“We’ve seen sharp declines in new foreclosure filings after legislation mandating delays to the foreclosure process was signed into law in several states — most notably in California, where overall foreclosure activity was down by double-digit percentage points for the second straight month in October, and where default filings were 44 percent below October 2007 levels,” said James J. Saccacio, chief executive officer of RealtyTrac. “Despite this, October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year.”

He added “While the intention behind this legislation — to prevent more foreclosures — is admirable, without a more integrated approach that includes significant loan modifications, the net effect may be merely delaying inevitable foreclosures. And in the meantime, the apparent slowing of foreclosure activity understates the severity of the foreclosure problem in these states.”

The top 10 states with high foreclosure rates ranking were Nevada, Arizona, Florida, California, Colorado, Georgia, Michigan, New Jersey, Illinois and Ohio.

A mortgage amortization loan followed by a balloon payment is sometimes one of the main reasons people fall into the foreclosure trap. Mortgages that are set up on a balloon mortgage get paid out in monthly installments for a select time period. At the end of this time frame, one lump sum payment is made to pay off the mortgage amortization.

Typically a balloon amortization mortgage is set on a 3, 5 or 7 year term. By financing and structuring the loan this way, it usually has a smaller interest rate but payments can span as many as 30 years with the same interest rate.

Advantages of a balloon amortization are mainly if you know you are going to sell your house before the balloon payment becomes due or if you know you can pay off the loan early / on the balloon date. Another advantage is if your interest rate is high, and you think that the rates may trend to go down before the balloon and you plan to refinance.

Most loans pay on interest and principle. When the term of the loan ends, the payments are paid in full. With a balloon mortgage amortization, this is not the case. Monthly installments include only part of the interest and very little principle. When the term expires the note is due in full, leaving the borrower a very large sum to come up with.

In most other loans, monthly payments do not only pay off the interest but also chip away at the principal amount - the original amount owed. Thus at the end of each loan term where balloon payment is applied, no money is owed.

Balloon mortgages are usually based on a 30 year amortization, but you actually only have 3, 5 or 7 years to pay. That in itself doesn’t let you have enough time to pay on the principle significantly. In other words, it often times feels like you are only paying on interest. At the end of the note, sometimes you can reset the loan but you have to meet certain criteria. In order to reset your loan, you have to still occupy the home, having no liens against the property, and should have made on-time monthly payments for the last year. If you don’t qualify to reset the mortgage, you may be able to still refinance the loan.

You may also find that due to a reverse in your financial situation you many not qualify to reset or refinance your home, and have to sell it to meet the balloon payment.

A tip for home borrowers is that when you take on a balloon payment mortgage, make sure that the due date will give you significant time to make the payment. With balloon payment mortgages, if you can’t pay the lender the amount on the due date, you might have to foreclose and lose the property. We have witnessed many foreclosures this year from balloon payment mortgages, from people that have paid all other payments on time every month. If you feel this type of loan may be right for you, check with other lenders or a financial specialist.

The President’s immediate focus is on deciding how to implement the $700 billion rescue program which the Congress had passed in October. He has proposed a 90-day foreclosure moratorium for homeowners “acting in good faith.” He has also called for reform in the bankruptcy law that would let bankruptcy judges reduce mortgage principals for bankruptcy filers. He has plans to increase penalties and law enforcement to fight mortgage fraud.

One in every 475 U.S. housing units received a foreclosure filing in September. Foreclosure filings were reported on 765,558 U.S. properties during the third quarter, increased 3 percent from the second quarter and 71 percent increase from the third quarter of 2007.

“Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures,” said James J. Saccacio, chief executive officer of RealtyTrac.

The top 10 states with high foreclosure rates ranking were Nevada, Florida, California, Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.

(Source: RealtyTrac)

“Families need to get together and be more open about it,” Christopher Viale, president of Cambridge Credit Counseling Corp says. “It comes down to being very open and willing to communicate what the lifestyle differences might be and be willing to find a middle ground in that. It’s all give and take.” as said to Bankrate.com.

Few tips below from Bankrate.com to tackle debt as a family:

1) Set goals together
When you talk with family members about ways to eliminate debt, try to avoid assigning blame. Instead, make it about the goals. Set a goal for each member of the family in eliminating the debt.

2) Set up a system
If you’re having trouble getting your partner on board, add fun twists and some positivity to help turn attitudes around. You could use non-monetary incentives to encourage savings. For example, tell your spouse that you’ll agree to take on a chore for a short period of time after they meet a spending goal.

3) Involve the children
It’s our responsibility to make our children well equipped with good financial practices for their secure financial future.

4) Make it a lesson for everyone
Harrine Freeman, author of “How to Get Out of Debt,” suggests keeping the family involved throughout the debt-reduction process with monthly family meetings. At the meetings, go over finances with the whole family: Write down expenses and how much money you have coming in, then write down financial goals.

“Show them every month, see, this bill is paid off and we are this much closer to achieving our goal, whatever that goal may be,” she says.

“Include everyone in the process, so they see from the beginning to the end and that every time they spend money there’s an impact on the household.”

(Source: Bankrate.com)

“The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary” Buffett said to The New York Times.

“So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities” the chief executive of Berkshire Hathaway added.

The reason he gave for buying American stocks is “A simple rule dictates my buying that is Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now”

“Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over” Buffett added.

He further added that over the long term, the stock market news will be good. For this he took the example how in the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts which resulted in the Depression, a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president and yet the Dow rose from 66 to 11,497.

He added “today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts”.

Buffett said equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

(Source: The New York Times)