Feb
18
No Country for Mortgage Brokers
Filed Under mortgage | 3 Comments
Over the weekend I finally caught the movie, No Country for Old Men. It’s critically acclaimed and several friends recommended that I go see it. At times the movie was boring and slow. At times it was quick witted and interesting. However, most of the time nothing about the movie made sense.
In the current mortgage landscape nothing makes sense.
I still get several refinance requests from the internet where people are shopping and getting quoted rates that haven’t existed in years. Moreover, to get a loan closed today is much more difficult than ever before. So for anyone to do a loan at the lowest possible rates doesn’t make any business sense.
Some requests are for home purchases by real estate investors. Every day lenders are limiting their risk by limiting what a mortgage broker can and cannot submit. Every day programs are disappearing. There are very few high risk loans available. It’s only a matter of time before buying a home with no money down will become extinct.
Most of the inquiries I get are questions. Simple questions such as “Is now a good time to refinance?” or “Will not paying my bills hurt my credit?” The people who ask these don’t give me any information about themselves just a name and an email. That’s like asking your optometrist (eye doc) “Do I have ocular degeneration?” without having him/her/it look at your eyes.
Just like the movie, No Country for Old Men, there is no end in sight to all the madness.
Dec
6
These rates are freezing
Filed Under economy, mortgage, rates | 2 Comments
Five-Year Mortgage Rate Freeze Looms
Wednesday December 5, 8:42 pm ET
By Martin Crutsinger and Alan Zibel, Associated Press Writers
Bush Mortgage Plan Will Freeze Certain Subprime Interest Rates for 5 Years WASHINGTON (AP) — The Bush administration has hammered out an agreement to freeze interest rates for certain subprime mortgages for five years to combat a soaring tide of foreclosures, congressional aides said Wednesday.
The aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of up to seven years and mortgage industry arguments that the freeze should last only one or two years.
Another person familiar with the matter said the rate-freeze plan would apply to borrowers with loans made at the start of 2005 through July 30 of this year with rates that are scheduled to rise between Jan. 1, 2008, and July 31, 2010.
The administration said President Bush will speak on the agreement at the White House on Thursday and the Treasury Department announced that Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson would hold a joint news conference Thursday afternoon with mortgage industry officials.
Treasury also announced there would be a technical briefing to explain more of the proposal’s details.
Paulson, who has been leading the effort to craft a plan, said on Monday that the program would only be available for owner-occupied homes — to ensure the break is not given to real estate speculators.
The plan emerged from talks between Paulson and other banking regulators and banks, mortgage investors and consumer groups trying to address an avalanche of foreclosures feared as an estimated 2 million subprime mortgages reset from lower introductory rates to higher rates.
In many cases, the higher rates will boost monthly payments by as much as 30 percent, making it very difficult for many people to keep current with their loans.
The plan is aimed at homeowners who are making payments on time at lower introductory mortgage rates but cannot afford a higher adjusted rate.
Through October, there were about 1.8 million foreclosure filings nationwide, compared with about 1.3 million in all of 2006, according to Irvine, Calif.-based RealtyTrac Inc. With home loan defaults still rising, the trend is expected to worsen next year.
The plan represents an about-face for Paulson, who until recently had insisted the mortgage crisis could be handled on a case-by-case basis. However, he and other administration officials became convinced the tide of foreclosures threatened by the mortgage resets represented such a severe threat that a more sweeping approach was needed. They opted for a proposal that was along the lines of a plan put forward in October by Sheila Bair, head of the Federal Deposit Insurance Corp.
Paulson and other federal regulators began holding talks with some of the country’s biggest mortgage lenders, mortgage service companies, investors who hold mortgage-backed securities and nonprofit groups that provide counseling for at-risk homeowners.
Under the typical subprime loan — those offered to borrowers with spotty credit histories — the rates for the first two years were at levels around 7 percent to 8 percent. But after two years, those rates were scheduled to reset to levels around 9 percent to 11 percent.
For a typical $1,200 monthly mortgage payment, the reset could add another $350 to the monthly payment, greatly raising the risks of loan defaults by homeowners struggling with the current payment.
The wave of mortgage foreclosures threatened to make the most severe slump in housing even worse by dumping more foreclosed properties onto an already glutted market, further depressing home prices and shaking consumer confidence.
The deepening housing slump has already roiled financial markets, starting in August, as investors grew increasingly concerned about billions of dollars of losses being suffered by banks, hedge funds and other investors.
The administration plan is designed to deal with the crisis by letting subprime borrowers who are living in their homes and are current on their payments to avoid a costly reset for five years. The hope is that by that time the housing downturn will have stabilized, clearing out the glut of unsold homes and halting the steep slide in prices that is hitting many parts of the country.
With sales and prices once again rising, the expectation is that homeowners will be able to renegotiate their current adjustable rate mortgages into a more affordable fixed-rate plan.
The housing crisis has become an issue in the presidential race with Democrats Hillary Rodham Clinton and John Edwards putting forward their own proposals this week that would go further than the administration.
Clinton said her own proposal that would impose a 90-day moratorium on foreclosures and freeze the rates for five years or until they had been converted to fixed-rate loans was a better approach that would help more people.
“Although the administration is finally giving the foreclosure crisis the attention it deserves, it seems that President Bush is going to give struggling homeowners far less than they need,” she said in a statement.
Mark Zandi, chief economist for Moody’s Economy.com, called the administration plan a good first step, but said the government eventually will have to go further given the problem’s size and the threat to the economy.
“This is the most serious housing downturn we have seen in the post World War II period,” Zandi said. “It is a threat to the broader economy. The risks of a recession are very high.”
Associated Press reporters Deb Reichmann and Nedra Pickler contributed to this report.
Oct
5
Alan Blinderis an American economist, on the faculty of Princeton University. He has served as the Deputy Assistant Director of the Congressional Budget Office, on President Bill Clinton’s Council of Economic Advisors, and as the Vice Chairman on the Board of Governors of the Federal Reserve System. Sounds like a government conformist right? Wrong
He has recently wrote a controversial column for the Foreign Affairs magazine about globalization in which he opined that globalization could cause more disruptions in service jobs than originally believed. He says that he still believes that globalization would be a net plus for the United States. This analysis has not been published in a peer-reviewed journal of economics. His views on this issue is not widely accepted by economists.
Then comes this gem: Six Fingers of Blame in the Mortgage Mess
Who’s the first finger? Everyone who has a mortgage.
The first finger points at households who borrowed recklessly to buy homes, often saddling themselves with mortgages that were all too likely to default. They should have known better. But what can we do to guard against it happening again?
Not much, I’m afraid. Gullible consumers have been around since Adam consumed that apple. Greater financial literacy might help, but I’m dubious about our ability to deliver it effectively. The Federal Reserve is working on clearer mortgage disclosures to help borrowers understand what they are getting themselves into. (“Warning! This mortgage can be dangerous to your family’s financial health.”) While I applaud the effort, I’m skeptical that it will work. If you have ever closed on a home, you know that the disclosure forms you receive are copious and dense. Should we add even more?
Fewer words, and in plainer English, might help, especially if they highlighted the truly important risks. (“In two years, your mortgage payments could double.”) But the truth is that there is much to disclose, that complicated mortgage products are, well, complicated, and that people don’t read those documents anyway.
He does go on to blame Lenders, bank regulators, and countless others. If you don’t read the New York Times, you should. Real estate is local, mortgages are national.
Oct
5
Universal REO
Filed Under foreclosure, real estate | Leave a Comment
Here’s a press release for Universal REO. What’s my connection to Universal REO - my buddy Dan is the CEO.
LOCAL DENVER COMPANY RELEASES NATIONAL WEB-BASED FORECLOSURE EDUCATION WEBSITE FOR REAL ESTATE AGENTS.
UniversalREO.com, a Denver-based company, is reaching out to thousands of real estate professionals across the nation by providing a ‘Resource Center’ for those trying to make a difference in the foreclosure epidemic. According to founder and CEO, Daniel Waterman, “UniversalREO.com is an unparalleled stratagem designed to unify the real estate foreclosure industry. Through the shifting of the REO (Real Estate Owned by Lender) paradigm to meet a more streamlined business model, professionals are enabled by technology and informative resources. Our objective is to elevate the standards by which REO professional operate on every level.”
By offering thorough education on the valuing of properties, the resources and tools on how to determine values, marketing tips, as well as where to obtain new REO business, UniversalREO.com is providing a service that not even real estate colleges offer. After spending years as an REO Specialist for the top REO Real Estate Marketers in the nation, Mr. Waterman realized his true calling as a teacher. His trial-by-fire education in technology was what gave him the foresight to provide this knowledge to the masses via the information highway.
In this “Web 2.0” universe there exist many one-offs offering overnight REO Business success schemes on the web. UniversalREO.com offers more. Education, Valuation, and Marketing are the keys to success in a real estate market flooded with properties for sale due to default mortgage payments. Cutting-edge concepts on moving these properties into the appropriate hands while maintaining value to companies like Countrywide Home Loans who recently took out an $11.5 billion dollar loan to aid their default mortgage deficit is the only way this country will ever jump back on track. By conveying knowledge through on-line video courses, eBooks, blogs, podcasts, certification, and connecting REO Management companies and direct lenders with the educated real estate agent, as well as the end consumer, UniversalREO.com is blazing new trails throughout the nation. UniversalREO.com currently covers over 50% of the nation for Real Estate Agent and Vendor clientele.
Oct
1
You’ll pay but you’ll pay less
Filed Under denver post, real estate | Leave a Comment
As the weather and the leaves turn, for some reason the Denver Post and the Rocky Mountain News have had a blitzkrieg of real estate and mortgage articles. This latest one called, Commission remission regarding the the declining commission for real estate agents is a doozy.
Commission rates last year averaged 5.2 percent nationwide, according to Littleton-based Real Trends newsletter, whereas in 1991 that number came in at about 6.1 percent.
That’s 5.2% of your home price. So if your house sells for $250,000 or $500,000, you’ll be shelling out 5.2% of that amount. However, the article discusses that real estate agents are willing to negotiate their commissions:
…real estate clients can haggle over more than just a home’s asking price. They might just work with their Realtor to find a mutually agreed upon commission rate too.
What makes this article somewhat interesting is this quote:
Too many mortgage lenders will do anything to get a loan through…
Actually once I read that quote, I went to read the entire article.
What do I think? If a real estate agent charges 6% to sell your home and sucks, fire him/her. If they charge 4.6% and kicks ass, refer them to everyone you know.
Sep
25
The Toll on Lenders is minimized
Filed Under denver post, mortgage | Leave a Comment
The headline is much better than the article:
“Quick action by Erin Toll, state Division of Real Estate director, kept lenders from pulling out of Colorado because of new laws.”
In June, some major lenders (OptionOne Mortgage, IndyMac, SunTrust Mortgage and Aurora Loan Services) threatened to stop making home loans in Colorado after they disagreed with new requirements the state placed on mortgage providers.
The lenders were beefing about this law:
Mortgage providers must show that loans are reasonable and benefit borrowers, and they must also disclose more about how they are compensated.
Seriously, don’t waste your time reading the full article: Regulator keeps money flowing for homebuyers
Sep
17
It’s not Easy Being a Borrower
Filed Under rocky mountain news | Leave a Comment
Last December I had a subprime loan not go through underwriting with an approval. It was awkward for me since I pride myself on being thorough. The start reality is that it was the start of the meltdown of subprime mortgage companies.
The Denver Post explores this issue in depth:
Gone are the days of easy loans. Foreclosures and a subprime loan-market meltdown have left buyers scrambling to ante up.
The article is full of stories from buyers, sellers, investors, et.al. who have been impacted by the credit crunch.
Read the full article: BUYERS: Lenders tighten loan standards
The article is fairly accurate
Sep
12
Got $135 million?
Filed Under mortgage, real estate, rocky mountain news | 1 Comment
Mortgage article from the Rocky Mountain News:
It was the most expensive home on the market in the world when it was listed last year. And for $135 million, Prince Bandar bin Sultan’s 95-acre spread and 56,000-square foot mansion can be yours.
With the credit crunch lenders aren’t exactly lining up to mortgage this property.
Read the full story: For sale: Aspen ranch fit for a prince, only $135 million
Sep
12
Housing lenders retreat
Filed Under mortgage, real estate, rocky mountain news | 2 Comments
Mortgage article from the Rocky Mountain News:
A third of home loans originated by mortgage brokers failed to close in August as investors shied away from riskier borrowers, a new survey says.
Read the full story: Housing lenders retreat
Sep
7
To merge or not to merge
Filed Under credit, mortgage, personal finance | 1 Comment
PRIVATE MORTGAGE INSURANCE: If your down payment is less than 20% of the purchase price of the home, mortgage lenders require that you take out Private Mortgage Insurance (PMI). This insurance protects the lender in the event you default on your mortgage. PMI has fallen out of favor in recent years due to the 80/10/10 (80% first mortgage, 10% second mortgage, 10% down payment), 80/15/5 (80% first mortgage, 15% second mortgage, 5% down payment), and 80/20 (80% first mortgage, 20% second mortgage, 0% down payment).
On the heels of the mortgage credit crisis comes word that the two bigger players in the mortgage industry may merge. However, after further deliberation, they decided against a merger.
MGIC drops bid for rival Radian
The mortgage insurers agree to end the deal and focus on how to survive in the industry.
By Emily Fredrix The Associated PressMilwaukee - Mortgage insurer MGIC Investment Corp. abandoned its $5 billion bid to buy rival Radian Group Inc. on Wednesday, saying it was in each other’s best interest to concentrate on surviving in the faltering mortgage industry.
Radian had vowed to see the deal through when MGIC announced in August it wanted to back out. But chief executive S.A. Ibrahim said Wednesday that Radian didn’t want to fight and instead needed to weather what he called “an industrywide scramble to survive.”
Investors seemed hopeful for both companies after news of the agreement.
Though Radian’s shares tumbled as much as 9 percent after the market opened Wednesday, they closed up 16 cents at $18.27. MGIC shares fell 29 cents to end at $30.05.
MGIC, based in Milwaukee, had agreed in February to pay about $5 billion in stock for Radian, valuing its shares at $60.78. Shares of MGIC closed the day the deal was announced at $70.09.
As problems mounted in the mortgage market, both companies saw their shares tumble and the deal’s value sink.
MGIC said it did not believe it had to complete its purchase of Philadelphia-based Radian because their joint interest in subprime-mortgage investor C-Bass LLC could be worthless.
The decision to end the deal was mutual, both companies said.
Neither party paid the other to get out of the agreement, according to a news release. The original agreement said there would be no breakup fee if a decision was mutual.
Both companies’ shareholders had already approved the deal, which MGIC had said would close in early October.
But woes felt throughout the mortgage industry made the deal difficult to finish, said Michael Zimmerman, MGIC’s vice president of investor relations.
While this is akin to splitting up, it remains to be seen what this means to the borrower. There aren’t too many PMI companies left and when the two biggest PMI companies are more concerned about surviving, especially when in 2007 PMI is tax deductible, this can’t be a good sign.