credit: Reverse Mortgage - Is It For You? - 12/14/09 05:06 PM
Reverse mortgages have been around for a while and the Department of Housing and Urban Development (HUD) under the Federal Housing Administration (FHA) was one of the first to offer them.

Before diving into the deep end of a reverse mortgage, you need to make sure you understand what it is, if you are eligible, and what will be expected if you decide on one.

A reverse mortgage is a home loan that allows you to borrow against the equity you've built up in your home over the years. The main differences between a reverse mortgage and a … (0 comments)

credit: Why Recession Recovery Will Be Slow - 10/24/09 05:11 PM
Austin is one of 79 metro areas across the country to be officially out of the recession, according to Moody's. Although the state of Texas is still considered to be suffering the constraints of the recession, Austin and seven other Texas cities have been given the all clear. This determination was based on an index that included employment, housing starts and home prices.

In fact, the latest poll of economist says that at least 80 percent of them agree that the recession is over. Unfortunately that piece of good news may not mean whole lot as the American economic landscape … (0 comments)

credit: National Bank: How to Fix the Housing Crisis for Less than 700 Billion - 10/17/08 07:48 PM
Recently the news has been dominated by developments with the 700 billion dollar bailout package, and rightfully so. 700 billion is an astronomical sum of money. The first problem is that the 700 billion dollar bailout adds a huge amount of money to the national debt. Not only that, some have hinted that the bailout is so large it could actually lower the US Credit Rating. The second problem is just as serious. There is no guarantee that the bailout will work.
The idea behind the bailout is that by taking on billions of dollars of toxic loans the government … (0 comments)

credit: How Will The US Economy Recover? - 05/18/08 06:02 PM
You would probably have to have been living on a remote desert island for the better part of two years to not see any signs of the slowdown in the economy of the United States. Since August of 2007, the real estate market has been reeling from plummeting house prices, due primarily to increasing defaults on sub-prime mortgages. While these mortgages were issued to millions of borrowers with patchy or relatively poor credit ratings over the past several years, interest rates remained unusually low before the Federal Reserve began to increase rates over 2005-2006.
Up until late 2006, this process … (3 comments)

credit: Credit Crunch: Light at the End of the Tunnel - 04/28/08 10:06 PM
When thinking about the economic slowdown now gripping the United States, one might think of the naked emperor of yore, who could not realize his condition until told by a child. By the time analysts and the White House recognize the extent of the credit crisis, its effects will probably not be noticeable. So where are we now? Several times since last August's signs of an imminent drop in growth, markets have rallied due to speculation that problems in the area of sub-prime mortgages have "bottomed out." Alas, thus far it appears to have been in vain.
On April 25th, … (2 comments)

credit: Interest Rates and the Credit Crunch - 04/19/08 05:58 PM
In Greek mythology, the hydra was a beast that, when one of its many heads were severed, would grow new heads in their place. The sub-prime mortgage crisis has developed in a similar fashion, initially appearing to be constrained to a sector of unworthy credit borrowers who likely didn't have the financial ability to own a home normally. However, this expected loss translated into falls in construction, consumer spending, and widespread mortgage defaults in prime markets. This hydra doesn't respond well to lip service, such as the interest rate freezing plan ushered in by the US Treasury which is constrained to … (0 comments)

credit: The Twin Menaces of Inflation - 04/15/08 04:21 PM
This week, a storm of bad news gave markets cold feet, resulting in Friday's 250-point loss. While this pattern of volatility has been the status quo for stock exchanges worldwide for the better part of the year-to-date, another factor has caused at least as many difficulties for a much larger percentage of the global population: the recent skyrocketing prices in energy and food. Wheat and other cereal prices have more than doubled this year, causing widespread effects ranging from speculative overbuying, which exacerbates the problem, to food riots in many poor countries. Millions of children around the world are likely to … (0 comments)

credit: Bear Stearns and the New Federal Reserve - 03/26/08 01:24 PM
On March 14th, Bear Stearns, the fifth-largest investment bank in the United States, entered a period of insolvency. As growing lack of confidence in the firm's subprime exposure grew, other banks eventually refused to lend to the stricken company, which has existed for over 85 years. Were Bear Stearns a commercial bank, (i.e. institutions that loan money to people or businesses) it would be able to, as a last resort, take advantage of the Federal Reserve's so-called "discount window," thus receiving a government loan at the lowest available interest rate. The reasoning behind making loans to private businesses is sound, because … (0 comments)

credit: Subprime Woes Reach New Heights - 03/21/08 12:31 PM
As the sub-prime mortgage crisis continues to unfold, new figures emerge from the Mortgage Banker's Association: A record .83. That means that, in three months, almost one out of one hundred homeowners have been foreclosed on. Because of America's size and diverse population, the statistics are somewhat skewed: In many places like Austin, Texas and New England, growth remains steady and house prices remain strong. However, in placed like Cleveland, Ohio and other pockets throughout the Midwest, foreclosures are much higher. One in every three mortgages has defaulted recently in these smaller, white-collar towns due in large part to predatory lending, … (0 comments)

credit: Sovereign-Wealth Funds: Savior or Menace? - 01/28/08 10:05 AM
In recent months, the sub-prime crisis has reached unforeseen heights, infiltrating banks and financial institutions worldwide and causing many to report multi-billion losses due to the risky investments going sour. While the underlying economy of the US appears to be relatively robust, and the dollar's continued weakness has made investment and exports more attractive to foreigners than ever before, these factors have not salvaged pessimistic markets: The FTSE has dropped more in the past two business days than any other point since September 11th.
In order for global markets to respond in such a definitive manner, they must either believe … (0 comments)

credit: Fed Credibility goes Down the Tubes - 01/23/08 09:57 AM
On January 22nd, the Federal Reserve cut their most important interest rate for the fourth time in the past six months, in an attempt to stem the widespread sentiment that the US is in, or headed for recession. Their cut comes at a strange time, because they were rumored, nay, expected, to deliver the cut at their monthly rate-setting meeting next week. But after stock and commodity markets suffered their largest losses in one day since the September 11th attacks, it seemed as though no amount of scheduled economic treatment would be able to rally confidence to a more optimistic level, … (0 comments)