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FHA and the Subprime Lending Alternative

Many loan professionals consider a FHA home mortgage as a subtype of a subprime mortgage. The fact is that finding a no down-payment home loan for borrowers with less than perfect credit is not as easy as it once was. However, while both FHA mortgages and subprime loans are designed to help those that could not normally afford a home get on the market for one (such as those with poor credit), there are important differences that should be considered. One of the key differences between FHA mortgages and traditional subprime loans is that FHA financing is insured by the U.S federal government. So basically, our tax dollars are being used with these government-backed home loans. The FHA was created during the Great Depression to help Americans become homeowners and the program has been helping borrowers with challenging situations get financed ever since.

After the subprime debacle in 2006, FHA mortgages are in fact one of the last option for subprime lending, as many lending practices were cut off as a result of the housing bubble. A subprime mortgage can definitely help those who want a home afford one, but one of the only subprime loan techniques still in practice is the FHA loan, although it is certainly a safer practice.  Read the Original article > The Truth behind Subprime and FHA Loans.

Posted in FHA Mortgage News, Subprime mortgage news.

By admin
March 1, 2011

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Loan Refinance Options After a Bankruptcy

Millions of borrowers are suffering with bad credit scores since the subprime mortgage crisis rolled in five years ago. The U.S. Department of the Treasury estimated that 8 to 13 million foreclosures will occur between now and 2012 unless subprime lenders expand bad credit refinancing and mortgage relief for borrowers who are stuck with an adjustable rate loan. If you have exhausted all home mortgage refinancing options, consider mortgage relief. Many borrowers have had success getting forbearance or a note modification that essentially accomplishes the same goal as a refinance. The reality is that many banks would rather extend loan relief than go through with a foreclosure.  Make sure that you refinance into a mortgage that you can afford because rates could go up, home values can go down and you may not qualify for another loan when you need it most.

Most bad credit lenders have a different policy when it comes to foreclosure prevention and refinancing after a bankruptcy, so you will have to talk to an experienced loan officer before throwing in the towel.  Read the entire article > Mortgage Refinancing After a Bankruptcy

Posted in Bad Credit Mortgage, Subprime mortgage news.

By admin
March 1, 2011

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New Plans to Improve Fannie Mae and Freddie Mac

As the dust has settled on the housing and mortgage crisis, several groups are considering new reform plans for Fannie Mae, Freddie Mac and the Federal Reserve. The fact is that is wasn’t just subprime home loans that defaulted.  Many conforming, jumbo and FHA loan activity saw huge increases in foreclosures and delinquencies.  Sure the bad credit mortgage programs failed miserably, but the dramatic rise in prime mortgage defaults underlines the fact that financial crisis was fueled by a lot more than subprime mortgages.

A new report from a liberal think tank with close ties to the Obama administration provides one of the most detailed mortgage industry road maps yet for the creation of a home financing entity to succeed Fannie Mae and Freddie Mac. This new home loan proposal is slated to be unveiled Thursday by the Center for American Progress, crystallizes the approach that leading liberal policy makers favor for dividing up the myriad functions that have been filled by Fannie and Freddie. The paper calls for bringing “as much private capital as possible” back to the mortgage market, where more than nine in 10 new loans today carry some kind of government backing. Under the proposal, privately-owned firms chartered by a federal regulator would issue mortgage-backed securities that carry explicit government guarantees. (By contrast, Fannie and Freddie were chartered by Congress and their securities and corporate debt carried an implied government guarantee until they were rescued by the U.S. in 2008.) Fees charged on mortgage bonds issued by the firms would finance a catastrophic risk insurance fund, similar to how the Federal Deposit Insurance Corp. charges fees to banks to help finance rescues of failed institutions. If a mortgage firm became insolvent, the government would guarantee payments to investors on the guaranteed mortgage securities, but the firm itself wouldn’t be rescued. Multiple firms would issue the same mortgage security, allowing bonds to continue trading if one issuer failed.  > Read the original Wall Street Journal Article

Posted in Subprime mortgage news.

By admin
January 27, 2011

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Bank of America Announces More Mortgage Defaults

Symbolizing the hang-over of the subprime mortgage debacle, Bank of America reported a 4th quarter loss of $1.2 billion, or 16 cents a share, as write-downs and charges tied to the bad credit mortgages and delinquent loans.  

Brian T. Moynihan, who took over as chief executive of Bank of America one year ago, has spent much of that time cleaning up the fallout from a series of disastrous acquisitions in recent years, including the 2008 purchase of Countrywide Financial, the subprime home loan specialist whose practices typified the excesses of the housing boom and ensuing bust.

Indeed, the earnings report included a series of one-time losses, most notably a $4.1 billion charge for mortgage repurchase claims, including the impact of an agreement late last month with Fannie Mae and Freddie Mac, the government-sponsored mortgage giants, to buy back troubled loans. In addition, Bank of America took a noncash charge of $2 billion to reflect a write-down of goodwill on its acquisition of Countrywide.

Posted in Subprime mortgage news.

By admin
January 21, 2011

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Fannie Mae and Freddie Mac Would Disappear in Proposed Bill

Bloomberg reported yesterday that Rep. Jeb Hensarling, who is the vice chairman of the House Financial Services Committee, plans to propose new home loan legislation that would do away with Fannie Mae and Freddie Mac within five years. Freddie Mac and Fannie Mae have been under the conservatorship of the FHFA since 2008, when the government seized the two quasi-governmental agencies in order to prevent their insolvency.  Since that time, they have drawn more than $150 billion from the Treasury.  The government has pledged an unlimited amount of funds to backstop their losses.  Estimates of the total costs of the bailouts vary, but most believe the whole figure to be somewhere between $200 and $400 billion.  Freddie and Fannie either own or guarantee over 90% of home mortgages in the United States.

 Fannie Mae  Freddie MAC

Mortgage loan refinancing guidelines continue to be tightened, because loan defaults continue to rise. “The financial crisis was caused by failed federal policies that strong-armed, incented, and cajoled financial institutions into loaning money to people to buy homes that they couldn’t afford to keep.  At the epicenter of this were Fannie Mae and Freddie Mac.”  I hate to think this line of thinking is the motive behind this proposed bill. This is a thoroughly discredited notion.  Fannie and Freddie absolutely bear some responsibility for the financial crisis, but the fact of the matter is that private lenders originated the vast majority of Alt-A and subprime mortgages.

Posted in Home Financing Articles, Mortgage News, Published Article.

By admin
January 21, 2011

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Will a Foreclosure Moratorium in California Help?

Even with the lowest mortgage rates in California in 40-years, many homeowners do not qualify for affordable refinancing. In the Golden state, most California lenders foreclose outside of court. The bank tells a trustee, which may be an arm of the bank, that it’s time to foreclose, says attorney Pamela Simmons, a partner with Simmons & Purdy in Soquel (Santa Cruz County), who works for borrowers.   Because there usually is no court involved, the court documents allegedly robo-signed in other states generally don’t exist in California. But California and other states with non-judicial foreclosures are seizing on the headlines to propose moratoriums on other grounds. Not since the subprime mortgage crisis of 2006 have we seen so much disarray in the housing sector.  Most bad credit lenders have folded so homeowners have been reaching out to FHA lenders in an effort to refinance into a lower payment.

 Jerry Brown California Attorney General Jerry Brown has called on GMAC and Chase to stop foreclosing on homes in California unless they can immediately prove they are complying with a state law.

This law prohibits lenders from recording default notices on mortgages made between Jan. 1, 2003, and Dec. 31, 2007, unless the lender (with certain exceptions) first tries to contact the borrower to assess his or her situation and explore options.  However, a state appeals court recently ruled that the California mortgage lender in this situation does not have to say, “Here is the day and time I called the borrower,” it can just say it contacted them, says Roger Bernhardt, a law professor at Golden Gate University. In a victory for lenders, the state Supreme Court refused to hear the case.

Brown spokesman Jim Finefrock says “there have been discussions” with GMAC and Chase. “Both have been cooperative.”  Bernhardt would not be surprised to see state legislatures try to impose moratoriums, like they did during the Great Depression. California has already enacted two laws that delay foreclosures – one by 30 days and another by 90 days – beyond the traditional four months or more it takes to foreclose. “That’s the beginning of a de facto moratorium,” he says.

Mark Zandi, chief economist for Moody’s Analytics, told the Washington Post that document-processing problems could lengthen the foreclosure process for years and could have “macroeconomic consequences” if banks become unwilling to extend credit to households or to small-business owners who use homes as collateral.  Banking consultant Bert Ely says he hopes states “weigh the consequences” before imposing foreclosure moratoriums.   “If a foreclosure moratorium endangers the security interest the lender has in the mortgage, given that most mortgages are securitized and sold on a global basis, it would make it more difficult to put mortgages (from that state) into securitization pools unless they met really strict underwriting standards,” he says.

Posted in Bad Credit Mortgage, Published Article.

By admin
October 5, 2010

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Wells Fargo Dealing with Option ARM Loans

Wells Fargo saw a $28.2 billion reduction in unpaid principal balances on legacy payment option ARM loans last year, according to an investor conference presentation by the company’s CFO. A recent Wall Street Journal report indicates that Wells has been reducing payments for some underwater borrowers who originally took out negative amortization loans by offering them extended-term mortgage loans with interest-only payment options.

Wells Fargo also reduced its legacy credit-impaired commercial real estate portfolio by $5.6 billion year-to-year, said CFO Howard Atkins in a web cast presentation from New York. Wells inherited both the CRE portfolio and the negative amortization ‘Pick-a-Pay’ ARMs when it bought Wachovia in the fall of 2008. Mr. Atkins said that despite these negatives, the Wachovia purchase was beneficial. Wells improved its distribution network and diversified its financial offerings. The deal also allowed it to bolster its origination and servicing volumes.

Addressing questions about the company’s second mortgage exposure, Mr. Atkins said performance in that area is relatively good given that it includes some first-lien product and has strong underwriting outside of the third-party sector it exited a couple of years ago. When asked about HAMP mortgage modifications’ effect on home equity loan program, he said he would not take a position other than to note the company is exploring its options. Wells has completed more than 118,000 loan modification plans through the government’s Home Affordable Modification Program.

Posted in Bad Credit Mortgage, Foreclosure Articles, Home Affordable Modification Program, Home Financing Articles, Mortgage News, option ARM.

By admin
February 3, 2010

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Mortgage Relief Plan

The Treasury Department announced new changes in an effort to streamline burdensome paperwork required for its mortgage relief plan.  The changes to the problem-plagued program could help more homeowners successfully complete a loan modification.  Mortgage lenders will now be required to collect two pay stubs at the start of the process, and borrowers will have to give the Internal Revenue Service permission to provide their most recent tax returns at the same time, according to the people who declined to be identified because the details were not yet final.

Participating mortgage companies must acknowledge they received a borrower’s application within 10 days and approve or deny the application within 30 days. After that, borrowers will still be required to make three months of trial payments before the mortgage modification becomes permanent. Treasury officials are also working on a plan to give unemployed borrowers a break on payments possibly for six months but those details were not expected Thursday. A Treasury spokeswoman declined to comment.

With foreclosures at record-high levels, the Obama administration’s program to attack the crisis has been a disappointment. Only about 66,500 borrowers, or 7% of those who signed up, had completed the program as of December. The program is designed to reduce homeowner’s monthly payments by lowering current mortgage rates to as low as 2% for five years and extending loan terms to as long as 40 years.

Posted in Foreclosure Articles, Mortgage News, Published Article, Subprime mortgage news.

By admin
February 3, 2010

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5 Ways to Improve the Mortgage Market

As debate in Washington is revving up over the future of the home financing structure, the head of Freddie Mac offered a defense on Tuesday of the government-sponsored enterprise model that served as the foundation of the U.S. mortgage loan market for decades.  In a speech before the Detroit Economic Club on Tuesday, Freddie Chief Executive Charles “Ed” Haldeman Jr. also noted that the housing market, despite some signs of stabilization, faced some potentially rough headwinds from the supply of foreclosures in process.  While the nation may be “at last approaching a bottom” in housing, Mr. Haldeman said, “The big downside risk to all this is a large wave of homes now in foreclosure potentially hitting the market at prices that are destructive.”

Fannie and Freddie have reemerged as a bit of a political punching bag on Capitol Hill. Last week, House Republicans introduced a bill to establish federal pay scales for the company’s executives in response to pay packages approved for top executives on Christmas Eve. Meanwhile, Rep. Barney Frank, the Massachusetts Democrat who has long backed the companies’ role in supporting affordable housing, said at a hearing last week that he would recommend ultimately “abolishing” Fannie and Freddie as part of a wholesale revamp of the U.S. mortgage market.  Mr. Haldeman described Rep. Frank’s statement as “not helpful” during a question-and-answer session after yesterday’s speech. “I do get that he’s the decision maker but in this interim period, it wasn’t a great day for me, and it wasn’t a great day for our 6,000 employees who saw that headline,” he said.

$6,500 Tax Credit with FHA Loans for First Time Home Buyers. Negotiate and settle credit card debt without bankruptcy- Debt Settlement.

 

Freddie Mac has been through a particularly tough and uncertain year that saw the company without permanent executives for the top three executive jobs. Mr. Haldeman, who said he was a “real Barney Frank fan,” said the comments had nonetheless made it harder to “keep people energized and motivated.” He said he had already met with a subset of the company’s employees on Monday to address the comment. “It was a concern,” he said.  Rep. Frank’s comments were widely picked up on Friday, largely because of the eye-catching use of the word “abolish.” But his underlying viewpoint—that the government should conduct a wholesale re-evaluation of the housing-finance system—wasn’t entirely new from his previous statements on Fannie and Freddie.  Employees can take comfort in the fact that the Obama administration doesn’t appear to be in a hurry to refashion the companies anyway. In an interview with PBS last week, Treasury Secretary Timothy Geithner said it was unlikely that the administration would advance legislation this year addressing Fannie and Freddie, despite the fact that policymakers would take a “cold, hard look” at the home financing structure.

Since taking the helm of Freddie six months ago, Mr. Haldeman has made clear repeatedly that he and the company won’t be lobbying for a desired outcome. Since they were taken over by the government, Fannie and Freddie have ceased all lobbying activities.  But Mr. Haldeman said that if asked to provide input by policymakers he’d be sure to “remind” them of a number of “very important” functions the companies serve:  

We are the constant liquidity provider—the source of almost three quarters of the liquidity to the mortgage market last year. We are the “backstop bid.” That means our customers know there will always be a buyer for their loans—which gives them the confidence they need to keep lending in any environment and keeps prices more stable.  We deal with innovation in the mortgage market better than a purely government entity. And we are an important counter-cyclical influence that stays in the housing finance market even when purely private capital has pulled out. This has been proven by the events of the last two years.

Mr. Haldeman bracketed his remarks on the future of the housing-finance system with the caveat, “We don’t claim to be perfect.” He lauded efforts taken 18 months ago to beef up Fannie and Freddie’s regulator, and he said that additional regulation was “virtually certain.”

Still, he said that the companies’ ability to clean up the housing mess of mortgage loan modifications illustrated the companies’ continued commitment to a public mission. “We’re making decisions on [loan modifications] and other issues—without being guided solely by profitability—that no purely private bank ever could,” he said. Read the original article online.  Article was written by Nick Timiraos

Posted in Home Financing Articles, Mortgage News, Published Article.

By admin
January 27, 2010

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Risked Based Credit Replacing Subprime Loans

Like conventional lending, subprime mortgage loans have always been evaluated based on your credit score, combined loan to value and debt to income ratio, the rate was always significantly higher. Most brokers would recommend the refinance mortgages that make the most sense financially based on your present and future needs. Choose refinancing from conventional, government, second mortgage loans and credit line terms.  For home loan applicants, it has been a six-year wait, but the Federal Trade Commission and the Federal Reserve finally have come out with important consumer credit protection rules first required by Congress in 2003.  

In late December, the two agencies published regulations designed to safeguard loan applicants from needless overcharges on interest rates caused by erroneous or outdated information in their national credit bureau files. The rules require mortgage lenders to alert consumers whenever derogatory credit data cause them to be charged higher rates, higher down payments or less than optimal terms on a “risk-based pricing” system. Risk-based pricing tied to credit scores is standard practice for home mortgages, credit cards, auto loans and most other financial products offered to the public.  Generally, the higher your credit score, the lower the rates and fees you’re quoted. In most cases, the lower your credit score, the higher your costs of credit.   The problem, though, is that credit bureau files sometimes contain junk entries mistaken or outdated reports of late payments, unpaid bills, charge-offs and judgments that can severely depress credit scores. This is one of the reasons the credit repair industry continues to grow.  > Read the complete Washington Post article online.

Posted in Bad Credit Mortgage, Mortgage News, Published Article, Risk Based Mortgage Lending, Subprime mortgage news.

By admin
January 8, 2010

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Are Bad Credit Mortgages Holding the Housing Industry Hostage?

Housing is going to go down again in the first quarter of 2010,” said Steve Horne, chief executive of Wingspan Portfolio Advisors, a firm that facilitates loan modifications. “The real healing won’t begin until all these nonperforming bad credit home loans start trading in earnest, until we get these borrowers back on their feet.”  The subprime mortgage market has not recovered since its collapse in 2006.

David Lowman, CEO of Chase Home Lending, also thinks the mortgage market could run into trouble early next year, especially if the Federal Reserve ends its purchases of mortgage-backed securities, a strategy that has artificially supported liquidity and kept home mortgage rates at historic lows.   “A lot does depend on how long the government keeps its buying up,” he said. “Home mortgage rates are at all-time lows, but once the buying stops we’re going to come to a pretty hard stop. We’re likely to see a much smaller mortgage market after the 2nd quarter and later in 2010.”   “We still have a crisis in the number of people who can’t pay their mortgage, and we haven’t seen the peak of that yet. It’s going to weigh on us for several years,” he said.

The official economic forecast from the MBA isn’t so gloomy. Jay Brinkmann, the trade group’s chief economist, predicts sales of both new and existing homes will rebound strongly in 2010 as mortgage rates remain relatively low, although mortgage loan originations will fall as refinancing activity falls by more than 40%. “Housing starts will be up, but they will still only be half of what they were at the peak in 2007,” he said. “And sales will be up, but they will remain concentrated in the lower end of the market. There are still strains on the McMansion market.”

Despite the uncertainty of what will happen when the Fed pulls its support from the mortgage-securities market, Brinkmann said mortgage interest rates should still be relatively low in 2010, gradually moving up to just over 5 1/2% from just under 5% today.   “There are some green shoots – fewer houses on the market, rising sales and stable prices in some markets. But the environment is fragile right now,” said Barbara Desoer, president of Bank of America Home Loans and Insurance.

Posted in Home Financing Articles, Mortgage News, Published Article, Subprime mortgage news.

By admin
October 13, 2009

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Thrift Loan Originations Down

Mortgage New Daily reported that residential home loan originations tumbled at U.S. thrifts, while mortgage loan delinquency spiked and troubled assets grew. Still, the lending sector earned its first profit in seven quarters.

The Office of Thrift Supervision reported that thrifts originated $62.4 billion in residential home mortgages during the 2nd quarter.  Mortgage loan production fell from the first quarter’s $88.1 billion and tumbled from $107.5 billion in the 2nd quarter 2008.  Mortgage lenders and bank chartered companies have become more cautious as loan modification plans and foreclosures continue to mount.

Posted in Mortgage News, Subprime mortgage news.

By admin
August 28, 2009

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Avoiding Foreclosure Rescue Scams

Unscrupulous scam artists have been targeting distressed homeowners who have been having trouble paying their home mortgage each month. These so-called foreclosure rescue companies promise to stop foreclosure. But they’re out to make a quick buck, and can turn a homeowner’s stress into a bigger disaster.  Due your due diligence and find a loan modification company that has a proven track record negotiating loan workouts with lenders.

Watch FTC Video for Avoiding Bad Loan Modification Companies

Posted in Foreclosure Articles, Home Financing Articles, Mortgage News, Published Article, Subprime mortgage news. Tagged with , .

By admin
July 22, 2009

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Home Affordable Modification Program

Under the Obama administration’s Home Affordable Modification Program, the Treasury Department offered lenders up to $75 billion to help them defray the cost of reducing borrowers’ monthly payments to 31% of their incomes. It also enticed loan servicers with $1,000 for each loan modification, plus another $1,000 for each restructured home loan that is still performing after 3 years.  


FOX Video on Loan Modification for Preventing Foreclosures

Read the complete Loan Modification Article > Loan Modification Facts for the Foreclosure Crisis

Posted in Foreclosure Articles, Mortgage News, Published Article, Subprime mortgage news. Tagged with , , , .

By admin
July 22, 2009

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Foreclosure Prevention Law Updates in California

Mortgage loan modification agreements have helped many homeowners salvage their homeownership with lower mortgage payments, but not everyone qualifies.  Mortgage modifications and loan workouts are successfully negotiated when the borrower has a job and has the ability to afford the revised loan payment.

A new wave of loan modification legislation continues to arise from the increasing volume of home foreclosures in the Inland area and around California is moving through the bills, following major loan workout initiatives at the state and federal levels in the past year.

A 90-day foreclosure moratorium approved as part of the February budget package takes effect Monday.  “It’s premature to add new legislation on top of what we have before we see what the results are,” Dustin Hobbs, of the California Mortgage Bankers Association, said. “We’re not saying more action can’t be taken down the road. But let’s see what happens first.”  But supporters say much remains to be done to address the state’s foreclosure problem, and to prevent it from happening again.

Read the original article>  Loan Modification & Foreclosure Law Update

Posted in FHA Mortgage News, Foreclosure Articles, Mortgage News.

By admin
May 28, 2009

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Subprime Mortgage Mess Explained


Watch This Subprime Lending Video

Posted in Subprime Mortgage Video, Subprime mortgage news. Tagged with .

By admin
February 3, 2009

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Subprime Mortgage Blues


Watch Subprime Mortgage Video >
Lyrics and Slide Show by Gregg Somerville Music by Chris Conti.

Posted in Subprime Mortgage Video. Tagged with .

By admin
February 3, 2009

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How Did Mortgage Giant IndyMac Bank Fail?



Indy Mac specializes in Alt-A loans and subprime mortgages to homeowners with bad credit or limited income documentation.

Posted in Home Financing Articles, Subprime mortgage news. Tagged with , , , .

By admin
January 27, 2009

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FORECLOSURES & THE ECONOMY Treasury Chief Paulson

Full committee hearing on “legislative and regulatory options for minimizing home loan defaults and mitigating mortgage foreclosures.” Witnesses included Henry Paulson, Secretary of the Treasury; Alphonso Jackson, Secretary of Housing and Urban Development and Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System.”

Posted in Foreclosure Articles, Mortgage News, Subprime mortgage news. Tagged with , .

By admin
January 16, 2009

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Risky Mortgage Loans Subprime Debate

The risky subprime loans have come back to bite us. 

Financial expert Ray Martin and Hannah Storm discuss the subprime mortgage meltdown and what you can do to avoid risky home mortgage pitfalls.

Posted in Foreclosure Articles, Subprime mortgage news. Tagged with , .

By admin
January 16, 2009

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Reflecting on the Subprime Meltdown of 2007

After years of massive credit expansion, the debt industry snapped, taking down major Wall Street figures and hitting corporations with initial loss estimates in the tens of billions. Investors from Wall St to Main St. were left wondering how it all happened. In the prior six years interest rates were historically low and the housing market was booming.  Jeanne Yurman report that the home mortgage industry doled out loans to subprime or more risky borrowers. Home loan programs with loose terms like zero down home mortgages or incredibly low teaser rates.

In 2009 the Subprime mortgage crisis rages on, but now it has caused a housing, credit and foreclosure crisis.  Hopefully we will learn something from this and lend money more responsibly.

Posted in Foreclosure Articles, Subprime mortgage news. Tagged with , , , , , .

By admin
January 16, 2009

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Mortgage Meltdown with Bill Moyers

This week PBS’ Bill Moyers Journal travels to ground zero of the mortgage meltdown in Cleveland, Ohio. Correspondent Rick Karr takes viewers to Slavic Village, one of the hardest hit neighborhoods in the nation when it comes to the spate of foreclosures caused by the subprime mortgage crisis.

 

There, more than 1,000 homes stand vacant and decaying in a neighborhood that once thrived with families living the American dream of home ownership. Moyers gets perspective from veteran journalist William Greider on the current financial crisis and what he calls “the great deflation of Wall Street.”

Posted in Foreclosure Articles, Home Financing Articles, Subprime mortgage news. Tagged with , .

By admin
January 16, 2009

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Foreclosure Rates Driven by Subprime Mortgages and Alt A Home Loans

In a recent Housing Wire article, Paul Jackson, created a clever analogy of the foreclosure crisis comparing it to a highway pileup accident, where one driver comes to a stop and then many more run behind it.  The national loan modification factories continue to attempt to negotiate loan workouts with the publically traded mortgage lenders.  These are the same mortgage lenders that continue to count the money they received in government bank bailout plan that has now benchmarks no reporting and apparently no obligations.  Supposedly the banking institutions claim to be following a foreclosure moratorium, yet millions of Americans continue to lose their homes to foreclosure. 

New loan performance data was released last week by Clayton Holding and the report highlights the foreclosures and how the “Alt-A” and subprime mortgage loans continue to default. Jackson summarizes the data like this: increasing 60+ day delinquencies, slowing pre-payments, increasing rolls except for foreclosures and decreasing cure rates.

Among subprime mortgage loans in 1st position, the 2006 and 2007 mortgages continue to lead delinquencies and mortgage defaults: Sixty + day delinquencies rose 4.16% and 6.41% from month-ago totals, respectively, Clayton reported. More than 43% of the 2006 subprime vintage is now severely delinquent. Cure rates fell a whopping 17.54% and 11.40%, respectively, for the bad credit mortgages and Alt-A home loan as well.  And to think that FHA home loan programs have taken over the majority of subprime mortgages since 2006.  The burden of FHA loans may be hindered if foreclosure rates continue to rise.   Read the complete Paul Jackson Article >

Posted in Mortgage News, Subprime mortgage news. Tagged with , , , , , .

By admin
December 23, 2008

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Modified Loans Defaulting Like Subprime Mortgages

Even some professionals in the lending industry are mystified at why so many companies are charging delinquent borrowers more in a modified loan when they clearly could not afford the original, lower amount.  “I don’t know why a mortgage lender would enter into that kind of agreement knowing what the outcome would be,” said Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association. “Why would it not go into foreclosure? Why would it not fail?” The new federal data did not distinguish among types of loan modifications. The OCC report indicated that of borrowers receiving loan modification plans earlier this year, 39% were thirty days in arrears after three months and 51% after six months.  Dugan said 60 days in arrears is a more reliable indicator of homeowners who will ultimately lose their homes. On that measure, the results were equally dismal: More than 35 % were 60 days past due on their home loan payments six months after getting help.

It’s clear the type of help can determine the outcome. Credit Suisse’s analysis revealed that 44 % of mortgage note modifications that included higher payments re-defaulted within eight months. Meanwhile, among those who had some of their principal permanently forgiven, 23 % had re-defaulted within eight months, while just 15 % of those with adjustable rates whose rates were decreased or frozen had defaulted.  Even an increasingly popular proposal floated by the head of the FDIC to refinance as many as 2.2 million distressed homeowners into affordable, fixed-rate mortgage loans estimates as many as a third, or about 700,000, could fall behind again by the end of 2009.

US Representative Barney Frank said that even with significant foreclosure default rates, the majority of those who are helped stay in their houses and slow the bleeding in neighborhoods struggling from abandonment and blight.  Frustrated with the pace of help to homeowners, the Newton Democrat yesterday threatened to tie up the remaining half of the $700 billion financial industry rescue money unless the Bush administration provided some of it for restructuring troubled subprime mortgage loans.

Other home preservation specialists said the problem is as much the homeowners. Paul Willen, an analyst for the Federal Reserve Bank of Boston, said too many borrowers simply cannot afford to own their homes.  “Many of the people in the foreclosure process are in deep, deep trouble. They are not a modified loan away from financial happiness,” said Willen. “Many people who are heading into foreclosure don’t need a modification, they need an exit strategy.” Article written by Jenifer McKim

Posted in Mortgage News, Published Article.

By admin
December 11, 2008

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Foreclosure Crisis with Loan Modifications, Refinancing and More

The foreclosure crisis continues to ravage our economy with job shrinkage, reduced home equity from plummeting home sales and delinquent mortgage payments. Unfortunately, many people have the ability to make their loan payment on time but they jumped on the mortgage modification train with their neighbors and stopped paying their home loan in hopes of reducing their monthly payments through negotiations with the loss and mitigation department of their mortgage servicing company.

Clearly, there is nothing wrong with renegotiating your mortgage for a lower payment. Essentially that is what mortgage refinancing is all about. Loan modifications are different, because the terms are not fair for the bank because they take a loss. Banks who hold the mortgage note loose income from pre-payment penalties, loss of interest and in some cases loss of principal. The argument could be made that each time a bank agrees to a loan modification jobs are lost, because revenue is lost and expenses must be cut. However the reality is that we are in a serious financial crisis and if the mortgage lenders did not restructure their customer’s mortgage loans, then the banks would crash quickly as the liquidity problems would worsen.

Millions of homeowners are seeking mortgage refinancing or loan modifications in an effort to save their house or make their monthly payments more affordable. Unfortunately for mortgage brokers and lenders, mortgage refinance closings have slowed to very uncomfortable rate.

According to CFB Branch loan officer, Jeff Moran, most refinance loans are taking seven to eight weeks. Imagine owning a mortgage company that had to fund four staff payrolls to fund a loan. Imagine paying underwriters, processors and loan officers to work on home loans that likely would not actually close. The mortgage business has seen brighter days. Credit restrictions have tightened lending guidelines to the level that very few borrowers qualify for a mortgage. Moran continued, “FHA mortgage loans have been the only lending product we can count on and fortunately the government loans will consider the borrower’s compensating factors for approvals.”On the other hand loan modification companies have never has more business. With millions of have homeowners on the brink of foreclosure, people are lining up to help people modify their loan terms. With the recent $850 billion dollars from the Financial Bail-Out package, you can bet that loan modifications will only increase in 2009. Once we get past the foreclosure crisis most financial critics agree that home refinancing will resume back on its normal course.

 

On the other hand loan modification companies have never has more business. With millions of have homeowners on the brink of foreclosure, people are lining up to help people modify their loan terms. With the recent $850 billion dollars from the Financial Bail-Out package, you can bet that loan modifications will only increase in 2009. Once we get past the foreclosure crisis most financial critics agree that home refinancing will resume back on its normal course.

Mortgage lenders have started to negotiate with borrowers who are not delinquent with their mortgage. In most cases, you don’t have to be 60 days late to get a loan modification any more. The Chinese define crisis as danger and opportunity. Hopefully Americans will utilize this foreclosure crisis and seize the opportunity to move forward as a stronger more pragmatic country.

Bryan Dornan is an experienced mortgage banker who has publishes many articles about the sub-prime mortgage debacle and foreclosure related news. Mr. Dornan runs several companies like Nationwide, Lead Planet and Nationwide Marketing. He has experience and has worked with lending companies like City National Bank and Community First Bank. Bryan Dornan suggests visiting the following web-pages: Search Marketing Company and Loan Modification. Dornan is an experienced real estate consultant who publishes many interesting foreclosure prevention articles for many real estate blogs.  Read more real estate articles written by Bryan Dornan.  Article Source: http://EzineArticles.com/?expert=Bryan_Dornan

Posted in Home Financing Articles, Published Article. Tagged with , , .

By admin
December 10, 2008

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