LARRY KING, HOST: Tonight, foreclosures -- they're at record levels and soaring.
How bad is it?
So bad that even an "Extreme Makeover" house is up for auction.
Are you living the nightmare?
If you're behind on payments, if you're drowning in debt, if you wonder how you'll ever climb out of the money mess, you can survive the crisis and even save your home.
Tough advice for tough times -- tune in and take charge of your financial future now on LARRY KING LIVE.
KING: Foreclosure rates are up more than 100 percent since last year and filings are up 120 percent. Today, the president signed a massive bailout plan. Lawmakers call it the most significant housing legislation in a generation.
Two hundred and twenty thousand homes were lost to bank repossessions in the second quarter. That's a lot of families.
We have an outstanding panel.
In Dallas, Jeremy Brandt, founder and CEO of 1-800-CASH-OFFER. It's a real estate -- he's a real estate investor and short sale expert.
In Detroit is Glinda Bridgforth, financial adviser, personal finance coach. And her latest book is, "Girl, Get Your Credit Straight." Here in Los Angeles, Jeff Lewis, house flipper and real estate speculator, star of Bravo's hit docu-reality series, "Flipping Out."
And a return visit with John Assaraf, the entrepreneur and best- selling author. His most recent book, "The Answer: Grow Any Business, Achieve Financial Freedom and Live An Extraordinary Life," co-written with Murray Smith. He's co-founder of OneCoach, which provides small business coaching services.
Jeremy, is there a way out of this?
JEREMY BRANDT, REAL ESTATE INVESTOR, SHORT-SALE EXPERT: Well, I think that there is. And the answer is sit tight. You know, there's not a lot the government can do at this stage to change what's happening in the housing markets. So I think the real answer is to let it work itself out.
KING: Jeff, even if you're getting foreclosed?
JEFF LEWIS, HOUSE FLIPPER, REAL ESTATE SPECULATOR: Am I getting foreclosed?
KING: No, if anybody's getting foreclosed, sit tight?
LEWIS: Well, no. I think there's things that people can do. I read something very disturbing in that half -- half the people that are facing foreclosure, nobody even makes a phone call to the lender to try to work anything out.
KING: They just accept the notice?
LEWIS: Yes. I mean there's a lot of people that I think are living in denial. And I think that they -- they stop making the payments. They keep receiving the notices and they still don't do anything about it. And I'm encouraging people to call your lender and try to work something out.
But there is something -- there's a great agency out there. And it's the Neighborhood Works Organization. And it's non-profit organization. And they have counseling agencies all around the United States. And they have basically set up this non-profit organization where you can call if you are facing foreclosure and they will guide you. And they will go through it with you and they will talk to you about what to say to your lender.
KING: Glinda, I would gather the lender doesn't want to foreclose, does it?
GLINDA BRIDGFORTH, AUTHOR, "GIRL, GET YOUR CREDIT STRAIGHT": No, they don't want to foreclosure on consumers. But I also feel that -- yes, I agree that very often what happens is that consumers don't make the phone call. They don't start early enough trying to figure out the problem, trying to determine what needs to be done to avoid foreclosure. I think often it's fear. And what happens is that they just become paralyzed. They keep thinking that something is going to happen to turn things around. And ultimately they wait too late, until there's not a whole lot that can be done.
KING: John, is the bill today going to help a lot?
JOHN ASSARAF, CEO, ONECOACH, AUTHOR: I think it will. But the bill is not going to help everybody. Most Americans are either getting into foreclosure or are in foreclosure in a state of denial. And they don't want to look at the true facts. And as Jeff suggested, they've got to get real. That's number one.
Then they've got to understand what are the rules of the game?
Every single lender in the country has a different rule of the game. But on the 30th day -- or the day after the 30th day that you're in foreclosure, that becomes public knowledge and all of a sudden the bankruptcy attorneys call, the mortgage brokers call. And everybody who is associated with that industry is going to call you.
So people are feeling embarrassed. They've got doubts, fears, anxieties. They are feeling shameful and guilty. And that causes them, as one of our guests suggested, to get paralyzed.
And the first order is to get communicate, as Jeff suggested, communicate with the lender. Find out what the rules are and make some new plans.
KING: Jeremy, how did this happen?
BRANDT: I think it's a confluence of a lot of different things that all happened at once. One of the biggest problems that we saw was people buying houses they couldn't afford. So there's a lot of people that had the dream of living in a very large house. And there were mortgage brokers that were happy to accommodate them in putting together a loan that maybe they should have never gotten into.
Part of the blame certainly lies on some of the real estate investors in the industry that were speculating, bidding up the prices of condos and houses on the coasts way more than the intrinsic value of that property.
KING: Why, Jeff, would a lender give money to a prospective homeowner who can't afford it?
LEWIS: I mean this is -- I mean, God, I wish we had the answer. But, you know, the fact is, is they were way too liberal giving out money. And now the problem -- now there's an even bigger problem, because now they're too strict. So they're -- I believe that they're killing the real estate market because we've -- I -- personally, I'm out in the trenches every day, Larry. I'm at open houses. I'm dealing directly with buyers.
And I see people with money in the bank that are credit worthy people that can't get loans unless they can put down 20 or 30 percent. Well, with the cost of living today, how is it possible for people to save 20 or 30 percent down payments? I've got -- I could sell my properties all day long for 10 percent down. The problem is, is you can't -- these people can't get the loans.
KING: Now, Glinda, you have some money tips. We're going to show the graphics here -- five steps to help.
Let's go through them, OK?
BRIDGFORTH: Well, I think very often that it is true that people were put into homes that they really couldn't afford. But I think that there's...
KING: OK, let's...
BRIDGFORTH: ...there's a financial responsibility that each person has. And so you have to look at...
KING: All right, let's go through your tips.
BRIDGFORTH: OK. You have to look at the...
KING: One, you say stop using...
BRIDGFORTH: ...consumer credit debt.
KING: You say stop using credit cards.
BRIDGFORTH: Right. Stop using the credit cards because what that does is if you're already in a hole, then it's going to put you deeper in a hole and have less money available to use to go toward your mortgage.
KING: Second, calculate the debt.
BRIDGFORTH: You want to add up what debt you owe, who do you owe the balance, the monthly payment, the interest rate, are you current, are you past due?
And once you add that up, then you're going to get an idea of how big picture is or how small the picture is, because some people don't owe as much as they think they do.
KING: All right. Create a spending plan.
BRIDGFORTH: Absolutely. Creating a spending plan, it's -- some people call it a spending plan. Some people call it a budget. I think it's important for you to anticipate what your needs are going to be in the upcoming months in terms of where your money needs to go.
KING: And track and modify spending.
BRIDGFORTH: Well, once you create the plan, then you also need to know how well did I do in sticking to the plan?
So you want to be able to determine how well you did and analyze it and then make the modifications that are necessary.
KING: Reduce expenses, increase income.
How do you increase income?
BRIDGFORTH: Oh, there -- in my book, "Girl, Get Your Credit Straight," I have a chapter with 101 ideas of how you can increase your income.
BRIDGFORTH: So there are lots of different things that people can do. And it's important to do that.
KING: John, does all that make sense?
ASSARAF: It does make sense. The challenge is...
KING: Do we have the wherewithal to do it?
ASSARAF: Well, it makes sense from a logical perspective. But people don't do things that are logical. People do things that are emotional. And if they're not habitually doing those types of things, now we're adding new habits to their behavior patterns and that doesn't happen for more than two or three or four days.
So part of what I would add to that is get some help. Get some outside help, some counseling, so people can really help you.
You know, somebody who Jeff mentions is great. There's another company called propertysolutionsofamerica.com that are great individuals that will help people get the...
KING: It's out there.
ASSARAF: ...get them into.
KING: Help is out there?
ASSARAF: Help is out there. Absolutely.
KING: Next, we're going to meet a family on the verge of losing their home.
Will they have a roof over their head next week or is it too late?
You're watching LARRY KING LIVE.
KING: Are you on the verge of losing your home? That's our quick vote question tonight. Go to CNN.com/larryking right now and weigh in. Sad story now. We go to Tallahassee, Florida. Standing by, Pamela and Quentin Allen. The Allens are four months behind on their mortgage. With them is Dionne Meyers, their attorney and director of Flash, that's the Florida Attorneys Saving Homes. That's their baby, Haley.
How did you get behind, Quentin? What happened?
QUENTIN ALLEN, LATE ON HOME PAYMENTS: Well, I -- basically, the economy around here -- I was building residential homes. Around January, I lost all my contracts, any contract that I had. I -- basically, I lost -- that's pretty much what happened.
KING: Pamela, your home was built for you, right?
PAMELA ALLEN, LATE ON HOME PAYMENTS: Did you say was our home built for us?
P. ALLEN: No, it was not. We actually bought it.
KING: Oh, you bought it. I'm under a misapprehension then. You bought the home for how much money?
P. ALLEN: I think the house was listed at 175. After closing costs, financing, it was around 179.
KING: And you were both working? Quentin?
P. ALLEN: Yes.
Q. ALLEN: Yes.
KING: Both of you were working. When you had the baby, did you quit work, Pamela?
P. ALLEN: Well, I continued to work from home for quite some time. Then I looked into the cost of day care, which is -- a decent day care around here is 600 dollars a month. And we realized financially that it wasn't in our best interests to put her in day care, because I would be working to pay for day care.
KING: Did they advise you to refinance? Quentin?
P. ALLEN: We actually tried to refinance. We have a loan with Chase Home Finance. We called them before any of this -- before we started going downhill to tell them our situation. We then tried to refinance. They basically told us we did not have enough equity in our home and that we already had a good interest rate, and that there wasn't anything they could do for us. They did not offer us a repayment plan.
KING: Dionne, how close are they to foreclosure?
DIONNE MEYERS, FLORIDA ATTORNEYS SAVING HOMES: Well, Larry, they're about a couple weeks away. And it's really unfortunate. But Flash, Florida Attorneys Saving Homes, Larry, first started when our chief financial officer, Alex Cync (ph), approached the Florida board of governors on February 1st and said to the Bar, it takes a lawyer to solve the problem, the avalanche of foreclosure that's plaguing Florida.
I would say, Larry, almost immediately, the Florida Bar, the Florida Bar Foundation, Florida legal services, our office, the Real Property Probate and Trust Law Section of the Florida Bar, almost -- a little over 10,000 lawyers stepped up to the challenge, Larry.
On June 25th of this year, we launched our hotline. The whole purpose of Flash, Larry, is to save homeowners --
KING: What's going to happen to the Allens? What's going to happen to them?
MEYERS: What Flash has been able to accomplish, Larry, is pair this couple with an attorney, Attorney Sheron James (ph), who is going to help and negotiate on their behalf with the lender. We're hoping -- it's the goal of Flash, Larry, to save the home so that all of Florida's homeowners can be saved from this foreclosure crisis.
KING: Hold it a second. Jeremy Brandt, is that the way to do it?
BRANDT: Yes, I'm not familiar with the Flash --
KING: Hold it, I'm talking to Jeremy. I'm sorry, Jeff Lewis, who deals with these things all the time. Then I'll get to you, Jeremy. Is that the way to do it?
LEWIS: It's unfortunate to say, but it's a little late for these people. I'm really sorry to say that, but it's looking a little late for these people. We can use them as an example and hopefully get started much, much earlier in the process. I home to god something can happen for them, but I'm a little worried that's it's kind of like the final hour.
KING: You have a phone number?
LEWIS: I do. I have a counseling agency number, which is non- profit, which is 1-888-995-HOPE. You can also go online, at www.nw.org. You can at least try that route. I wanted to bring up something else. I have a friend of mine who lost her job for three months, could not make the payments on her condo. She called the lender. The lender said, we will not work with you until you come become behind in your payments.
She was very smart. She called her credit card companies. They deferred her credit card payments. She called Ford financial. They deferred her car payment. She was able to use the money she would normally use to pay the credit cards and her car payment, used it to make her condo payment, was able to save her condo and she got a job three months later.
KING: Jeremy, do you think our couple can be helped?
BRANDT: Absolutely. I think the most important thing, which it sounds like they're in the process of doing, is talking to their bank, being very realistic about the situation, laying out the finances for them, and asking the bank to work out a repayment plan on the loan. It sounds like they originally contacted the bank before they were behind in payments. As you can imagine, the bank isn't very interested in doing anything when they think somebody is going to keep making payments on their loan.
ASSARAF: There's a potential problem with that as well. If the house is not worth as much as the mortgage is, and they defer their payments, the banks will actually tack on the difference between what the mortgage statement now, what the actual payment that they're going to make is to the actual loan. So they're going to have an increasing loan to value ratio. That's not a great scenario to be in unless you know for sure the property's going to go up.
KING: Quentin, do you think you're going to get through this?
Q. ALLEN: Yes, I certainly hope so.
P. ALLEN: We're very optimistic, Larry. We're very optimistic. We need a refinance that's going to lower our payments and then we would probably be out of this situation.
KING: Jeremy, thanks for being with us. The panel and others will be returning. Who's to blame if you can't pay your mortgage? We'll talk about it after the break.