Posts Tagged ‘mississipi’

House Predictor.com has conducted a survey after analyzing the country’s largest metropolitan real estate markets. It forecasts that within two and a half years 2 million homes will be foreclosed. 50 US states comes under this dubitable distinction. So far the site has been 85% correct in its conclusions.

Housing Predictor gives details about the foreclosure tsunami in America and how the virus of the sub-prime loan calamity is gnawing into the conventional mortgage market. Topping the list are Michigan, Ohio, Minnesota, Nevada and Colorado. Next in line and about to catch up are California, Alabama, Indiana and Mississippi.

The apprehensions of House Predictor are echoes of what The Center for Responsible Lending has already estimated. The latter gives a very grim picture. About 2.2 million houses will come under the hammer of foreclosure during the same period of two and a half years, as a result of the sub-prime hiccups.

Some researchers are of the opinion that the infection has not spread into all the real estate markets on a big scale. In eighteen states the local housing markets are appreciating. Signs of stabilization are apparent in 10 other property markets. A phenomenal increase in adjustable mortgage rates have spiked off this disaster. At the root of it all is unethical lending by agents and accepting of the same by borrowers without thinking of the risk involved.

Researchers have found a link between high number of foreclosures and mortgages made to sub-prime borrowers. The latter fell into the trap because their credit history was questionable. As such they agreed to any terms to somehow realize their dreams – have a house of their own. Little did they realize that they were mere stooges in the game of big money. The housing market of the country had hitherto appreciated, egged on by falling interest rates and liberal lending rules. This had gone on for five years only to slow down in some regions.

Another discovery was that mortgages made to first-time investors were being foreclosed. The U.S. Commerce department said that prices of vacant private houses had reached an all time high level. Many investors had bought properties with the hope of making a fast buck by selling it to a new buyer before the market reached its peak. However now the situation is that they can neither rent out or sell their properties without suffering heavy losses.

Via

Search Images

Bankers are watching and waiting with uncertainty the snowballing effect of the sub-prime tsunami crisis.

Even though April provided a breather by a dip of 1% in foreclosure listing, it was still up by 62% compared to last year. Even then it will be far above the average of last year. Statistics pouring in show a worsening of the situation. No one knows the actual number of active sub-prime mortgages, its source of origin or refinancing procedures in Northeast Minnesota and Northwest Wisconsin.

Risky loans had triggered off this crisis. Some of the biggest sub-prime lenders like Ameriquest and New Century Financial are toppling down.

Some regions of the country have remained untouched by this virus – Wyoming, Vermont, North and South Dakota, Mississippi, Delaware and Washington D.C. Topping the list are 10 cities of which six are in California. These six ranks first among the group of notorious 10. Las Vegas comes first. Others claiming this dubious distinction are Nevada, Colorado, Connecticut, Florida, Arizona, Illinois, Michigan, Ohio and Georgia. As a result of this fall out Michigan, Minneapolis and Ohio are reeling under massive layoffs.

Big national financial services are practically non-existent in some important regions. Yet sub-prime activity has been typical with apprehended results. Real estate businesses having taken a U turn, lenders are tightening loan conditions thus putting marginal borrowers in a soup. Their rates of mortgage interest are rising while the value of their property continues to plummet.

The situation is so alarming that Lutheran Social Services have come forward to provide pre-bankruptcy counseling in Minnesota and Douglas County. The sub-prime lending has hit not only the borrowers but also local banks and communities. A ‘teaser’ rate tempts the borrower to fall into the net. Later the net closes in on the catch with disastrous consequences to all but the lender-agent nexus. Sub-prime lending essentially steals business from smaller entities.

Authorities have come forward and tightening the belt of the law – a grim reminder that playing around with lending will attract felony charges coupled with compensation and damages. However it applies only to current frauds and does not extend backwards. Thus primarily the focus is on prevention.

Wisconsin is the only state that has no limits on interest rates. Pay-day lending has been rampant which many regard as an unhealthy drain on the economy. The heat is on to find a solution and save the people.

Via

Search Images

When buying a property it is very important that the buyer of the property is not in any way taken advantage of by the lending institution. It may happen that sometimes smaller lending institutions may try to take advantage of the borrower’s situation and charge a higher rate for the mortgage or any other discrepancies which may put the borrower at a disadvantage. The Government has taken steps to put a curb on such practices. There is an act which is known as the Home Mortgage Disclosure Act (HMDA). The Home Mortgage Disclosure Act was passed by the Congress in 1975 and brought into force by the Federal Reserve Board’s regulation C. In principal this act makes it mandatory to most of the financial institutions including banks, savings associations, credit associations and other lending institutions to make certain disclosures to the Government. These disclosures may include the number of mortgage applications received by the institution, whether the mortgage application has been sanctioned, the amount sanctioned, the interest and other details about the loan. The Government also seeks information on the location of the property.

These details are important for the government to analyze whether the financial institutions are playing their role in community development and if there are any discrepancies in the mortgage applications and sanctions. Another important factor that the Government tries to analyze from the HMDA is whether Government officials in distributing the public funds are attracting private investments to the areas where it is needed.

The total number of disclosures made by financial institutions in the year 2006 was around 36.8 million records submitted by as many as 8848 institutions. There is a Government institution known as the Federal Financial Institutions Examinations Council (FFIEC) which examines these records and prepares different reports for each Metropolitan Statistical Area (MSA) and Metropolitan Division (MD). This institution also prepares disclosure reports for the financial institutions.

Most of the home loans are covered in the HMDA data. There may be some which may not have records in HMDA such as a home-equity loan which is taken to pay for medical expenses or any other use. There are some cases where a home loan is not reported to the HMDA. If a financial institution does not have an office in the Metropolitan Statistical Area it is not mandatory for the institution to submit the data. Hence loans that are taken in the rural areas may not be reported to the HMDA.

If you are planning to take a home loan for buying your property it is suggested that you check the disclosure report of the financial institutions and decide on which institution to approach. These important steps help us from being put at a disadvantage.

Search Images

Is the interest rate on your current existing loan bothering you? Now how about trying for a refinance loan. Refinance loan is the best option if you’re considering lowering your interest rate by applying for a secured loan to replace the existing one, secured by the same assets.

As a borrower you can refinance a loan for different reasons. It could be to lower your interest rates, pay of your other current debts or to pay off all your equity. If you are considering lowering your monthly payments then Refinance loan is probably the best option to opt for. If applied sensibly you can actually end up saving a lot of money, which can be utilized to pay of your principal amount of the loan. Likewise you can actually transform the equity in your house into ready cash that can be used for other expenses.

Benefits of refinancing debts

• Refinancing debts can help you save a lot of your money that can be utilized to meet other expenses or to pay of your debts.
• Refinancing debts can lower your interest costs, reduce your debts and thereby reduce the burden of paying high monthly payments.
• You can also reduce the risk associated with your current loan by applying for a new loan to replace the existing one.
• You can refinance your loan and opt for a fixed rate mortgage. This will reduce your burden of paying high interest rates considering the fact that adjustable interest rates keep on fluctuating every now and then.

Types of Refinance loans

Refinance loans are of two different types mainly

• Rate and Term Refinance
• Cash Out Refinance

Rate and Term Refinance
The basic purpose of Rate and Term Refinance is to change the rate and term of an existing loan. For instance as a borrower you can lower the interest rate on the loan or change the term of a loan without paying any additional cash. As a borrower you receive 1% of the loan amount in cash at the time of closing.The basic purpose of Rate and Term Refinance is to change the rate and term of an existing loan. For instance as a borrower you can lower the interest rate on the loan or change the term of a loan without paying any additional cash. As a borrower you receive 1% of the loan amount in cash at the time of closing.

Cash Out Refinance
Rate and Term refinance and Cash-Out Refinance are more or less similar. The only difference being you can take cash out from the refinance in the latter. As a borrower you can pay off your existing debts or also advance new cash on the loan. You also have the option to lower the interest rate on the loan and also the term of your existing loan.

Search Images