If you’re struggling to pay credit card debts, you’re probably feeling that you should never have started using credit cards, and that you’re somehow a bad person for getting over your head in debt. You’re not a bad person, and credit cards themselves are not bad.

One of the first things you’re going to have to do, in order to get out of your debt spiral and get your life back on track, is to understand that you are not a horrible person. It’s important that you understand this, so you can get out of your depression and despair enough to move forward and start getting yourself out from under all of this debt.

Almost everyone uses a credit card these days. No one intends to get in trouble. You, like everyone else, just allowed things to literally spiral out of control. Whether your credit card problems were caused by impulse spending, an emergency or a decrease in income, what caused it doesn’t matter.
At this point, you need to start looking forward and identify some ways that you can break out of the pattern of behavior you’re in.

Diagnosing the problem is the first step. Can you pay all your bills, even if it’s a struggle? Are you paying only the minimum on credit cards? Are you paying off credit cards with other credit cards? You need to understand how serious the problem really is, before you can know what to do about it.

If you’re able to pay all of your bills, but it’s a struggle, you may qualify for debt consolidation, or some credit counselors may be willing to help. Others will not speak to you until you’re a month behind on at least one payment. If you’re behind on your credit cards, cancel the accounts, cut up the cards, and seek credit counseling if possible.

Whether you work with a credit counselor or not, your first goal is to cancel all your accounts so that you don’t incur new debt. The next step is to make a plan for paying your creditors, and send them a letter explaining what you will be paying until the debt is cleared.

Many debt reduction experts suggest putting 20% of your income toward your debts, giving each creditor a proportional payment. When you pay one off, you add that money to the other payments.

While creditors will not like being told that they’ll receive an amount less than the minimum on your statement, many will not take you to court, as long as you do what you agree to do. They may put this on your credit record, but at this point, your credit record is not a big problem. The goal here is to get out of a growing mound of credit card debt and begin to get your life back on track.

The important thing to understand, in trying to get out from under crippling debt, is that you have to take care of yourself and your family, too. You can’t live on nothing. You need to create a plan that gives a portion of your income to your creditors, because you do owe the debt. But make sure you’re taking care of your own needs first, because your health and your family come first.

Salon reports on a man who, faced with foreclosure, bulldozes home.

If there are any among us who still don’t believe that this Great Recession is devastating, I offer you the story of Terry Hoskins of Moscow, Ohio.

Hoskins, who had been trying to work out a loan modification with his bank to save his house from foreclosure, has made good on his promise to bulldoze the house before the mortgage company could reclaim it.

Flying an airplane into an IRS building in Austin, Texas over similar frustrations isn’t cool. But this action I like.

I can’t begin to tell you the number of people I know or have met who are struggling to keep their homes. They are decent people who want to remain in the house and maintain it. All they need is a little relief from their banks.

But instead of helping their customers out, the banks are only too happy to evict them. Often, the house remains vacant and the bank has to pay for up-keep. The property erodes. And instead of taking in some money (albeit a reduced amount) for the house, they lose any flow of income.

And some family finds itself out on the street.

A family that probably shouldn’t have qualified for the loan in the first place but that was granted it because of the bank’s own predatory lending practices. Or a family whose head-of-household has simply been laid off and fallen on hard economic times.

I spoke the other day with a female friend — a single mom — whose ex-husband has hidden assets from her to avoid paying his fair share in child support and alimony. She works three — count ‘em, three — jobs in an attempt to keep a house that is home to her and her four children — all of them college-aged, all of them not getting any financial assistance from their father for their educations.

She has tried to utilize the programs that are supposedly available to help her keep her home. But the system is far stronger than her. It has beaten her down.

Now, this is a tough woman who has successfully battled cancer. She’s someone I admire because she has been doing all of the “right things” to provide for her family without outside assistance. She probably could have gone on welfare rather than work three jobs, but that’s just not her nature.

And the improvements she’s made on this house over the years — it has an amazing garden and yard, the result of long hours of her tender loving care.

Of course, none of this matters to the bank. The answer is “no” to her request to refinance the house. It’s a sure-fire bet that once they evict her — as surely they will — the value of that property will decrease.

I doubt that my friend will rent a bulldozer and knock the house down like Terry Hoskins did. But there are millions of Terry Hoskinses and people like my friend who have reached the end of their rope. They are our friends, our neighbors — and sometimes us.

The nation should be in crisis mode over this. Real programs to help people — laws to protect them — are needed. The time for words is over. It’s time for action.

The discontent runs much deeper than the superficial analysis of the Tea Party movement would suggest. But, as usual, those insulated within the Beltway are the last to know. And those who do know, on Wall Street, are too busy counting their bonuses to care.

Feb. 25 (Bloomberg) — The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

“It is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” Treasury spokeswoman Meg Reilly said in an e-mail. “This proposal has not been approved and there are no immediate planned announcements on the issue.”

She confirmed the authenticity of the document, which hasn’t been made public.

At present, lenders can initiate foreclosure proceedings on any loan that hasn’t been submitted for HAMP eligibility. Under current HAMP rules, foreclosure litigation can proceed while borrowers are under review for the program or even in a trial modification.

The proposed changes would prohibit lenders from initiating new foreclosure actions before loan screening by HAMP and would require lenders to halt existing proceedings for borrowers once they are in a trial repayment plan.

‘Improved Protections’

The Treasury Department will soon release guidance “which will include a set of improved protections for borrowers” in HAMP, Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office, said today in testimony prepared for a House Oversight and Government Reform subcommittee. She didn’t provide details.

The proposal goes further than rules adopted amid the crisis by federally controlled mortgage-finance companies Freddie Mac and Fannie Mae, which require lenders to review borrowers for a federal loan modification before a foreclosed property can be sold.

Foreclosure proceedings can still be initiated without a review, said Freddie Mac spokesman Doug Duvall. Fannie Mae spokeswoman Amy Bonitatibus said it adopted the same policy last March.

About 89 percent of outstanding residential mortgage loans are covered by the voluntary HAMP program.

About 2.82 million U.S. homeowners lost properties to foreclosure last year and 4.5 million filings are expected in 2010, RealtyTrac Inc., an Irvine, California data company, said last month.

Seven Million

Obama’s foreclosure prevention initiative, announced in February 2009 to help as many as 4 million Americans avert foreclosure, has modified 116,297 loans through steps such as lowering interest rates or lengthening repayment terms. More than 830,000 borrowers received trial repayment plans through January, according to Treasury data.

“Foreclosure processes differ among states, and the process is often confusing to homeowners already facing distress,” Caldwell said in her prepared testimony. “Treasury has been reviewing guidelines around outreach and the foreclosure process as part of its continual assessment of program effectiveness and transparency.”

Foreclosures may reach as many as 7 million mortgages, and an additional 5 million are at risk of default because borrowers owe more than the property is worth, Laurie Goodman, senior managing director at Amherst Securities Group LP in New York, said in a Feb. 17 interview.

Republican Criticism

“This is a problem of mammoth proportions,” Goodman said. “You can’t throw 12 million people out of their homes, so you need a successful modification program. My fear is that this isn’t it, but I’m highly confident that the administration will continue to iterate until they succeed.”

The Treasury proposal would require all borrowers who are 60 or more days delinquent on their mortgage to be sought out for participation in HAMP. Mortgage companies would need to try to contact the borrower at least four times by phone and twice by certified mail over 30 or more days before going to foreclosure.

Under current Treasury policy, foreclosure proceedings are only halted when a borrower receives a permanent modification plan.

House Republicans criticized HAMP as a failure today, saying in a report that it is prolonging the economic crisis and harming homeowners.

“By every empirical measure, HAMP has failed,” according to the 18-page report released by Republicans on the House Oversight and Government Reform Committee. “In its current form, HAMP both hurts homeowners who might otherwise spend their trial-period mortgage payments on rent and also distorts the housing market, delaying any recovery.”

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net;

Melissa Hughett and her husband set out to buy their first home in the best buyer’s market in years, confident they would land a deal within a few months.

The couple put offers on several homes, but lost them all to rivals who weren’t offering more money – just a lot more cash.

“Each time somebody came in and put $100,000 down in cash and scooped up the property or they had enough money to pay for the whole property in cash,” said Hughett, 30. “It’s agonizing.”

Would-be homebuyers, armed only with financing, are competing with real estate investors with the means to pay for a home in cash. Often, the all-cash buyers are edging out everyone else, leaving many frustrated at a time when lower prices and tax incentives favor buyers.

The market scuffle is happening primarily over heavily discounted foreclosed homes and other properties typically under $300,000, or even well below $100,000 in some markets. These homes are attractive to investors seeking a good return and first-time buyers looking for an affordable home.

The trend is most pronounced in areas of California, Florida, Arizona, Nevada and elsewhere where home prices have dropped sharply and foreclosures make up a large slice of homes for sales in many metro areas. In Las Vegas and Phoenix, for example, foreclosures accounted for more than half of all home resales in December, according to MDA DataQuick.

Although getting financing for heavily damaged foreclosures can be difficult, there’s still a healthy competition. Ultimately, cash is king.

“Even though a first-time buyer may be offering the same price as an investor, or a higher price, the investor has the edge,” said Jed Smith, a researcher for the National Association of Realtors. “The investor may actually pay less, but it’s cash, right now.”

Across the country, some 22 percent of all previously owned homes sold in December were purchased entirely with cash, up from 16 percent a year earlier. That’s the highest level since March and April, when all-cash purchases made up 30 percent of sales, according to a survey by the trade association.

That rate jumps even higher in metro areas where foreclosures have driven home prices down sharply.

In Las Vegas, all-cash transactions accounted for nearly 46 percent of all sales in December, up from 33 percent a year earlier, according to MDA DataQuick. In Miami, they were 54 percent of sales, an 8 percent increase. While in Southern California, they accounted for a quarter of sales, an increase of 2 percent.

“I’ve never seen so many cash transactions in my career as I have in this market,” said Stephanie Vitacco, a Coldwell Banker agent in Woodland Hills, Calif., with 20 years in the business.

Making matters worse, the inventory of homes for sale is down in many markets. That’s due in part to banks delaying the foreclosure process as troubled homeowners are evaluated for loan modification assistance. It has all made the competition for the most affordable properties even fiercer.

Many of the cash buyers are groups of people who have pooled their money to buy foreclosures and flip them or turn them into rentals. Another large segment consists of homeowners looking for a vacation property. It’s possible that some cash buyers will turn around and take out a mortgage later.

Sellers favor all-cash or cash-heavy deals because it speeds up the closing process and makes it more likely the transaction won’t fall through. One common concern when a loan is necessary is that the property appraisal could come in too low for the bank to approve the deal. It’s a pitfall that’s become more common as home values have fallen.

“Even if the offers are comparable, a seller will go with all cash all of the time,” said James Joseph, who owns Century 21 and Coldwell Banker real estate offices in Southern California. “They don’t have to worry about an appraisal.”

Hoping to circumvent competition from investors, Hughett approached family friends about buying their three-bedroom, two-bath house for $340,000. The owners had yet to put the home for sale.

“That’s the only way we can get in,” said Hughett. This way she and her husband are sure there won’t be another buyer “coming in and dropping a large amount of cash.”

Homebuyers who can’t afford to pay cash are at a disadvantage. But experts say there are some steps homebuyers can take to boost the chances:

- Get a financing prequalification letter from a lender for an amount that’s 20 percent higher than the price they’re offering the seller.

- Come up with a large down payment in the 20 percent range.

- Look for HUD properties. Only noninvestors are allowed to make offers on HUD properties during the first five days that they hit the market. That gives buyers a head start over investors or those looking for second homes.

- Ask a real estate agent to get a list of recently repossessed properties being prepared for sale. It can take several weeks before these homes hit the market. That’s because the bank’s agent can’t officially advertise the home until it’s ready to be sold. But agents can ask for details on these foreclosures and get their clients ready to pounce.

- Write a letter to the seller or bank handling a foreclosure sale and make a case for why they should sell you the property – anything to make you stand out as a potential buyer.

From the LA Times

Three years have passed since the housing bubble burst, and yet the number of mortgage defaults and foreclosures continues to increase. RealtyTrac tallied up a record 2.8 million homes that received at least one foreclosure notice last year, and predicted that 4.5 million would go into foreclosure this year. If so, that would be nearly one out of every 20 homes. Analysts also estimate that there is a “shadow inventory” of 1.7 million to 7 million homes in foreclosure that lenders haven’t yet put up for sale.

The extremely high foreclosure rate is a problem not just for the individuals at risk of losing their homes, but also for their communities, the housing industry and the economy in general. And the problems are mounting despite the signs that fewer homeowners are falling behind on their payments, home prices may be hitting bottom and more troubled borrowers are benefiting from federal aid programs.

As of January, nearly 1 million homeowners were receiving at least temporary help through the federal Home Affordable Modification Program. But lenders are still moving too cautiously, hampered by financial complexities (such as mortgages that have been bundled and sold to investors), insufficient staff to handle the volume of modifications, uncooperative borrowers and loan servicing companies that profit from delinquent loans.

Admittedly, some borrowers took on such outlandish amounts of debt that their homes can’t, and shouldn’t, be saved. And the current loan modification programs, which are designed to help people with predictable incomes, may not be much help for homeowners who are in trouble because they have lost their jobs. Nevertheless, too few loans are being modified and too many of the modifications haven’t given borrowers a meaningful break. That’s one reason so many of the borrowers who’ve been given a second chance have defaulted again. The re-default rate drops considerably when lenders write off some of the debt, yet for the most part they’ve been either unwilling or unable to do so.

Last week, President Obama launched yet another initiative to avert foreclosures, offering $1.5 billion from the $700-billion Troubled Asset Relief Program to housing finance agencies in California and four other states where home prices have dropped by at least 20%. The administration gave states a great deal of flexibility in using the aid, which will help them craft programs for those who owe more than their homes are worth or who have lost their jobs and need temporary or transitional help.

Although the initiative is promising, there’s a drawback to the administration’s repeated efforts to lower the foreclosure rate: Lenders may be tempted to wait for Washington to give them even more incentive to modify loans, rather than offering borrowers significant reductions now. The administration should make it clear that the best deals are already on the table.

Besides, lenders’ interest in maximizing their returns should be reason enough for them to write off part of some borrowers’ debt in order to avoid a foreclosure sale that would be even costlier. The only additional motivation Congress should provide is to give bankruptcy judges the same power to write down home mortgages as they have with other types of debt. Such a change could cause lenders to raise interest rates for future borrowers, but they also would be more likely to negotiate new, mutually beneficial terms with defaulting borrowers before a judge dictates them. California lawmakers can also help by requiring lenders to determine whether delinquent borrowers qualify for a modification before they start foreclosing, not after.

CNN Foreclosure News Lenders Must Now ‘Produce The Note’ For more info call 818-642-8524 With foreclosures rising over 158% year after year, CNN’s Greg Hunter shares a tactic that could very well save your home… “In foreclosure, the bank has to show that it owns your house, and what most people don’t know is that almost half the time, the banks don’t have the paperwork to prove it in court.”

60 Minutes reports that the housing market for 2010 will be much worse than it has been for the past few years and that we are far from a bottom. Of course every market is local and it depends on where you live.

Contra Costa County investigators arrested home owner Joel Atwater for the alleged arson fire at his foreclosed property.

The financial crisis claims another victim. Just two weeks ago an unemployed financial manager killed five family members and then himself. Now a Pasadena woman facing eviction apparently set fire to her rented home and then committed suicide.

Lt. Dewar is talking about Wanda Dunn, a 53-year-old Pasadena woman who killed herself early Monday, rather than vacate a bungalow home on North Wilson Avenue. It had been in her family for generations.