 |
| 30 Yr Fix |
6.05% |
-0.01% |
| 15 Yr Fix |
5.60% |
0.01% |
| 1 Yr ARM |
5.29% |
0.00% |
| 5/1 ARM |
5.67% |
-0.06% |
| 30 Yr Tres |
4.56% |
-0.06% |
| Fed Prime |
5.00% |
-0.25% |
|
|
|
|
 |
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Lenders, Feds Finally Paying Attention to Mortgage Crunch
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Looks like people are finally starting to take the mortgage situation
seriously, and by people we mean the federal government and major industry players.
'Bout time!
There were several major and minor developments in the subprime
arena this week that indicates that the people who can actually do something
are now paying attention.
Maybe the most significant is the announcement that a group consisting of banks
and major lenders has been formed under the name "Hope Now"
to head off what is expected to be a tsunami of foreclosures by expanding and
improving assistance to troubled mortgagors.
The new group was announced by the federal government and participating lenders
on Wednesday. 11 lenders are involved in the project including Citigroup, Option
One Mortgage (a subsidiary of H&R Block), and First Horizon National Corp,
Treasury Secretary Henry Paulson, who, along with HUD Secretary Alphonso Jackson
represented the government in the announcement, said that the Hope Now participants
were all major mortgage servicers which among them handle 60 percent of the
mortgages in the U.S. Also contributing to the alliance are several approved
credit counseling organizations.
The group has established a website (www.hopenow.com)
which, at present, is not particularly helpful. It informs debtors how to ID
their servicers (i.e., look on your mortgage statement), and recommends several
approved credit counselors and provides links to other foreclosure information.
However, according to Secretary Paulson, participating lenders will be sending
out direct mail to borrowers to help them understand the available services
and the companies have been asked to establish a model which includes a toll-free
phone number, email address, and fax number.
The second indication that the situation is being taken seriously
came in a speech by Eric S. Rosengren, the newly minted President of the Federal
Reserve of Boston before the Portland (Maine) Chamber of Commerce.
President Rosengren gave the Chamber a mini-tutorial about the background and
mechanics of the current subprime mortgage situation but then provided some
interesting new insights into the market, at least as it exists in New England.
The Federal Reserve of Boston, he said, has been studying available public
information from the Registries of Deeds in the six New England states and has
found that multi-family housing is disproportionately represented in the subprime
mortgage market. For example, in Middlesex County, Massachusetts which encompasses
Cambridge, Somerville, and several other dense urban areas but also some extremely
wealthy suburbs, multi-family housing comprises about 10 percent of the housing
stock but 27 percent of the subprime mortgages. This, Rosengren said, may reveal
a potentially serious problem for tenants "who may not have known that
the owner might be in a precarious financial position."
The study also showed that people do not keep their subprime mortgages
over a long term. Of those used to purchase a home between 1999 and 2004, two-thirds
were prepaid within two years and almost 90 percent within three years. Thus,
it is possible that many borrowers who used subprime mortgages to purchase their
homes did benefit from the appreciation of home prices over the last decade.
While home prices in the area are declining, Rosengren said, there are three
hopeful factors that may mitigate any upcoming damage. First, the Fed
researchers found that many of the subprime borrowers have respectable credit
histories. Data, again from Middlesex County, shows that 64 percent of subprime
borrowers had FICO credit scores of 620 or higher and 18 percent had scores
over 700. They may have chosen a subprime product in order to more greatly leverage
a purchase or may have been steered there by an aggressive loan agent. In either
case, these borrowers may be able to transition into a prime product if their
interest rates start to spiral upwards.
Second, many borrowers have owned long enough that their home has appreciated
and they may have sufficient equity to refinance into a prime product.
Third, many so-called "teaser" mortgages carried
a much higher rate than found on prime loans; if these borrowers could qualify
for a prime product, they might actually see a significant reduction in their
interest rate.
Rosengren said that he had been meeting with bankers from all over New England
to explore opportunities for commercial banks to get back into the mortgage
market. Since they were not involved in originating subprime products and are
well capitalized, they may have profitable opportunities in the current market
and, "They have shown some interest in the opportunities and have agreed to
examine how we can encourage borrowers to pursue opportunities with banks before
they get behind in their mortgage. To the extent that some subprime borrowers
have improved their FICO score with regular payments, already had a high FICO
score, or have appreciated wealth in their house, now is the time for these
borrowers to seek lower cost financing opportunities."
The Fed President said that "The Federal Reserve Bank of Boston has created
several brochures that are intended to help borrowers consider all their options,
and we are creating a web site to help borrowers in subprime products to get
information and help looking for refinance opportunities."
Finally, The Mortgage Bankers Association (MBA) has established a Foreclosure
Prevention Resource Center on its consumer education site, HomeLoanLearningCenter.com.
The site is part of MBA's effort to advise those who may face trouble
making their loan payment to contact their loan servicer as soon as possible
to determine if an alternative to foreclosure may be possible based on the borrower's
financial and employment status.
The site is bi-lingual and includes a listing of major loan servicers and their
contact information as well as a guide to the "Things to Know When You
Contact Your Lender" so that borrowers having difficulty making mortgage
payments can begin an informed dialogue with their servicer about potential
solutions.
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Comments (25)
| I am from Arkansas and I have a mortgage nightmare. The mortgage company that financed my home has been busted by the FBI . and the appraiser who appraised the home has given up his license, after an investigation that was done by the Arkansas Appraisal and Licensing Board. GMAC who currently has my mortgage note said that none of this mattered, they are still holding me liable for a home that appraised for $84.000 but is only worth $45,000. Where is the justice for the poor homeowner. I am behind on my note, and I don't see how I will catch up. To me it seems as though the Law protects the crooks , not the victims |
|
| Above Posted By:
Gwendolyn Worsham
| Tue, 29 Apr 2008 14:49:02 EST |
| Liars! The financial institutions are lobbying to help the lenders, but there is no help for the homeowners. The coin-operated politicians don't give a hoot about "the peop[le", that isn't where they get the buld of their contributions. Democrates or Republicans, they are not working for "the people".
The Well Fargo could have had my loan paid back, but they would not waive the pre-pay. The loan was origianlly made by Centex then sold. It was a scam, they lied about the pre-pay, said it would not apply after 2 years. In print, it was three. They said the payment wouldn't change for three years, it was 2. How convienient that the mortgage salesman said it backwards. And they blame the consumers! |
|
| Above Posted By:
Tim
| Mon, 21 Apr 2008 11:47:47 EST |
| For all the talk out there about the "Evil" banks in our case this has been untrue , We had a so called sub prime loan with wells fargo ...9.25 % arm with prepay cost and a 2 year reset but we where pro-active in our loan . we went for a refi befor the 2 year mark and with a very low score of 628 was able to get the prepay waved and was able to get a 30 year Fixed at a great 6.0 % and on top of that we was able to roll all of our closeing cost into the loan so no money out of our pocket. our dept ratio was 39% and the worth of the house went up very little in the 1 3/4 year we owned the house , I know this blog has mostly bad news from folks but there really is help out there. |
|
| Above Posted By:
Randy
| Sun, 6 Apr 2008 06:28:00 EST |
| Its bad enough when one discovers, after the fact, that s/he has made a mistake in trusting their real estate broker and mortgage officer(s). However, its even worse when one has essentially been swindled and the law is not there to protect them from the predators. When we purchased our home in 2002, we were told it was a 30 year fixed mortgage, otherwise, we were not interested. During closing, we started signing the mirade of papers. Half-way through, someone came to collect the papers we had already signed and left the office while we continued through what was left to sign (they headed to the courhouse to file the papers dealing with deed, etc.). Miraculously, our mortgage officer appeared with a big smile on her face. The seller left with his check as the mortgager handed us our updated presigning papers. Guess what changed. Instead of a 30 year fixed, we had an ARM. On top of that, there were now two mortgages to cover a $179K loan, and the ARM was on the larger loan. Tried to back out, but our lawyer told us it would take more than two years and thousands we did not have. Two years later, 2004, we refinanced, again looking only at lenders who would give us a 30 year fixed. By then, the house "appreciated" and the loan increased from the 30 year fixed we wanted for $169K to $210K. Two years later, 2006, the house was reappraised, and it was only valued at $200K, even though both smaller an larger houses around us built in 2003 and 2004 were valued from $220K to $240K. Turns out, the appraiser worked with the mortgage company to inflate housing values to up the loan value and commission fees. Oh, yes, also found out that we were once again in an ARM with a first and second. Our recourse, none, because the feds caught on to the scam, and the appraiser was already in jail on multiple counts and the lender had sold the loan to another company and closed shop. All of this occurred on the hush-hush. It was the 2006 appraiser and inspector who told us about what had occurred. So for those who think it is solely the buyers fault, think again. We thought we were on top of everything. Turns out we were not. The lenders have a stake in it also. For two years now, I have tried to refinance with reputable banks, including the one that bought the first loan, to no avail. Our interest rate has gone from 7.25 in 2002 on the 169K to 11.5 and still going. The second mortgage is fixed at 10.25%. The ARM is due to cap at 14.5%. Now, rather than have someone who pays on-time and never late, the mortgage company will wind up with the keys to this puppy in 30 days, and we will reenter the renters market and moving every 2-4 years after annual increases for something we will never own. We are not in arrears, and the notes have been paid on-time since we first moved in. However, we cannot afford the next increase. My wife and I are disabled and did not buy beyond our means. The last two years have been a struggle, and inflation is causing havoc with our finances. Oh yeah. I have banked with Wells Fargo since 1981. They turned me down for any kind of loan twice. No hope for the honest homeowner whose credit has otherwise been ruined by the ARM. I thought Hope Now would be a viable alternative. However, the comments on this blog lead me to believe otherwise. Anyone know of a lender willing to finance for 30 years fixed for someone who pays and is never late or in arrears? |
|
| Above Posted By:
Louis
| Fri, 21 Mar 2008 16:49:00 EST |
| The reality is that the average borrow did not foresee the cost of living going up exponentially with their mortgage rates when they signed the ARM. When I went to purchase a home 2 years ago I backed out because EVERY lender I spoke with was trying to push me into an ARM. I even got closing docs with ARM terms after I specifically told the lender no. Good, honest, hard working people who exepected to be able to refi in 2 years have been hit with lost jobs, high fuel and energy prices, and increased costs of living that their paychecks couldn't keep up with. 2 years later (when my rate would start adjusting up) my office has relocated 45 miles away (more driving) fuel is $3.25 a gallon vs. the $2.30 it was then and my salary has increased $100/month. Not exactly enough to cover those new high bills much less a mortgage increase. Yes borrowers should be educated and aware, but they shouldn't be bullied by their lender or held responsible for situations they can't control. I didn't vote for high gas prices, did you? |
|
| Above Posted By:
Anonymous
| Tue, 18 Mar 2008 11:01:54 EST |
| Hope Now is a joke. I have an ARM and called my mortgage company Chase to inquire about Hope Now. Sure, if you qualify they will keep your payments constant but what you owe is only deferred to a later date and they will charge penalty fees and flag you as a late payer on your credit report. Anyone would be insane to sign up for Hope Now. |
|
| Above Posted By:
Dave
| Fri, 14 Mar 2008 12:53:25 EST |
| Why not make changes during a crisis such as the one we are in now, so that borrowers can "pull" from the equity in the property for the sole purpose of paying off credit cards debts, etc.
The Government should make a law that allows this and for the Loans to be modified to fixed rate, and expanded to 45-50 years at a low rate vs the poor peoples special high rate! This is what gets you poorer, the low rates go to the rich! The economy is being affected by this system of providing good rates to the rich, when in fact the majority of the people are poor and they get the worst rates.
The government must step in and make lending really non-discriminatory. Not based on color or race, but on rates.
The credit system must be done away with, and a new one based on realistic credit vs what people want to arbitarily report on you. There should be an arbitrator before anything goes on your credit report vs having to waste time cleaning up something that was incorrectly or un justly sent in.
USA Society is credit based but the credit system is outdated. You can't judge a person by numbers. Companies are at fault by laying off and firing people, unscrupulous banks and their rates, etc. A person does not choose to get in debt and foreclose on purpose, it's the rates. Are we brought into this world to work forever?
We need to spend some of that money we work for on ourselves. |
|
| Above Posted By:
Raymond Rodriguez
| Fri, 14 Mar 2008 03:58:44 EST |
| I guess I was a little nieve when the mortgage broker told me that the adjustable rate could go based upon the market and my credit rating. But, how was I suppose to know the apprasial was inflaited way over the actual value. No one wants to refinace 136 % of home value. |
|
| Above Posted By:
Don
| Wed, 12 Mar 2008 09:49:16 EST |
| I am adding my deep concern with our "Teaser" loan. I was definitely "mislead". I am not a lawyer, or a CPA to be able to understand the documents at time of signing a loan. I was neve explained the "Real Meaning" of what was to happen once the loan mature. Now, my loan will be going up from $2,263.00 to $6,300.00. Is that a shocker or what!!!!
The financial institutions who put us into these, "teaser" loans, should be prosecuted. They made billions of dollars on folks such as myself. Now, we are the victims, and they're all off the hook? How fair is that? We expect the federal government will be there for us during this TIME OF CRISIS !
Thank you, Mary in So California |
|
| Above Posted By:
Mary
| Mon, 10 Mar 2008 19:13:46 EST |
| While it is very convenient to blame big business for all of this, everyone seems to be forgetting that this is AMERICA-meaning, as Americans, we all must be responsibile for our own actions. We cannot claim ignorance when we make bad decisions. If you want the government to support you all of the time or blame business for every bad decision you make-move elsewhere and give up your personal freedom. Granted, there are lots of scary and manipulative people out there who will steal the shoes off of your feet, but how many of us do not know this already? Rip off stories are shown every night on the news, in magazines and newspapers. Therefore, it is common sense that we should go into every contract/major purchase with open eyes.
So many Americans are caught up in materiality nowadays. In some cases, that's where the money for their mortgages is going. Give up the expensive cars and drive a Hyundai. Give up the cell phones that everyone has. Sell your big flat screen TVs. Sell your iPods and Playstations. Stop shopping at the mall, eating out and using shopping as a hobby. I would like to know how many of these people who cannot afford their homes spend $100 a month on cable TV....
Sorry, but I am unable to feel sorry for people with huge homes that are precisely decorated and thousands and thousands of dollars of "toys" and other luxuries who are suddently screaming.
Please do not jump all over me talking about the single mother who has three kids who has a modest home and no luxuries-it is obvious that I AM NOT SPEAKING ABOUT SUCH SITUATIONS.
Somehow I just can't help but feel that the person who lives modestly and within their means will end up paying for this fiasco-whether it be more taxes or increased cost of goods and services, while the "psuedo rich" will be given huge breaks to remain in their homes surrounded by their toys. |
|
| Above Posted By:
Mary
| Wed, 5 Mar 2008 06:47:42 EST |
| we need to get rid of the central bank and return the money power back to the people in congress and the us tresuary. |
|
| Above Posted By:
big
| Tue, 19 Feb 2008 10:08:28 EST |
| I have a 2/28 loan with wells fargo. I lost my job for 3 month and wiped out everything we had, we even notified wells fargo and they wouldn' help. my monthly mortgage payment went up 800.00 I couldn't affford what i had,never mind more. I find it hysterical that Wells Fargo is part of this Hope Now group. Any ideas out there. I'm in financial hell. |
|
| Above Posted By:
Deb
| Thu, 14 Feb 2008 18:44:13 EST |
| i am not a financial person and know next to nothing, but what about a longer mortgage time. say 40 or 50 years. |
|
| Above Posted By:
anonymous
| Wed, 13 Feb 2008 07:30:35 EST |
| Like many other people, I 'm about to loose my house because of an ARM loan has increase from 8.25 to 11.25%. I bought this house for 2 yrs and this is our first home. we were very happy that we could have a home for our kids and this is the begin of our life, hope and dream. I'm 30 yrs old, I've try to adjust my life,credit,and I work hard to earn any reward to have a better life. Now I'm facing this short sell/foreclosure situation losing my house and owe a whole lots of bebt for being a good citizen and not knowing too much of laws to watchout for my future. I'm losing my hope and dream, not only that but my 3 kids hope and dream that i want to save money for college were also not exit because I have mortgage debt that don't think I would be able to paid off. |
|
| Above Posted By:
khiem nguyen
| Wed, 30 Jan 2008 10:19:35 EST |
| We had an 80/20 loan with citi mortgage and citi bank. We had a conventional loan that was raised over $700.00 That meant we went from a payment of $1600 to $2300 amonth. We went to a lawyer and they could do it because of the way our contract was written. Listen if we would have known this before we signed our original contract we would not have signed it and walked away..We have tried to deal with them for a long time to stop this. They never wanted to deal with us at all. It was not financially feesable for them. We tried to sell our house..To many houses on the market....SO into forclosure we must go. So we have to start all over......SO you people who think it was the borrowers fault..think again....
By the way Citi is in the Home Alliance Now...HAHAHA
|
|
| Above Posted By:
mike
| Mon, 28 Jan 2008 19:42:32 EST |
RE: Accountability: Although this is true to some degree, some blame has to be placed on the lenders for not saying "NO" to those who wouldn't qualify under a standard 30-year mortgage. If a family can't afford a $300K home today, what would change so drastically in 5 yrs. for them to afford it when their mortgages re-adjust. Had the lenders said "NO" from the beginning, the housing market would not have seen the unrealistic gains that it did over the past 5 yrs.
Without these unrealistic gains in the housing market, many people would still be living in their humble homes and continuing to lead a good life. The financial woes from this housing crash, the foreclosures, and the bankruptcies will be felt in our economy for years to come. Recovery will happen, but not for a long time... for our country and those individuals whom lost their homes. |
|
| Above Posted By:
The Doctor
| Tue, 8 Jan 2008 08:52:08 EST |
| Hope Now-Lenders and Borrowers
12/07/2007
American Securitization Forum, which represents companies that issue mortgage backed securities, as well as investors, loan servicers and rating agencies, issued a document outlining guidelines for servicers to follow in streamlining refinancing or loan modifications on adjustable rate mortgages that are scheduled to adjust in the next 2 1/2 years.
Roger Herrick
California Mortgage Broker |
|
| Above Posted By:
Roger Herrick
| Fri, 7 Dec 2007 12:25:04 EST |
| Accountability-Does no one do there homework before they spend hundreds and thousands of dollars. Accountability lies in the borrower, not the lender, realtor or loan officer. |
|
| Above Posted By:
ken d
| Thu, 6 Dec 2007 17:29:16 EST |
| The downside is that I can see the junkmail now...with fraudulent lenders advertising under the guise of being a HOPE NOW participant and pushing ridiculously low rates (I get at least ten a week). I hope someone is going to set up a way to verify legitimate participating lenders. |
|
| Above Posted By:
Kevin
| Thu, 6 Dec 2007 12:53:47 EST |
| These loans programs were distributed by the large lendering institutions most CEO's have already cut & run. Don't blame the Loan officers & realtors. Problem is these loan Borrowers are good people, as property values lower it's impossible to refri. They're stuck, Principle balances keep growing & the interest rates adjust & there you go another short sale/foreclosure....We need to stop this process or the mighty dollar & our property values will be zero. Refi these loans and Save the USA |
|
| Above Posted By:
sadiesol
| Mon, 3 Dec 2007 14:59:23 EST |
| Hope Now Alliance = banks hoping for more money NOW!
As I understand it, currently in California borrowers who have not refinanced have NON-RECOURSE LOANS.
Currently, the FB's (= f'ed borrowers) have the right to walk away and mail the keys to the bank.
|
|
| Above Posted By:
Anonymous
| Sun, 2 Dec 2007 12:53:23 EST |
| Roger,
I really do believe that a very high percent of these 2 million homes can not afford what they are paying right now. That is why we are where we are. Where is the accountability from the client, realtor, mortgage lender, reps of companies that pushed these programs and the loan officer that put the clients in this situation. Accountability and responsibility rather than how we each individually can make fast money. Here we are now,and all of us will be we all paying for it. |
|
| Above Posted By:
Sue
| Mon, 22 Oct 2007 09:40:06 EST |
| For most consumers, buying a pre-foreclosure property from a private homeowner is the good option. It's important that both the buyer and the seller see the situation as a win-win in order to ensure a smooth process. In this case, the seller is able to get out from a mortgage without destroying their credit, the lender is saved the time and expense of foreclosing on the property. The buyer gets a below-market price on a home. |
|
| Above Posted By:
Roger Herrick
| Thu, 18 Oct 2007 14:31:06 EST |
| It's estimated that in the next 18 months, over 2 million people will be faced with their ARMs resetting, resulting in an increase in their minimum payments of anywhere from 30-100%. While this will not push people over the top, what it does do is add additional strain to an already over leveraged consumer. Add in any life events such as injury, job loss or other financial difficulty and you have a recipe for financial disaster. |
|
| Above Posted By:
Roger Herrick
| Sun, 14 Oct 2007 20:53:44 EST |
I clicked on www.homenow.com and got Genworth Financial, not the site described in this article.
Editors Note: We apologize for this error. The URL is www.hopenow.com. |
|
| Above Posted By:
carrie
| Fri, 12 Oct 2007 10:55:34 EST |
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