sins. Now falling home values have stripped off the mask.

Four potential clients who called last week all had the same problem: They used their home equity as an ATM and now are almost broke.

"All four owed more money than their homes were worth and all four were behind on their mortgages," Morgan said.

Morgan counsels lifestyle changes: dump the designer clothes and shoes, stop leasing the expensive car, trim foreign travel and eating out each weekend.

"They have to be retrained and change their lifestyle," he said.

Desperate people are vulnerable people, and credit counselors warn of vultures who prey on that weakness. Some sham credit counselors collect money only to damage clients' credit further or else scam people out of their homes.

Last month, a federal jury found five Tampa residents guilty of cheating homeowners into selling their homes to avoid foreclosure, then siphoning off more than $2-million in home equity.

In addition to its "credit rebuilding workshops," CCCS is holding a seminar Thursday in Tampa called the "ABCs of avoiding foreclosure."

"We plan on having these on a pretty regular basis," Pichler said.

Often, consumers can be their own worst enemy. Playing with easy credit can be habit-forming.

"I have people who move their credit score from a 500 to 700 and the first thing they do is buy a new car, " Morgan said. "They make the same mistakes all over again."

James Thorner can be reached at or 813 226-3313.

[Last modified May 13, 2007, 00:54:24]

Nigeria: Skye Bank Releases Naira Credit Card

Frances OviaLagos

Skye Bank Plc has introduced a new credit card denominated in naira, into the banking industry for customers. The primary objective is to offer a differentiated card payment value propositions to the discerning target market that would address the specific needs of each market taking into cognizance its peculiarities. The scheme developed by e-Channels Group of the bank is targeted at customers and non-customers of the bank who have verifiable and regular sources of income.

The new product has two variants of Classic and Premium. The Skyecard credit Classic is targeted at the low income earners who form a sizable number of the bank's current customer base, it renders benefits derivable from carrying a debit card while Premium is targeted at a wide market, differentiated by income bracket and credit profile such as income, employment structure, credit history and so on. It provides both secured and unsecured finance for customers and non-customers of the bank. Mr. Adesola Akinfemiwa, Managing Director, Skye Bank who expressed delight at the acceptance rate and transaction volume of debit cards, which the bank has been a leading promoter in the banking industry, said the new credit card would be very useful to customers as it would save them stress of carrying cash around at the risk of armed robbery attack. He said the intention of the bank is to put the cards in the hands of people who want cash before their next pay day.

General Manager, Retail Banking, Skye Bank, Mr. Dotun Adeniyi, explained that the new credit card introduction is in furtherance of the bank's marke leadership in card business. "As we launch these two credit cards, those who buy into it will enjoy the good things that are happening here and we will continue to maintain market leadership," he said.

Mr. Chuma Ezirim, Assistant General Manager, e-Channels Group, Skye Bank said the card process comprising issuance, operations and management is fully automated and runs on a robust credit card management system and that credit scoring and assessment module makes it possible for applications to be processed on-the-spot while there are no restrictions on usage.






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He said the size of the market is very large but very challenging and this i formed the bank's reason taking its time to offer to the market a credit card scheme that runs on a well tested, best in class and robust credit card management system. He said the scheme is expected to receive the required support from the government and Central Bank as it will complement various federal government initiatives towards the promotion of customer credit policy as incorporated in the National Economic Empowerment Development Strategy (NEEDS).

Ezirim who explained the features of the credit card said it is an electronic local card payment scheme which will be used to avail credit lines to individuals that has interest fee period of up to 30 days, interest rate of 18 per cent per annum on utilized credit only, flexible limit-based on income of cardholder; free internet and mobile banking services; SMS alerts on all transactions and two years validity period for the card, among others.

"A large proportion of Nigerians need extra cash outside monthly income to meet personal financial commitments, which they cannot easily obtain from friends and family members, and would like to pay back inn a convenient manner. "Skyecard credit avails the average Nigerian this opportunity," he added.

Minorities hit hard by rising costs of subprime loans

CHICAGO - Charles Davis bought his home on the South Side of Chicago in 2003 using adjustable-rate, high-interest loans and betting an improving economy would help him handle rising payments ahead. Things didn't go as planned.Davis, 54, has struggled to stave off foreclosure on the brick ranch-style house where he lives with his wife, Valerie, and three teenage kids. He financed his home with a $200,000 mortgage at 8.5% interest, and a second $50,000 loan at nearly 12%. Those rates were fixed for only two years, and payments are escalating.YOUR EXPERIENCE: Are you having trouble keeping up with your mortgage payment?Davis went to his bankers to refinance. They said no. Over the past year or so, he talked to four or five companies and was turned away. His bank has him on a "forbearance" plan, which lowers his payments, but has also started foreclosure proceedings. If he misses a payment, he fears, he could lose his house."I got into a bad deal," says Davis, an African-American, adding that no one told him about help for first-time home buyers or warned him about the risks of adjustable loans.Across the nation, black and Hispanic borrowers helped fuel a multiyear housing boom, accounting for 49% of the increase in homeowners from 1995 to 2005, says Harvard's Joint Center for Housing Studies. But Hispanics and African-Americans were far more likely to leverage the American dream with subprime loans - higher-cost products for buyers with impaired credit - that are now going bad at an alarming rate.About 46% of Hispanics and 55% of blacks who took out purchase mortgages in 2005 got higher-cost loans, compared with about 17% of whites and Asians, according to Federal Reserve data. The South Side of Chicago, with a large concentration of minority borrowers, has a high concentration of subprime loans and the state's highest foreclosure rate. In Boston, where defaults are rising - especially in minority areas - 73% of high-income black buyers (those making $92,000 to $152,000) and 70% of high-income Hispanics had subprime loans in 2005, compared with 17% of whites.Concentrated foreclosures in minority neighborhoods could reduce property values. The NAACP, National Council of La Raza and other civil rights groups recently called for a six-month moratorium on subprime home foreclosures. Problems are centered on subprime borrowers who took out adjustable-rate mortgages, which are now resetting at higher rates, increasing the monthly payments.One of those swept up in the subprime frenzy was Paris Alston, 35, of Boston, who moved from a homeless shelter to a steady job and hard-to-get federally subsidized housing. Last year, after seeing an ad targeted at first-time buyers, she jumped into a subprime adjustable-rate loan that started with a 9.95% interest rate that could jump to as much as 15.25%."I was getting older in my life, I wanted to have something for my kids," says Alston, adding that the lender made the process easy - until it came time to sign the documents."They inflated everything. … My income was more than what I expected. When I asked to go over the loan application, they said, 'You don't need to. All you need to do is sign it,' " Alston says.Instead of the $1,200 monthly payments she expected, Alston faced $3,000 in loan, tax and condo fee bills. That was not only more than her monthly income, it was more than she had paid for an entire year's rent on her subsidized apartment. Alston lost her home. With the help of Boston non-profit ESAC, Alston recently moved into a rental apartment.Targeting minority borrowers There are many reasons minorities turn to subprime lenders. Firms have aggressively marketed their products to populations that have long been underserved by, and often don't trust, traditional banks.Recent immigrants lack credit histories, and 35% of Latino families don't have checking accounts. Hispanic families are more apt to have undocumented income, leading them to lenders who make loans without income verification, according to the National Council of La Raza. Lower rates of minority homeownership mean less wealth to draw on.Regulation has been spotty. Federal data on race or ethnicity and lending were recently expanded by regulators. But they don't include credit scores, making it difficult to easily ferret out reasons for pricing disparities.Independent analyses and government investigations indicate that minority borrowers are steered to higher-cost loans even when they qualify for cheaper products. Countrywide (CFC) Home Loans settled a New York lawsuit over racial disparities in lending last year, compensating some Latino borrowers and setting up a $3 million education program.Many subprime lenders, who operate through loosely regulated mortgage brokers, aren't covered by federal banking laws that provide consumer protections and are designed to prevent discriminatory lending. The non-profit National Community Reinvestment Coalition, in a recent study of the 25 top U.S. metro areas, found fewer commercial bank branches in minority and working-class neighborhoods.Doug Duncan, chief economist of the Mortgage Bankers Association, points out that voluntary data by lenders show many minority applicants who are turned down for loans are denied due to poor credit. Federal data also don't take into account such things as collateral, property values and borrower debt-to-income ratio.Duncan warns that efforts to tighten lending laws to protect borrowers, including minorities, could end up constricting credit and preventing people from refinancing. At a recent meeting, subprime lenders told the Mortgage Bankers Association they expect loan volume to fall 30% to 40% next year."This is before any regulatory action," Duncan says. "This is the reason why we're cautioning regulators and lenders to be very careful."In Denver, Gaby Sanchez, 33, found her lender through her Realtor and was given a high-cost loan she couldn't afford when the interest rate reset."They said our credit wasn't that great, so the loan we were given was two-year, interest-only. … To refinance we were going to go through them again," Sanchez says. "We had the number; we kept trying and trying until we found out they were no longer in business."Sanchez tried other lenders who also offered high-rate loans, until she found non-profit group Del Norte Neighborhood Development Corp. The group helped her and her husband, Fabian Lopez, 36, get an affordable fixed-rate loan.Another reason for the subprime surge: Lenders have been supported by politicians and community leaders eager to promote minority homeownership, which remains about 25 percentage points below that of white non-Hispanics."Access became such a buzzword that people forgot about basic lending practices," says Keith Corbett, executive vice president of the Center for Responsible Lending. "You are really in debt servitude, having a loan with a loan-to-value ratio of 100% or greater."How to regulate Trying to protect borrowers or neighborhoods targeted by high-cost lenders can be challenging.Illinois last year created a program of mandatory financial counseling for borrowers taking out certain high-cost loans. It was implemented in 10 ZIP codes, focused on Chicago's South Side. The program was a boon to John McKinley, 70. After fielding marketing calls from mortgage firms, McKinley decided to use a company promising a 30-year, fixed-rate product. Before closing, he met with a financial counselor at the Greater Southwest Development Corp. who discovered the rate was set for just 10 years, with rising interest and payments thereafter. He got out of the loan."I'm disgusted with all these people," says McKinley, an African-American, of lenders he believes are trying to scam their clients."These lenders are thinking, 'If you pay three or four payments then stop, we'll repossess it,' " McKinley says, adding that the problem is fueled by willing borrowers, many with poor credit or low savings, who want a cheap deal.From Sept 1, 2006, to Jan 19, 2007, a dozen federally certified counseling groups worked with 1,200 borrowers, most on loan refinances, not initial purchases. They found signs of fraud in about 9% of the cases. In about half, they said borrowers could not afford the home or were perilously close to not being able to afford the loan.The state has proposed changes to the program, which was suspended after tension with community leaders who called it racist for singling out minority ZIP codes, privacy concerns and data showing a large drop in home sales in neighborhoods where it was in effect. The changes would widen the program to all of Cook County and change the focus to loan terms viewed as predatory, rather than borrowers' credit history."On the southwest side … there's more mortgage brokers than there are doctors and lawyers and grocery stores. It's like the Las Vegas strip of mortgage brokers," says Illinois Democratic state Sen. Martin Sandoval, who sponsored the law, though not with the idea of singling out minority borrowers.Federal regulators have tightened lending standards. But the record is muddy regarding whether they have done enough to go after possible lending discrimination.A Fed analysis of higher-cost loans, defined as those 3 percentage points above select Treasury bill rates, shows a good chunk - but not all the difference in lending among races and ethnic groups - can be explained by other factors, such as borrower income.The Fed two years ago said its analysis of 2004 data indicated that 200 lenders might be making too many high-cost loans to minorities who might be able to qualify for better deals; 35 of those lenders are overseen by the central bank. The 2005 data raised red flags about 270 lenders, 45 under Fed oversight. It conducted follow-up examinations and has referred one lender to the Justice Department.The Office of the Comptroller of the Currency, another bank regulator, based on an analysis of the 2004 data, did a number of targeted exams. But the OCC says the vast amount of day-to-day OCC supervision does not involve public enforcement actions, and it doesn't keep data on enforcement actions based on the lending information."There's a real lack of transparency," says Marva Williams, senior vice president of the non-profit Woodstock Institute in Chicago and a member of the Fed's community advisory panel. "It's difficult or impossible to know which institutions have received complaints, the nature of those complaints and the status of any investigation."Looking to a tough future Going forward, Congress is debating national standards for lending, while regulators and lenders are setting up multibillion-dollar programs to help people get out of bad loans. Robert Pulster, executive director of Boston's ESAC, says recovery will be tough."These are poor communities. … (Homeowners) were borrowing money. They did everything they could to sustain them for as long as they could, so any resources they have are depleted," Pulster says. "There's no quick fix."Kirchhoff reported from Washington, D.C., and Keen from Chicago