Home Loan Magician Blog

As the average interest rate for the thirty-year mortgage with a fixed rate fell back toward the 5% mark last week, the Mortgage Bankers Association’s Weekly Mortgage Applications Survey found a corresponding increase in home refinancing applications. For the week ending Jan. 15, 2010, the Market Composite Index, a measure of refinance loan application volume, increased 9.1% on a seasonally adjusted basis and 10.4% on an unadjusted basis from one week earlier.  According to a subprime lending source, bad credit home loans remained difficult to find.

The mortgage refinance Index increased 10.4% and the seasonally adjusted Purchase Index increased 4.4% from one week earlier. There was a small gain in the market share of refinance activity, from 71.5% one week ago to 71.7% for the survey period. The market share of adjustable-rate mortgage loan applications increased to 4.1%, up from 4.0% for the previous two weeks. The average contract interest rate for 30-year fixed-rate mortgages fell to 5% from 5.13%, with points decreasing to 1.05 from 1.17 (including the origination fee) for loans with an 80% % loan-to-value ratio, the association reported. The average contract interest rate for 15-year FRMs decreased by 12 basis points to 4.33% from 4.45%, while for one-year ARMs the average contract interest rate increased by 11 basis points to 6.72%.

All conventional home loan banks have stopped offering 125 loans so only private investors offer that type of mortgage loan.  They are very strict with their guidelines and they underwrite with the low score of whichever bureau has the lowest score and they want a $5,000 residual income after all your bills are paid.  The 125 mortgage suddenly has the highest default rate out of the second mortgage loans so they are strict. 

FHA mortgage products have become popular because they allow debt consolidation and cash out refinancing up to 95% loan to value.  If a client has no other alternatives our attorney could possibly settle their debt which would significantly reduce the balance and the payments.  Debt settlement is a viable solution that does not have the long lasting negative credit impact that bankruptcies have.

According to a recent Bloomberg article, home loan applications in the US fell last week by the most since February, defying efforts by President Barack Obama’s administration to revive the sluggish housing market.   The Mortgage Bankers Association’s index of applications to home purchase loans or mortgage refinancing declined 19% to 444.8 in the week ended June 26 from 548.2 the prior week. The group’s refinancing gauge declined 30% to the lowest in seven months, while the index of purchases fell 4.5%.  Unemployment, which touched a 26-year high in May, and rising borrowing costs discouraged homeowners from refinancing, while a growing number of foreclosures sidelined potential buyers waiting for house prices to stop tumbling.

Pending home sales showing contracts signed in May rose 0.1%, compared with a gain of 6.7% in April, the National Realtors Association said today.   “2^nd in FHA mortgage rates is exacting a toll in terms of depressing mortgage applications,” Brian Bethune, chief U.S. financial economist at IHS Global Insight in Lexington, Massachusetts, said in an interview. “The economy is in a phase of attempting to find a bottom. Anything that comes in the way of that, like higher rates, is going to mean it takes longer.”

Home loan rates climbed above 5% the week of May 29th for the 1^st time in three months, according to mortgage bankers’ data, and have remained elevated relative to 10-year Treasuries. The percentage age of consumers who said they plan to buy a home in the next six months fell to 2.7 % in June from 2.8 % in May, the Conference Board in New York said yesterday. FHA home loans have been a great opportunity for 1^st time homebuyers to jump into the real estate market with only 3.5% of the sales price required for the down-payment. 

Record low interest rates on home loans are finally getting the attention of new home buyers who may have been on the sidelines in recent years waiting for signs of the housing recovery.  Earlier this week, FICO released a new report showing the affects of credit line reductions.  The credit score study measured the credit card limit cuts as well as the subsequent impact to consumer’s FICO credit scores. The study is the first of its kind since credit card issuers began to heavily ramp up their credit limit reduction activity in early 2008.

In a interview by telephone, home financing tipster, Jason Cardiff said, ”I understand why the banks are cutting credit lines, but for many homeowners trying to qualify for a refinance, the 20-40 points they lost often pushes them out of the range for refinancing contention.”  Cardiff continued, “To make matters worse, many credit lines have set up alerts in their system when their credit card customers’ fico score declines or when their other credit lines percentage of available credit diminishes and they react by cutting the credit limit again.”  Clearly the train reaction can be devastating to homeowners looking for a mortgage solution.  

Cardiff considered some note-worthy points of the credit report study by FICO: 16% of the U.S population had their overall available revolving credit reduced between April and October of 2008. With credit bureau databases holding 200+ million consumer credit files, this would seem to indicate that at least 32 million cardholders lost some of their credit limits during the study timeframe of April 2008 through October 2008.

The Fair Isaac report found that 10 million consumers acknowledged that their credit limits were reduced by a credit card company or home equity lender.  The financial companies that hold the debt on these credit cards claim that the maximum revolving debt for these accounts changes “because of some sort of risky credit activity including late payments, accounts in collections, or a negative public record added on their credit reports.”  However thousands of consumers with good credit scores reported to have their credit lines cut or significantly reduced without any changes in the credit profile.  Many of these consumers also claim that the reduction in credit limits caused their credit scores to drop on average of 40 points. 

Read more of the article > Does Credit Report Study by FICO Consider the High Cost Regions?

The NAACP, contending that several major mortgage lenders forced African Americans into bad mortgages that sparked a foreclosure crisis, filed a class-action suit last week in a Los Angeles court. Among the culprits, says the nation’s largest and oldest civil rights organization, are Wells Fargo and HSBC, which steered Blacks into bad credit mortgage loans, even in cases when their credit qualifications such parameters as credit scores, incomes and down payments  were better or identical to those of “White” borrowers.

Watch Video on NAACP Sueing Wells Fargo and HSBC for Discrimination

African-American homebuyers have been nearly four times more likely to receive a bad credit home mortgage loan than White borrowers, and six times more likely to get a subprime rate when refinancing mortgages, NAACP co-lead counsel Austin Tighe told the Associated Press. The lawsuit is “totally unfounded and reckless,” argues Melissa Murray, vice president of corporate communications for Wells Fargo & Co., whose bank is receiving federal bailout funds.   “We have never tolerated, and will never tolerate, discrimination in any way, shape or form in any of our business practices, products or services.”

Officials at HSBC declined to discuss specifics of the case, saying it does not comment on litigation, AP reported.  “HSBC stands by its fair lending and consumer protection practices, and we are confident that we are treating our customers fairly and with integrity,” said Neil Brazil, vice president for public affairs.  The NAACP also has lawsuits pending against a dozen other subprime mortgage lenders.

Housing industry researchers say the U.S. Treasury Department’s $75 billion “Making Home Affordable” plan likely will help a host of borrowers wounded by rising unemployment rates, high levels of credit card debt and diminished property values nationally.

John Berlau on Obama’s Mortgage Rescue Plan

Homeowners who aren’t behind on house payments, but who have suffered financial hardship also stand to benefit. So could people who are in default and need more affordable mortgages. Even some people who own vacation or investment homes could benefit by refinancing at low interest rates.

Home Loan Relief with Federal Loan Modification Programs

The Loan Modification Outlet provides mortgage relief with loss mitigation opportunities with negotiated loan workouts that will lower the interest rate on your existing home mortgage. Let LMO help you negotiate an affordable mortgage payment with companies like Bank of America, Countrywide, Citi Bank, Chase, WAMU and Wells Fargo. We suggest foreclosure prevention solutions that preserve your homeownership with renegotiated home loan payments that meets your current budget!

The worst value stricken cities are located in the where the sun shines bright. Riverside, San Diego, Orange County, Los Angeles and Las Vegas, 61.4% of all primary residence homes are underwater.

Over the last few years, mortgage lenders have tighten the lending guidelines for home loans to the point where very few people actually qualify to refinance their home.  Bill Stone, of PNC Wealth Management, discusses how long it will take to see a return of confidence in the credit markets. 

Will the financial rescue package help lift America out of the recession?  Does the economic stimulus package go far enough to help distressed homeowner get back on their feet and avoid foreclosure?  How long will it take for TARP to help revitalize credit markets?  Consumer confidence remains weak, so easing home loan guidelines should help.

Fed Agrees to Purchase Bad Credit Securities and Keeps Key Interest Rates Near Zero
Federal Reserve committed to buy bad credit mortgage securities and treasuries if deemed effective; Fed says mortgage rates to remain low for “some time”; Fed ready to expand purchase of housing debt by buying or insuring defaulted home loans.

Watch the Mortgage Financing Analysis by Richard Dekaser of National City Bank.

Interest rates are low but if you are a first-time buyer, is the situation is different? Do you have enough cash for a down payment — at least 3.5 percent for a Federal Housing Administration loan, as much as 20% for a conventional mortgage or FHA home loan. — plus closing costs?  Bad credit home loans are not as readily available in 2009, but FHA still offers new home financing to borrowers with poor fico scores if the applicants have significant compensating factors.  Is your job or career relatively stable?  “Now is a much better time for home financing than a year and a half ago,” said Chris Toadvine, a certified financial planner in Orlando and president of the Financial Planning Association of Central Florida. “I think home prices may fall a bit further, but if I were a buyer, I would not be trying to time a bottom.”

From a dollars-and-cents perspective, it’s certainly a buyer’s market. Asking prices for Orlando-area homes have not been so low at any time in the past four or five years, and the number of properties on the market is still at or near record levels.  “There’s a substantial amount of inventory still to be sold,” said Hank Fishkind, a private economist who analyzes the Florida and Central Florida real-estate markets for Attorney’s Title Insurance Fund and other industry groups and companies.

Foreclosures news continues to document the discounted homes for sale and these mortgage defaults will continue adding to the volume of homes for sale and keep downward pressure on prices throughout the year, Fishkind predicts, though he notes that the rate of increase in the number of foreclosures is now slowing.  The median sales price for existing homes in Central Florida has fallen about 30 percent in the past year, to well below $200,000. Prices are now back to levels last seen in the spring of 2004. New-home prices in the Orlando area have dropped about 20 percent from their 2006 peak, according to some industry surveys, to just more than $300,000, and are still heading down.

As a result, homes are much more affordable now than they were only a year ago. For example, a first-time homebuyer with the median household income of $34,947 in January 2008 had only 75 percent of the income needed to afford the median-priced existing home, which cost $188,275 at the time. But as of two months ago, a first-time buyer making the median of $35,334 had 96 percent of the income needed to afford that median-priced starter home, which by November cost $141,971.  Denise Kovach, a certified financial planner with Certified Financial Group Inc. in Altamonte Springs, said that, for first-time homebuyers who do not have to sell an existing house, this is a decent time to consider making a move. “As with the stock market, usually the best time to buy is when everyone is feeling most pessimistic,” she said.

Those first-time buyers can take advantage of a relatively new federal tax credit for primary residences purchased by July 1, 2009. The credit reduces your income tax dollar for dollar as much as $7,500, with the size of your credit depending on your home’s purchase price. It’s actually more like an interest-free loan from the government, because the IRS “recaptures” the credit during the next 15 years, or when the home is sold.  Read the original article>

If you believe you’re old enough and have a secure job, but you are nervous, but you feel ready to take that huge leap into the real estate market.  Financing your 1^st home can be difficult. You don’t have home equity in an existing home to apply toward a down payment. Not to worry though.   Everyone who has ever purchased a house has stood in your shoes. There are some simple steps to ensure that you will be able to buy your first home, even without help from your parents:

Get pre-approved for a home loan. It’s easy if your credit is good (if it’s not, see my last column). Go to a licensed mortgage broker. I recommend an independent broker. They will have many more options than a bank. Be prepared with 2 years of tax returns. The application takes about 20 minutes and you should have your answer within a couple of days at the most.  If you have poor credit scores, make sure you are approved for bad credit home loan options with FHA or a subprime lender that puts it in writing for you.

Establish your budget.  Getting a pre-approval may not be enough anymore. Only you know you know your own spending habits. Can you afford to make that jump from $1000 per month in rent to a $2000 PITI (principle, interest, taxes and insurance) payment? Ask your mortgage lender to help you or use this affordability calculator.

How to Get a First-Time Home Buyer Loan > 

Do not start shopping until you are pre-qualified with a written pre-approval letter in your hand. Most real estate agents won’t even show you property without a pre-approval letter from a mortgage company. You don’t want to waste their time, but more importantly, you don’t want to set yourself up for disappointment. There’s nothing worse than finding the perfect house and then realizing that everything within your price range pales in comparison.  You will need to a documented saving for the deposit and down-payment. In an ideal world, you would have a 20% down-payment and a few extra thousand for closing costs. However, very few people are in that situation, so the FHA loans that cover 96.5% of the home, with closing costs built in. There are also some grants designed to help first time home buyers, who are defined as anyone who hasn’t owned a home in the last three years.

Make a list of what you need in a home, not just what you want. Do you have children or are you planning on having they in the near future? Then good schools and low crime rates will probably be a larger priority than proximity to nightlife. If you’re looking to green your life, then access to public transportation will be a priority. Are you prepared to maintain the property? If not, you might want to look at condos or townhomes, where outside maintenance is taken care of for you.  For example, if you have a dog, might want to consider a house over a condo. How many bedrooms do you need?  Read the complete article>

One of the central themes that I’ve written about extensively over the course of the past few years here at HousingWire is that the current mess isn’t the result of any one single group — there are, of course, now no less than 25 books out there that you can buy that provide some detail on these sort of claims. But the one group that has clearly been given a free hall pass, at least thus far are consumer advocacy organizations.

In June of last year, HW published commentary that shed light on just how involved many advocacy groups really were in driving the push towards greater homeownership, particularly in lower-income geographies and minority-heavy neighborhoods. I suggested then that the push towards ever-greater homeownership, particularly in minority communities, was aided and abetted in most cases by the very same groups now indignantly suing lenders for so-called “reverse redlining.”

On Monday, the Wall Street Journal caught up with this theme in a story that looks at how homes were marketed to the Hispanic community as part of the Bush administration’s vision for the “ownership society.” The story focuses on California Rep. Joe Baca, chairman of the Congressional Hispanic Caucus, but the message within is a bit broader: that many of the so-called advocacy groups now indignant about lending practices in their communities actually helped push their constituents into the muck to begin with.

Consider:

Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, according to the U.S. Census Bureau. Over that same period, homeownership nationally grew by 8%. In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive subprime mortgage loans soaring 169%, according to the Federal Financial Institutions Examination Council.

An examination of that borrowing spree by the Wall Street Journal reveals that it wasn’t simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.

A spokesperson for the Center for Responsible Lending told the Journal that “lenders were seeking out those borrowers and charging them through the roof.” Perhaps, but it was also often done hand-in-hand with community groups, and those through-the-roof fees were often charged at the hands of brokers that represented the interests of the communities they allegedly served: agents and brokers, for example, that were members of the National Association of Hispanic Real Estate Professionals. Read the Complete Paul Jackson Article >

Welcome to WordPress. This is your first post. Edit or delete it, then start blogging!