borrower: New mortgage rules from HUD questionable - 11/13/08 02:00 PM
The recent mortgage and real estate troubles have sparked all sorts of efforts by the federal government to update existing rules and regulations governing housing transactions. In all honesty there certainly is some room for that, but there also were many other reasons to this ugly mess. In the spirit of doing something the Department of Housing and Urban Development, or HUD, burned the midnight oil for months and now it has released a new set of rules.  
Actually, what it did was to some degree revise RESPA, or Real Estate Settlement Procedures Act, that has been the benchmark for home … (6 comments)

borrower: IndyMac mortgage loan modification plan could become national standard - 10/23/08 03:30 PM
IndyMac is one of the many hard-luck banks that was deeply involved in subprime mortgages and because of that it was about to go bust a few months ago when FDIC, the Federal Deposit Insurance Corp., swooped in and took control of it. In the following weeks FDIC did more, though, than just guarantee depositors' money. At the urging of its Chairman Sheila Bair the agency and IndyMac formulated an ambitious home loan work-out program and are now testing it.
At the core of the operation is the desire to save the FDIC money on foreclosures now in IndyMac's books. To … (13 comments)

borrower: Is the financial bailout plan addressing the wrong issue? - 10/16/08 03:24 PM
The extensive financial, or housing and mortgage, rescue program in its present form is clearly designed to first lift Wall Street off the mat. Details are still being worked out in Washington on it but that's where its main focus is. Some say that this direction is ill-advised, though. Among the heavy hitters supporting that is the Chairman of FDIC, or Federal Deposit Insurance Corp., Sheila Bair who just voiced her displeasure the other day.
In the center of the dispute is the belief that the key problem now is the number of foreclosures that still keep on rising in many … (8 comments)

borrower: Mortgage lender settles lawsuit that will help out many struggling homeowners - 10/07/08 10:30 AM
The media is still abuzz about the massive, controversial and headline-grabbing Wall Street bailout plan put in the books just last week and now there is another important financial development that is trying to elbow itself some room on the headlines. Bank of America just settled a lawsuit with 11 states over predatory lending practices Countrywide Financial, a mortgage lender Bank of America took over this summer, had allegedly committed.
Although only 11 states originally filed the complaint, all 50 states can take part in the loan modification program that was the result of the settlement. Homeowners who obtained mortgage loans … (2 comments)

borrower: The bailout program may offer real help for struggling homeowners - 10/04/08 01:55 PM
The extra time that Washington took to hammer out the much-anticipated rescue plan may have produced something that will make distressed mortgage borrowers feel a little better about the whole exercise. In the original blueprint their plight wasn't very important at all but according to the revised version they have a good chance of receiving help that could allow many to keep their homes. Some months ago the government introduced the Hope Now program that had a major weakness in it, namely that it was voluntary for the lenders and by many accounts it hasn't provided that much relief at all.
… (12 comments)

borrower: Mortgage industry undermined by rating agencies? - 09/23/08 10:21 AM
They are a little known piece of the puzzle in the huge U.S. mortgage lending arena but credit agencies definitely play a crucial role in it. The big players in the field are Moody's, S & P and Fitch. Historically they were rating corporate bonds so that investors would know where to put their money at what return and risk.
In the late ‘90s, though, they began looking at residential real estate finance and learn how to rate mortgage-backed securities. And they liked what they saw and jumped into it feet first. The boom years came and they kept giving ratings … (8 comments)

borrower: Mortgage creativity reached too far - 09/16/08 03:36 PM
As the world today watches major, with a capital M, American financial institutions come apart at the seams because they were too carelessly and deeply involved in recently-issued mortgage securities, many experts are already starting to look for reasons to the obvious meltdown. There are many of them but it's hard to put the right weight on each. One of them, for sure, has to be the innovative programs the home loan industry produced over the last decade or so.
Bringing new, creative products to the mortgage marketplace is often invigorating and is normally accepted with open arms by all participants. … (10 comments)

borrower: Some mortgage loans still risky - 09/13/08 04:10 PM
Many areas in the nation are in the grip of a serious real estate price erosion and that presents all sorts of problems. Homeowners have seen their built-up equity being eaten up by it and in other cases it results in foreclosures when borrowers can't refinance out of their unattractive existing home loans because they have no equity. It also is rapidly becoming a challenge to lenders who have recently issued mortgages with low down payments.
Let's take a look at an example. Las Vegas single-family home prices have lost about 30% in the last twelve months, therefore averaging around 2.5% … (8 comments)

borrower: 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)

borrower: Fannie Mae makes news with Alt-A adjustments - 08/09/08 01:38 PM
Fannie Mae, the giant player in the secondary mortgage market where it buys loans and either keeps them in its own books or packages them for resale, just announced a hefty second quarter loss of $2.3 billion. A loss was expected but this was much more than what experts had anticipated. Anyway, that's one thing. The other is that this will result in some painful adjustments to its lending practices toward Alt-A loans.
Alt-A mortgage falls in between the prime and subprime products and is normally applied for by borrowers with a nice credit background but can't or won't disclose income … (18 comments)

borrower: Housing rescue bill almost a reality - 07/24/08 04:59 PM
Washington has been hard at work for a while on this huge housing rescue legislation - it'll provide $300 billion to distressed homeowners who face a possible foreclosure - and it passed the House this week. Once it gets the blessings of the Senate and the White House, it'll become law, which it is expected to do soon. Besides coming to the aid of financially-hurting homeowners, it'll also extend a helping hand to the ailing mortgage heavyweights Fannie Mae and Freddie Mac, something they both badly need.
The bill includes a lot of rules about all sorts of things, as it … (14 comments)

borrower: New mortgage lending rules from the Fed - 07/15/08 04:08 PM
The revered Fed is taking steps to streamline how lenders go about making higher-priced home loans, higher-priced by the way is another way to say subprime, to borrowers. These guidelines are intended for the entire spectrum of mortgage lenders and not just for those under the Fed's regulatory umbrella. As of right now, they'll go into effect on October 1, 2009 to give everybody time to adjust.
One of the better rules is the one where the lender must verify that the borrower's income and assets do indeed meet the repayment needs of a particular product he applied for. The repayment … (10 comments)

borrower: 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)

borrower: Countrywide faces more challenges - 06/26/08 05:19 PM
The one-time king of the hill of mortgage lending is now being continuously hounded by lawsuits from just about all corners of the spectrum. Company shareholders, employees and borrowers have already filed a pile of legal action against it and to make matters worse several states just now decided to join the increasingly far-reaching tussle.
California, Illinois and Washington each filed their own particular lawsuits, claiming for instance that Countrywide employed "misleading marketing practices", maneuvered borrowers into "risky and costly mortgage loans" without having the ability to pay them back and that it used "unfair and deceptive practices" in marketing loan … (20 comments)

borrower: 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)

borrower: Short sale can be a headache this big - 04/21/08 02:33 PM
Mortgage foreclosure is something that isn't advantageous to have glaring at you from a credit report. It has a large negative impact on FICO's computations and can make future credit very costly to obtain, if it's available at all. Before a distressed homeowner resorts to that route, another option has increasingly made its way into the realm of possible solutions.
A short sale. Under this arrangement the homeowner sells the house for less than the mortgage balance, with the lender's full blessing. At first sight it seems to be the ideal way to go. The borrower, or homeowner, is clear of … (14 comments)

borrower: Mortgage walkaways face unkind future - 04/20/08 03:42 PM
The tough real estate market gripping large sections of the country has incubated multiple trends and one of the more noteworthy of them is the mortgage walkaway. This is where a distressed homeowner or an out-of-luck investor decides to cease loan payments and at some point later on hands in the house keys to the lender. Many of them believe that the action will just like that solve their mortgage payment problems and they will be able to start anew somewhere else. 
It's not that easy, however. Fannie Mae, the mammoth buyer of mortgages on the secondary market, issued new guidelines to … (2 comments)

borrower: 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)

borrower: 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)

borrower: 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)