Posts Tagged ‘Mortgage Lenders’
Congress holds mortgage limits at nearly $730K
Congress has extended a policy that allows homeowners in pricey real estate markets to secure government-backed mortgages of nearly $730,000. Lawmakers have voted to keep the maximum size of loans guaranteed by Fannie Mae and Freddie Mac and the Federal Housing Administration at the current level through the end of 2011. Those limits apply in expensive areas like New York and San Francisco. Without the change, the limits would have fallen to about $625,000. The limit was $417,000 before 2008 and remains at that level in most of the country. The measure was included in a temporary spending bill that lawmakers sent to President Barack Obama early Thursday. Real estate agents, mortgage bankers and homebuilders lobbied to keep the upper limit in high-priced markets, arguing that the housing market would suffer if the limits were not extended. Critics argued that lower limits would help wean the housing market off government support. Keeping the current limit will help about 60,000 borrowers annually, estimated Mahesh Swaminathan, a mortgage analyst with Credit Suisse. Even though relatively few borrowers will be assisted, Guy Cecala, publisher of trade publication Inside Mortgage Finance, said lawmakers are focused on keeping the struggling housing industry happy. “Nobody wants to oppose or upset the Realtors and the homebuilders in an election year,” he said. Anything above the limit set by Congress falls into a category known as “jumbo” loans. They made up 5 percent of the mortgage market this year, down from a typical level of about 18 percent, according to Inside Mortgage Finance, a trade publication. During the financial crisis, mortgage lenders became far less willing to make those loans. In December 2008, borrowers who wanted a jumbo loan were paying 1.8 percentage points higher on their mortgage rates than conventional government-backed loans, according to financial publisher HSH Associates. That gap narrowed as the crisis eased. As of last week, borrowers who receive jumbo loans were paying a premium of 0.8 percentage points, according to HSH. That’s still above a pre-crisis level of 0.25 percentage points. AP Logo Copyright © 2010 The Associated Press, Alan Zibel
Communities to get first shot at foreclosed homes
Major mortgage lenders will now give state and local governments the right to buy foreclosed properties before they go on the market, giving them “a leg up” on speculators who have often thwarted local redevelopment efforts, Housing Secretary Shaun Donovan announced Wednesday. The First Look program will give communities a 48-hour heads up on foreclosed properties and the ability to buy them at a 1 percent discount, Donovan said. The effort is intended to help improve the $7 billion Neighborhood Stabilization Program, he said. “First Look is good for our housing market because it will bring much-needed speed” to the sale of bank-owned homes, Donovan said. Data show that vacant homes are more than three times more destructive to neighboring home values than those early in the foreclosure process. USA TODAY reported in July that more than $1 billion in Neighborhood Stabilization Program funds were unspent two years after Congress authorized the program. Short staffing and confusion over rules were partly to blame, but local governments also said lenders wouldn’t deal their foreclosed properties. Often, cities can’t move as quickly as private companies in buying homes – especially in highly visible areas or where they’re trying to assemble multiple properties in a land bank. “You can’t be successful in neighborhood stabilization unless you control all the pieces on the chess board,” said Craig Nickerson, president of the National Community Stabilization Trust, which runs the clearinghouse. The participating mortgage lenders account for 75 percent of foreclosed homes, Donovan said. They include Bank of America, Chase, Citibank, Wells Fargo and Freddie Mac. The banks won’t offer all their foreclosures. “We’re not going to run all our inventory through this engine,” said Steven Nesmith, senior vice president of Ocwen Financial Corp. He said about 20 percent will be offered to governments and non-profits. The plan might come too late to help communities involved in the first round of funding. Many have just days to write contracts or risk losing their federal funding. In all, 143 communities have less than a month to spend their federal money. If they don’t, the Department of Housing and Urban Development will freeze their unused funds – as much as $354 million nationally – and could take the money back. Palm Bay, Fla., has until Friday to spend its $5.2 million, and might fall $200,000 short. “Just with our purchasing requirements, we do not move as quickly as the private sector,” said David Watkins, the city’s growth management director. If First Look had been available from the beginning, he said, “we might be at least three or four months ahead of where we are now.” © Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Gregory Korte
Higher closing costs may not be
A new federal rule this year requiring mortgage lenders to give borrowers reliable estimates of closing costs appears to be working – whether it’s also costing borrowers more money is uncertain. A recent survey by Bankrate.com found that, on average, origination and third-party fees on a $200,000 purchase mortgage added up to $3,741 – a 37 percent jump over last year’s average of $2,739. The fees can include appraisals, credit reports, a closing or settlement attorney and surveys. Some housing experts say costs are rising because lenders have had to hire more staff to comply with the requirements of the Jan. 1 rule. That includes auditors, inspection experts and others who make sure estimates are accurate. “Lenders have had to hire compliance people,” David Leoncavallo, president of GFEazy, a Salt Lake City provider of compliance and other data for lenders. “To go up from $2,700 to $3,700 overnight is insane. Consumers should be upset.” But others say closing costs haven’t gone up. Rather, they say, the estimates simply seem higher because they more accurately reflect actual costs that buyers pay. “Before, it wasn’t an accurate assessment of closing costs,” says Tim Dwyer, president of Entitle Direct, a direct-to-consumer title insurance service. “Now, it’s a more accurate portrayal. Actual closing costs have not increased. The estimates have gotten closer to the actual costs.” The good-faith estimates also are aimed at protecting consumers by ensuring that lenders don’t lowball the numbers, says Vicki Bott, deputy assistant director of the Department of Housing and Urban Development. “Consumers get more accurate estimates upfront,” she says. “It’s not an increase in closing costs.” One reason lenders are ensuring accurate estimates is that, in many cases, they must now make up the difference between the estimate provided and the actual total. Denis Orloff, a sales associate with Rhodes Van Note & Co. Realtors, says fees have risen because more people are needed to process the same number of loans. He estimates borrowers pay $800 to $1,500 more than two years ago to have their mortgage application processed. Bob Davis, executive vice president at the American Bankers Association, says some costs have gone up because it takes more time for lenders to comply with the estimates. He also says new estimates have to be issued if, for example, the terms of a loan change. “It’s true the new requirements are more complicated and take more time to comply with,” Davis says. “Anything that takes more time and effort adds an element of cost, but it’s not significant.” © Copyright 2010 USA TODAY
How Can I Save My House?
The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you’re having trouble making ends meet because of job loss, death, divorce or other financial problems. Or maybe you’re one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate – and now you can’t afford the new, higher payments. Here are the scenarios you will face and solutions to them. Renegotiate If you wait it out, all mortgage lenders are eventually going to be in very difficult positions especially if you owe close to or more than the current value of the house. Eventually your lender will be forced to do whatever they can to keep you in the home, even if it means forgiving 50% of your loan value. Life is not fair, and it’s not going to be fair when the guy next to you gets his mortgage cut in half while you paid full price. If your lender will not budge, then ask to refinance at a lower fixed rate. If your lender still will not budge, as most lenders are only negotiating with delinquent borrowers, try stop paying your mortgage for a month and then ask again. Rent If the house is your primary residence, consider renting a room to a college student. If there is a college in your area, just put up flyers on the college bulletin boards advertising your room for rent – emphasizing the many advantages of living in a house vs. a dorm room. College exchange students are students from other countries that visit the US by attending a US college. They usually prefer to stay in a house close to the college in order to take full advantage of their stay by learning everything they can about our culture by living with a family. You can also ask friends and family if they or someone they know of needs a cheap place to live. You can also market the benefits of living in a house to apartment renters, by posting flyers on apartments in your area. You can offer benefits like, a garage, a yard with a nearby park, a private entry or allowing pets. There are a lot of people in apartments that would love to enjoy some of the benefits of home owners. Double Up Find another family to live with you and share the costs of your home. This works great if you have a house that has a mother in law suite or a finished basement because it gives each family the privacy they need. Children will love the idea of more kids to play with and if you’re lucky you can cut babysitting costs for both families from time to time. This idea can also cut the chores in half as both families help to maintain the house. To find a great family to double up with, just ask around your friends, family, church or other social groups that you’re involved in. Start a Home Business Leverage your home as office space to start a home business. Use an extra room for your home office. Your home business wouldn’t have to consume all your free time, just enough to help you pay your mortgage. I suggest that you start small and develop a plan. The Internet is one of the best places to look for home businesses. You could try selling things on eBay.com or recruiting people for Monster.com or affiliate marketing for Amazon.com or any number of things. You could also call a few local businesses and ask if there is anything you can help them with from your home office, like accounting, data entry, virtual assistant, letter writing or dictation. Foreclosure If you bought your house with little or nothing down and it’s worth less than your mortgage loan, your best option may be foreclosure. You have nothing to lose but your credit – which will be restored with time anyway. But, if you have a significant amount of equity (money) in your house, then foreclosure or letting the bank or mortgage company take it back is a much harder choice- and in this case you need to look at your long term financial outlook. If you have poor job security, then you should consider foreclosure now rather than sometime in the future. There are lots of houses for rent and the cost of renting is low because of the many houses that are not selling. If you are planning to let you house be foreclosed, call your lender after a few months of missing payments and ask for a non-recourse foreclosure, which means the bank accepts the house as full payment and gives up their right to try to get any more money from you in the future. You should consult a licensed professional before making any of these decisions. For more information regarding this topic, contact the article’s writer Lindsey Huntington lindsey_huntington@yahoo.com or www.CentralFloridaRealEstateDeals.com
Banking execs say gov’t needs to back mortgages
The call from business for less government has a notable exception: the mortgage market. The Obama administration invited banking executives Tuesday to offer advice on changing the government’s role in backing the mortgage market. While they disagreed on the exact level of support needed, the group overwhelmingly advocated for the government to maintain a large role in the $11 trillion market. If the government pulled out, millions of Americans wouldn’t be able to convince banks to take the risk of giving them home loans, the executives said. Ending government support could lead to a spike in mortgage rates. That could deter many from buying homes, and banks, mortgage lenders and Realtors would lose money over time. “It will take on a different form, but there is a role for government,” Kevin Chavers, a managing director at Morgan Stanley, said in an interview. Most attendees agreed the time had come to do away with Fannie Mae and Freddie Mac. Rescuing the two mortgage giants has cost the government nearly $150 billion so far. Bill Gross, the managing director for bond giant Pimco, suggested Fannie and Freddie should be formally merged into the government. He also called on the administration to allow millions of homeowners to automatically refinance their loans to help stimulate the economy. A more widely held view at the conference is for the government to do away with Fannie and Freddie, and instead provide a guarantee that mortgage investors get paid even if borrowers default in droves. Figuring out a plan for Fannie and Freddie is also a political challenge for President Barack Obama and his party. Republicans have seized on the administration’s management of Fannie and Freddie to illustrate Democrats’ push for growing the reach of the federal government. While the banking industry has joined Republicans in criticizing the administration for instituting stronger regulations of Wall Street, they support the government playing a large role in the mortgage market. “There would be a lot of homeowners who wouldn’t be able to afford homes because we’d be dealing with higher interest rates,” said S.A. Ibrahim, chief executive of mortgage insurer Radian Group Inc. Treasury Secretary Timothy Geithner pledged on Tuesday “fundamental change” to the structure of Fannie and Freddie. The mortgage giants profited tremendously during good times but burdened taxpayers with losses when the housing market went bust. He said the two companies weren’t the only cause of the financial crisis, but made it worse. Fannie and Freddie buy mortgages and package them into securities with a guarantee against default. They have ensured that millions of Americans can get home loans – even after the housing market collapsed. The two companies, the Federal Housing Administration and the Veterans Administration together backed about 90 percent of loans made in the first half of the year, according to trade publication Inside Mortgage Finance. Geithner did not offer a specific exit strategy for Fannie and Freddie. But he said, “It is our responsibility to make sure that we create a system that is not vulnerable to these same failures happening again.” The administration is expected to offer a plan next year. One option that dominated the discussion Tuesday is for the government to collect money from the mortgage industry and set up an insurance fund that could be used to cover losses during a severe downturn. This would prevent taxpayers from having to foot the bill for the industry. Some want the administration to take more dramatic actions. Gross said Fannie and Freddie’s function should be consolidated into one government agency that would issue mortgage-backed securities. Without such a solid guarantee, mortgage rates would soar, he warned. He also told the administration that the economic recovery required more government stimulus, particularly in the housing market. He suggested the administration push for the automatic refinancing of millions of home loans backed by Fannie and Freddie. Refinancing those loans at the lowest mortgage rates in decades would give Americans more money each month. That would boost consumer spending by $50 billion to $60 billion and lift housing prices by as much as 10 percent, he said. Without such stimulus in the next six months, Gross said, the economy will move at a “snail’s pace.” Obama officials say they do not plan to enact such a program, which has been the subject of intense rumors on Wall Street in recent weeks. Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadca
3 foreclosure law firms probed
Three South Florida law firms that represent mortgage lenders are being investigated by the state attorney general over allegations they forged documents filed with the courts in foreclosure cases. The Florida attorney general issued the subpoenas this week, requesting reams of paperwork by the end of the month from attorneys working in the one of the top foreclosure areas of the country. The investigation targets firms considered to be handling the largest number of foreclosures in Florida on behalf of lenders, in some cases handling thousands of cases a month. They are the Law Offices of David J. Stern in Plantation; the Law Offices of Marshall C. Watson in Fort Lauderdale; and Shapiro & Fishman, which has offices in Boca Raton and Tampa. The subpoenas request documents going back to at least Jan. 1, 2008. Attorney General Bill McCollum said the firms may have presented fabricated documents in court to obtain foreclosure judgments against homeowners. Thousands of final judgments of foreclosure against Florida homeowners may have been the result of improper actions by the firms under investigation, said McCollum, a Republican who is a running for governor. He likened their work processing so many foreclosures to a mill, churning out foreclosures in large volumes. “Law firms are not immune to Florida deceptive and unfair trade practice” laws, McCollum said during a press conference. “I want law firms to really think about it before they go through this volume.” The attorney general’s office was alerted to possible problems by attorneys for homeowners, said Mary Leontakianakos, director of the economic crimes division. “I can tell you having seen some of this paperwork there is clearly some concern,” she said. Leontakianakos said that in the best-case scenario, the mistakes could be sloppiness; in the worst, fraud. Jeffrey Tew, a Miami attorney who represents Stern’s firm, said foreclosure proceedings are well supervised, leaving little room for paperwork mistakes. “Every foreclosure file is personally supervised by a circuit judge who is there to do one thing: Make sure the rights of the borrower or lender are protected,” Tew said. He added that there have been occasional errors, but that is to be expected at a firm that employs 1,200 people and worked on as many as 75,000 foreclosure cases in the last year. “We’re convinced that David’s law firm has been acting appropriately,” Tew said. “We don’t have any concern about the outcome.” Stern was sued in federal court in late July by a homeowner. The lawsuit accuses Stern of generating fraudulent mortgage assignments in foreclosure cases, and Oakland Park resident Ignacio Damian Figueroa is seeking class-action status for the case. Watson’s firm declined to comment. West Palm Beach attorney Gerald Richman, who represents Shapiro & Fishman, said there are no grounds to investigate the firm. The firm will cooperate with the investigation, he said. “We don’t have any information that there’s anything been done by Shapiro & Fishman that’s been improper or would require investigation,” Richman said. Copyright © 2010 The Miami Herald, Nirvi Shah. Distributed by McClatchy-Tribune Information Services.
Risks abound if too many refinance
Lots of homeowners are frustrated these days that they can’t seem to get a mortgage refinance even though interest rates are at historical lows. It turns out they’re not alone. Plenty of people on Wall Street would also love to see a boom in refinancing activity, saying it would be a near-painless way to inject more money into the economy. If more people can refinance, the thinking goes, the more cash they’ll have to spend. Those economists and analysts calling for a mass mortgage reset say it could be engineered by the government, which controls the giant mortgage lenders Fannie Mae and Freddie Mac. Have them loosen underwriting standards and give breaks on fees, and more people will qualify to refinance. Here’s what the Obama administration says about that idea: Don’t get your hopes up. And that’s a good thing, since ushering in a refinancing boom would only be a short-term fix for the housing market and the economy that would have long-term consequences. A widespread refinancing of loans would mean reverting to looser lending standards, one of the things that got us into this mess. It could also boost mortgage rates for new borrowers and force U.S. taxpayers to shoulder more risk, since they technically own Fannie and Freddie. “At some point, we have to ask ourselves how much more can we ask taxpayers to do to support people staying in their homes,” says Dean Baker, co-director of the left-leaning Center for Economic and Policy Research in Washington. Wall Street has been abuzz in recent weeks over the possibility of the government engineering a broad refinancing of loans. Mortgage rates for a 30-year fixed home loan are now 4.49 percent, the lowest it has been since Freddie Mac began tracking rates in 1971. But millions of borrowers haven’t been able to benefit from those low rates. A big reason has to do with the fact that falling housing prices have left many borrowers with little or no home equity, which is also known as being “underwater.” As a result, they can’t qualify for refinancing. Others are deterred from refinancing by strict lending standards and the high fees that come with it. To get more mortgage resets done, some well-known economists and analysts at firms like Morgan Stanley and Goldman Sachs say the government should encourage a refinancing wave by adjusting lending policies at Fannie and Freddie. The mortgage lenders were taken over by the government two years ago. They own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. They buy home loans from lenders, package them into bonds with a guarantee against default and sell them to investors. The savings from a major mortgage reset could be significant. Allow someone with a $200,000 mortgage at 6 percent to refinance down to 4.5 percent, and suddenly there is $3,000 a year available to be plunged back into the economy. Add that up across millions of people, and you have what Morgan Stanley economist David Greenlaw calls a “slam dunk stimulus.” The government is already trying to help borrowers refinance, but its existing program has been a bust. The Home Affordable Refinance Program, or HARP, is directed at homeowners whose loans nearly or completely outsize the value of their homes. The government had hoped HARP would lead to millions of mortgage resets, but only a few hundred thousand have been done. The problem is that there are too many restrictions when trying to refinance under HARP. That’s why some people on Wall Street want the government to roll out a less restrictive program to get more mortgages resets done. Regardless of the pressure coming from homeowners and some on Wall Street for the government to ease refinancing rules, Treasury Department spokesman Andrew Williams tells The Associated Press that “the administration is not considering a change in policy in this area.” The government sees where the pitfalls are. Taxpayers have already pumped $145 billion into Fannie and Freddie over this last two years, and widespread refinancing now could raise that burden. Fannie and Freddie would very likely see their earnings decline and writedowns on their mortgage securities go up. In total, a mass mortgage reset could cost the mortgage lenders $75 billion, according to research from investment firm Keefe, Bruyette & Woods. Let’s also consider that a refinancing boom could have unintended consequences. The pace of foreclosures might not slow. A lower interest rate still might not be attractive enough for deeply underwater borrowers to stay in their homes. To some, it is not worth paying any money toward a depreciating asset, regardless of the interest rate. New borrowers could also face higher interest rates. A large refinancing wave would depress the value of mortgage-backed securities, making them less attractive to investors such as pension funds and foreign governments. Weak demand for those securities could lead to higher mortgage rates because lenders could have a harder time selling off their loans to investors. A short-term refinancing wave could help stabilize the housing market now, but it could also hurt home sales later. Homeowners who are able to lock in a once-in-a-lifetime interest rate could be deterred from moving in the future. Hitting the mortgage reset button could put more money into homeowners’ pockets today, and would also give the economy a quick jolt. But the ultimate costs may be too high. Copyright © 2010 The Associated Press, Rachel Beck, AP business writer.
Evaluating Your Foreclosure Defense Options
In the wake of the greatest financial crisis since the Great Depression, many people have found it difficult to keep up with their mortgage payments. Factors like high unemployment have caused financial distress for many households. When a borrower is unable to make mortgage payments on time, banks and other lenders can take legal action to repossess and auction off that person's home in a process known as foreclosure. If you are struggling with heavy debt or facing foreclosure, you are not alone. Many people do not realize that, with the help of an experienced foreclosure defense attorney, they can put an end to the foreclosure process. Attorneys can help their clients evaluate their situations and avoid the fate that has disrupted the lives and taken the homes of millions of people. It is an unfortunate truth that many homeowners every year could have protected their homes from an impending foreclosure. Had they explored their legal options fully, many homeowners could have protected their livelihoods from foreclosure. An experienced foreclosure defense attorney has a deep and detailed knowledge of the foreclosure process and what can be done to bring it to a halt. By evaluating your situation thoroughly and giving weight to all of your options, you and your attorney may be able to put a stop to the foreclosure and reorganize your debt. Negotiating with mortgage lenders can help you find a new repayment arrangement. You can work to reduce, eliminate, or consolidate your debts and finally return to a normal life. Living under the threat of foreclosure is a profoundly stressful and emotionally difficult time. If you are struggling to protect your home from the hands of mortgage lenders, an foreclosure defense attorney can help you make the right decisions and may be able to help you safeguard your home from repossession. For more information, visit the website of the Boston foreclosure defense attorneys of Spirn & Associates today. Article Source: http://EzineArticles.com/?expert=David_S_Caldwell
The Story Behind Repo Houses (And Why They Are Good Buys)
Foreclosure houses are flooding the market, creating a niche of their own in the real estate industry. They are cheap buys and many people have recognized their investment potentials. Why Foreclosures Houses are Cheap Buys: Repossession houses are on the market for sale at very low prices. Basically, these houses were foreclosed by banks and mortgage lenders because the homeowners defaulted on their mortgage. To recover the unpaid balance of the loan, banks and mortgage lenders do not have a choice but to foreclose the properties. On the part of banks, many want to sell the foreclosed properties immediately to recover the unpaid loan balance. Banks also want to cut their losses because they know that the longer a foreclosed property remains unsold on the market, the bigger their losses will be. Also, having a long list of foreclosure homes on their inventory would not look good on their business image. If you are planning to buy a distressed property directly from a troubled homeowner, you can also expect a bargain. Many foreclosure property owners prefer to avoid the trouble and stress of getting into the foreclosure process. This is the primary reason why they are willing to sell their homes at real bargain prices. Pre-foreclosure sale is also one way to save their credit rating which will be completely ruined if they allowed banks or mortgage lenders to foreclose on their houses. The Many Opportunities of Foreclosure Houses: Foreclosure houses represent many possibilities for smart investors. They buy these properties at almost 50 percent below their market value, do some minor repair and re-sell them at a profit. Some rent these properties while waiting for the real estate market to bounce from its current slump. For other people, foreclosed homes are the only option they have to own properties. The cheap prices allow them to finally be able to afford to buy homes they can call their own. And as long as you do some research before making a buying decision, you can be sure that repossessed houses are the best buys to make. Joseph B. Smith has been educating buyers on the finer points of Repossession Houses at Repo-Homes.com for over five years. Contact Joseph B. Smith through Repo-Homes.com if you need help finding information about Repossession Houses. Article Source: http://EzineArticles.com/?expert=Joseph_B._Smith
