Older California homeowners in loans they can't afford

Older California homeowners who can't afford their mortgages are at the heart of a story from the Wall Street Journal:

As the government presses lenders to modify mortgages, a large subset of distressed borrowers is being left out: older homeowners on low fixed incomes. Many of them are now facing foreclosure, say legal-aid advocates and AARP attorneys, because they were sold loans they could never afford, often fraudulently.

Many of these homeowners had lived for decades in their home and had built up substantial equity, but had low incomes. This made them tempting targets for brokers who persuaded them to refinance their mortgages, telling them they could lower their monthly payments. Instead, many of these loans were loaded with fees and exploding interest rates and quickly became unaffordable.

These borrowers' incomes are often so low -- many are living solely on Social Security -- that few qualify for mortgage-relief programs. Even if lenders agree to reduce the interest rate and stretch out the repayment period, strategies at the heart of the Obama administration's antiforeclosure guidelines, "they won't get payments low enough," says Tara Twomey, an attorney with the National Consumer Law Center.

Hundreds of thousands of people in once-hot markets such as California's Central Valley fall into this camp, say housing counselors. Often the only way to keep these people in their homes is if lenders rescind the fraudulent loans or reduce the principal, steps most are unwilling to take.

The U.S. House of Representatives has endorsed legislation that would allow bankruptcy judges to modify or rescind loans even if lenders are unwilling. But lenders oppose the measure and the legislation has stalled in the Senate.

Seems during the mortgage run-up, older owners were targeted by cold-calling mortgage brokers, and some were drawn in by low teaser rates. Some of the foreclosures are being challenged by attorneys on the grounds that the homeowners were defrauded. These types of cases certainly make an argument for bankruptcy judges to order "cramdowns."

-- Lauren Beale

Thoughts? Comments?

Take your housing complaints to the president

Got a beef about housing prices, loan mods, jobs or otherwise? The White House is standing by to field your comments .

The White House is inviting you to post your questions on the economy and vote on submissions from others. The President will answer some of the most popular in an online town hall on Thursday.

Those of you who would like to let us know what you sent can post it here too. Thanks to commenter NoHoDolphin, who alerted L.A. Land on another thread.

-- Lauren Beale

Thoughts? Comments?

Photo: President Barack Obama speaks during a town hall meeting  March 18 at the Orange County Fairgrounds in Costa Mesa. Credit: Luis Sinco / Los Angeles Times

White House unveils 'Making Home Affordable' plan

Do you fit into the White House housing plan? From the "$75-billion housing plan unveiled" report today at latimes.com:

The Obama administration today released details of its $75-billion plan to stabilize the housing market by helping as many as 9 million homeowners refinance or modify their mortgages.

"Two weeks ago, the president laid out a clear path forward to helping up to 9 million families restructure or refinance their mortgages to a payment that is affordable now and into the future," Treasury Secretary Tim Geithner said in a news release. "Today, we are providing servicers with the details they need to begin helping eligible borrowers."

The administration's "Making Home Affordable" housing plan has two main parts -- one aimed at prudent homeowners who would like to refinance into a lower rate, and another aimed at struggling homeowners seeking a way to lower burdensome monthly mortgage payments.

Details of the eligibility requirements for both programs have been posted on the government's economic recovery website: www.financialstability.gov/.

How many people might fall within the guidelines was the recent subject of analysis by Zillow, the online real estate site, which found that 9% of mortgage holders in the Los Angeles metropolitan statistical area met the parameters for part one of the plan as compared with 25.1% nationwide. Zillow explains:

This would mean that 91% of loan holders do not qualify for part 1 because they have:

-- A loan to value ratio of less than 80% and can refinance under traditional terms.

-- A conforming loan but exceeds the 105% qualifier: 8% ( 182,916 mortgages)

-- Both a jumbo (non-conforming) loan and a loan to value ratio of greater than 105%: 7.5% (171,761 mortgages)

-- A jumbo loan and fall between 80%-105% loan to value ratio -- the jumbo loan automatically disqualifies them: 7.6% (173,160 mortgages)

Not surprising, that we're out of the norm here with high home prices, steep value drops and lots of jumbo loans.

-- Lauren Beale

Thoughts? Comments?

Photo: Treasury Secretary Timothy Geithner. Credit: Susan Walsh / Associated Press

Obamas should apply feng shui in the White House, practitioner says

Remember when moving into the White House engendered controversies over the new first lady's choice of curtains? A New York Realtor sent around a press release Wednesday urging the Obamas to redecorate and clean the White House based on the principles of feng shui, the ancient Chinese system of aesthetics intended to improve the flow of positive energy. 

The Obamas should install fish tanks and water features in rooms that face southwest, west, northwest or northeast; they could also paint those rooms red, peach or rose, said Debra Duneier, a New York real estate broker who is also a feng shui practitioner.

Duneier says the White House is an old building where a lot of drama has taken place, so there might be some lingering bad vibes the new residents need to shoo away.

"So much history is in the White House, and energy from all of those years, both good and bad, inhabit this space," Duneier said

Here are some of Duneier’s suggestions to spiritually spiff up the White House: Change the doorknobs on the doors in the rooms most frequented by the departing administration. If the doorknobs cannot be changed, wash them with warm water and sea salt solution. "The minerals in the sea salt will cleanse the energy and make room for the new energy to flow," Duneier said. She also suggests "smudging" the place before moving in, an American Indian method of banishing evil spirits that involves lighting a bundle of dried sage and lavender herbs on fire and waving it around. "Let the smoldering smoke travel in all corners of the room, especially where energy enters the home by the doorways, windows, fireplaces and electrical outlets," she said.

Oh, and the Obamas should hook up the stereo first and play their favorite music as they move in. "The vibrations of the music will be uplifting and bring good energy," according to Duneier. Finally, she said, based on his birth date, Obama is an "East Life" person who will feel most grounded in the East Room. That's where he should entertain his "most challenging" guests.

-- Roger Vincent

Photo: Time for good vibrations at the White House?

Credit: Karen Bleier / AFP / Getty Images