subprime: HAMP improving subprime mortgage performance - 06/17/10 02:04 PM
Subprime home loans became a noteworthy ingredient in the recent real estate frenzy. Large pools of them were sold on the secondary mortgage market as RMBS, or residential mortgage-backed securities, to supply additional liquidity for more loans. When the air suddenly escaped from the tremendous housing bubble the first mortgage product to absorb its swift and devastating effects was the subprime kind, leaving scores of investors wondering what had whacked them.
Moody's Investors Service details that subprime RMBS issued from 2005 to 2008 reached a delinquency level of 54.4% in January of 2010, an all-time high. From there on, though, the … (14 comments)

subprime: When Buffett speaks people listen - 01/27/09 07:47 AM
Warren Buffett rarely needs an introduction. By most standards he can be considered as popular as today's movie stars, music performers and sports heroes. As a savvy guru of the business world he has made a tidy sum of money as one of the most revered investors of the last several decades. Whatever his formula is, it works. Besides the record-breaking numbers on investment returns, he personally brings confidence and prestige to any process he is involved in.
Confidence in the U.S. economy is what's largely lacking right now. Actually, it all pretty much started with the subprime mortgage deterioration that … (2 comments)

subprime: New mortgage fiasco in the making? - 12/05/08 09:10 AM
The financial system has taken it to the chin repeatedly over the last few years thanks to multiple factors, one of which was the subprime home loan product. Many eager borrowers were able to secure funding for a home purchase using its flexible underwriting criteria although many really didn't have the means to keep making payments in the long term. The loans were structured with the idea that the real estate market would continue to expand and if it somehow tanked, well, that probability wasn't considered much at all. And so the bubble burst and the subsequent damage is severe.
As … (12 comments)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: Las Vegas set to benefit from HUD foreclosure program - 09/27/08 03:00 PM
The Department of Housing and Urban Development, or HUD, has received a grant package that totals almost $4 billion to aid cities and states embroiled in mortgage foreclosures. These funds actually were put aside for this purpose in the recently passed Housing and Economic Recovery Act.
The effort has a fitting name, The Neighborhood Stabilization Program, and its aim is to let local and state governments use the available money under certain guidelines. They can tear down or restore abandoned homes and buy land temporarily to stabilize deteriorating areas and then promote redevelopment.
Possibly the more pro-active aspect of it is … (8 comments)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: 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)

subprime: Mortgage industry tested by foreclosures in 2007 - 02/05/08 05:32 AM
Mortgage foreclosure filings on a national scale kept a steady pace throughout 2007, reports RealtyTrac, a California-based real estate marketplace and an expert in foreclosure data. Despite government and lender efforts to come to the rescue of homeowners in distress, the figures toward the end of the year showed no improvement at all. In fact, there was a minor push upward in the last few months. Foreclosure filings include correspondence informing homeowners that they are in default or that their property can be auctioned off or repossessed by a bank.
As anticipated, Nevada still lingers at the top of the state list … (2 comments)

subprime: Las Vegas housing crawls along - 12/23/07 01:41 PM
The November residential real estate indicators for Southern Nevada were recently published by Home Builders Research and SalesTraq, two local industry research shops. In general the numbers are down, an altogether familiar pattern for the past several months.
In the new home category sales are off by 47.5% from last year and the median price declined 20.2% , to $271,228. The drop in the price is meaningful, as it now reached over 20% year over year, a moderately high number. Resale house sales decreased 42% and the price was cut back 10.5%, to $257,000. During the boom years in Las Vegas the … (2 comments)

subprime: Subprime mortgage rate freeze on thin ice - 12/05/07 02:05 PM
When the Treasury Secretary announced in a recent speech that the Hope Now coalition is working on an ambitious plan to freeze interest rates on qualified mortgages, the mood among homeowners who could be positively affected surely was upbeat. Hope Now is an alliance of community, government and industry groups in search of viable solutions to the subprime mess. The aim is to rewrite eligible adjustable rate mortgages, or ARMs, so that when they reset, borrowers won't be burdened with unaffordable payments.
After a mortgage is issued, it typically is sold to the secondary market where it could be repackaged and sold … (11 comments)