Archive for the ‘Mortgages’ Category

The economic slump is telling on slim purses. Less and less can avail of mortgage loans to buy properties. There are no units for sale than buyers. It is apprehended by National Association of Realtors that real estate market rates will fall to a five-year record low dip.

For the eighth time this year their predictions were revised. Each time the rate kept falling down and down. Home sales were to fall by 6.8% to$ 6.06 million in 2007. Since 2002 this was the lowest mark. Sale of new houses comprise of 15% of the real estate market. The prices of these will drop by 19% to $852,000 – this being an all time low dip in a decade.

Economist Lawrence Yun is hopeful however that trouble in the mortgage industry will affect the market only for a short period. But economist Michael Darda is of the view that an air of uncertainty looming large is causing further turbulence. It will take time for the stress and tension to abate.

The blame is being laid at the door of Wall Street firms for tying up mortgages with specific security clauses. This has led to many failing to keep to their commitments in the sub-prime market. The virus has spread from here to borrowers in the traditional loan zone. The flow of money has dried up to such an extent that American Home Mortgage Investment Corporation has had to seek protection from bankruptcy laws during this week.

Real estate agents are optimistic that during the last three months of 2007 the sale of houses will begin to pick up to $6.08 million per year. This will be a rise from the low count of $5.85 million during the third quarter of this year. Most of the forecasts are sunny about the near future with the lowest point being reached during the second quarter.

But expert Robert Shiller from Yale University is not that hopeful saying that realtors are basing their assumptions on conventional calculations. In all probabilities in this specific instance the uncertainties will continue for a much longer period – may be couple of years, leading to general economic regression.

According to figures released by the Mortgage Banker’s Association the applications to buy or re-finance a loan has jumped by 8.1% in a week. This meant a further anticipatory increase in credit and re-financing demand.

Via

Search Images

Mortgage disclosures keep many clauses carefully confused. This is the opinion of Federal Trade commission’s Bureau of Economics. With changes here and there borrowers could get a much better deal.
A serious study was made of 800 mortgages covering 12 areas across the country. Half were given current mortgage disclosure forms and half given other forms, which were easier to understand. Participants were queried on two hypothetical fixed rate mortgage loans regarding costs, terms and comparison. Approximately a 5^th of those who took the first set of forms could not pinpoint the annual percentage rate of the loan. This being the cornerstone of the issue how was it possible for them to compare? Another 5^th could not calculate the exact amount of cash due at the time of closing or even the monthly instalments. Questions about escrowing for taxes and insurances remained unanswered. About a quarter couldn’t be definite about the settlement amount charges and a third was confused about interest rates. A third of the participants remained ignorant that the loan was inclusive of a huge inflated payment or that the loaned amount also carried with it settlement charges. As many as half failed to spot the loan amount itself in the current forms. In the other set of forms mortgage costs were clearly outlined while less important or confusing trivialities were left out. The language was easy and borrowers were able to distinguish clearly the various segments in costing.
The results were electrifying and hopeful of a fresh start. It was an eye-opener into the endemic confusion reigning in both the prime and sub-prime borrowers. Only 61% could give a correct answer to those questions related to the current form. But 80% were successful in those connected with the prototype forms. In every way the second lot looked pointed to a hopeful future in the world of loans.

This survey apart, 36 interviews were taken of customers who had recently undertaken mortgages. Most of them were not clear about costs and terms. The scenario is not surprising considering the fact that forms in circulation had been introduced as far back as 30 ago! No wonder even simple loans are not understandable! These forms do not take into account the modern complexities of mortgages. Better forms might not totally solve the problem of frauds but it will go a long way to forewarn the borrowers about the pitfalls.

Search Images

Cambridge based Real estate consultant Paul Martinez recounts the experience of his client – a novice investor. He built castles in the air around a two-family house in Somerville. The 30-year-old debutante in this field was greatly influenced by shows and advertisements about buying, renovating and converting units into condominiums that could be sold at a higher equity within a month. But 18 months later he had run out of breath after having bought when the tide was high. But now with funds running out the retreating tide in the housing market left him high and dry. The unit remained unsold and overpriced by $60,000. It did not take long for foreclosure clouds to loom large and darken his horizon.

Martinez is skeptical about these house-flip shows on HGTV (Flipping Out, Flip the House, Property Ladder) that highly influence viewers. Novices lack the experience and knowledgeable friends to realize that the numbers are wrong. It is all show talk. Reality and actual income from real estate is quite another thing. Here there is no surety. It is the first timers who are the worst hit. They lose money and peace of mind to foreclosures.

According to figures released by ForeclosuresMass.com, during the first quarter of 2007 foreclosure listings rose in Massachusetts by 75% compared to that of 2006 during the same time. Suffolk County alone stood out with 83%. Simultaneously the number of non-traditional mortgage numbers also rose.

Many green horns had forayed in the real estate field for the first time about a year and a half ago to come out with their fingers burnt. Their units remained unsold either because they could not cope with the spiraling mortgage rates or because they had invested in the wrong locality opines broker Paul Turcotte, owner of Re/Max Destiny, Newbury Street, Cambridge.

Realtors tell the newcomers to follow a ‘golden rule’ – never to buy unless the pocket permits it and do not invest without a ready exit route. The buyer must be there even before the investor buys. Jeremy Shapiro of ForeclosuresMass.com echoes this view and adds that cautious steps should be taken backed by licensed contractors. One should know the law before anything else and also keep in mind that laws are continually changing. There is no doubt that increasing foreclosures have complicated matters making it impossible for individuals without ready resources to own a house.

Search Images

What is the missing link between the bond market at Walls Street and the price of a property that has been retaken by a lender after it fails to be sold at a foreclosure auction? It is missing to the eye but it is there alright – lurking behind. In a foreclosure what goes up for auction is not really the property but the loan/loans on it. If no buyer can be found then the unit goes back to the company who forwarded the loan or to the servicer, that is the agent that had been collecting the payments. Laura Pephens, a board member of California Mortgage Banks Association, gave the explanation. The ongoing discussion about houses owned by banks or REO’s (real estate owned), as they are technically known in lending industry’s parlance.

In most of the instances of foreclosure the loans are not with the lenders nowadays. These are held by those investors who bought securities that were mortgag- backed. This means that the lender does not have the direct right to decide on the price of the property. For instance the lender cannot say that $6000,000 is acceptable for a mortgage that was $700,000. The lender has to run around and get the approval from others – those that issued the mortgage-backed securities or the loan aggregator.

It should be kept in mind, said Pephnes, that many mortgage-backed securities are resting in pension funds, insurance funds and other relevant investment portfolios. Thus one does not have far to go to reason out why the issuers are far from eager and hesitant about discounting the loans beyond a certain point. The compelling fear is that the value of the stakeholder’s investments might be eroded. This will give the stock market an uncomfortable shake.

This is a completely new approach to the raging foreclosure crisis lashing through the country. Daniel Gross at Slate analyzed it from quite another angle – the link between the lender and the bond brokers. It came through Inman News blog, which has also other points of interest centering on the foreclosure crisis in its discussion topics. The website is open to discussion with anybody who has had experience in buying an REO unit in California of late. It will be interesting to know how it went off and how much time was spent to get the sanction for the final offer.

Via

Search Images

Mortgage defaults sweeping across the entire country for the last six months has not spared northeast Baltimore County.

There are many local realtors who differ on this point as to the severity of the problem of foreclosures in the northeast region stretching from Baltimore city lines to Harford County.

Êone, the head of major real estate organization says that the local foreclosure listings are far less than the national average. It has risen about 12%, she admitted. Nevertheless, she admits that more and more people are opting to sell their homes because they can no longer afford to repay installment dues. Two other professionals echoed her sentiments saying that the region had only a slight fall in numbers as compared to national figures. It was nothing much to crow about.

Goodman representing a reporting service says that Circuit Court in Towson for the last year shows a foreclosure listing of 1,987 – that is a 12% increase during the time period of a year.

Mortgage lenders can legally sell a house once the payments fall behind four months. Why is this happening?

Many young people below the age of thirty-five are living beyond their means. Another group is of the opinion that divorce rates are rising making it impossible for one person to manage the financial responsibilities. Put the other way – are foreclosures leading to divorces? It is a vicious circle where the roof above the head is at stake. A rise in delinquency is the obvious outcome. Broken marriages, loss of jobs and major illnesses are the prime causes for foreclosures.

Homebuyers should avoid loans with high rates of interest. During four years starting from 2002 there was a boom in the real estate market with rising prices. During that time the owners of property could easily meet their commitments and have something left over by selling their houses. But a boom cannot last forever. It is the natural law. The bubble has now burst.

During March there was slight rise of 3% in sale prices for both Baltimore and Harford counties. But this is applicable to only some houses. Many are finding that their houses are worth less than the amount, which they have to pay to the lenders on the mortgage. This situation is termed ‘negative equity’. The house owner does not have any escape route. The only alternative is foreclosure.

Via

Search Images

After reading this document, you’ll have the knowledge necessary to get the house you want on your terms. A concept so simple, yet hardly anyone follows these simple steps that will surely give you a competitive advantage over other buyers. Visit our mortgage loan resource site to get the info.

More: continued here

Search Images

What is a bad credit home loan mortgage? Do these type of mortgages really exist? The answer is an astounding yes! Contrary to popular belief, you do not have to have perfect credit to obtain a mortgage loan.

More: continued here

Search Images

A 125% home equity loan is a second mortgage loan program that allows home owners to borrow money even if they have no equity in their home. Discover how this program works and how you can use it to your advantage.

More: continued here

Search Images