Keeping up with…

Keeping up with the low interest rates: . I haven’t seen rates on a 30 year fixed this low in years. Yet for some strange reason people are playing the “wait and see” game. Personally I hate this game mainly because people don’t know jack about the mortgage market. The rate cut means nothing to the mortgage market. Nothing. My advice is simple, if rates are low enough for you to act, then act.

Keeping up with the Joneses: . I had an interesting discussion with a friend of mine in California who said “It’s hard to keep up with the Joneses especially when the Joneses are totally out of control.” Foreclosures are rampant in California and it’s getting worse. Maybe now people will try to keep up with their other neighbors, the ones with the older model cars.

Keeping up with Tom Brady. I have a lot of respect for Tom Brady, however, I seriously question why he’s in NY the week before the big game. Shouldn’t he be in Mexico where the weather is much warmer.

Keeping up with the weather: Being an avid skier it pains me to say that I hate snow and i’m looking forward to the 50 degree weather in Denver this weekend.

Keeping up with a 20 month old: Having a child means reliving your childhood. Except my childhood didn’t include visits to the stockshow.

Keeping up with DirecTV: I dropped satellite television the first week of the year. I was sick all week and instead of watching Rome is Burning and SportsCenter I had to endure Dr. Phil and Oprah. I must say that watching daytime television is more painful than watching Fox News.

Keeping up with the Rebate: The feds are implementing a rebate to invigorate the economy. Some people weigh in on what they’d do with the money. The Federal Government is giving us money to spend it elsewhere. Give a man a fish and they’ll keep up with the Joneses….

Colorado and Prepayment Fees

From the Rocky Mountain News:

With foreclosures at record levels, a Colorado regulator has tackled prepayment penalties that can trap borrowers in costly mortgages.

The measure, which took effect Friday and was announced Monday, prohibits fees that extend past the dates loans are adjusted to higher interest rates.

Read the full story: Prepayment fees limited

These rates are freezing

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.

Foreclosures dropping in CO or rising elsewhere

From the Rocky Mountain News: Metro area tumbles on foreclosure list

From the Denver Post: Metro areas in California, Florida lead foreclosures

While it’s good to see that Denver is not on the top ten, we’re still close to the top of the list.

RMN: Foreclosures slam door on home prices

Foreclosure article from the Denver Post:

A third-quarter report on home values in the metro area shows that foreclosures and short sales are still having an impact on Denver-area housing markets – particularly those where homes are priced at no more than $200,000.

Read the full article: Foreclosures slam door on home prices

Option Arms are in the news again

File this under: Unsuspecting borrower duped into getting a difficult loan to comprehend.

From Sunday’s Denver Post: Crushing ARMs squeeze homeowners

In 2003, 1.1 percent of mortgages originated for a purchase or refinance in Colorado were option-ARMs and another 2.5 percent were interest- only loans that didn’t pay down principal, according to First American LoanPerformance, a San Francisco mortgage research firm.

…

Many borrowers don’t understand amortization »”>negative amortization, how their payments are rising, and why the loans they expected to rescue them are dragging them into foreclosure, he said.

The mortgage brokers who sold these loans were (most of them are out of the industry) dumber than dirt yet were great at selling these products. If you went with a mortgage broker because they sold you on a loan products, who’s really to blame?

We’re 8th!

State foreclosures slip to 8th

In the past couple of years Colorado has ranked at or near the top in foreclosures, but other states are now encountering their own crises.

Keep in mind that every state identifies foreclosures differently. In this race, 8th place is better than 1st.    

FHASecure and your Adjustable Rate Mortgage, perfect together?

FHA Secure is being touted as the solution to the maddening mortgage adjustable rate mortgage crisis. It remains to be seen if a government loan will really solve the mortgage crisis or if the crisis was really a spend like there’s no tomorrow attitude.

A new federal loan program designed to help borrowers cope with rising payments on adjustable-rate mortgages is kicking into gear.

An estimated 80,000 borrowers nationally are expected to take advantage of the FHASecure loan program, said Ben Johnson, director of the Denver Homeownership Center with the Federal Housing Administration.

Another 160,000 or so are expected to use other FHA loans to escape their unaffordable mortgages.

The first Colorado borrowers in the program should start receiving their new loans in early November.

Critics say the program doesn’t go far enough to help homeowners.

FHASecure loans, unveiled by President Bush in August, are designed to shift borrowers who can’t afford higher payments on their ARMs into more traditional FHA-backed loans.

But they aren’t a shoo-in. Borrowers facing a reset must have stayed current on their payments for at least six months, although those who have fallen behind because of a reset to a higher interest rate are eligible.

Loans are underwritten to FHA standards, which limits how much can be financed. In Denver-Aurora, the FHA cap is $308,370.

The FHA will insure a mortgage for up to 97 percent of a home’s appraised value. If the borrower can’t come up with the down payment or the loan is worth more than the home, the current mortgage provider must be willing to accept a second mortgage for the difference, including any prepayment penalties or other fees.

Borrowers must also demonstrate an employment history and that they can afford the payments on the new loan, based on an interest rate that will come in somewhere between the initial rate offered on the ARM and the higher adjusted rate.

Critics charge that FHASecure and other administration efforts represent a Band-Aid on an open wound. There were 223,538 foreclosure filings in the U.S. in September, according to RealtyTrac.

“Unfortunately, the bottom is falling out of our housing market much more quickly than the administration is willing to stem the tide of foreclosures,” Sen. Charles Schumer, D-N.Y., said Wednesday.

Schumer was responding to an announcement Wednesday by Treasury Secretary Henry Paulson Jr. of a new alliance with mortgage servicers, housing counselors and government agencies to help an estimated 2 million borrowers who face higher payments on their ARMs – not all of whom would qualify for FHASecure loans.

“A combination of stagnant or falling house prices, low- down-payment mortgages and resetting adjustable-rate mortgage rates are creating real challenges for many American homeowners,” Paulson said in a statement.

The Hope Now program will work to establish best practices in housing counseling and launch a mass-mail marketing campaign next month to reach struggling borrowers before they fall off a cliff.

As it reaches out to help borrowers, the FHA also has cracked down on seller-financed assistance programs.

The programs, which claimed to be charities, inflated home sales prices, allowing the minimal 2 percent to 3 percent down payments to be wrapped back into the FHA loans and increasing the risk to buyers and the government.

Source: Denver Post

Foreclosure Caesar

Being of Roman descent (Alfedena for those who like geography) I prefer Caesar to Czar:

Susan Foley, recently appointed “foreclosure czar” for the city of Denver, has seen firsthand the impact of people losing their homes.

According to the article, Susan Foley has been a planner for Denver’s economic development office for 20 years and also works as a real estate agent.

Read the full story: Why homes are lost studied

The biggest hurdle WAS getting tenants

Investing in real estate is NOT for the weak. There are so many challenges with being a real estate investor. The biggest challenge is usually buying your first property. The biggest hurdle according to most of my friends and clients who have investment properties is getting qualified tenants. You should have no problems getting them rented according to these two stories from the Rocky Mountain News:

Demand for affordable rental housing in the state is being driven by record foreclosures and rising market-rate rents.

Read the full story: Affordable rental vacancies tighten

Statewide vacancies in affordable housing fell during the second quarter, dropping to 4.7 percent, from first quarter in the first quarter, according to a new state report.

Read the full story: Affordable apartment vacancies fall below 5 percent