Monday Morning Quarterback

Microsoft may be buying Yahoo. They also might be buying the Sun complex in Broomfield. Despite Google’s meteoric rise, Microsoft is/are still the Joneses and Google knows it!

The caucus in Colorado is Tuesday. Isn’t twenty years of Bush (4) + Clinton (8) + Bush (8) enough? For the record, I’m a huge fan of Barry. If you read his bio, you might become one too. He’s half African, half Caucasian. Raised in Hawaii. Lived in Indonesia. Schooled in California and NY. Senator for Illinois. He’s got the whole country and a lot of ethnicities covered plus according to the NY times he’s a MAC.

Rate cuts, rate cuts, and more rate cuts.

I’ll be the first to admit that I really didn’t think the Giants had a shot at winning the Superbowl. I grew up watching both the Jets and the Giants but since my brother liked the Giants, I adopted the Jets as my team just to spite him. Boy do I regret that move big time!

Despite being a Jets fan, it’s hard for me to hate the Patriots. New England line backer Tedy Bruschi is the same ethnic chop suey as I am.

Why do we love sports? My brother said it best, it’s unscripted drama.

My brother is now a Broncos fan.

Suck it Peter King!

    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.

    Rates are really low again

    I’ve had severa mortgagel inquiries lately so it probably had something to do with this

    National mortgage rates fell sharply last week, with rates on 30-year mortgages dropping to the lowest level in more than two years.

    As of today 30 year rates are pretty low:

    • One point will get you 5.5%
    • Want no points, you’ll get 5.75%
    • Want zero points, you’ll get 6.5%

    Of course to qualify for these mortgage rates you’ll need superb credit, decent income, an 80% loan balance to property value ratio, and decent assets.

    The SKY hasn’t fallen YET

    According to BlackRock’s CEO:

    Laurence Fink, who helped create the market for mortgage-backed securities, said the credit losses that have already cost banks and securities firms $45 billion are about to get worse.

    Read the full article: BlackRock CEO sees no ebb in credit storm

    What does this mean? If you have good credit and equity in your home and a fixed rate mortgage, NOTHING. If you have mediocre credit, zero equity, and your mortgage is about to refinance you’ll need to do the following:

    1. Get your credit in order. By in order I mean it needs to be above 680.
    2. Start reading your mortgage documents. Your note, your riders, everything that you bypassed at closing.
    3. Call your existing mortgage company first. See if they’re willing to work with you on your rate when it adjusts.

    Interest rate last week

    The Fed’s lowered rates on Halloween:

    The Federal Reserve handed out a second interest rate cut on Halloween, giving markets and borrowers the treat they were expecting.

    It was my daughter’s first Halloween. She dressed up as a “Happy Pumpkin.” Not the evil  wicked pumpkin that her dad (me) carved the night before. I on the other hand haven’t dressed up for Halloween since 1999 when I dressed up as Mike Piazza. I still can’t believe I lost to a person who wore an orange hooded sweat shirt and claimed to be Kenny from Southpark.

    Read the full article: Interest rate cut spooks skeptics

    Countrywide righting a wrong or righting their ship?

    Countrywide Financial Corp., the nation’s largest mortgage lender, plans to offer refinancing or modifications on $16 billion in loans whose interest rate is set to adjust by the end of 2008.

    Rocky Mountain News: Countrywide to push refis, modified loans

    New York Times: Countrywide to Help Restructure Loansm

    Or are they simply trying to get more business?

    Mortgage giant Countrywide Financial Corp., whose loan volume is down sharply in the wake of the housing downturn and the sub-prime meltdown, is aggressively trying to get its customers to refinance. Here are excerpts from two pitches the company sent recently to homeowners:

    Exciting news — we are now offering a Special Online Rate Discount. . . . If you qualify, you could get up to $511,006 to pay off credit cards and other loans.

    – Countrywide e-mail

    No need to show bank statements or verify other assets . . . no paycheck stubs or proof of income required . . . no new appraisal needed (in most cases).

    – Countrywide flier

    Could be a combination of both. However, this uber annoying Countrywide commercial has been in HEAVY ROTATION:

    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?

    Jobs, Rates, and Math Standards at the Dept of Labor

    Mortgage back securities are often affected by the weekly jobs reports so when August was initially slated to have a 4k job loss and instead it was a 89k job gain, rates increased. We need to improve the math standards at the Dept of Labor.Read more: Jobs report gives market bounce, but rate-cut bets could lose air

    Study confirms Option Arms not evil

    The study comes from NYU and Columbia, two universities known for academia not athletics:

    according to a new study by professors from Columbia and New York universities, the “optimal” mortgage in a perfect world is precisely that kind of loan—an adjustable-rate mortgage with an option for amortization »”>negative amortization and a ban (or at least severe restriction) on prepayment.

    Read the full article from Business Week