home loan: FHA boosting mortgage insurance premiums - 08/28/08 11:53 AM
FHA has made a remarkable comeback in the last several months. Many of the creative home loan products that fueled the recent boom, especially those under the banners subprime and Alt-A, are rapidly being swept into the dustbin. FHA has stepped into the vacuum, offering low down payment options to borrowers who are itching to buy a property while prices are still as attractive as they are. FHA's market share in 2006 was about 2%, rather trivial number, and now it's around 23% and is expected to climb to 30% by the year's end, according to Inside Mortgage Finance.
But FHA … (10 comments)

home loan: Freddie Mac ups incentives to stem foreclosures - 07/31/08 05:07 PM
Freddie Mac, the government-backed entity that buys mortgages on the secondary market to provide liquidity, is getting more aggressive in trying to slow down the foreclosure train on loans it owns. Evidently it feels it has to do more than what it has done thus far in order to minimize the damage. Its new initiative is to better reward workouts by mortgage servicers.
When a home loan servicer completes a repayment plan with a distressed borrower Freddie Mac will compensate it $500, up from the previous $250. And loan modification payment goes up from the current $400 to $800. Compensation increases … (12 comments)

home loan: Are mortgage borrowers well informed? - 07/05/08 02:22 PM
At first look, the foreclosure epidemic that is currently roiling the home loan industry is clearly pointing in the direction that a good portion of buyers are relatively unconcerned about the mortgage program they signed for and that's why they are now in distress. The number of foreclosures, however, is only affecting about 4% of all mortgages outstanding, a very manageable percentage. Historically it's high, but in the big picture today it can still be considered minor.
It means then that most borrowers do actually understand relatively well what they are committing to. No one needs to be an expert in … (14 comments)

home loan: Senate housing bill on mortgage industry draws fire - 06/17/08 05:02 PM
U.S. Senate has been working for a long time on a wide-ranging housing legislation that should spell a lot of relief to the battered mortgage industry. Their intentions are certainly sincere, but sometimes they just get too eager to find solutions, hoping to fix everything in a matter of months. Which of course is unrealistic. And they also tend to listen to people who call themselves experts when they really aren't. They are just lobbyists representing a segment of the market that is looking to benefit from the changes.
The latest draft now working its way through the U.S. Senate has … (6 comments)

home loan: Is that elusive real estate market turnaround near? - 06/15/08 09:38 AM
The mortgage and housing markets have been severely punished in the last couple of years, there's no denying it. The home loan industry, of course, covers the entire nation while the real estate field's troubles have been rather uneven. Some areas, like Las Vegas, lots of Florida and California, have suffered much more than others. Optimistically, some indicators are now popping up all over that perhaps the very bottom is here for many regions, or at least within sight.
In any case, one financial expert is heavily leaning towards an impending recovery. Edward Lampert's ESL Investments, a hedge fund presently owning large … (6 comments)

home loan: Mortgage lender REO count still growing - 06/04/08 09:25 AM
Recent statistics, especially on sales numbers, have instilled some optimism among consumers that the distressed real estate market is about to bottom out in many areas of the country. Maybe it is and that would be a welcome boost for the industry, and also for the beleaguered mortgage lending community. On the other hand, though, perhaps a few more tough months lie straight ahead.That is what First American CoreLogic, a research shop from California, is indicating in its latest foreclosure report compiled from bank and county sources. Investors in home loans and mortgage lenders together had in their books roughly 660,000 homes … (10 comments)

home loan: Mortgage lenders facing another obstacle - 05/28/08 05:41 PM
 The home loan industry has been dealing with all sorts of problems lately, from a soaring heap of foreclosures to a stagnant real estate market that makes meeting monthly revenue projections difficult. Many companies have been forced to close their doors and a host of others still operating are barely hanging in there. Those record-breaking earnings years of the recent past are long gone. Amid all that distress, now it's forced to battle another challenge.
 And this one comes from the investment community. Investors who bought mortgage securities on the secondary market during the boom years are increasingly seeking to force … (8 comments)

home loan: Mortgage market risk management basics - 05/20/08 03:14 PM
 The subprime home loan debacle sure has exposed the huge and complicated marketplace to careful scrutiny as to how it handles risk management. Sterling banking firms and mammoth investment organizations have lately lost untold amounts of money on U. S. mortgage-backed securities. When some of the better finance minds the world over get dragged into a mess like this there must be something fundamentally questionable about it all.
 Let's take a closer look. For residential mortgages, the current risk management function rests on two legs.
 The well-known element is the one where a weak borrower is charged a higher interest rate … (8 comments)

home loan: Mortgage and real estate scams alive and well - 04/12/08 12:10 PM
Now that the mortgage and housing markets are together going through tough times scam artists have come out to sniff for opportunity under just about every rock. They are shamelessly preying on the unaware. The numbers alone tell the story, as FBI's Financial Crimes Enforcement Network, or FinCEN, registered almost 15,000 SARs, or suspicious activity reports, in the first fiscal quarter of 2008 and plans on getting over 60,000 of them for the entire year. Fiscal 2007 had 46,700 and 2006 35,600. That makes for quite an upward curve for the last three years.
And those figures are only part of the story. … (4 comments)

home loan: Finance market overhaul plan's positives - 04/05/08 05:15 PM
The recent proposal from the Treasury Secretary to revise how Wall Street operates and is regulated has been largely greeted with well-aimed criticism, and even some yawns because it seems to be just good old-fashioned politics. To many it goes way too easy on the finance industry at a time when it should give it more chaos-avoiding, meaningful direction. There are, though, a couple of proposals that merit a further look.
One of them is the mortgage lender issue. The plan seeks to set up a Mortgage Origination Commission that would draw up a draft of federal home loan licensing standards and … (4 comments)

home loan: Mortgage refinance made troublesome - 03/25/08 11:47 AM
The residential real estate markets in many areas of the country are plodding along in high weeds. When that is combined with a home loan industry that is grappling with serious balance sheet tremors, the situation is ripe for healthy head scratching for a homeowner who needs to refinance his explosive mortgage. As if that isn't enough to take a deep breath, there is another new, potentially crippling twist to the scenario.
The refinance process can turn murky, even impossible, if a second mortgage is involved. It usually is subordinate to the 1st loan, so in case of a default the … (2 comments)

home loan: Reverse mortgage choices multiply - 03/22/08 05:09 PM
The still little talked-about reverse mortgage option is fast becoming a household word. It only makes up less than 1% of the huge overall home loan market that right now stands at around $10 trillion, so it's no wonder. In the coming years it'll take a larger bite out of that total, though, if a recent trend is any indication. According to HUD, the Department of Housing and Urban Development, federally-sponsored reverse product lending grew 41% in the fiscal year ending in September, 2007. The increase is indisputably substantial.
The traditional reverse mortgage is available to homeowners 62 years and older who … (8 comments)

home loan: Mortgage industry faces more reforms - 03/16/08 11:15 AM
A high-powered economic panel has been meeting under the direction of the U.S. Treasury Secretary to seek solutions to the current mess in the mortgage and overall credit markets. The task is difficult, of course, because of the complexity the financial segment has grown into over the last several years. But something has to be done, tried at least, to get the industry back on the right path.
One of the favored recommendations of the working group is the careful overhaul of the mortgage broker sector that would require at least a national licensing system, if not more. Uniform mandatory licensing would definitely … (8 comments)

home loan: The return of the ARM - 03/07/08 05:09 PM
The Adjustable Rate Mortgage, or ARM, lost much of its edge over the 30-year fixed in the last few years. Things actually got so tangled up for a couple of weeks in 2007 that the 5-year ARM, or 5/1 ARM, the most sought-after of them, demanded a higher interest rate than the standard 30-year mortgage. ARMs have traditionally offered lower rates due to their shorter maturity period and that they will adjust either up or down annually after their initial set time frame.
Even as recently as early January the 5/1 ARM and 30-year fixed displayed the same rate in Bankrate.com's weekly … (2 comments)

home loan: Mortgage insurance firm scaling back - 02/26/08 04:47 AM
Where does it all end? The snowball effect continues to throw cold water on the entire home loan industry. Things started off with the subprime bombshell, which was soon followed by the rapidly rising foreclosure rate, then large investors purchasing bundled mortgage products on the secondary market got sucked in and now it's the mortgage insurance segment's turn. These sectors, and possibly others, are all being called on the carpet to answer for their sins.
Mortgage insurance companies offer coverage to lenders who underwrite loans with less than 20% borrower down payment or, in case of a refinance, under 20% owner's equity. … (6 comments)

home loan: Mortgage lenders and new "redlining" - 02/19/08 01:35 PM
The nation's home loan companies have been battling deteriorating housing market conditions for some time now and that has caused severe losses for many of them. Property values are dropping in several areas and borrowers in these markets increasingly face the threat of foreclosure as their exotic ARMs reset higher and make payments unmanageable. Times are tough on both sides of the fence, to say the least.
In an effort to stem the bleeding, mortgage firms have instituted a bunch of new policies, one of which has drawn pretty heavy criticism from consumer advocacy groups and some in the lending industry itself. … (11 comments)

home loan: Mortgage refinance obstacle - 02/16/08 04:01 AM
The home loan industry is buffeted by a major gale and so is in many areas the residential real estate business. They are right now battling the elements as they best can. While at it, mortgage lenders have made scores of adjustments out of necessity to their loan programs and business practices.
One of the adjustments is causing extra strain on homeowners and investors who are looking to refinance their properties. Now is as good a time as ever to find a more affordable product as the existing interest rate is about to reset upward and mortgage money can be had … (8 comments)

home loan: Mortgage industry regulation overload - 12/21/07 05:14 AM
The residential real estate market is still in a state of upheaval in many regions of the country. Overbuilding, investor speculation and lax mortgage lending standards are mentioned as some of the key reasons to the contraction. In many respects, however, it's merely a market economy at work which has its periodic ups and downs. With proper government controls these turbulent periods can be softened, but not eliminated. Yet, the blame game is in full force from coast to coast and the home loan sector, for one, was caught in the cross-hairs of many regulators who are now busy rewriting its … (6 comments)

home loan: Foreclosure process tripped by a court - 12/08/07 03:15 PM
The climbing foreclosure graph has been in the news for a good while and according to industry observers more are on the way as mortgage interest rates on a host of ARMs reset higher in the coming months. The financial markets are really concerned. To try to put a halt to the rise, Washington, consumer groups, lenders and investors are desperately seeking solutions to the hardship.
Their task just became a little harder.
A judge in the U.S. District Court in Cleveland recently dismissed a lawsuit where Deutsche Bank had sued to repossess 14 homes that were foreclosed on. The reason was … (4 comments)

home loan: FICO 08 credit scoring model still unavailable - 11/08/07 02:29 PM
The mortgage industry could really use the new and improved FICO scoring system, but it unfortunately continues to be under development and there currently is no firm time frame when it's going to be ready. Back in June FICO announced that it would go live this fall first at Experian, one of the big three credit bureaus. The other two, Equifax and TransUnion, would receive it sometime next year. However, all everyone can do now is wait.
The most anticipated feature in the FICO 08 will be the elimination of the now famous Internet credit score improvement scam. The way the scam … (4 comments)