In our last Post, just over a week ago - Tax Day to be exact, we focused on past statements made by Federal Reserve Chairman, Ben Bernanke, and recent utterances of his. We questioned whether his statements about the economy generally, and the housing(mortgage) market specifically, were posturing because of political considerations, as we had seen during and leading up to the general elections toward the end of 2008.
An academic first and foremost, many believed that Bernanke's move from the Ivory Towers of Academia to become Federal Reserve Chairman, enabled him to "experiment" with the theories he lectured about in the classroom. One school of thought is of the opinion that this, in effect, was a contributing factor to much of the economic downturn the country is experiencing today.
It appears that even with the economic stimulus plan - monies to the banks - monies to the auto industry, and to others - the expectations for a quick economic turn a round is not at this time clearly evident. Some liken the situation to a helmsman attempting to turn an aircraft carrier or supertanker - it will happen... but...it takes time.
As the economy is taking some time to turn around, more Americans than ever before, are loosing their jobs, which leads eventually to loosing their homes in foreclosure actions, which brings more homes into an already saturated housing market,further lowering home values contributing to greater losses of equity in homes nationwide impeding the progress of the economy's turn.
Faced with a soaring Budget Deficit,an overburdened Treasury,millions of lost jobs and counting since the start of the recession, what answers has Professor Bernanke for the nation.Some say the answer is, even lower rates - we shall see.
Thursday, April 23, 2009
Wednesday, April 15, 2009
MORTGAGES: The Posture of Politics or the Politics of Posturing?
"Today's economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence." Fed Bank Chairman, Ben Bernanke, yesterday, in a talk delivered in Atlanta.
That whole statement there make you go..."where did I hear that before?" Follow my lead here - replace the word "foundation" with "fundamentals" - does that jog your memory....yeah!! it did, didn't it? So I will not go into that... okay?
According to Bloomberg, today, April 15, 2009 ( Tax Day) "The number of mortgage applications in the U.S. fell last week for the first time in more than a month, indicating any stabilization in housing will be slow to materialize even as borrowing costs drop.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan decreased 11 percent to 1,113.2 in the week ended April 10, the lowest level in a month, from 1,250.6 the prior week. The group's refinancing gauge and purchase measure each dropped 11 percent. "
The Bloomberg report recalls that "Increases in home sales and residential construction have been among the signs Federal Reserve Chairman Ben S. Bernanke says show the economic slump is starting to slow."
The Fed Chairman acknowledged the development in his Atlanta address yesterday when he said "Recently we have seen tentative signs hat the sharp decline in economic activity may be slowing, for example, in data on home sales, home building and consumer spending including the sales on new motor vehicles."
So my question to you is: Did Mr Bernanke read the Mortgage Bankers Association report? If so, Did he read it while standing on his head? Did he read it from right to left? As if any of those activities would have aided his comprehension. Maybe he saw other reports which he choose not to divulge - Could his statement be seen as political posturing - sending a positive message - or is it just politics posturing - How long were we seeing and experiencing recessionary trends - can anyone recall the political posturing at the time - the country was told that everything was alright - there were no recession - when confronted with the facts of the economic situation in the U.S. Bush II responded by saying that he would not call it a recession unless the economists called it a recession - was that politics posturing, or what?
Where was Bernanke - Why did he not state the obvious? Was the lack of a timely and factual statement on the economy a deliberate act of political posturing, or was it politics posturing in the heated and hotly contested political years leading up to the recent Presidential Elections.
So now all the pain and suffering which could have been so much less severe had those who were expected to do their jobs without fear of favor had done so, rather than choosing to wade in waters they are not familiar with.
That whole statement there make you go..."where did I hear that before?" Follow my lead here - replace the word "foundation" with "fundamentals" - does that jog your memory....yeah!! it did, didn't it? So I will not go into that... okay?
According to Bloomberg, today, April 15, 2009 ( Tax Day) "The number of mortgage applications in the U.S. fell last week for the first time in more than a month, indicating any stabilization in housing will be slow to materialize even as borrowing costs drop.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan decreased 11 percent to 1,113.2 in the week ended April 10, the lowest level in a month, from 1,250.6 the prior week. The group's refinancing gauge and purchase measure each dropped 11 percent. "
The Bloomberg report recalls that "Increases in home sales and residential construction have been among the signs Federal Reserve Chairman Ben S. Bernanke says show the economic slump is starting to slow."
The Fed Chairman acknowledged the development in his Atlanta address yesterday when he said "Recently we have seen tentative signs hat the sharp decline in economic activity may be slowing, for example, in data on home sales, home building and consumer spending including the sales on new motor vehicles."
So my question to you is: Did Mr Bernanke read the Mortgage Bankers Association report? If so, Did he read it while standing on his head? Did he read it from right to left? As if any of those activities would have aided his comprehension. Maybe he saw other reports which he choose not to divulge - Could his statement be seen as political posturing - sending a positive message - or is it just politics posturing - How long were we seeing and experiencing recessionary trends - can anyone recall the political posturing at the time - the country was told that everything was alright - there were no recession - when confronted with the facts of the economic situation in the U.S. Bush II responded by saying that he would not call it a recession unless the economists called it a recession - was that politics posturing, or what?
Where was Bernanke - Why did he not state the obvious? Was the lack of a timely and factual statement on the economy a deliberate act of political posturing, or was it politics posturing in the heated and hotly contested political years leading up to the recent Presidential Elections.
So now all the pain and suffering which could have been so much less severe had those who were expected to do their jobs without fear of favor had done so, rather than choosing to wade in waters they are not familiar with.
Thursday, April 9, 2009
Mortgage Loans - The Front End and the Back End
In any economy at any time $8,000 is a lot of money. To be guaranteed by the U. S. Government that you could have a credit of up to $8,000 if you were to buy a home in the next 8 months is more than enough incentive to send first time-home home buyers ( that is a qualification) into the market place looking for homes.
Mortgage Interest Rates are very, very low - home prices are extremely low. Securing a mortgage loan and purchasing a home at this opportune time is a must-do for tens if not hundreds of thousands across America.
Adding their lot to the mix are certain members of the Real Estate Industry, who have obviously taken a page from the playbook of the auto industry. More incentives for the potential home buyer - how about not having to worry about mortgage payments for 6 months if you or your spouse were to lose your jobs.
According to a report by Diana Golobay carried two days ago on Housingwire.com "the California Association of Realtors (CAR) announced late last week it would offer a new "mortgage protection program" that promises first-time home buyers .....the guarantee of up to $1,500 per month for six months, in the event of job loss due to layoffs." The report goes on to inform that " ...co-buyers get up to $750 per month for up to six months, in case of layoffs. The program also includes benefits for accidental disability as well as a $10,000 death benefit, CAR said."
With these additional incentives now available at the back end of a mortgage loan, home buyers, on the front end, can take advantage of the $8,000 income tax credit, and easily slide into a new home loan knowing there is a cushion, at the other end, to ease their pain if they should fall. Yet, it is a good thing as it could remove from the marketplace the abundance of foreclosed homes that are out there - that's on the front end, while providing a mechanism for slowing the emergence of new foreclosed homes into the marketplace - this is on the back end - you with me?
Mortgage Interest Rates are very, very low - home prices are extremely low. Securing a mortgage loan and purchasing a home at this opportune time is a must-do for tens if not hundreds of thousands across America.
Adding their lot to the mix are certain members of the Real Estate Industry, who have obviously taken a page from the playbook of the auto industry. More incentives for the potential home buyer - how about not having to worry about mortgage payments for 6 months if you or your spouse were to lose your jobs.
According to a report by Diana Golobay carried two days ago on Housingwire.com "the California Association of Realtors (CAR) announced late last week it would offer a new "mortgage protection program" that promises first-time home buyers .....the guarantee of up to $1,500 per month for six months, in the event of job loss due to layoffs." The report goes on to inform that " ...co-buyers get up to $750 per month for up to six months, in case of layoffs. The program also includes benefits for accidental disability as well as a $10,000 death benefit, CAR said."
With these additional incentives now available at the back end of a mortgage loan, home buyers, on the front end, can take advantage of the $8,000 income tax credit, and easily slide into a new home loan knowing there is a cushion, at the other end, to ease their pain if they should fall. Yet, it is a good thing as it could remove from the marketplace the abundance of foreclosed homes that are out there - that's on the front end, while providing a mechanism for slowing the emergence of new foreclosed homes into the marketplace - this is on the back end - you with me?
Tuesday, April 7, 2009
New Mortgage Loan Program - 105% Loan To Value????
According to information received by this Post, two National Mortgage Lenders, Countrywide, owned and controlled by Bank of America, and Metlife Home Loans, a new mortgage loan refinance program called the Fannie Mae Refi Plus program commenced yesterday.
As its name indicates, this program is only for mortgage refinances of currently owned homes, and available to all homeowners under the recently passed American Recovery and Reinvestment Act of 2009. Availability, however, remains subject to certain conditions, which I will reveal shortly - the good news first, okay?
What is positive (if it could be viewed that way) is that Loan To Value ratios of up to 105% is allowed. Aside from owner-occupied homes, second homes and investment properties are also acceptable. Existing second liens are okay, if subjugated and Credit scores as low as 580 will be considered. For certain Counties around the nation, the conforming limit is set at $729,750 - more on this last in a bit.
Original First Mortgage Loans with a loan to value greater that 80% and those with Mortgage Insurance (MI), will not be considered, not at this time, anyway. Consolidation of a second lien into the new loan is also not allowed, neither are loans with new subordinate financing. Other ineligible loans are Balloon Mortgages, Interest Only Programs and Reverse Mortgages. It appears that the Mortgage Lender will also be developing their own criterion in addition to what the Treasury Departments' program calls for.
The program is not final at this time. The program will be expanded and undergo additional changes to facilitate more refinance options in keeping with the goals of the Home Affordability Refinance Initiative released earlier this year on March 4, 2009.
The Conforming limits is the new limit of $729,750 set by Congress earlier this year under the American Recovery and Reinvestment Act of 2009. However, loans acquired in 2009, but originated prior to July 1st 2007, will remain subject to the previously announced 2009 loan limits - Refer to our post of 03/25/2009. These limits were set under the provisions of the Housing and Economic Recovery Act of 2008.
As its name indicates, this program is only for mortgage refinances of currently owned homes, and available to all homeowners under the recently passed American Recovery and Reinvestment Act of 2009. Availability, however, remains subject to certain conditions, which I will reveal shortly - the good news first, okay?
What is positive (if it could be viewed that way) is that Loan To Value ratios of up to 105% is allowed. Aside from owner-occupied homes, second homes and investment properties are also acceptable. Existing second liens are okay, if subjugated and Credit scores as low as 580 will be considered. For certain Counties around the nation, the conforming limit is set at $729,750 - more on this last in a bit.
Original First Mortgage Loans with a loan to value greater that 80% and those with Mortgage Insurance (MI), will not be considered, not at this time, anyway. Consolidation of a second lien into the new loan is also not allowed, neither are loans with new subordinate financing. Other ineligible loans are Balloon Mortgages, Interest Only Programs and Reverse Mortgages. It appears that the Mortgage Lender will also be developing their own criterion in addition to what the Treasury Departments' program calls for.
The program is not final at this time. The program will be expanded and undergo additional changes to facilitate more refinance options in keeping with the goals of the Home Affordability Refinance Initiative released earlier this year on March 4, 2009.
The Conforming limits is the new limit of $729,750 set by Congress earlier this year under the American Recovery and Reinvestment Act of 2009. However, loans acquired in 2009, but originated prior to July 1st 2007, will remain subject to the previously announced 2009 loan limits - Refer to our post of 03/25/2009. These limits were set under the provisions of the Housing and Economic Recovery Act of 2008.
Thursday, April 2, 2009
Mortgages, Monies and Markets
The Mortgage Market is in an uncertain turmoil - on the one hand some homeowners are struggling to keep up with their mortgages while dreading the seemingly inevitable pink slip. Lucia Mutikani of Reuters reported today from Washington that "The number of U.S. workers filing new claims for jobless benefits surged to a 26 1/2 year high last week..." She goes on to say that Thursday's data showed "..that layoffs have yet to peak even as other signaled some improvement in the economy.
Other homeowners are trying desperately to reduce their monthly mortgage payments, in sometimes futile efforts, to keep possession of their homes. Loan Modification and Loan Restructuring does not work for all.
Buyers, on the other hand, are seeking to take advantage of the $8000 tax credit offered to first-time home buyers as part of the stimulus package. Many are not finding it easy though, as the guidelines Banks are now using to make home mortgage loans are so restrictive, few can qualify to buy a home at this time. Due to the foreclosure crisis home values have plummeted, making homes cheaper to purchase. Due to recent developments in the market and the actions of the government interest rates for 30-year fixed conforming loans are now below 5 percent.
According to Alan Zibel, a Real Estate Writer with the Associated Press "Mortgage finance Giant Freddie Mac said Thursday that the average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week..." Yet many who would want to buy, cannot. They are just not able to qualify. Insufficient income, weak or shaky credit and a lack of required reserves (liquid assets) in the bank often elicit a negative response from lenders.
Reports are, however that the ongoing recession appears to be levelling off. With the G20 meeting in London as a backdrop it appears that some minimal policy successes were achieved for attacking the flagging world economy. Yet with contrary economic philosophies between the U.S. and Britain on the one hand and Continental Europe; led by France and Germany on the other, enactment of agreed upon policies will be predicated upon local (national) politics - not the photo ops.
Meanwhile, in the U.S. and across the globe Mortgages are difficult to acquire, Money is scarce and the Market is uncertain.
Other homeowners are trying desperately to reduce their monthly mortgage payments, in sometimes futile efforts, to keep possession of their homes. Loan Modification and Loan Restructuring does not work for all.
Buyers, on the other hand, are seeking to take advantage of the $8000 tax credit offered to first-time home buyers as part of the stimulus package. Many are not finding it easy though, as the guidelines Banks are now using to make home mortgage loans are so restrictive, few can qualify to buy a home at this time. Due to the foreclosure crisis home values have plummeted, making homes cheaper to purchase. Due to recent developments in the market and the actions of the government interest rates for 30-year fixed conforming loans are now below 5 percent.
According to Alan Zibel, a Real Estate Writer with the Associated Press "Mortgage finance Giant Freddie Mac said Thursday that the average rates on 30-year fixed-rate mortgages dropped to 4.78 percent this week..." Yet many who would want to buy, cannot. They are just not able to qualify. Insufficient income, weak or shaky credit and a lack of required reserves (liquid assets) in the bank often elicit a negative response from lenders.
Reports are, however that the ongoing recession appears to be levelling off. With the G20 meeting in London as a backdrop it appears that some minimal policy successes were achieved for attacking the flagging world economy. Yet with contrary economic philosophies between the U.S. and Britain on the one hand and Continental Europe; led by France and Germany on the other, enactment of agreed upon policies will be predicated upon local (national) politics - not the photo ops.
Meanwhile, in the U.S. and across the globe Mortgages are difficult to acquire, Money is scarce and the Market is uncertain.
Tuesday, March 31, 2009
Home Loan Mortgages:Who is Helping Who is Hurting II
The discussion in our last post centered around the impact mortgage modification and loan restructuring applications are having on both the Service Provider/Banks, and on the Homeowner applicant as well.
As the time for foreclosure sale draws nearer homeowners are becoming increasingly concerned that their applications for mortgage modification will not be processed by their Banks before that time expires. At the same time the Banks, short staffed as they are because of recent layoffs, are also concerned that if they are unable to approve these applications in time, they will end up landlording vacant,vandalized and deteriorating buildings.
Some banks are simply overwhelmed and are failing at this. Some homeowners just do not qualify for mortgage modification or loan restructuring, even if they were lucky to get their applications processed prior to the foreclosure deadline. The result - more foreclosed properties entering a market already saturated with homes declining in value.
According to a report today by NPR.org "U.S. home prices fell an average of 19 percent in January from an year earlier....." Foreclosures, said the report "...and a hefty backlog of unsold houses continued to glut the market..." This situation may well be exacerbated by the actions of some Loan Servicers/Banks, who according to a report yesterday by the New York Times, are walking away "themselves", my quote, "on foreclosures".
The Times report, authored by Susan Saulny, quoted Larry Rothenberg, a lawyer for Weltman,Weinberg & Reis as saying "The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders decisions to walk away."
Not only have homeowners been walking away and abandoning their homes - now the banks are also participating in the act, according to the New York Times report - Is this a good thing for the homeowner? No! They still owe the Banks on the mortgage note - they are still obligated to make payments on the note - they are still hurting... and the Banks? Are they helping...I don't think so... What do you think?
As the time for foreclosure sale draws nearer homeowners are becoming increasingly concerned that their applications for mortgage modification will not be processed by their Banks before that time expires. At the same time the Banks, short staffed as they are because of recent layoffs, are also concerned that if they are unable to approve these applications in time, they will end up landlording vacant,vandalized and deteriorating buildings.
Some banks are simply overwhelmed and are failing at this. Some homeowners just do not qualify for mortgage modification or loan restructuring, even if they were lucky to get their applications processed prior to the foreclosure deadline. The result - more foreclosed properties entering a market already saturated with homes declining in value.
According to a report today by NPR.org "U.S. home prices fell an average of 19 percent in January from an year earlier....." Foreclosures, said the report "...and a hefty backlog of unsold houses continued to glut the market..." This situation may well be exacerbated by the actions of some Loan Servicers/Banks, who according to a report yesterday by the New York Times, are walking away "themselves", my quote, "on foreclosures".
The Times report, authored by Susan Saulny, quoted Larry Rothenberg, a lawyer for Weltman,Weinberg & Reis as saying "The soft housing market and the vandalism that often occurs when a house sits empty are the two main factors influencing the mortgage holders decisions to walk away."
Not only have homeowners been walking away and abandoning their homes - now the banks are also participating in the act, according to the New York Times report - Is this a good thing for the homeowner? No! They still owe the Banks on the mortgage note - they are still obligated to make payments on the note - they are still hurting... and the Banks? Are they helping...I don't think so... What do you think?
Monday, March 30, 2009
Home Loan Mortgages: Who is Helping - Who is Hurting
Statements coming from mortgage industry watchdogs, around the nation, indicate that all is not well for homeowners, faced with foreclosure needing to restructure and modify their mortgages. Banks and Loan Servicers are experiencing a backlog of mortgage modification applications as an ever increasing number of homeowners queue up to participate in the government supported program. Banks and Loan Servicers had only recently downsized their staffs in their efforts to stay afloat.
As Loan Servicers struggle to keep up with the increasing volume of applications, and their desire not to end up playing landlord for vacant, vandalized and deteriorating properties, the focus seem to be to assist the most troubled of homeowners - those with the sub prime loans. This development places prime borrowers on a slower track to mortgage modification and loan restructuring.
According to report by Paul Jackson, writing in housingwire.com,"During February, 39.7 percent of loan workouts for prime borrowers were loan modifications; in contrast 66.5 percent of subprime workouts were loan modifications ."
This situation does not augur well for the homeowner who is running out of time or the Loan Servicer who may end up doing exactly what they are not qualified or want to do - landlording vacant, vandalized and deteriorating properties.
Our next post will look at the impact this development is having on both the homeowner and the Loan Servicer Banks.
As Loan Servicers struggle to keep up with the increasing volume of applications, and their desire not to end up playing landlord for vacant, vandalized and deteriorating properties, the focus seem to be to assist the most troubled of homeowners - those with the sub prime loans. This development places prime borrowers on a slower track to mortgage modification and loan restructuring.
According to report by Paul Jackson, writing in housingwire.com,"During February, 39.7 percent of loan workouts for prime borrowers were loan modifications; in contrast 66.5 percent of subprime workouts were loan modifications ."
This situation does not augur well for the homeowner who is running out of time or the Loan Servicer who may end up doing exactly what they are not qualified or want to do - landlording vacant, vandalized and deteriorating properties.
Our next post will look at the impact this development is having on both the homeowner and the Loan Servicer Banks.
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