home loan: Low appraisal, then what? - 06/19/07 04:01 PM
 
It's a well-known fact that appraising is an art, not an exact science. Most appraisers are very good at what they do. And thorough. They are licensed, they belong to a trade association, they attend refresher courses and they make sure that their results are accurate. However, mistakes are sometimes made and your number comes in low and you don't like it. There are a couple of ways you can approach the injustice.
Go ahead and ask for a second opinion. What has become more and more popular lately is the AVM, or an Automated Valuation Model. It's nothing more than a computer program … (17 comments)

home loan: Nevada mortgage foreclosure rate rises - 06/16/07 10:05 AM
 
The rate actually went up so much in the first quarter that Nevada, unfortunately, managed to top all other states for the dubious honor. The number of home loans in foreclosure grew 0.32% to reach a total of 1.16% of all mortgages in the state, according to the Mortgage Bankers Association. The other high-ranking states are Arizona, California and Florida.
What's intriguing about the results is that if these four states are left out of the report, the statistics for entire nation would've shown a decline. These four were invaded by real estate speculators a few years ago and now that the … (4 comments)

home loan: Where is the real estate recovery in Las Vegas? - 06/13/07 10:37 AM
I certainly can't find it anywhere no matter how many rocks I turn over. The stats that have come out lately haven't given much encouragement, but you tend to remain optimistic and try find some light in the famous tunnel.
Last fall things were pretty bleak here when the MLS inventory hit over 24,000 listings in October. Then the winter months started to whittle down that number and it fell to somewhere above 19,000 and hopes were slowly beginning to stir. Fingers were crossed in mortgage, real estate and other related offices. The spring might be better, the summer for sure. Not much better, but an … (5 comments)

home loan: Lenders to the rescue - 06/07/07 02:34 PM
The present housing downturn has plunged the subprime lending sector into a less than desirable situation. The soft market is hurting some borrowers who bought late in the boom days with exotic mortgage products and now can't make the payments when the loan rates a resetting. But it also is threatening several financial institutions because a wave of foreclosures can become too much to overcome. So, lenders are facing the good old bottom line pressure, but also political pressure from Washington to assist in holding back the foreclosure threat.
The lending industry is stepping up efforts to provide relief. Fannie Mae, a leading player in the … (4 comments)

home loan: Subprime news improve - 06/04/07 10:33 AM
 
It's still early in the cycle, but there are some signs that the subprime market might be on the mend. Congress, federal regulators and consumer groups are all poking around the business practices of this troubled mortgage market segment, trying hard to pinpoint where exactly the real problems are. But it's taking a while because it's very complicated. In the meantime, the world of business moves on, doing what needs to be done. 
Today it was announced that a private equity firm is going to acquire Accredited Home Lenders, a besieged subprime lender out of San Diego. Many fellow lenders in the industry … (10 comments)

home loan: Subprime and Congress - 06/02/07 09:13 AM
 
 
Washington continues to work on finding a sensible solution to the subprime turmoil. It's taking a while because the situation really is tangled and the easy answers just aren't available. There are so many participants in the subprime market that to legislate smartly from here on out takes a deft hand. The sector is still important to the mortgage and real estate industries, and for the entire economy for that matter, that you don't want to shake it too hard. But some adjustments are needed to correct the past practices that led to this slippery slope.
Congress has already looked at the … (6 comments)

home loan: Mortgage a good move? - 05/29/07 11:54 AM
 
Let's step away from the subprime discussion and go into something else that for a change should yield positive returns. Enough is enough. Undoubtedly a mortgage is the single largest debt obligation we'll ever sign up for. It can be intimidating, but it doesn't have to be. If handled correctly, it can work to our financial benefit. Why don't we take a look at some ideas here.
Financial experts tend to agree that mortgage money is the cheapest money around. The low rate is just one thing, the other is that the interest is tax deductible. And this brings us to the equity … (3 comments)

home loan: Real estate speculators - 05/25/07 11:54 AM
 
Who are these guys? The talk about who is to blame for the subprime jolt is going around as strong as ever. Consumer advocates are leaning hard on the mortgage industry. Washington is probing into the practices of the secondary mortgage market that packages loans for investors. Lenders are pointing the finger at real estate speculators. And so it goes. Oh, wait, why don't we take a look at the speculators, or investors.
Let's examine unscientifically how human nature and a market economy interact? To me one large reason to the current real estate mess is the adverse impact caused by the speculator. I … (9 comments)

home loan: Subprime mortgage difficult to restructure - 05/18/07 06:55 AM
As the foreclosure numbers keep climbing for subprime mortgage holders, the lending industry is facing a major dilemma. Congress and others are almost daily making demands that it should work with delinquent borrowers and help them restructure their home loans. It surely would like to do that. It's usually in no one's best interest to repossess a home. But there are limits to what can be done.
And the reason to the limits is the securitization of mortgages. More specifically in the subprime sector where the private label mortgage-backed securities have grown rapidly in recent years. Private labels have been good for the market, … (6 comments)

home loan: FICO primer VI - 05/15/07 09:56 AM
This is the sixth part on how FICO works. To be able to fully follow the flow of discussion it would be to your benefit to first read FICO primers I, II, III, IV and V. This is the next to last in the series, so there's hope.
It's now time to go to the fourth category, which is new credit. This one is about 10% of your score. We today tend to shop for more credit than ever before and FICO is monitoring that. In general, more new credit will lower your score. According to past financial studies, someone opening multiple credit accounts … (0 comments)

home loan: Private mortgage insurance comeback - 05/02/07 09:52 AM
That insurance sector, the so called PMI, almost disappeared during the real estate boom days a few years ago. It wasn't really needed much then. If the borrower lacked down payment, piggyback home loans came to the rescue and life went on. Piggyback typically consists of two loans. For example, 80-15-5 setup means that there's an 80% first, 15% second and 5% down. The benefits with it were the standard tax deduction come April and financing the second, despite it posting a higher interest rate, was normally less costly than taking an PMI.
Today, however, there's a different tune playing in the … (2 comments)

home loan: Subprime dilemma and "moral hazard" - 05/01/07 05:12 AM
That's an intriguing thought. Moral hazard. What is it? It's a term in economics and insurance that explains how people behave carelessly when they are safeguarded or insured in some way. Let's take an example from the real estate business. If companies make flood insurance available, people will feel it's now okay to build homes on flood plains, because they are covered. Otherwise they wouldn't, goes the theory.
It applies to the mortgage business in a logical manner. A few years ago lenders eased on their underwriting standards to make more money. Well, when you do that, the whole process also becomes more risky. … (8 comments)

home loan: Is it time to refinance? - 04/27/07 09:51 AM
It very well may be. The most urgent reason to do so is if the homeowner has an adjustable rate mortgage, or an ARM, and it's about to reset upward. That way the payments can be kept from changing too much or not at all. To cash out some of the built-up equity for a home improvement project or something else could be another good reason to do it. And there still are older loans with high interest rates that could benefit from today's low levels.
There are a few things that need to be taken into account, though. Is there a prepayment penalty … (0 comments)

home loan: FICO score boost. - 04/27/07 05:30 AM
Mortgage lenders today are setting higher loan qualification standards for borrowers with weak credit files. Since they're facing mounting defaults in the subprime segment, they have to. Now there's another issue to contend with. When they study a credit report, the one compiled by FICO, are they really looking at the applicant's true financial background, or has it been artificially boosted by someone else's excellent credit file?
This is what's happening. Companies are turning up on the Internet that offer to marry a stellar credit file with a file that is so-so, or worse. In essence, the high-quality information is shared and that'll help … (8 comments)

home loan: New mortgage product. - 04/26/07 07:17 AM
Good news at last. It took a while. The last several weeks have been tough. The real estate headlines just about everywhere have oozed with subprime troubles this and foreclosure that and home values are dropping and so on. Followed by long and dark narratives about new regulations and who is to be blamed for what. Now the beam of light is shining on a new home loan program from Washington Mutual. At least for the time being.
It's called Mortgage Plus. People who are looking for more flexibility and control are going to be dancing in the streets. It actually combines a … (0 comments)

home loan: Mortgage foreclosure remedy. - 04/24/07 04:18 AM
Contrary to popular belief, mortgage lenders are totally opposed to foreclosing. If they have to do it, it'll usually cost them money. And who wants to lose money? Nobody. EMC Mortgage reports that on average it loses 40% of the value of a home loan gone into foreclosure, plus typically has to pay property taxes and other expenses related to the house. That's bad business.
The question is, how are lenders dealing today with the alarmingly climbing foreclosure numbers? EMC and some others have come up with feasible solutions. Read more by clicking here.
 
… (5 comments)

home loan: Shared equity mortgage to the rescue. - 04/23/07 06:23 AM
Despite the recent softness in the real estate market, buying a home can be a stretch for many first-time buyers and young move-uppers. Prices are relatively high in most areas and lenders are getting fussy. Shared equity mortgage could be worth a look. Let's go over some of the basics.
Normally it involves well-off parents helping out their children. But it can be anyone besides the parents. Anyway, let's say a father contributes $60,000 toward a down payment on a $300,000 house his married daughter wants purchase. His investment is 20% of the home's value. He would get that back at a future sale, … (11 comments)

home loan: National homebuilder under scrutiny. - 04/18/07 06:39 AM
This appears to be part of the subprime turmoil. Federal investigators have recently launched a criminal probe into the mortgage lending methods and other financial transactions of Beazer Homes. Several agencies are involved, among them HUD and IRS. They are emphasizing, though, that an investigation alone doesn't necessarily mean there has been any unlawful activity.
As we are aware, many large homebuilders nowadays have their own mortgage divisions. The idea is to offer the buyer a one-stop shop, a great concept from the business point of view. And perfectly within the rules. Now that the home loan industry is suffering from a moderate to serious … (0 comments)

home loan: Mortgage buybacks the rage. - 04/16/07 05:44 AM
There was very little talk about mortgage buybacks before the year 2006. Why? The real estate market was doing quite well in those days. We all remember that. If a borrower fell on hard times, he could quickly unload the property and make a profit in the process, too. Even a shoddy loan was a good loan. That was then.
What's a buyback anyway? When a bundle of mortgages is sold, there's a contract between the parties that often stipulates that the seller must take back from the buyer loans that go into default early on, usually within 90 days. Another reason for such action … (2 comments)

home loan: New Century bonus plan. - 04/13/07 06:28 AM
That's all we need now. One of the leading subprime lenders that is now in bankruptcy is seeking to grant bonuses to its top managers. The leadership there has the nerve to make that request in front of the bankruptcy judge in Delaware. First they run a large home loan institution to the ground with ill-advised policies and then they turn around as if nothing had happened and ask for bonus money for their labors.
Should they be able to attract buyers for the mortgage company's assets, they argue, they then ought to be entitled to bonuses. But the documents that were filed with the court … (2 comments)