Our friends in Washington are taking the “kitchen sink” approach to the Great American Mortgage Crisis: Throw everything at the problem, including the kitchen sink, and see if it somehow improves.
Last week, Federal Reserve Chairman Ben Bernanke asked lenders to cut the principal on troubled mortgages to make payments cheaper for borrowers. Fed officials signaled they will probably cut interest rates again next week. Fannie Mae, Freddie Mac and the Federal Housing Administration eased the lending limits on their loans. And legislators kicked around the idea of reviving a New Deal program to help people buy their homes out of foreclosure.
Unfortunately, some of the ideas that are getting the most attention will do little to fix the crisis. In fact, a cut in interest rates could make things worse. The best idea – re-creating a New Deal housing program – has not yet made it to the drawing board.
“Everything that's being done is on the periphery, but nothing done so far will really stabilize the market,” said David McDonald, president of the San Diego chapter of the California Association of Mortgage Brokers.
Here's a look at the proposed changes, from the worst to the best:
Interest rate cut. In the past two weeks, several Fed officials, including Bernanke, Vice Chairman Donald Kohn and Sandra Pianalto, head of the Fed branch in Cleveland, dropped hints that they will cut the federal funds rate when they meet March 18. That has raised hopes that mortgage rates will soften, easing the pain for borrowers with adjustable rates.
But to make the cut, the Fed will pump more money into the economy, which devalues the dollar and boosts inflation. That can drive down the long-term bond market, raising the rate on 30-year mortgages.
“The last two times the Fed dramatically reduced the fed funds rate, (long-term) mortgage rates went in opposite directions. It's been terrible,” said Mark Goldman, mortgage consultant with Windsor Capital Mortgage Corp.
Cutting the principal. Bernanke said last week that before foreclosing on a home, banks should try to make the mortgage more affordable by lowering the principal to reflect its current market value.
That's a nice ivory-tower idea, but would it work in real life?
Bernanke is asking lenders to rewrite their loans even though most loans are out of their hands. Instead, they have been packaged and resold to investors around the globe.
“The lenders are under contractual obligations to their investors,” said Norm Miller, real estate economist at the University of San Diego. “Any proposal that changes the terms of the contracts would just not fly unless it clearly maximizes the net present value or minimizes losses.”
Consider the implications. More than 10 percent of homeowners have mortgages that exceed their home's value. Some analysts say that number could top 30 percent this year. Does Bernanke expect lenders to rewrite all those loans? If so, what will happen a year from now if property values decline further?
“When you goof around with a contract, you get away from the stability that investors count upon,” said T.J. Knowles, a mortgage broker at CalBrokers in San Diego. “Who in the world would invest in mortgages if they know the bank might rewrite the terms? And then banks will get more restrictive in their lending because they won't know which investors will buy them.”
Cutting government loan limits. Last week, government-sponsored lenders lifted the caps on “conforming” loans to let more people take advantage of their relatively low rates. The upper limits on loans from Fannie Mae, Freddie Mac and the FHA were once $417,000. Now those limits are being boosted nationwide. In San Diego's case, the new cap amounts to $697,500.
But when Fannie Mae and Freddie Mac lifted the cap, they raised their fees and tightened lending restrictions, meaning fewer borrowers will qualify.
“This does absolutely nothing for anybody who isn't a perfect borrower. And for a perfect borrower, it does not do much,” Knowles said. “Fannie Mae and Freddie Mac have always required full documentation and very high credit scores for loans. Now that they've lifted the cap, those restrictions are going to get tighter because there's more risk.”
Raising the limit on FHA loans could help the market more, since the FHA has fewer restrictions and aims at downscale borrowers. But even then, “it's not as if there's going to be an earthquake of activity,” Goldman said.
Back to the future. So far, the best ideas are proposals to revive two programs created by Franklin Roosevelt in the heart of the Great Depression.
Congress is working to bolster the FHA, which Roosevelt created in 1934 to stabilize the weak housing market. In the past few years, the FHA has insured as few as 3 percent of U.S. loans, undercut by lenders who were offering no-documentation, no-equity, adjustable-rate mortgages. Now that those lenders have gone belly up, the FHA could help stabilize the market.
Rep. Barney Frank, D-Mass., is pushing to help the FHA refinance 1 million troubled homeowners, as long as lenders agree to reduce their principal. Although cuts in principal could be problematic, Frank's bill is only one indication of the renewed interest in the FHA.
In the meantime, Sen. Christopher Dodd, D-Conn., is pushing to re-create the Home Owners' Loan Corp., or HOLC, a New Deal agency that helped defaulted borrowers buy their homes out of foreclosure with low-interest, long-term loans. Dodd proposes putting $20 billion into a similar program that would be embedded within an existing government agency, such as the FHA.
If the past is any indicator, this money would not be wasted. Ninety percent of the HOLC's loans were repaid, making it one of those rare government agencies that turns a profit. The concept has drawn support from both the conservative American Enterprise Institute and the liberal Center for American Progress.
“It's not like I'm creating something altogether new,” Dodd told reporters last week. “In fact, it goes back a long time.”
But sometimes, judging from the current crop of proposals, old ideas are the best.
http://www.signonsandiego.com/
Sunday, March 9, 2008
Darling to introduce 25-year fixed mortgages
Home owners will be able to take out mortgages at interest rates fixed for as long as 25 years under Budget plans to restore stability to a housing market plunged into crisis by the recent global credit crunch.
Alistiar Darling, the Chancellor of the Exchequer, is due to unveil his first Budget
The most reliable customers will also get access to "gold standard" loans at much cheaper rates than poorer, high-risk borrowers.
In a tacit admission that Labour has overseen a high-risk boom in house prices, Alistair Darling, the Chancellor, will encourage mortgage lenders and consumers to use long-term loans to make the UK market less volatile.
From this week, mortgage lenders will be able to use new rules to offer more long-term fixed-rate mortgage deals, with interest rates set to be fixed for as long as 25 years.
Ministers are concerned that the "boom-and-bust" nature of British house prices risks wider economic stability and makes many households vulnerable to even relatively small fluctuations in interest rates.
Long-term mortgages are commonplace in many European economies, but relatively rare in the UK.
Only a handful of lenders currently offer fixed-term loan rates longer than five years, and those deals available are typically more expensive than short-term offers.
Mr Darling's long-term mortgage plans are based on giving mortgage lenders greater freedom to raise money using covered bonds - a loan secured against a pool of assets that "covers" the loan if the issuer collapses.
But Treasury officials accept that any plan for lenders to make more use of such financing will face obstacles in the current banking climate.
Since last summer, many banks have suffered huge losses as they had bought bonds and other debt instruments that were ultimately secured on "sub-prime" mortgage customers whose low incomes and limited assets made them more likely to default on their repayments.
That has left many banks extremely wary of investing in mortgage-backed securities, where banks package their debt and sell it on to investors.
As a result, wholesale money markets are almost entirely frozen, making it very hard for mortgage firms to raise the funds to lend out in long-term mortgages.
Mr Darling's answer is a new system of "kite-marking" that will effectively give every mortgage deal a quality rating.
That would allow mortgage firms to raise money on wholesale markets by offering bonds secured against the home and repayments of their most reliable customers.
In a speech last month, Mr Darling promised a new "gold standard" for covered bonds and mortgage-backed securities. He said the move would help "not just the housing market but wider economic growth in these uncertain times".
However, there are concerns that grading mortgages according to customers' reliability could create a two-tier system for would-be house buyers.
The richest and most secure customers would be able to access cheap loans raised on international markets, which would not be available to poorer customers.
The Council of Mortgage Lenders has warned that a quality-mark system risks "driving a wedge" between different groups of mortgage customers.
The European Securitisation Forum has also expressed concerns, suggesting that a grading system might make it prohibitively expensive for riskier customers to borrow.
Bankers are also sceptical about the plans, because the Treasury itself would not be involved in grading loans to avoid any appearance that the Government was backing particular investments.
Long-term interest rates are typically around six per cent. The best deal available for a long-term rate is 5.5 per cent, compared with a market-best rate of 5.2 per cent for a two-year fixed-rate mortgage.
Many fixed-rate mortgages are rising in cost, as lenders fail to pass on cuts in base rates to customers. The Bank of England has cut rates twice since December, to 5.25 per cent.
Data published by the Bank of England last week showed that, in January, the average mortgage fixed rate, paid by new and existing customers, rose from 5.36 per cent to 5.39 per cent.
# Transport
Motorists who want to buy cars with the largest engines will bear the brunt of Mr Darling's efforts to present a "green Budget " on Wednesday.
"Gas-guzzlers", including large 4x4s and estate cars, will face a new "showroom tax" that could add as much as £2,000 to the sale price.
The Chancellor is also expected to penalise existing vehicles with the highest emissions for the second year running with a further increase in top-level Vehicle Excise Duty (VED). And tax discs will be colour-coded to indicate how much carbon dioxide a vehicle emits.
Mr Darling has come under intense pressure over a planned 2p increase in fuel duty after record global oil prices sent UK pump prices soaring. Economists say higher prices mean Mr Darling can afford to at least delay the duty increase.
# Tax
Wealthy "non-domiciled" UK residents will get new concessions in the Budget as Mr Darling refines his package of new tax rules.
The Chancellor will stick to plans to levy a £30,000 annual charge on long-standing "non-doms" - people with foreign links who live in Britain but pay no UK tax on overseas income - but he is expected to allay fears that Americans, in particular, would be taxed twice on their money by announcing a deal with US authorities.
The Treasury's plans for a tax crackdown on non-doms had triggered a backlash, with warnings that many of the wealthiest people in the UK would chose to leave the country.
The Chancellor is set to press ahead with plans to increase the rate of corporation tax paid by small companies from 20 per cent to 22 per cent.
# Energy firms
Mr Darling is putting intense pressure on energy companies to give financial help to customers who are struggling with rising fuel bills.
Soaring wholesale prices for oil and gas have helped many suppliers record high profits, but there is more strain on many households.
Officials say there are more than 4.5 million people in "fuel poverty," and up to £200 million could be distributed by cutting the fuel bills of selected customers, with those over 70 given particular priority.
The Treasury is locked in talks with the industry over the plan, and the outcome is likely to be announced in the Budget.
Mr Darling is understood to want the scheme be voluntary, but is prepared to impose a windfall tax on energy companies if an agreement cannot be reached.
# Alcohol
Tax on beer, wines and spirits will all increase in the Budget as the Government responds to growing concerns about Britain's binge-drinking culture.
Duty on most alcoholic drinks has risen more slowly than inflation in recent years, as ministers avoided tax rises that might have angered voters.
But a chorus of warnings from doctors and police chiefs about rising numbers of problem drinkers has helped persuade Mr Darling that public opinion will now accept some price rises.
He is expected to announce an immediate above-inflation duty rise on Wednesday.
In the long term, the Chancellor is said to be considering an alcohol "accelerator" much like that applied to fuel duty, which would mean that taxation on drinks would automatically rise in real terms every year.
http://www.telegraph.co.uk/
Alistiar Darling, the Chancellor of the Exchequer, is due to unveil his first Budget
The most reliable customers will also get access to "gold standard" loans at much cheaper rates than poorer, high-risk borrowers.
In a tacit admission that Labour has overseen a high-risk boom in house prices, Alistair Darling, the Chancellor, will encourage mortgage lenders and consumers to use long-term loans to make the UK market less volatile.
From this week, mortgage lenders will be able to use new rules to offer more long-term fixed-rate mortgage deals, with interest rates set to be fixed for as long as 25 years.
Ministers are concerned that the "boom-and-bust" nature of British house prices risks wider economic stability and makes many households vulnerable to even relatively small fluctuations in interest rates.
Long-term mortgages are commonplace in many European economies, but relatively rare in the UK.
Only a handful of lenders currently offer fixed-term loan rates longer than five years, and those deals available are typically more expensive than short-term offers.
Mr Darling's long-term mortgage plans are based on giving mortgage lenders greater freedom to raise money using covered bonds - a loan secured against a pool of assets that "covers" the loan if the issuer collapses.
But Treasury officials accept that any plan for lenders to make more use of such financing will face obstacles in the current banking climate.
Since last summer, many banks have suffered huge losses as they had bought bonds and other debt instruments that were ultimately secured on "sub-prime" mortgage customers whose low incomes and limited assets made them more likely to default on their repayments.
That has left many banks extremely wary of investing in mortgage-backed securities, where banks package their debt and sell it on to investors.
As a result, wholesale money markets are almost entirely frozen, making it very hard for mortgage firms to raise the funds to lend out in long-term mortgages.
Mr Darling's answer is a new system of "kite-marking" that will effectively give every mortgage deal a quality rating.
That would allow mortgage firms to raise money on wholesale markets by offering bonds secured against the home and repayments of their most reliable customers.
In a speech last month, Mr Darling promised a new "gold standard" for covered bonds and mortgage-backed securities. He said the move would help "not just the housing market but wider economic growth in these uncertain times".
However, there are concerns that grading mortgages according to customers' reliability could create a two-tier system for would-be house buyers.
The richest and most secure customers would be able to access cheap loans raised on international markets, which would not be available to poorer customers.
The Council of Mortgage Lenders has warned that a quality-mark system risks "driving a wedge" between different groups of mortgage customers.
The European Securitisation Forum has also expressed concerns, suggesting that a grading system might make it prohibitively expensive for riskier customers to borrow.
Bankers are also sceptical about the plans, because the Treasury itself would not be involved in grading loans to avoid any appearance that the Government was backing particular investments.
Long-term interest rates are typically around six per cent. The best deal available for a long-term rate is 5.5 per cent, compared with a market-best rate of 5.2 per cent for a two-year fixed-rate mortgage.
Many fixed-rate mortgages are rising in cost, as lenders fail to pass on cuts in base rates to customers. The Bank of England has cut rates twice since December, to 5.25 per cent.
Data published by the Bank of England last week showed that, in January, the average mortgage fixed rate, paid by new and existing customers, rose from 5.36 per cent to 5.39 per cent.
# Transport
Motorists who want to buy cars with the largest engines will bear the brunt of Mr Darling's efforts to present a "green Budget " on Wednesday.
"Gas-guzzlers", including large 4x4s and estate cars, will face a new "showroom tax" that could add as much as £2,000 to the sale price.
The Chancellor is also expected to penalise existing vehicles with the highest emissions for the second year running with a further increase in top-level Vehicle Excise Duty (VED). And tax discs will be colour-coded to indicate how much carbon dioxide a vehicle emits.
Mr Darling has come under intense pressure over a planned 2p increase in fuel duty after record global oil prices sent UK pump prices soaring. Economists say higher prices mean Mr Darling can afford to at least delay the duty increase.
# Tax
Wealthy "non-domiciled" UK residents will get new concessions in the Budget as Mr Darling refines his package of new tax rules.
The Chancellor will stick to plans to levy a £30,000 annual charge on long-standing "non-doms" - people with foreign links who live in Britain but pay no UK tax on overseas income - but he is expected to allay fears that Americans, in particular, would be taxed twice on their money by announcing a deal with US authorities.
The Treasury's plans for a tax crackdown on non-doms had triggered a backlash, with warnings that many of the wealthiest people in the UK would chose to leave the country.
The Chancellor is set to press ahead with plans to increase the rate of corporation tax paid by small companies from 20 per cent to 22 per cent.
# Energy firms
Mr Darling is putting intense pressure on energy companies to give financial help to customers who are struggling with rising fuel bills.
Soaring wholesale prices for oil and gas have helped many suppliers record high profits, but there is more strain on many households.
Officials say there are more than 4.5 million people in "fuel poverty," and up to £200 million could be distributed by cutting the fuel bills of selected customers, with those over 70 given particular priority.
The Treasury is locked in talks with the industry over the plan, and the outcome is likely to be announced in the Budget.
Mr Darling is understood to want the scheme be voluntary, but is prepared to impose a windfall tax on energy companies if an agreement cannot be reached.
# Alcohol
Tax on beer, wines and spirits will all increase in the Budget as the Government responds to growing concerns about Britain's binge-drinking culture.
Duty on most alcoholic drinks has risen more slowly than inflation in recent years, as ministers avoided tax rises that might have angered voters.
But a chorus of warnings from doctors and police chiefs about rising numbers of problem drinkers has helped persuade Mr Darling that public opinion will now accept some price rises.
He is expected to announce an immediate above-inflation duty rise on Wednesday.
In the long term, the Chancellor is said to be considering an alcohol "accelerator" much like that applied to fuel duty, which would mean that taxation on drinks would automatically rise in real terms every year.
http://www.telegraph.co.uk/
Wednesday, February 20, 2008
The Real Estate Wonk
So much attention has been paid lately to the travails of short-term homeowners that longer-term homeowners probably feel a bit left out. "What do I care?" you grumble. "Why don't you cover something that affects me, dagnabbit?"
All right. How about getting that private mortgage insurance premium off your monthly mortgage bill?
Private mortgage insurance, for those of you short-termers and renters following along, is something homebuyers need if their down payment on a non-government loan is less than 20 percent of the property value. Lenders insist on it to protect them if you go into foreclosure.
It's in an effort to avoid this bill that many buyers opted for two mortgages during the housing boom. Now, an increasing number of new borrowers are finding their way back to PMI -- by choice or default.
The Mortgage Insurance Companies of America, an industry trade group, said the number of new PMI policies increased nearly 40 percent last year.
Not sure whether you're paying for private mortgage insurance? Check your monthly mortgage bill, or look at the "HUD1" form with the paperwork you signed to close the loan. (Or call your lender.)
If you have it, there are three ways you can qualify to cancel: Make enough payments, raise the value of your property with home improvements or (rarer and rarer nowadays) live in an area that's seeing strong gains in sales prices. One or more of those options can get your loan balance down to 80 percent of the value of the home when you got the loan.
There's a checklist about next steps at Mortgage Insurance Companies of America's website, with a more detailed Q&A HERE. Here's what the association says:
--Contact your loan servicer. You should be able to find the contact information on your monthly mortgage bill. Be prepared to provide your Social Security and loan numbers.
--Tell the servicer you'd like to cancel your private mortgage insurance and ask about its requirements to do so. That could mean gathering additional information and paying for an appraisal. (Let the servicer arrange for the appraisal, the insurer association says, so you don't end up on the hook for two bills.)
--After you've jumped through the necessary hoops, send in a written request to cancel.
Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., says your private mortgage insurance will generally get canceled automatically once your payments equal 22 percent of the original home value. (Federal law requires it for most loans taken out by borrowers after July 29, 1999.)
But now you know how to move things along sooner if you think you qualify -- or get the ball rolling if you suspect it's long overdue.
Click HERE for a calculator that helps you figure out when you might be able to cancel.
http://weblogs.baltimoresun.com/
All right. How about getting that private mortgage insurance premium off your monthly mortgage bill?
Private mortgage insurance, for those of you short-termers and renters following along, is something homebuyers need if their down payment on a non-government loan is less than 20 percent of the property value. Lenders insist on it to protect them if you go into foreclosure.
It's in an effort to avoid this bill that many buyers opted for two mortgages during the housing boom. Now, an increasing number of new borrowers are finding their way back to PMI -- by choice or default.
The Mortgage Insurance Companies of America, an industry trade group, said the number of new PMI policies increased nearly 40 percent last year.
Not sure whether you're paying for private mortgage insurance? Check your monthly mortgage bill, or look at the "HUD1" form with the paperwork you signed to close the loan. (Or call your lender.)
If you have it, there are three ways you can qualify to cancel: Make enough payments, raise the value of your property with home improvements or (rarer and rarer nowadays) live in an area that's seeing strong gains in sales prices. One or more of those options can get your loan balance down to 80 percent of the value of the home when you got the loan.
There's a checklist about next steps at Mortgage Insurance Companies of America's website, with a more detailed Q&A HERE. Here's what the association says:
--Contact your loan servicer. You should be able to find the contact information on your monthly mortgage bill. Be prepared to provide your Social Security and loan numbers.
--Tell the servicer you'd like to cancel your private mortgage insurance and ask about its requirements to do so. That could mean gathering additional information and paying for an appraisal. (Let the servicer arrange for the appraisal, the insurer association says, so you don't end up on the hook for two bills.)
--After you've jumped through the necessary hoops, send in a written request to cancel.
Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., says your private mortgage insurance will generally get canceled automatically once your payments equal 22 percent of the original home value. (Federal law requires it for most loans taken out by borrowers after July 29, 1999.)
But now you know how to move things along sooner if you think you qualify -- or get the ball rolling if you suspect it's long overdue.
Click HERE for a calculator that helps you figure out when you might be able to cancel.
http://weblogs.baltimoresun.com/
Consider a reverse mortgage
NEW YORK (CNNMoney.com) -- Mortgage payments sucking you dry? Boomers short on retirement savings may have another option: reverse mortgages. Can these complicated products fill the gap?
Know the process
Reverse mortgages are exactly that. Instead of paying the bank, the bank pays you. It's a type of loan where your equity is converted into cash.
These mortgages are designed for people 62 and older. And you can get this cash in a few ways: Either you can get it all in a lump sum, a monthly payment or a line of credit that you can tap into when you need it.
The loan doesn't need to be repaid if you continue to live in the home. But if you move, the debt must be repaid - with interest. If you die, your heirs can elect to sell the house to repay the loan.
While the payment doesn't usually affect social security or Medicare, it may affect Medicaid according to Peter Bell of the National Reverse Mortgage Association.
You will also be responsible for property taxes and any repairs on the home.
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
Consider your Candidacy
The older you are, the more likely you are to benefit from a reverse mortgage according to AARP.
First, you'll probably have built up more equity in your home. And lenders calculate the payout based on your age and your expected lifespan. Reverse mortgages are most beneficial if you own your home or have a small amount left to pay on the original mortgage that can be paid off at closing with the proceeds from the reverse loan, according to HUD.
Reverse mortgages are also best for people who want to remain in their home for the long-term. If you're looking to move in two or three years, a reverse mortgage may not be right for you.
Weigh the Downsides
Fees on home equity conversion mortgages can be high. For a $300,000 loan, a person who is 74 years old can expect to pay $15,000 in upfront fees according to AARP. There is an origination fee, appraisal fee, title fee, escrow fee, recording fee, a monthly servicing fee and an ongoing mortgage insurance premium.
Bell says the total of these fees are about 5% of the home's value. They can be included in your loan balance, if there is enough equity available.
Remember - a reverse mortgage is a loan with rising debt and falling equity. So, if you get a lot of cash over the years, there will be little, if any, left over for your heirs according to AARP.
Do your homework
Reverse mortgages, while only one percent of the mortgage market, are on the rise. There were less than 7,000 reverse mortgages in 2000. Last year, over 107,000 reverse mortgages were sold according to AARP.
There are a lot of nuances you should consider before buying a reverse mortgage. In fact, you are required to get counseling before buying this product.
You can contact the Housing Counseling Clearinghouse at 800-569-4287 to find a lender in your area. Your bank should give you a list of counselors in your area that can help you. Be wary of lenders that try to get you to buy more products, like long term care insurance or annuities.
http://money.cnn.com/2008/02/20/pf/saving/toptips/
Know the process
Reverse mortgages are exactly that. Instead of paying the bank, the bank pays you. It's a type of loan where your equity is converted into cash.
These mortgages are designed for people 62 and older. And you can get this cash in a few ways: Either you can get it all in a lump sum, a monthly payment or a line of credit that you can tap into when you need it.
The loan doesn't need to be repaid if you continue to live in the home. But if you move, the debt must be repaid - with interest. If you die, your heirs can elect to sell the house to repay the loan.
While the payment doesn't usually affect social security or Medicare, it may affect Medicaid according to Peter Bell of the National Reverse Mortgage Association.
You will also be responsible for property taxes and any repairs on the home.
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
Consider your Candidacy
The older you are, the more likely you are to benefit from a reverse mortgage according to AARP.
First, you'll probably have built up more equity in your home. And lenders calculate the payout based on your age and your expected lifespan. Reverse mortgages are most beneficial if you own your home or have a small amount left to pay on the original mortgage that can be paid off at closing with the proceeds from the reverse loan, according to HUD.
Reverse mortgages are also best for people who want to remain in their home for the long-term. If you're looking to move in two or three years, a reverse mortgage may not be right for you.
Weigh the Downsides
Fees on home equity conversion mortgages can be high. For a $300,000 loan, a person who is 74 years old can expect to pay $15,000 in upfront fees according to AARP. There is an origination fee, appraisal fee, title fee, escrow fee, recording fee, a monthly servicing fee and an ongoing mortgage insurance premium.
Bell says the total of these fees are about 5% of the home's value. They can be included in your loan balance, if there is enough equity available.
Remember - a reverse mortgage is a loan with rising debt and falling equity. So, if you get a lot of cash over the years, there will be little, if any, left over for your heirs according to AARP.
Do your homework
Reverse mortgages, while only one percent of the mortgage market, are on the rise. There were less than 7,000 reverse mortgages in 2000. Last year, over 107,000 reverse mortgages were sold according to AARP.
There are a lot of nuances you should consider before buying a reverse mortgage. In fact, you are required to get counseling before buying this product.
You can contact the Housing Counseling Clearinghouse at 800-569-4287 to find a lender in your area. Your bank should give you a list of counselors in your area that can help you. Be wary of lenders that try to get you to buy more products, like long term care insurance or annuities.
http://money.cnn.com/2008/02/20/pf/saving/toptips/
Thursday, February 7, 2008
NAB buys $1b of RHG mortgages
NATIONAL Australia Bank (NAB) said it had acquired about $1 billion of mortgages originated by RHG at net asset value.
RHG owns the closed mortgage book of the former RAMS Home Loans Group.
RAMS sold its brand and distribution business and all the business it wrote from November 15 to Westpac Banking Corporation last year for $140 million.
"Further to the RHG Ltd announcement today and as advised to the market on November 21, National Australia Bank today confirmed it had acquired approximately $1 billion of mortgages originated by RHG Ltd at net asset value,'' NAB said.
At 10.46am AEDT, RHG shares were 4 cents, or 17.39 per cent, higher at 27 cents. NAB was 74 cents stronger at $33.55.
RHG announced earlier today it had successfully refinanced $5.5 billion in short-term debt.
RHG said one of two US extendable commercial paper (XCP) facilities had now been fully repaid.
The remaining XCP facility is intended to be repaid in full during New York business hours today, RHG said.
The two XCP facilities needed to be refunded by a February 11 deadline.
To fund them, RHG said it used, or expects to use, funds from warehouse facilities with an aggregate commitment of $3.5 billion; a $750 million issue of residential mortgage-backed securities and the $1 billion reaped from the sale of mortgages to NAB.
Following the repayment of both XCP programs, RHG will have two warehouse facilities worth $1.9 billion and $725 million due to mature in May.
Another $970 million will mature in June and another $1.5 billion will mature in October.
Two more facilities worth $2 billion and $1.5 billion will mature in December.
Westpac last year promised to provide RHG with $1.5 billion in funding if it could form a syndicate of lenders.
NAB said the residential mortgages it bought were prime, seasoned Australian mortgages, which were all mortgage insured.
http://www.news.com.au/business/story/0,23636,23179734-462,00.html
RHG owns the closed mortgage book of the former RAMS Home Loans Group.
RAMS sold its brand and distribution business and all the business it wrote from November 15 to Westpac Banking Corporation last year for $140 million.
"Further to the RHG Ltd announcement today and as advised to the market on November 21, National Australia Bank today confirmed it had acquired approximately $1 billion of mortgages originated by RHG Ltd at net asset value,'' NAB said.
At 10.46am AEDT, RHG shares were 4 cents, or 17.39 per cent, higher at 27 cents. NAB was 74 cents stronger at $33.55.
RHG announced earlier today it had successfully refinanced $5.5 billion in short-term debt.
RHG said one of two US extendable commercial paper (XCP) facilities had now been fully repaid.
The remaining XCP facility is intended to be repaid in full during New York business hours today, RHG said.
The two XCP facilities needed to be refunded by a February 11 deadline.
To fund them, RHG said it used, or expects to use, funds from warehouse facilities with an aggregate commitment of $3.5 billion; a $750 million issue of residential mortgage-backed securities and the $1 billion reaped from the sale of mortgages to NAB.
Following the repayment of both XCP programs, RHG will have two warehouse facilities worth $1.9 billion and $725 million due to mature in May.
Another $970 million will mature in June and another $1.5 billion will mature in October.
Two more facilities worth $2 billion and $1.5 billion will mature in December.
Westpac last year promised to provide RHG with $1.5 billion in funding if it could form a syndicate of lenders.
NAB said the residential mortgages it bought were prime, seasoned Australian mortgages, which were all mortgage insured.
http://www.news.com.au/business/story/0,23636,23179734-462,00.html
OFHEO Questions Mortgage Proposal
A federal regulator yesterday suggested that a measure that would allow Fannie Mae and Freddie Mac to take on jumbo mortgages could divert loan money from less expensive housing.
Funding one $600,000 mortgage takes as much capital as funding three $200,000 loans, James B. Lockhart III, head of an agency that oversees the federally chartered mortgage companies, told the Senate Banking Committee.
The economic stimulus package passed by Congress last night would temporarily permit District-based Fannie Mae and McLean-based Freddie Mac to buy or guarantee mortgages 25 percent higher than an area's median home price -- to a maximum of $729,750, up from the current limit of $417,000.
The increase would allow the companies to fund bigger mortgages in areas with high housing costs, such as the Washington area, where the median price is $450,000, according to the National Association of Realtors. Advocates have argued it could provide relief to housing markets.
Lockhart, director of the Office of Federal Housing Enterprise Oversight, testified that the change would push the companies deeper into some of the riskiest real estate markets, including parts of California.
Chartered by the government to bring affordability and stability to the housing system, Fannie Mae and Freddie Mac package mortgages into securities for sale to investors, promising to pay the loans if the borrowers default. They also buy mortgages themselves.
Fannie Mae and Freddie Mac have long sought the freedom to fund larger mortgages, and some lawmakers have argued that a uniform limit of $417,000 doesn't make sense given the variation in housing prices across the country.
Until recently, it appeared that any increase in the limit would be coupled with long-stalled legislation giving regulators more power over Fannie Mae and Freddie Mac, such as a bill approved by the House last year.
The downturn in the housing sector and growing concern about the economy could hand them a major legislative victory -- the opportunity to expand their business without new regulatory constraints.
The change "will be a significant and profitable new business" for the companies, said Sen. Charles E. Schumer (D-N.Y.), a member of the Banking Committee.
Freddie Mac chief executive Richard F. Syron countered that setting up new systems to handle the larger loans will cost his company a lot of money and will be "kind of a bear to do."
Lawmakers from both parties have been saying the companies need stricter regulation at least since 2003 and 2004, when multibillion-dollar accounting scandals revealed that Fannie Mae and Freddie Mac had dysfunctional internal controls.
http://www.washingtonpost.com
Funding one $600,000 mortgage takes as much capital as funding three $200,000 loans, James B. Lockhart III, head of an agency that oversees the federally chartered mortgage companies, told the Senate Banking Committee.
The economic stimulus package passed by Congress last night would temporarily permit District-based Fannie Mae and McLean-based Freddie Mac to buy or guarantee mortgages 25 percent higher than an area's median home price -- to a maximum of $729,750, up from the current limit of $417,000.
The increase would allow the companies to fund bigger mortgages in areas with high housing costs, such as the Washington area, where the median price is $450,000, according to the National Association of Realtors. Advocates have argued it could provide relief to housing markets.
Lockhart, director of the Office of Federal Housing Enterprise Oversight, testified that the change would push the companies deeper into some of the riskiest real estate markets, including parts of California.
Chartered by the government to bring affordability and stability to the housing system, Fannie Mae and Freddie Mac package mortgages into securities for sale to investors, promising to pay the loans if the borrowers default. They also buy mortgages themselves.
Fannie Mae and Freddie Mac have long sought the freedom to fund larger mortgages, and some lawmakers have argued that a uniform limit of $417,000 doesn't make sense given the variation in housing prices across the country.
Until recently, it appeared that any increase in the limit would be coupled with long-stalled legislation giving regulators more power over Fannie Mae and Freddie Mac, such as a bill approved by the House last year.
The downturn in the housing sector and growing concern about the economy could hand them a major legislative victory -- the opportunity to expand their business without new regulatory constraints.
The change "will be a significant and profitable new business" for the companies, said Sen. Charles E. Schumer (D-N.Y.), a member of the Banking Committee.
Freddie Mac chief executive Richard F. Syron countered that setting up new systems to handle the larger loans will cost his company a lot of money and will be "kind of a bear to do."
Lawmakers from both parties have been saying the companies need stricter regulation at least since 2003 and 2004, when multibillion-dollar accounting scandals revealed that Fannie Mae and Freddie Mac had dysfunctional internal controls.
http://www.washingtonpost.com
Saturday, January 5, 2008
Building societies rank high for cheap mortgages
ALTHOUGH a bank, HSBC, was the cheapest mortgage lender in 2007 for existing borrowers, building societies took two of the top five places and five of the top ten.
In its annual survey, Defaqto, an independent financial data collection and research company, found that for standard variable rate (SVR) mortgages or their equivalent for existing borrowers, HSBC retained its top spot as the cheapest mortgage, closely followed by two building societies, Skipton and Nationwide.
Scottish banks did not fare well – Bank of Scotland was named as most expensive, followed by the Royal Bank of Scotland and the Clydesdale Bank.
The research was based on the amount of gross interest payable on a £50,000 interest-only mortgage provided by top lenders in 2006, as defined by the Council of Mortgage Lenders (CML). In order to provide a level playing field for comparisons, specialist providers were not included, and neither were any privilege or loyalty rates.
Borrowers with HSBC paid £3,361.99 in 2007 for their mortgage, which was £532.39 cheaper than the most expensive
deal.
David Black, principal banking consultant at Defaqto, said: "In 2007 there were three increases in the Bank base rate and one decrease so it is not surprising that the average cost of servicing a standard variable rate mortgage for the largest lenders rose last year by 14 per cent over the cost in 2006.
"While it is acknowledged that standard variable rate mortgages are only one type of mortgage, their importance may be increasing due to the knock-on effects of the credit crunch, making it more difficult to obtain attractive alternative deals."
Given the availability of competitive mortgage deals is expected to reduce further, people would be advised to shop around as soon as possible.
Bob Pannell, CML head of research, said: "Borrowers should make a New Year resolution to review their finances and plan ahead if they are coming off fixed rate deals later this year."
http://business.scotsman.com/personal-finance/Building-societies-rank-high-for.3643340.jp
In its annual survey, Defaqto, an independent financial data collection and research company, found that for standard variable rate (SVR) mortgages or their equivalent for existing borrowers, HSBC retained its top spot as the cheapest mortgage, closely followed by two building societies, Skipton and Nationwide.
Scottish banks did not fare well – Bank of Scotland was named as most expensive, followed by the Royal Bank of Scotland and the Clydesdale Bank.
The research was based on the amount of gross interest payable on a £50,000 interest-only mortgage provided by top lenders in 2006, as defined by the Council of Mortgage Lenders (CML). In order to provide a level playing field for comparisons, specialist providers were not included, and neither were any privilege or loyalty rates.
Borrowers with HSBC paid £3,361.99 in 2007 for their mortgage, which was £532.39 cheaper than the most expensive
deal.
David Black, principal banking consultant at Defaqto, said: "In 2007 there were three increases in the Bank base rate and one decrease so it is not surprising that the average cost of servicing a standard variable rate mortgage for the largest lenders rose last year by 14 per cent over the cost in 2006.
"While it is acknowledged that standard variable rate mortgages are only one type of mortgage, their importance may be increasing due to the knock-on effects of the credit crunch, making it more difficult to obtain attractive alternative deals."
Given the availability of competitive mortgage deals is expected to reduce further, people would be advised to shop around as soon as possible.
Bob Pannell, CML head of research, said: "Borrowers should make a New Year resolution to review their finances and plan ahead if they are coming off fixed rate deals later this year."
http://business.scotsman.com/personal-finance/Building-societies-rank-high-for.3643340.jp
Mortgage approvals hit new low
The number of mortgages approved for people moving home fell to a three-year low during November, figures showed.
Just 83,000 new home loans were approved for people buying a property during the month, the lowest figure since January 2005, according to the Bank of England.
The latest slump follows on from a subdued month during October, when only 89,000 new mortgages were approved for house purchase, itself the lowest figure since February 2005.
It is the fifth month in a row that mortgage approvals for house purchase have fallen, adding to mounting evidence that the housing market has finally run out of steam.
Nationwide Building Society said last week that house prices fell by 0.5% during December, while Britain's biggest mortgage lender Halifax has reported price falls in each of the three months to the end of November.
The Bank of England said on Friday that there was a slight month-on-month increase in the number of loans approved for people remortgaging during November at 95,000, but this was still below the recent monthly average of 99,000.
This helped to push up the value of all mortgages approved to £25.67 billion, marginally above the £25.66 billion recorded in October, which was the lowest figure since July 2005.
Banks and building societies advanced a total of £28.45 billion in November, the lowest figure since September 2006, Friday's figures showed.
But net lending, which strips out redemptions and repayments, rose slightly compared with the previous month to £7.78 billion, although this was still well below the recent six-month average of £8.8 billion.
The data comes the day after the Bank warned consumers are likely to face higher mortgage costs, while the availability of home loans is set to fall as a result of the global credit crunch.
http://ukpress.google.com/article/ALeqM5hVwK1g2pEA-TL5eZ2lm96pEndeWg
Saturday, December 29, 2007
Housing Market Tracker - Subprime and Mortgage Review
Here's our summary of articles and data points on the housing market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this sent to your Blackberry or desktop email by signing up for our no-spam free email subscription service.
Quote of the Day
"Interesting presentation. God, I hope you're wrong." – A NY investment firm's chief risk officer said to J. Kyle Bass, a hedge fund manager from Dallas, in August 2006. Bass made a presentation to that CRO's investment firm, drawing a scenario that the housing market would crash Bass offered to set up a hedge fund betting against the housing market. (Seattle PI, Dec. 26th)
Subprime Fallout
* Credit Crunch Amplifies Housing Downturn (Inman News, Dec. 27th): "Private mortgage insurers PMI Group Inc. (PMI) and MGIC Investment Corp. (MTG) have raised or are raising rates for borrowers with lower credit scores and loan-to-value ratios above 95%. Both companies have discontinued mortgage insurance on loans with LTVs above 95% for borrowers with credit scores below 620... MGIC will no longer insure reduced-documentation loans for investment properties or cash-out refinances... Government-sponsored lenders Fannie Mae (FNM) and Freddie Mac (FRE) [announced] new surcharges on most [new] loans... for borrowers with credit scores below 680... Lenders must also be able to provide documentation supporting an assessment that the property is not located in a declining market."
* Online Resources Survey Shows Credit Concerns Not Limited to Mortgages (Fox Business, Dec. 26th): "Online Resources Corporation (ORCC), a leading provider of web-based financial services, today released the results of a survey of U.S. households and billers regarding the effect of the current mortgage crisis on bill payment and collection patterns... The survey of more than 1,000 nationally representative U.S. households finds that Americans are increasingly being forced to prioritize among their bills by creating a "delinquency budget" to determine which bills get paid. While the mortgage bill tends to be the one that households are most likely to pay, businesses across other industries are facing a decreasing share of that delinquency budget."
* Miller Offers Best Way Out Of Mortgage Mess (News Record, Dec. 26th): "In November, the House of Representatives passed a bill to curtail predatory lending that Miller, as well as Reps. Mel Watt and Barney Frank, had sponsored. It would require lenders to provide documentation that applicants can afford the loans they get. It also prohibits prepayment penalties and bans paying bonuses to mortgage brokers for steering people to higher-interest loans when they qualify for ones at lower rates. The bill was modeled after North Carolina law, which is one reason why the subprime crisis hasn’t hit this state as hard as others."
* Mortgage Woes Hurt H&R Block (News Leader, Dec. 26th): "H&R Block's (HRB) plan to sell Option One to Cerberus Capital Management LP, announced in April, fell through by December... HRB said it would shutter most of Option One... The turmoil cost Chairman and CEO Mark Ernst his job... NovaStar Financial Inc. (NFI), also a subprime lender, watched its stock price drop from $105 in January to, at one point, less than $2. Continued losses forced the company to give up its REIT status, incurring large tax payments and leading the NYSE to move to delist NovaStar... Three of NovaStar's top executives will step down early next year: Chairman and CEO Scott Hartman, CFO Gregory Metz and General Counsel Jeff Ayers"
* Making A Profit On The Crashing Market (Seattle PI, Dec. 26th): "J. Kyle Bass conceived a hedge fund that bet on a crash for residential real estate by trading subprime mortgage securities... Bass and investors like him saw opportunity in a range of new investment tools that banks created to sell subprime securities worldwide. These included mortgage bond derivatives, contracts whose values are derived from packages of home loans and are used to hedge risk or for speculation. The vehicles allowed hedge funds such as Bass' to bet against particular pools of mortgages. The new subprime derivatives, which amplified the risks of the underlying mortgages, were sold to banks and institutional investors."
* Indian Mortgage Glass Half-Empty In 2007 (Indian Country, Dec. 26th): "Government numbers released in August [show] the total dollar volume of loans made to Indians and the number of lenders willing to extend credit to Native people fell for 2006, with Indians in danger of being lapped by loans to the much smaller Native Hawaiian contingent... The subprime mortgage crisis shuttered several of the top lenders to Indians, cutting off credit access [although] some of these subprime lenders were accused of predatory lending practices toward Natives. The closure of GreenPoint Mortgage, also shuttered TribalPOINT, an active private-firm mortgage [program which] extended private mortgages to Indians under the HUD-184, Rural Housing Services programs [and] through private mortgages."
* Weekly Guru Bargains Highlights: Ambac Financial Group Inc. (Guru Focus, Dec. 26th): "Analysts predict that Bond insurer Ambac Financial Group, Inc. (ABK) is currently undervalued... Legislation to freeze ARM mortgages [is] good news for bond insurers... Insider buys were made between $25.25-$41.85 as of November: Chairman, President and CEO, Director Robert J. Genader and Senior Managing Director Kathleen A. Mcdonough bought 10,000 shares each, Executive VP John W. Uhlein bought 7,500 shares, Director Thomas C. Theobald bought 4,000 shares, Director Michael A. Callen bought 3,000 shares, Senior Managing Director David W. Wallis bought 2,500 shares, Director Henry D. G. Wallace bought 2,250, and Senior Managing Director Thomas J. Gandolfo bought 1,000 shares."
* Zacks Lowers MGIC Shares To 'Sell' (Milwaukee Journal Sentinel, Dec. 26th): "Zacks Equity Research: The rating on shares of MGIC Investment Corp. (MTG) has been lowered to "sell" from "hold". The mortgage insurance company... expects to post losses through the end of 2008... Q3's $372.5 million loss... "came in substantially below our expectations," Zacks analyst Eric Rothmann wrote... MGIC's "performance trends continue to be negatively impacted by issues within the residential mortgage markets, and expect higher delinquency rates and additional losses from foreclosed loans over the near-term... We are expecting expenses from losses incurred to be substantially elevated over the next year." The company has also cut its quarterly dividend by 90% to $0.02.5/share. Rothmann believes the dividend "remains vulnerable."
Mortgage Lenders
* Wells Fargo Yields to AG Regs (Boston Herald, Dec. 27th): "Wells Fargo (WFC) is refusing to reimburse mortgage brokers across Massachusetts... via a controversial payment system that’s been harshly criticized by Attorney General Martha Coakley. WFC, one of the top mortgage lenders in Massachusetts, told brokers...last week that... it will no longer do business with brokers who use a “yield spread premium” to pay themselves... Traditionally, those seeking mortgages are charged flat upfront point fees to process mortgages [which] many lower-income customers can’t afford... So many brokers... use “ysp” that allow those fees to be paid via higher interest rates spread out over the course of a mortgage loan."
* Most U.S. Stocks Decline on Retail Sales, Home Price Concern (Bloomberg, Dec. 26th): "MBIA, the world's biggest bond insurer, gained $1.84, or 9.2%, to $21.96. Davis Selected Advisers LP, a money manager which also plans to take a $1.2 billion stake in Merrill Lynch & Co., said today in a filing with the SEC that it increased its stake in MBIA to 5.1%.Bear Stearns added $0.49 to $89.29. Billionaire investor Joseph Lewis said he raised his stake in Bear Stearns for the second time this month after the fifth-biggest U.S. securities firm's stock fell 11% in December. Lewis now holds 9.6% of the company, according to a regulatory filing Wednesday."
* Spaces And Places: Home Builders' Solution For State's Housing Slump (San Jose Mercury News, Dec. 25th): "Joseph Perkins, head of the Northern California Home Builders Association... says he will work in 2008 to raise the so-called "conforming" loan limit from $417,000 to $600,000. That refers to loans eligible to be purchased by either Fannie Mae or Freddie Mac. Perkins: "Housing generates $273 billion in economic output in this state. Our governor has declared a fiscal emergency due to diminished tax receipts because of the housing downturn. It makes sense to jump-start housing again by creating some incentives." Building Industry Association: New-home construction in November sank almost 50% from 2006 to 3,200 houses, and more than 20% from October."
http://seekingalpha.com/article/58491-housing-market-tracker-subprime-and-mortgage-review
Quote of the Day
"Interesting presentation. God, I hope you're wrong." – A NY investment firm's chief risk officer said to J. Kyle Bass, a hedge fund manager from Dallas, in August 2006. Bass made a presentation to that CRO's investment firm, drawing a scenario that the housing market would crash Bass offered to set up a hedge fund betting against the housing market. (Seattle PI, Dec. 26th)
Subprime Fallout
* Credit Crunch Amplifies Housing Downturn (Inman News, Dec. 27th): "Private mortgage insurers PMI Group Inc. (PMI) and MGIC Investment Corp. (MTG) have raised or are raising rates for borrowers with lower credit scores and loan-to-value ratios above 95%. Both companies have discontinued mortgage insurance on loans with LTVs above 95% for borrowers with credit scores below 620... MGIC will no longer insure reduced-documentation loans for investment properties or cash-out refinances... Government-sponsored lenders Fannie Mae (FNM) and Freddie Mac (FRE) [announced] new surcharges on most [new] loans... for borrowers with credit scores below 680... Lenders must also be able to provide documentation supporting an assessment that the property is not located in a declining market."
* Online Resources Survey Shows Credit Concerns Not Limited to Mortgages (Fox Business, Dec. 26th): "Online Resources Corporation (ORCC), a leading provider of web-based financial services, today released the results of a survey of U.S. households and billers regarding the effect of the current mortgage crisis on bill payment and collection patterns... The survey of more than 1,000 nationally representative U.S. households finds that Americans are increasingly being forced to prioritize among their bills by creating a "delinquency budget" to determine which bills get paid. While the mortgage bill tends to be the one that households are most likely to pay, businesses across other industries are facing a decreasing share of that delinquency budget."
* Miller Offers Best Way Out Of Mortgage Mess (News Record, Dec. 26th): "In November, the House of Representatives passed a bill to curtail predatory lending that Miller, as well as Reps. Mel Watt and Barney Frank, had sponsored. It would require lenders to provide documentation that applicants can afford the loans they get. It also prohibits prepayment penalties and bans paying bonuses to mortgage brokers for steering people to higher-interest loans when they qualify for ones at lower rates. The bill was modeled after North Carolina law, which is one reason why the subprime crisis hasn’t hit this state as hard as others."
* Mortgage Woes Hurt H&R Block (News Leader, Dec. 26th): "H&R Block's (HRB) plan to sell Option One to Cerberus Capital Management LP, announced in April, fell through by December... HRB said it would shutter most of Option One... The turmoil cost Chairman and CEO Mark Ernst his job... NovaStar Financial Inc. (NFI), also a subprime lender, watched its stock price drop from $105 in January to, at one point, less than $2. Continued losses forced the company to give up its REIT status, incurring large tax payments and leading the NYSE to move to delist NovaStar... Three of NovaStar's top executives will step down early next year: Chairman and CEO Scott Hartman, CFO Gregory Metz and General Counsel Jeff Ayers"
* Making A Profit On The Crashing Market (Seattle PI, Dec. 26th): "J. Kyle Bass conceived a hedge fund that bet on a crash for residential real estate by trading subprime mortgage securities... Bass and investors like him saw opportunity in a range of new investment tools that banks created to sell subprime securities worldwide. These included mortgage bond derivatives, contracts whose values are derived from packages of home loans and are used to hedge risk or for speculation. The vehicles allowed hedge funds such as Bass' to bet against particular pools of mortgages. The new subprime derivatives, which amplified the risks of the underlying mortgages, were sold to banks and institutional investors."
* Indian Mortgage Glass Half-Empty In 2007 (Indian Country, Dec. 26th): "Government numbers released in August [show] the total dollar volume of loans made to Indians and the number of lenders willing to extend credit to Native people fell for 2006, with Indians in danger of being lapped by loans to the much smaller Native Hawaiian contingent... The subprime mortgage crisis shuttered several of the top lenders to Indians, cutting off credit access [although] some of these subprime lenders were accused of predatory lending practices toward Natives. The closure of GreenPoint Mortgage, also shuttered TribalPOINT, an active private-firm mortgage [program which] extended private mortgages to Indians under the HUD-184, Rural Housing Services programs [and] through private mortgages."
* Weekly Guru Bargains Highlights: Ambac Financial Group Inc. (Guru Focus, Dec. 26th): "Analysts predict that Bond insurer Ambac Financial Group, Inc. (ABK) is currently undervalued... Legislation to freeze ARM mortgages [is] good news for bond insurers... Insider buys were made between $25.25-$41.85 as of November: Chairman, President and CEO, Director Robert J. Genader and Senior Managing Director Kathleen A. Mcdonough bought 10,000 shares each, Executive VP John W. Uhlein bought 7,500 shares, Director Thomas C. Theobald bought 4,000 shares, Director Michael A. Callen bought 3,000 shares, Senior Managing Director David W. Wallis bought 2,500 shares, Director Henry D. G. Wallace bought 2,250, and Senior Managing Director Thomas J. Gandolfo bought 1,000 shares."
* Zacks Lowers MGIC Shares To 'Sell' (Milwaukee Journal Sentinel, Dec. 26th): "Zacks Equity Research: The rating on shares of MGIC Investment Corp. (MTG) has been lowered to "sell" from "hold". The mortgage insurance company... expects to post losses through the end of 2008... Q3's $372.5 million loss... "came in substantially below our expectations," Zacks analyst Eric Rothmann wrote... MGIC's "performance trends continue to be negatively impacted by issues within the residential mortgage markets, and expect higher delinquency rates and additional losses from foreclosed loans over the near-term... We are expecting expenses from losses incurred to be substantially elevated over the next year." The company has also cut its quarterly dividend by 90% to $0.02.5/share. Rothmann believes the dividend "remains vulnerable."
Mortgage Lenders
* Wells Fargo Yields to AG Regs (Boston Herald, Dec. 27th): "Wells Fargo (WFC) is refusing to reimburse mortgage brokers across Massachusetts... via a controversial payment system that’s been harshly criticized by Attorney General Martha Coakley. WFC, one of the top mortgage lenders in Massachusetts, told brokers...last week that... it will no longer do business with brokers who use a “yield spread premium” to pay themselves... Traditionally, those seeking mortgages are charged flat upfront point fees to process mortgages [which] many lower-income customers can’t afford... So many brokers... use “ysp” that allow those fees to be paid via higher interest rates spread out over the course of a mortgage loan."
* Most U.S. Stocks Decline on Retail Sales, Home Price Concern (Bloomberg, Dec. 26th): "MBIA, the world's biggest bond insurer, gained $1.84, or 9.2%, to $21.96. Davis Selected Advisers LP, a money manager which also plans to take a $1.2 billion stake in Merrill Lynch & Co., said today in a filing with the SEC that it increased its stake in MBIA to 5.1%.Bear Stearns added $0.49 to $89.29. Billionaire investor Joseph Lewis said he raised his stake in Bear Stearns for the second time this month after the fifth-biggest U.S. securities firm's stock fell 11% in December. Lewis now holds 9.6% of the company, according to a regulatory filing Wednesday."
* Spaces And Places: Home Builders' Solution For State's Housing Slump (San Jose Mercury News, Dec. 25th): "Joseph Perkins, head of the Northern California Home Builders Association... says he will work in 2008 to raise the so-called "conforming" loan limit from $417,000 to $600,000. That refers to loans eligible to be purchased by either Fannie Mae or Freddie Mac. Perkins: "Housing generates $273 billion in economic output in this state. Our governor has declared a fiscal emergency due to diminished tax receipts because of the housing downturn. It makes sense to jump-start housing again by creating some incentives." Building Industry Association: New-home construction in November sank almost 50% from 2006 to 3,200 houses, and more than 20% from October."
http://seekingalpha.com/article/58491-housing-market-tracker-subprime-and-mortgage-review
Friday, December 28, 2007
Bad Credit Debt Consolidation Mortgage – At Relatively Low Interest Rate
Are you fed up of giving various payments to different creditors. Looking for a program that can bring down your payments by making you debt free within short period? Avail bad credit debt consolidation mortgage.
What is a bad credit debt consolidation mortgage?
A bad credit debt consolidation mortgage is a loan to repay one’s consolidated debt in spite of the bad credit incurred. In other words easing the debt burden off faster is possible through refinancing of the mortgage which means that one pays less interest and swings off the hook by repaying the principal amount.
Comparative shopping for bad credit debt consolidation mortgage loans:
When you undertake debt consolidation loans, having bad credit does not always entail high charges as penalty. Comparative shopping for online consumer debt consolidation loans enables huge savings on these debt consolidation loans which means you have more cash to pay off your debts.
Check out the online quotes offered by consumer debt consolidation agencies. Use a debt consolidation calculator available online to check your stand. Surf the Internet for websites of lenders and brokers. Most websites will display rates of interest lenders are likely to offer but if you are seeking a bad credit debt consolidation mortgage, then, be specific about the quotes.
Financial institutions offer a variety of mortgage loans especially the home equity loans which spell low rates of interest and flexible repayment terms in exchange for collateral like real estate, bonds or shares. A home equity loan is akin to a second mortgage on your asset, the home, and it borrows a portion of or the entire equity though the safeguard is that a line of credit enables one to withdraw the entire equity at a time as and when required.
What to watch for when undertaking a debt consolidation loan:
* Do not jump for the first lender you come across. Check out all options: financial institutions, traditional lenders, private investors and sub prime lenders. The best deals essentially come through from the smaller lenders.
* Know whether the lenders you liaise with are legitimate ones or not. Check out the schemes, questionnaires, costs entailed.
* Know whether the interest rates can be worked on for mutual benefit eventually and whether mortgages can be refinanced once the bad credit has been reasonably eliminated.
* Understand the language the lenders speak and do not sign documents without comprehending them in full.
* Learn to manage your money. Budget your income and expenses every month, avoid credit cards and use cash when making purchases. Keep track of the repayments and make them regularly to avoid penalties and loss of the collateral.
http://www.americanchronicle.com/articles/viewArticle.asp?articleID=47345
What is a bad credit debt consolidation mortgage?
A bad credit debt consolidation mortgage is a loan to repay one’s consolidated debt in spite of the bad credit incurred. In other words easing the debt burden off faster is possible through refinancing of the mortgage which means that one pays less interest and swings off the hook by repaying the principal amount.
Comparative shopping for bad credit debt consolidation mortgage loans:
When you undertake debt consolidation loans, having bad credit does not always entail high charges as penalty. Comparative shopping for online consumer debt consolidation loans enables huge savings on these debt consolidation loans which means you have more cash to pay off your debts.
Check out the online quotes offered by consumer debt consolidation agencies. Use a debt consolidation calculator available online to check your stand. Surf the Internet for websites of lenders and brokers. Most websites will display rates of interest lenders are likely to offer but if you are seeking a bad credit debt consolidation mortgage, then, be specific about the quotes.
Financial institutions offer a variety of mortgage loans especially the home equity loans which spell low rates of interest and flexible repayment terms in exchange for collateral like real estate, bonds or shares. A home equity loan is akin to a second mortgage on your asset, the home, and it borrows a portion of or the entire equity though the safeguard is that a line of credit enables one to withdraw the entire equity at a time as and when required.
What to watch for when undertaking a debt consolidation loan:
* Do not jump for the first lender you come across. Check out all options: financial institutions, traditional lenders, private investors and sub prime lenders. The best deals essentially come through from the smaller lenders.
* Know whether the lenders you liaise with are legitimate ones or not. Check out the schemes, questionnaires, costs entailed.
* Know whether the interest rates can be worked on for mutual benefit eventually and whether mortgages can be refinanced once the bad credit has been reasonably eliminated.
* Understand the language the lenders speak and do not sign documents without comprehending them in full.
* Learn to manage your money. Budget your income and expenses every month, avoid credit cards and use cash when making purchases. Keep track of the repayments and make them regularly to avoid penalties and loss of the collateral.
http://www.americanchronicle.com/articles/viewArticle.asp?articleID=47345
Sunday, December 16, 2007
A Top Secret Investment Opportunity: Don't Fight the Fed!
How the world has changed! Marty Zweig's 1986 book, Winning on Wall Street, gained a lot of popularity after he famously called the market crash of 1987. One of the most noted Zweig precepts was the following: Don't Fight the Fed!
What has changed?
The Challenge
Fed policy under Bernanke has a new challenge. The seizure in the credit markets has created a situation where the Fed Open Market Committee sees a challenge that has several different dimensions. From their perspective, the problem is not just one of adding liquidity. The Fed is attempting to address two specific additional concerns:
1. The elevated LIBOR rate -- something that affects Adjustable Rate Mortgages, swaps, and many business loans. LIBOR, a rate little understood by equity traders, reflects the interest charged by non-US banks holding dollar deposits. It is elevated because the banks are unsure of the counter party exposure to structured investment vehicles that include mortgage securities. The lack of transparency in other bank's holdings makes short-term lending problematic. Why reach for a little yield, when there is a risk of bank failure? When LIBOR was adopted in many agreements, it reflected a reasonable risk premium to Treasury Bills. That was the usefulness - something better than the prime rate. The agreements did not contemplate a situation like the current one.
2. Banks holding mortgage investments on their balance sheets may have difficulty in using these as collateral for additional lending. This limits their ability to do future lending, an important consideration. The discount window accepts these assets as collateral, but the rate is higher and there is still a stigma attached to this approach.
The Fed Reaction
The Fed chose this week to target the specific problem rather than to cut fed funds by 50 bp's instead of 25 bp's. Was this wise?
As we noted in our reaction to the Fed policy, the proposed auction process, the Term Auction Facility [TAF] is explicitly targeted to the perceived problems. We see the Fed as completely engaged in the process of reducing LIBOR and creating a market for mortgage holdings.
Earth to traders! The concept of not fighting the Fed has a new dimension. Get with it, or lose.
The Fed succeeded only marginally with its effort at expanding borrowing through the discount window. It is trying something else. If it works, they will do more of it. If it does not, they will try something else.
The Market Reaction
We are struggling to recall a reaction to a new policy that was more negative. Partly because of the market decline on the day of the Fed announcement, and partly because of the timing of the new policy initiative, nearly everyone is negative.
Leading market pundits of both bullish and bearish persuasions condemn the Fed. Some are unhappy that the markets were misled. Some think the policy will be ineffective. Traders must remember that each day is a new one. Complaints about the sloppy Fed timing of announcements have little bearing on future prospects.
In his excellent blog, Harvard Economist Greg Mankiw highlights the bad press for the Fed. He notes, as we did last week, the divergence of opinion between professional economists and everyone else.
Our Perspective
When so many people have the same reaction, and we think it is incorrect, it provides an unusual opportunity. Leading critics think that the Fed members are not as intelligent as they are, that they are all academics and therefore out of touch, that they are "behind the curve", that another 25 bp's of fed funds would have made the difference, and that the Fed should include trucking company executives and fund managers (to pick at random two recent comments). More on these criticisms in future articles.
The criticisms often point to the lack of reaction in current LIBOR rates (using many incorrect time periods and many irrelevant expirations), while declaring the Fed's innovative TAF as dead on arrival. Anyone thinking this through should realize that the impact on LIBOR cannot be expected to happen until the auctions take place. We shall see this week.
Conclusion
We acknowledged that the timing of the Fed announcements lacked sensitivity to market reactions. The "false signals" were neither planned nor expected. Those who do not understand government agencies tend to impute motives that were not really there. They think that organizations behave like a unitary actors -- with a clear, rational plan in mind.
The simple explanation is that the Fed is doing multiple things, with various other cooperating agencies, on different schedules with different announcement timetables. One of the advantages for our readers is that we have the only approach (we think) that describes for readers the actual policy-making process.
Could the Fed have done better? Sure. But the process of transparency in policy announcements is new, and still developing. Meanwhile, the question for investors is what to do now. We take the approach that no one is stupid. We look for the best information from all sources.
We do not know whether the TAF will be successful, and neither does the Fed. They are attempting something innovative that might work. If it does, you will soon see many articles in mainstream publications that will get around to explaining what economists and our readers already know. It could be a solid market catalyst, and that is our position going into this week.
For readers with futures accounts, we have bought a few Jan 08 Eurodollar contracts. This is an interest rate instrument based upon LIBOR that should rally if the TAF is successful. For those who do not trade futures, a perceived success in the auctions should also help equities.
A Final Thought
http://seekingalpha.com/article/57373-a-top-secret-investment-opportunity-don-t-fight-the-fed
What has changed?
The Challenge
Fed policy under Bernanke has a new challenge. The seizure in the credit markets has created a situation where the Fed Open Market Committee sees a challenge that has several different dimensions. From their perspective, the problem is not just one of adding liquidity. The Fed is attempting to address two specific additional concerns:
1. The elevated LIBOR rate -- something that affects Adjustable Rate Mortgages, swaps, and many business loans. LIBOR, a rate little understood by equity traders, reflects the interest charged by non-US banks holding dollar deposits. It is elevated because the banks are unsure of the counter party exposure to structured investment vehicles that include mortgage securities. The lack of transparency in other bank's holdings makes short-term lending problematic. Why reach for a little yield, when there is a risk of bank failure? When LIBOR was adopted in many agreements, it reflected a reasonable risk premium to Treasury Bills. That was the usefulness - something better than the prime rate. The agreements did not contemplate a situation like the current one.
2. Banks holding mortgage investments on their balance sheets may have difficulty in using these as collateral for additional lending. This limits their ability to do future lending, an important consideration. The discount window accepts these assets as collateral, but the rate is higher and there is still a stigma attached to this approach.
The Fed Reaction
The Fed chose this week to target the specific problem rather than to cut fed funds by 50 bp's instead of 25 bp's. Was this wise?
As we noted in our reaction to the Fed policy, the proposed auction process, the Term Auction Facility [TAF] is explicitly targeted to the perceived problems. We see the Fed as completely engaged in the process of reducing LIBOR and creating a market for mortgage holdings.
Earth to traders! The concept of not fighting the Fed has a new dimension. Get with it, or lose.
The Fed succeeded only marginally with its effort at expanding borrowing through the discount window. It is trying something else. If it works, they will do more of it. If it does not, they will try something else.
The Market Reaction
We are struggling to recall a reaction to a new policy that was more negative. Partly because of the market decline on the day of the Fed announcement, and partly because of the timing of the new policy initiative, nearly everyone is negative.
Leading market pundits of both bullish and bearish persuasions condemn the Fed. Some are unhappy that the markets were misled. Some think the policy will be ineffective. Traders must remember that each day is a new one. Complaints about the sloppy Fed timing of announcements have little bearing on future prospects.
In his excellent blog, Harvard Economist Greg Mankiw highlights the bad press for the Fed. He notes, as we did last week, the divergence of opinion between professional economists and everyone else.
Our Perspective
When so many people have the same reaction, and we think it is incorrect, it provides an unusual opportunity. Leading critics think that the Fed members are not as intelligent as they are, that they are all academics and therefore out of touch, that they are "behind the curve", that another 25 bp's of fed funds would have made the difference, and that the Fed should include trucking company executives and fund managers (to pick at random two recent comments). More on these criticisms in future articles.
The criticisms often point to the lack of reaction in current LIBOR rates (using many incorrect time periods and many irrelevant expirations), while declaring the Fed's innovative TAF as dead on arrival. Anyone thinking this through should realize that the impact on LIBOR cannot be expected to happen until the auctions take place. We shall see this week.
Conclusion
We acknowledged that the timing of the Fed announcements lacked sensitivity to market reactions. The "false signals" were neither planned nor expected. Those who do not understand government agencies tend to impute motives that were not really there. They think that organizations behave like a unitary actors -- with a clear, rational plan in mind.
The simple explanation is that the Fed is doing multiple things, with various other cooperating agencies, on different schedules with different announcement timetables. One of the advantages for our readers is that we have the only approach (we think) that describes for readers the actual policy-making process.
Could the Fed have done better? Sure. But the process of transparency in policy announcements is new, and still developing. Meanwhile, the question for investors is what to do now. We take the approach that no one is stupid. We look for the best information from all sources.
We do not know whether the TAF will be successful, and neither does the Fed. They are attempting something innovative that might work. If it does, you will soon see many articles in mainstream publications that will get around to explaining what economists and our readers already know. It could be a solid market catalyst, and that is our position going into this week.
For readers with futures accounts, we have bought a few Jan 08 Eurodollar contracts. This is an interest rate instrument based upon LIBOR that should rally if the TAF is successful. For those who do not trade futures, a perceived success in the auctions should also help equities.
A Final Thought
http://seekingalpha.com/article/57373-a-top-secret-investment-opportunity-don-t-fight-the-fed
Bush lets banks write rules for mortgage relief
President George W. Bush and Treasury Secretary Henry Paulson have unveiled their subprime mortgage relief plan, which they call the “New Hope Alliance.” The corporate media coverage of Bush’s Dec. 6 announcement was massive. Sadly, the number of families whom this plan will help is miniscule.
Subprime mortgage loans are characterized by interest rates that start at 1 percent to 2 percent but soon “reset” to much higher rates. The Bush administration claims its plan will help families avoid foreclosure by freezing interest rates on some subprime loans for the next five years.
The administration has attempted to portray its mortgage relief plan as a lifeline for at-risk borrowers. But the plan is more akin to a wish list for the very same banks and mortgage lenders whose insatiable greed helped create the currently unfolding economic crisis.
The Bush-Paulson plan includes a maze of eligibility requirements that are designed to disqualify all but a handful of the more than 2 million households facing foreclosure. Housing advocacy groups estimate that less than 2 percent of subprime borrowers nationwide would qualify for a rate freeze under the administration’s plan. And it provides no help for the growing number of renters across the country who have been left homeless since their landlords entered foreclosure due to a subprime loan.
The Bush administration has ensured, however, that the plan is agreeable to mortgage lenders and Wall Street banks by making lender participation in the relief plan completely voluntary. In other words, the banks and mortgage lenders don’t have to freeze interest rates if they don’t want to. They are likely to do so only if they decide that the housing market is so glutted that going the foreclosure route could leave them stuck with property that can’t be sold.
This hollow “relief” plan stands in stark contrast to the hundreds of billions of dollars in bailout money that the Federal Reserve has handed the Wall Street banks and investment funds over the past few months.
These bailout funds have come in the form of massive liquidity infusions and central bank purchases of collateralized debt obligations. CDOs are asset-backed securities that are tied to mortgage loans. Banks such as Citigroup and Bank of America hold this now-worthless paper in massive quantities. The Federal Reserve has been attempting to bail the major banks out of their crisis by essentially taking the worthless paper off the banks’ balance sheets.
Working-class households are entering into foreclosure and bankruptcy at levels not seen since the Great Depression, yet it is the rich capitalist investors and bankers who are given hundreds of billions of dollars in rescue funds.
Across the country, once-vibrant working-class communities have turned into near ghost towns as “For Sale” signs and boarded-up windows have become ubiquitous. Workers are also suffering under the weight of rising food and energy costs at the same time that the economic downturn is intensifying the bosses’ drive to slash wages and cut jobs. Yet the only relief plan the president can conjure up is to tell workers to “hope” that banks will voluntarily freeze interest rates on some mortgages.
Recent polls suggest that the economy is fast becoming the number one issue on the minds of potential voters in the 2008 election. Eager to garner votes, the Democrats have also been outlining proposals for mortgage relief. It’s part of a debate within the ruling class over how to smooth over some of the massive fallout from the currently unfolding crisis.
“Relief” for the working class will not come through the empty proposals of ruling-class politicians. It takes the organized resistance of the multinational working class against the banks and swindlers on Wall Street who are robbing workers of their homes. Democrats and Republicans can debate back and forth endlessly over their mortgage plans, with little consequence. But millions of workers in the streets demanding a moratorium on foreclosures, layoffs and wage cuts would create the potential for truly lasting relief.
Articles copyright 1995-2007 Workers World. Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.
http://www.workers.org/2007/us/mortgages-1220/
AM, Sun 16th Dec - UK house prices: Spin on this
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values, house prices will fall...
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values, house prices will fall...
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values, house prices will fall...
Posted: 10:04 am, 16th December 2007
UK house prices have risen according to Government figures. And, as the DCLG index uses data from the land registry, it would seem the opinionated 'gloomers' writing articles for media these days have got it all wrong. Again!
I was looking back at some house price forecasts from the so called 'experts' over the past 5 years. Our hastiness to fall for the spin that is spun by freelance editors listening to these predictions is worrying to say the least.
Most experts are actually still predicting a positive outlook for house prices in 2008. Knight Frank believe house prices will rise 10% in prime London while the Council of Mortgage Lenders (CML) predict a 2-3% rise. Lombard, Nationwide, HSBC, Hometrack and Savills all predict 0-5% growth during 2008. In fact, the only notable gloomers are HousePriceCrash.co.uk and FirstRung.co.uk - hardly suprising considering their alliance.
We will brush past the rediculous 35% fall for 2008 predicted by HousePriceCrash.co.uk and focus on the much publicised fall predicted by the well respected Capital Economics, one of the leading economic research consultancies in the UK and founded by Roger Bootle who is one of the City of London’s best known economists, having worked in or around the financial markets since 1978.
As many people are placing a good deal of their faith on such organisations, I thought it pertinent to highlight some cracks.
Capital Economics predicted that house prices were going to fall by some staggering 20% from January 2005 through to January 2007. Clearly, Mr Bootle has a bad opinion of our own property market. And, it would seem, a knack for getting things glaringly wrong. House prices actually rose by some 22% over this period making the Capital Economic prediction a massive 42% wide of the mark.
FirstRung.co.uk and HousePriceCrash.co.uk are new additions to the prediction pile - mainly because they are trying to make up the numbers in the notable absence of past public prophets.
It would seem predicting house prices is an impossible task. Those that do stick their necks out usually get it wrong and those that don't just sit back and laugh at the endless spin.
I read an article on FirstRung.co.uk that had the headline "UK house prices crash 1.1%". A little desperate I am sure you will agree. Aside from the fact that house prices haven't crashed, such a minute 'fall' certainly doesn't justify such a ludicrous spin. Strangely, this actually filled me with some confidence. If such websites are declaring a crash at a time when a crash is not even close it surely shows that they have decided to clutch at as many straws as they can!
The worrying factor here is that consumer confidence and sentiment dictates house prices. After-all, if we decide to lower our values out of fear of a falling market, house prices will innevitably fall. This is actually the main problem, not the housing market or house prices themsleves.
With RightMove reporting a drop in prices, it would seem that this theory is correct. Asking prices have fallen because the press are spinning yarns fuelled by wild predictions from historically innacurate forecasters influenced by largely unreliable data.
If we ignore the spin and focus on the actual prices of property sold we will surely not go far wrong. For the most accuarate index look to the DCLG data. They showed house prices rising 0.5% in November following a rise of 0.7% in October.
Strange then how so many other less reliable indices are showing house prices falling!? It would seem innacurate information is available in abundance.
A friend once said to me - "54.9% of statistics are made up on the spot".
Vote in Congress backs law to help subprime victims
The US Senate passed a bill yesterday that could help an estimated 200,000 homeowners avoid foreclosure, bringing lawmakers a step nearer to enacting legislation addressing the subprime mortgage crisis after weeks of deadlock.
The Senate bill raises the limit on the number of loans available through the Federal Housing Administration by allowing the federal agency that insures mortgage loans to halve the required downpayment for an FHA loan. It also increases the maximum allowable loan to $417,000.
The legislation passed on a 93-1 vote days after Harry Reid, the Senate majority leader, called on President George W. Bush to intervene in a long-running standoff with Republican lawmakers over the housing legislation.
The White House urged Congress to pass FHA reform when it unveiled its own industry-backed plan to address the housing meltdown. But the bill was stalled for weeks because of objections from Tom Coburn, a Republican senator. Hr said the FHA bill would create more liability for the government by leading to more, not fewer, risky loans.
Chuck Schumer, a New York Democratic senator, said: "It was past time to approve a proposal like this that can help a good number of Americans save their homes."
The Senate version of the legislation differs from the proposal passed in the House of Representatives, which has higher loan limits and more flexible downpayment standards. A White House spokesman said Mr Bush was pleased the Senate had passed the bill, but that he had "some concerns" with both versions. He is, nevertheless, expected to sign the bill into law once both houses agree on the final legislation.
Democrats feel that White House moves to tackle the mortgage crisis do not go far enough. But until yesterday, the Senate had failed to gather the political consensus needed to pass any legislation to address the housing meltdown.
http://www.ft.com/cms/s/0/cadc0304-aaaf-11dc-a779-0000779fd2ac.html
The Senate bill raises the limit on the number of loans available through the Federal Housing Administration by allowing the federal agency that insures mortgage loans to halve the required downpayment for an FHA loan. It also increases the maximum allowable loan to $417,000.
The legislation passed on a 93-1 vote days after Harry Reid, the Senate majority leader, called on President George W. Bush to intervene in a long-running standoff with Republican lawmakers over the housing legislation.
The White House urged Congress to pass FHA reform when it unveiled its own industry-backed plan to address the housing meltdown. But the bill was stalled for weeks because of objections from Tom Coburn, a Republican senator. Hr said the FHA bill would create more liability for the government by leading to more, not fewer, risky loans.
Chuck Schumer, a New York Democratic senator, said: "It was past time to approve a proposal like this that can help a good number of Americans save their homes."
The Senate version of the legislation differs from the proposal passed in the House of Representatives, which has higher loan limits and more flexible downpayment standards. A White House spokesman said Mr Bush was pleased the Senate had passed the bill, but that he had "some concerns" with both versions. He is, nevertheless, expected to sign the bill into law once both houses agree on the final legislation.
Democrats feel that White House moves to tackle the mortgage crisis do not go far enough. But until yesterday, the Senate had failed to gather the political consensus needed to pass any legislation to address the housing meltdown.
http://www.ft.com/cms/s/0/cadc0304-aaaf-11dc-a779-0000779fd2ac.html
Mortgage pain starts to hit spending
Half of homeowners whose mortgage rates have risen in the past year have cut back on spending to pay the more expensive loans, according to Bank of England research published today.
The rise in the number of households struggling to pay their debts is small but likely to fuel concerns about the ability of the 1.4m homeowners on fixed rates facing a sharp jump in repayments when their deals expire.
The NMG Research survey of 2,000 people in the Bank's quarterly bulletin found
8 per cent of homeowners with loans reported problems paying for their accommodation, similar to last year, but up on 2005. Almost one-quarter of those coming off cheap fixed-rate deals reported problems and 22 per cent found it difficult to service their new loans.
According to the article by Matt Waldron and Garry Young: "This was appreciably higher than the 5 per cent of mortgagors on continuing fixed-rate deals who reported problems." Of the total number of mortgage-holders, 16 per cent said that they had been on a fixed-rate deal that had expired over the year. Most reported a rise in repayments of £59 a month, or about 12 per cent of their average monthly repayments. The rise in mortgage payments was equivalent to 0.4 per cent of total household disposable income, the research said.
Another 38 per cent of homeowners with a mortgage were on a fixed rate and 23 per cent said their deal would expire within the next year.
About 30 per cent of people with mortgages owe more than £5,000 on top of their mortgage. Six per cent of those with a mortgage reported their unsecured debts were a heavy burden.
The Bank has been monitoring household finances to see whether the number of people getting into financial difficulty is large enough to pose a threat to the economy.
The survey was conducted in September, when the Bank's main rate was 5.75. It cut its main rate to 5.5 per cent this month.
*UK house prices slumped for the second month in a row from November to December, with the annual measure hitting a 21-month low, online estate agent Rightmove said today.
House prices in mid-December were 3.2 per cent lower on the month, the sharpest monthly decline since the series began in January 2002. The largest decline was a 6.8 per cent drop in Greater London followed by a 3.8 per cent slide in south-east England.
http://www.ft.com/cms/s/0/1f09c216-ac42-11dc-82f0-0000779fd2ac.html
The rise in the number of households struggling to pay their debts is small but likely to fuel concerns about the ability of the 1.4m homeowners on fixed rates facing a sharp jump in repayments when their deals expire.
The NMG Research survey of 2,000 people in the Bank's quarterly bulletin found
8 per cent of homeowners with loans reported problems paying for their accommodation, similar to last year, but up on 2005. Almost one-quarter of those coming off cheap fixed-rate deals reported problems and 22 per cent found it difficult to service their new loans.
According to the article by Matt Waldron and Garry Young: "This was appreciably higher than the 5 per cent of mortgagors on continuing fixed-rate deals who reported problems." Of the total number of mortgage-holders, 16 per cent said that they had been on a fixed-rate deal that had expired over the year. Most reported a rise in repayments of £59 a month, or about 12 per cent of their average monthly repayments. The rise in mortgage payments was equivalent to 0.4 per cent of total household disposable income, the research said.
Another 38 per cent of homeowners with a mortgage were on a fixed rate and 23 per cent said their deal would expire within the next year.
About 30 per cent of people with mortgages owe more than £5,000 on top of their mortgage. Six per cent of those with a mortgage reported their unsecured debts were a heavy burden.
The Bank has been monitoring household finances to see whether the number of people getting into financial difficulty is large enough to pose a threat to the economy.
The survey was conducted in September, when the Bank's main rate was 5.75. It cut its main rate to 5.5 per cent this month.
*UK house prices slumped for the second month in a row from November to December, with the annual measure hitting a 21-month low, online estate agent Rightmove said today.
House prices in mid-December were 3.2 per cent lower on the month, the sharpest monthly decline since the series began in January 2002. The largest decline was a 6.8 per cent drop in Greater London followed by a 3.8 per cent slide in south-east England.
http://www.ft.com/cms/s/0/1f09c216-ac42-11dc-82f0-0000779fd2ac.html
Wednesday, November 14, 2007
Buy to Let Mortgages
Buy to Let Mortgages are mortgages specifically designed for people wanting to invest in the property market by purchasing one or more houses and letting them out to private tenants. They differ from other mortgages as the lender allows the rental revenue to be considered as income when considering the ability of the buyer to meet the mortgage payments.
If you have money to invest in another property and you have made the decision to buy and let then here are a few important things to consider.
Choose the Right Property
One of the key points of consideration is the location of your property. This should take up most of your time, as you will need to investigate many locations before coming up with a short list.
You can cut down on some of the work by consulting letting agents in you areas you are considering as they can give you some priceless information on the supply and demand of rental properties in the area.
As part of your research you should also consider whether there are organisations, public services or Schools/Universities nearby. They could all provide you with a steady supply of tenants.
You should also consult The Association of Residential Letting Agents (ARLA). They can give you contact details of ARLA-registered agents in your area and they will also have information on regulations and rental prices in your area of interest.
Once you have made a decision on what and where to buy you now need to get the right mortgage.
Choosing a Buy to Let Mortgage
As a general rule most lenders in the UK will give you up to 85% of the property value. Of course if you can prove that the rental income could cover a higher mortgage then they may also take this into consideration. However, it's still best to come up with a good deposit. Another rule of thumb is to try and ensure your rental income is 125% of your mortgage payments. This will ensure you not only cover rental costs but also and maintenance expenses too. Remember, the property is a long-term investment so don't think you'll be creating a nice income from the rent minus the mortgage payments.
Costs Involved
You will obviously have done your sums and know how much rental you will receive plus any on-going costs. Also make sure to include any hidden costs such as solicitor fees, insurance, stamp duty, and potential rise in interest rates, which could affect your mortgage.
As a landlord you will also have additional health and safety considerations so you may need to modify the property to adhere to fire regulations etc.
Conclusion
Taking on a buy to let property and mortgage can be a very exciting venture. Get it right and you could start yourself out on the road to building a very nice property portfolio. But get it wrong and you can land yourself into a lot of financial trouble.
But if you follow the basic principles laid down in this article it will give you a good starting point on the key areas to consider before making the move.
Paul Hockney is an online loan expert who provides Debt Consolidation Secured Loan tips and advice.
The Secret is Out About Reverse Mortgages
As predicted, it's another recording breaking year for reverse mortgage volume. Over 90,000 FHA insured reverse mortgages were done in FY 2007 which ended on Sept. 30. This breaks the previous year's number of 76,000 + for fiscal 2006. And compare that to 43,121 loans in FY 2005. These are significant numbers for a loan product that is still considered to be in its infancy, barely a blip on the radar screen to many loan officers.
If you haven't done so already, it's time to sit up and take notice of this innovative loan that can change the lives of your clients, and change your business in the process. Let's take a look at some recent data, and see if you will decide to get "ready in reverse".
The first of the 77 million baby boomers in our country (those born between 1946 and 1964,) turned 60 in 2006. As with just about everything they have touched, they're going to have a dramatic impact on our economy as they age and move toward retirement. This is the largest generation in our country's history and they will define retirement on their terms. Travel, purchasing vacation properties, and helping children and grandchildren are goals sited for their future. However, it is no secret that many are not financially prepared for the lifestyle they want in their retirement years, and may continue working well past their intended retirement age.
Are you missing the opportunity to serve this demographic group as part of your overall strategy? The reverse mortgage can unlock built up equity that would otherwise be doing little or nothing for the senior homeowner. Utilizing your expertise, you become the solution when you show them how to effectively use this equity. When you combine the easy qualification guidelines, the fact that the loan proceeds are tax free, and the desire of seniors to remain at home, the possibilities are endless. As this product becomes more mainstream, the demand will increase for many years to come. New products as well as improvements to existing ones are on the horizon.
We all know the importance of maintaining those Realtor relationships in this uncertain market, and one thing is certain- your Realtor partners are hungry for the information. When you show them how a senior client can access tax-free funds from this mortgage and use those funds toward a vacation property or second home, you have just cemented that relationship. Help them build their business in a way they have probably not heard about before. You will be viewed as the expert, an innovator, and someone who really is a partner. Try speaking about reverse mortgages at your local board of Realtors (I teach a class for continuing ed once per quarter). Watch the reaction you'll get. That is just one way to market this product- there are many, many more.
No doubt the next several years will also be record setting years for these types of mortgages. As the population ages and the need to use equity as a financial tool in the retirement years becomes evident, it will become the natural product of choice. Many savvy financial experts are already including discussions about reverse mortgages in their overall planning strategy. There is even a product that targets the affluent senior. Imagine showing your client who has a home valued at $2 or $3 million how they can access tax free funds and never make a mortgage payment! No longer is this a product only for the destitute.
Loan originators who will be truly successful over the long term in this niche will be "ready for reverse". You'll need a game plan that is different from most things you have done in the past with your "forward" loans. Seniors will be among the most loyal customers you have ever seen. In addition, it is often their children who first investigate them for the seniors, and here is your chance to shine and win over that business as well. Frequently, after closing, I'll get a call a month or so later asking me if I can handle a refi or "move up" purchase for another member of the family. You can increase your sphere many times over just by doing one reverse mortgage.
There has never been a better time to embrace this niche product that targets the fastest growing age group in our country. Don't let another year go by...waiting could be costly.
Sue Haviland is a Certified Senior Advisor and founder of Reverse Mortgage Success where hundreds of loan officers around the country are learning the insider secrets to success in the fastest growing niche the mortgage industry has ever seen. She is an in-the- trenches loan officer who still originates every day.
Sign up for a free mini-course about reverse mortgages at http://www.reversemortgagesuccess.com and see what all the buzz is about.
Bad Credit Mortgages and IVAs
In times of rising interest rates and spiralling household debts, some people are left with no option other than to reorganise their finances in order to avoid bankruptcy.
One of the most popular methods of gaining relief from unmanageable debt is through Individual Voluntary Arrangements (IVAs).
The popularity of IVAs increases after long periods of low interest rates and excessive borrowing that are followed by periods of rapidly increasing interest rates. This is because the cost of the money previously borrowed will increase.
When this situation occurs, people who have over borrowed are forced to find solutions to their debt problems as they can no longer afford to keep up with their loan repayments.
An IVA is one of several ways of reorganising debts and using any surplus household funds to make repayments each month. IVAs are not an easy way out of debt and the rules are strict.
An alternative to IVAs is a debt consolidation loan. A debt consolidation loan is also called a bad credit mortgage and is secured against the borrower's home.
A bad credit mortgage allows for individual debts to be consolidated into one loan and the amount that can be borrowed will be based on the equity value of the applicant's home.
A bad credit mortgage can make the repayment regime of various individual debts more manageable as their will only be one monthly repayment amount to pay each month. This can help considerably with household budgeting.
When credit cards, personal loans, store cards, and other debts are consolidated into one bad credit mortgage, the loan products that originally had a shorter term will now have the same term as the bad credit mortgage. This means that although the amount of the monthly payments reduces, more money is repaid in the long term.
Neither an IVA nor a bad credit mortgage represents an easy way out of financial difficulties.
If you are facing debt problems, advice should be sought from debt counsellors and independent mortgage brokers in order to discover whether an IVA, a bad credit mortgage, or a different option altogether is the best solution to your debt problems.
UK Mortgage Source provides up-to-date Bad Credit Mortgage information.
Canadian Mortgages and Future Predictions
Mortgage Brokers in Canada
Surprisingly, one of the recently conducted surveys revealed that only 43% of people actually shopped around for the best mortgage, including mortgages packaged by brokers. Comparing rates of various lenders can help you save tens of thousands of dollars, get flexible terms and also get valuable assistance with hefty down payments.
Types of Mortgages in Canada
A fixed rate mortgage has a “fixed” rate of interest. The benefit offered by a fixed rate is that it remains constant throughout the life of the loan. These mortgages allow for consistency and are not dependent upon the marketplace. Experts recommend fixed rate mortgages so that borrowers as well as lenders can predict exactly what their payments will be every month.
With an adjustable rate mortgage, the interest rate is tied to the Bank of Canada’s interest rates. The major benefit of an adjustable rate mortgage is the low monthly payment during the time that the economy is faring well. However, there is the risk that interest rates could go up substantially if the market is not favorable. Many lenders entice borrowers by offering lower initial interest rates, which can increase a few fractions of a point each year. Within a few years, these rates can be much higher than traditional, fixed rate loans.
One of the more popular mortgages in Canada is called a “refi”, which is the refinancing of one loan by taking out a new loan, using the same property as collateral. Borrowers are cautioned to make sure the savings outweigh any fees associated with the refinancing. The reason these mortgages have become so popular in Canada is because many borrowers wish to escape their adjustable rate mortgages.
Mortgage Market Prediction
Canadian mortgage rates are directly affected by the actions of the Bank of Canada. By monitoring the interest rate on bonds issued by the Bank, anyone can get an indication of interest rate directions. The bond market is essentially a reflection of investors’ interest rate expectation for the future of the Canadian economy.
Investors who do their homework know that bond rates have been declining. The decline in bond rates results in lower interest rates on mortgages in Canada. The Bank of Canada has backed away from increasing rates due to recent unrest in the market. However, there is speculation the Bank of Canada may slightly raise interest rates in the coming months.
Please contact Maryam for more information: Vancouver Mortgage Broker
Reverse Mortgages - Fixed Interest Rates & 2nd Homes - Deal with the Direct Lender
In the financial world, going in reverse can mean gaining ground! By using a Reverse Mortgage, many seniors are getting money out of their homes by using equity to earn a tax-free income. If you own a home or condo worth $ 100,000 +, a Reverse Mortgage can be a major benefit. With real estate values continuing to drop, now is the time to take advantage of the various Reverse Mortgage programs before property values drop further. "For many seniors their home is the largest asset," said Stu Naar, Branch Manager for US Financial Mortgage Corp. in Boca Raton, Florida, and "although many shudder at the thought of borrowing on it, a home is a viable way to increase monthly income, providing extra cash for future stability."
As Reverse Mortgages gain in popularity, we now have more programs to offer with Fixed Interest Rates, and loans for 2nd homes. The reverse mortgage doesn't have to be paid until the homeowner sells the home or passes away, and the title to the home will remain in their name. Many people are confused about this product line. "Even if you have a current "forward" mortgage, the reverse mortgage may be the answer because the current mortgage would be paid off and you would still have additional savings," remarked Naar. There are 4 "Nevers" to keep in mind with a Reverse Mortgage.
1) You NEVER make a payment while living in the home.
2) You NEVER give up title to YOUR home
3) You are NEVER forced to move out
4) You and your estate can NEVER owe more than the value of the property at the time of sale.
A reverse mortgage is not only for homeowners that are financially strapped; it is also a means of improving a senior's quality of life. This is without a doubt, a true "Financial Strategy" that seniors should consider, especially if they are planning on staying in the property for at least 3-4 years or more.
Most banks are not originating Reverse Mortgages, since their profit is realized only when the loan is paid in full at the time the owners decide to sell the property. The homeowner does not make any monthly payments on the money taken with a Reverse, and pays off the total whenever they are ready. There are myths about Reverse Mortgages that need to be dispelled and explained to all potential clients prior to them proceeding. Mortgage companies originating this product have an obligation of Integrity and Honesty in providing the best possible advice to clients to tell a prospective client whether or not the Reverse Mortgage is in their best interest, based upon their individual circumstances.
As Reverse Mortgages gain in popularity, due to the ever increasing cost of living, Senior's are investigating this product thoroughly, making sure that the Lender they select is practicing a very rigid Code of Ethics, and has a good rating with the Better Business Bureau. You hear too many horror stories about unethical Mortgage Loan Officers and Brokers attempting to deceive people with "bait and switch tactics." Because of this increase in popularity, the addition of the Fixed Rate Reverse Mortgage, and loan availability on second homes is jumping to the forefront of conversations among Seniors.
For a free phone consultation, answers to your questions, and an informational packet on Reverse Mortgage programs, call Stu Naar, Certified Senior Advisor(CSA)®, and Branch Manager with US Financial Mortgage, in Boca Raton, at 561-995-2111 or 800-616-4008, or visit http://www.stunaar.com to use our Reverse Mortgage Calculator. Watch for our upcoming schedule of weekly FREE Lunch Seminars in South Florida.
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