Housing Market Crash of 1992 and 2008

Readers Question: How can i compare and contrast the current UK Housing market with that of the 1990s. What are the key drivers for the markets and the outlook for prices?The 1990s saw the end of a housing bubble and a serious house price crash in the year 1992.Leading upto the housing market crash of [...]

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[Source: Mortgage Blog]

Outlook for Interest Rates

A few months back I looked at the prospects for interest rates in the UK. Since then market conditions have increased the likelyhood of lower rates - With some commentators suggesting that base rates could fall to 4%. Whilst a 1.5% fall would represent a significant loosening of monetary policy, the prediction is based on [...]

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[Source: Mortgage Blog]

Financial New Year Resolutions for 2008

Financial New Year ResolutionsThe New Year is an opportunity to make a fresh start, getting rid of bad habits and resolving to find some new good habits. Financial Resolutions for the New Year can include:Have an Annual Financial Service.At least once a year it is worth looking at all your financial decisions and decide whether [...]

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[Source: Mortgage Blog]

Why US House Prices are falling - 6 reasons

House prices in the US are falling by over 4%. In some areas the rate is much higher.Many of these factors remain relevant for the UK housing market except: rise in defaults and over supply.Why US house prices are falling1. Correction to large Increases in House pricesUS house prices increased by 135% in the past [...]

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[Source: Mortgage Blog]

The Good and Bad News for UK Housing Market

The Bad NewsHouse prices are now unequivocably falling. Surveys by the Chartered Surveyors also suggest falling prices in the futureUS House prices are falling even more. Evidence suggests the US Housing Crash is deepening even more. House prices could fall by 5-10% next year (Bloomberg) There is concern that the UK market could mirror the [...]

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[Source: Mortgage Blog]

Tracker Mortgages offer Best Deal

The recent cut in interest rates by the Bank of England has not necessarily resulted in lower mortgage payments. According to a new report from the Press Association, only eight of 120 UK mortgage lenders have so far reduced their lowered their rates following the base rate decision.Given this reluctance to pass interest rate cuts [...]

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[Source: Mortgage Blog]

A Year in the UK Housing Market

Interesting article her in the Times - A Year in Housing. It offers a look back at a roller coaster ride for the UK housing market.Lookback at Housing market for 2007Despite conservative predictions for house prices in 2007, the first 6 months saw unexpectedly large rises in house prices as as average house prices touched [...]

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[Source: Mortgage Blog]

How to get a Home Information Pack - HIPS

The law now requires homesellers to have a home information pack HIP when selling your house. From 14th December you can have one in the pipe line but that wouldnt impress me as a buyer. From June you will have to have one from when you start marketing so here are some quick tips.Quick Tips [...]

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[Source: Mortgage Blog]

Is it a good time to Buy a House?

Many in the housing and mortgage industry are predicting house price falls for 2008. Therefore, many prospective house buyers may be worrying whether it is best to wait before buying. These are some of my thoughts about whether now is a good time to buy a house.Are you buying as an investment or are [...]

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[Source: Mortgage Blog]

Will A Fall in House Prices cause a Recession?

A reader, Rob, offered an interesting comment about the relationship between house prices and consumer spending. From: drop in UK house pricesWhy will a drop in house prices effect consumer spending, this has not occurred in the U.S. The only effect a house price drop will have is to stop consumers increasing their borrowing against [...]

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[Source: Mortgage Blog]

Tips to Consolidate Debt

Consolidating debt, means that you bring together different loans and debts and place them in one or two specific accounts. This makes it easier to manage. Also consolidating debt often enables a lower interest rate to be gained.What is the best way to go about consolidating debt?1. Work out Where your Debts are.The first thing [...]

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[Source: Mortgage Blog]

Prospects for Buy to Let

Despite the prospect of falling UK house prices, there remains some good news for Buy to Let tenants. Average rents are continuing to rise, buoyed by rising demand.A key factor in the rising demand for rentable properties is the growth in immigration, especially from Eastern Europe. This means that with rising demand, the price of [...]

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[Source: Mortgage Blog]

Interest Rate Cut for UK Homeowners

With growing signs of falling UK consumer confidence, the Bank moved to cut interest rates by 0.25% from 5.75% to 5.5%. However, it is uncertain whether the interest rate cut will actually be passed onto homeowners. Due to the credit crunch, there is a real problem of a shortage of funds for mortgages. For example, [...]

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[Source: Mortgage Blog]

How To Sell Your House for a Higher Price

I have just been watching a BBC programme - ‘Open House’ Basically, it suggests ways for people to increase the value of their house, through making minor changes. This article looks at the simple changes you can make to maximise your home’s selling price.First Impressions Count.Make sure the pathway to the house is free of [...]

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[Source: Mortgage Blog]

Reasons not to pay off your mortgage

Invest in HousingIn the past few decades buying houses has proved a very good investment. The buy to let sector offers good opportunities for capital gains and income from renting. Although, there are concerns about the short term prospects of UK house prices. In the long term, housing is likely to provide a good [...]

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[Source: Mortgage Blog]

Largest Drop in House Prices for 12 Years

Nationwide Building Society released their latest figures from the state of the UK Housing Market. These statistics suggest that house prices fell by 0.8%. It is the largest monthly drop since June 1995Combined with other statistics and reports, it shows there has been a fundamental shift in the prospects of the UK housing market.There is [...]

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[Source: Mortgage Blog]

What Factors effect House Prices?

House prices in the UK are probably one of the most popular topics of conversation. Partly this is due to the the fact house prices have nearly trebled since the mid 1990s. This has left a situation where homeowners have seen tremendous gains in wealth; Whereas those struggling to get on the property ladder have [...]

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[Source: Mortgage Blog]

Mortgage Lenders Criticised for Poor Advice

A study by the FSA has revealed that 25% of mortgage lenders are giving poor advice.In particular the FSA was critical of self certification mortgage lenders. Quite a few were willing to proceed with lending despite the uncertainty of the income for borrowers.10 of these (mainly) self-certification lenders now face sanctions from the FSA. These [...]

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[Source: Mortgage Blog]

Mortgages Rates Lower This Week (Washington Post)

WASHINGTON -- Mortgage rates sank this week, with rates on 30-year mortgages dropping to a six-month low, a spot of welcome news to would-be home buyers.

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[Source: Yahoo! News Search Results for mortgages]

Are House Prices Falling?

Data on house prices are often unreliable. The government doesn’t actually have a national official house price statistics (it really ought to, given the extensive press and economic interest they generates)However, despite the fact that there are conflicting reports, there are an increasing number of reports which suggest house prices in the UK are now [...]

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[Source: Mortgage Blog]

Mortgage Interest Rates Explained

Mortgages are paid back over a period of 25-50 years. Monthly mortgage repayments depend upon the interest rate charged by the bank building society. Homeowners choose between variable interest rates and fixed interest rate mortgages.Variable mortgage interest rates.Most mortgages in the UK have a variable mortgage interest rate. This means that the interest rate [...]

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[Source: Mortgage Blog]

Bank Forecast Interest Rate Cuts

Despite inflation surging over the 2% target for the first time since June, the Bank of England indicated that 2008 is likely to see 3 cuts in interest rates. This will bring rates down to 5%.The rise in the CPI inflation rate from 1.8% to 2.1% is primarily due to rising food and fuel costs. [...]

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[Source: Mortgage Blog]

ASIC warns on reverse mortgages risks (AAP via Yahoo!7 News)

An investigation by Australian Securities and Investment Commission has found home-owners taking out "reverse mortgages" knew little about the product.

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[Source: Yahoo! News Search Results for mortgages]

Newcastle Building Society launches new mortgages range (Banking Business Review)

UK-based Newcastle Building Society has launched four fixed rate and one discount rate mortgages.

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[Source: Yahoo! News Search Results for mortgages]

Get out of debt Quick: 7 Tips

In order to get out of debt there are various steps that we need to look at. There is no magic cure or special product, it requires a careful look at our financial state and making practical changes to improve our situation. The important thing is to be willing to take bold and radical changes [...]

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[Source: Mortgage Blog]

UK House Prices to fall in 2008?

Interesting article in the New Statesman, written by housepricecrash.co.uk spokesman Jonathan Davis; - House prices set to TumbleBasically, the article argues that house prices are set to collapse. The arguments for this collapse in house prices are:House prices increased faster than incomes and inflation. They have increased by more than the long run trend [...]

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[Source: Mortgage Blog]

Advantages of Credit Cards

1. 6 week interest free Period before payingWhen you make a purchase on a credit card, it takes upto 6 weeks before you have to pay the credit card company. This is an easy way of gaining an interest free period. Useful, if you are expecting income soon.2. There is no need to pay [...]

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[Source: Mortgage Blog]

Foreign Mortgages for Oversees Property

In the past 10 years, UK house prices have increased by nearly 200%. Given the difficulties and costs of buying a house in the UK, many have looked oversees for the potential of getting on the property market.Popular destinations for buying an oversees property have included countries such as Bulgaria, Poland, Romania, Czech Republic and [...]

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[Source: Mortgage Blog]

Mortgages rates lower this week (Lexington Herald-Leader)

Mortgage rates sank this week, with rates on 30-year mortgages dropping to a six-month low, a spot of welcome news to would-be home buyers. Freddie Mac, the mortgage company, reported Wednesday, that 30-year, fixed-rate mortgages averaged 6.20 percent. That was down from 6.24 percent last week and was the lowest rate since the week ending May 10, when rates stood at 6.15 percent. Other mortgage ...

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[Source: Yahoo! News Search Results for mortgages]

A plunge in the 10-year Treasury yield will lower some mortgages but endanger portfolios (Canadian Business)

Leslie Wines, The Associated Press November 21, 2007 - 6:45 p.m. NEW YORK - A plunge in a closely watched Treasury bill yield Wednesday spells relief for some borrowers who want to buy homes and big-ticket items like cars, but is a threat to retirement portfolios and the broader economy.

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[Source: Yahoo! News Search Results for mortgages]

Mistakes of Using Credit Cards

These are some of the most common mistakes with using credit cards. These mistakes are easy to make and they can be very costly for your personal financial situation. If you are new to using credit cards make sure you avoid making them.1. Withdrawing Cash on a credit cardIf you withdraw cash on a credit [...]

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[Source: Mortgage Blog]

Sub Prime Mortgage News

Although the UK sub prime mortgage market is relatively smaller than the US. The UK sub prime sector is also less likely to have major defaults because generally UK lending stuck to stricter criteria than in America. However, the main concern at the moment is that the US Sub prime woes are increasingly affecting the [...]

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[Source: Mortgage Blog]

Treasury rally will lower mortgages, hurt some portfolios (USA Today)

NEW YORK (A) A plunge in a closely watched Treasury yield Wednesday spells relief for some borrowers who want to buy homes and big-ticket items like cars, but is a threat to retirement portfolios and the broader economy.

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[Source: Yahoo! News Search Results for mortgages]

Reducing mortgage interest payments

Mortgage interest payments are the biggest outgoing for most families. With a recent downturn in the economy, many households are struggling to meet their mortgage interest payments (especially those with a sub prime balloon mortgage)If you find yourself in this situation there are a few things you can do to reduce your mortgage interest payments.1. [...]

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[Source: Mortgage Blog]

Credit crunch begins to hit home as rising numbers turned down for cards and mortgages (Sunday Herald)

are beginning to feel the squeeze of the global credit crunch as banks get tougher on borrowers. The number of applicants turned down for a credit card has jumped by 17% to an estimated 3.3 million in the past six months, according to figures released last week by MoneyExpert.

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[Source: Yahoo! News Search Results for mortgages]

Second mortgages scarcer (Long Beach Press-Telegram)

WASHINGTON - The common practice of homebuyers with shaky credit taking out second mortgages for downpayments is ending because there's no investor demand for securities backed by such loans.

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[Source: Yahoo! News Search Results for mortgages]

Reverse mortgages may bear the brunt (Adelaide Now)

WHILE some retirees have welcomed the latest interest rate rise, there are concerns about the impact this week's increase will have on those with reverse mortgages.

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[Source: Yahoo! News Search Results for mortgages]

New-and-Improved VA Mortgages Look Better in a Difficult Market (Washington Post)

Veterans Day presents an opportunity to take a look at an important benefit available to military veterans and active-duty personnel, the zero-down payment VA mortgage.

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[Source: Yahoo! News Search Results for mortgages]

Second mortgages are vanishing (Long Island Business News)

The common practice of homebuyers with shaky credit taking out second mortgages is ending because there's no investor demand for securities backed by such loans.

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[Source: Yahoo! News Search Results for mortgages]

Few second mortgages going to subprime borrowers (Houston Chronicle)

The common practice of homebuyers with shaky credit taking out second mortgages for down payments is ending because there's no investor demand for securities backed by such loans.

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[Source: Yahoo! News Search Results for mortgages]

UK House Price Growth Coming to an End

On my economics blog, I recently posted an article about whether the UK could experience a house price crashOn balance, I feel that a house price crash is unlikely.The economy is relatively strongHouse price growth has mainly been based on supply and demand dynamicsInterest rates are unlikely to rise any further (for the medium term)The [...]

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[Source: Mortgage Blog]

Czech CSOB nine-month net climbs 10 pct on mortgages (Sharewatch)

PRAGUE (Thomson Financial) - Profit at CSOB, the Czech Republic's largest bank by total assets, rose 10 pct in the first nine months of 2007 on the back of mortgages and building loans.

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[Source: Yahoo! News Search Results for mortgages]

Second mortgages drying up (Sun-Sentinel)

The common practice of home buyers with shaky credit taking out second mortgages for down payments is ending because there's no investor demand for securities backed by such loans.

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[Source: Yahoo! News Search Results for mortgages]

Drawbacks of Mortgages

A mortgage is one of the few ways for people to be able to buy a house. Without the potential of mortgages, most people would never be able to get on the property ladder. However, if you are considering getting a mortgage, these are some of the drawbacks and potential disadvantages of a mortgage.Monthly [...]

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[Source: Mortgage Blog]

WEEKEND EDITION: Scarcity, Cost Of Jumbo Mortgages Portend Big Home-price Drops (Nasdaq)

WASHINGTON (Dow Jones) -- Home buyers with the very best credit are still having a difficult time getting mortgages in California, raising concerns that the real estate market in the nation's most populous state could fall much further, sending home values spiraling lower and toppling the state's economy into recession.

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[Source: Yahoo! News Search Results for mortgages]

$11 billion might not be end of write-down at Citigroup (USA Today)

Citigroup's problems deepened Monday when it couldn't promise that a potential $11 billion write-down for subprime mortgages won't grow, and its nearly pristine credit rating was downgraded.

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[Source: Yahoo! News Search Results for mortgages]

Latin America May Face Impact From U.S. Mortgages, Ortiz Says (Bloomberg.com)

Nov. 5 (Bloomberg) -- Mexico central bank Governor Guillermo Ortiz said Latin America may experience a ``significant'' effect from U.S. credit market losses caused by subprime mortgages.

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[Source: Yahoo! News Search Results for mortgages]

Citigroup shares drop on mounting woes (Reuters via Yahoo! News)

Citigroup Inc's problems deepened on Monday as it was unable to assure investors that a potential $11 billion write-down for subprime mortgages won't grow, and its nearly pristine credit ratings were downgraded.

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[Source: Yahoo! News Search Results for mortgages]

Poll Shows America Does Not Support Federal Intervention in Sub-Prime Mortgages: FreedomWorks poll shows 62 percent ... (PRWeb)

National headlines are dominated with stories about the housing market slowdown and growing defaults on subprime mortgages, which were often extended to people with bad credit. Believing that market problems need government solutions, Congress is debating federal intervention into the mortgage market. (PRWeb Nov 5, 2007) Post Comment:Trackback URL: ...

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[Source: Yahoo! News Search Results for mortgages]

Adding debt to Mortgage

Adding debt to your existing mortgage can be a convenient way to consolidate your debts into one place and save on interest payments.If you have credit card debts, incurring an interest rate of 15% or more, this strategy may be particularly effective.Can I add debt to my Mortgage?Many people who have witnessed a growth in [...]

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[Source: Mortgage Blog]

New Mortgage Blog Logo

We have a new Logo for Mortgage Blog.The logo was designed by UK Web SpaceSimple but effective. I like it

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[Source: Mortgage Blog]

What?s Behind the Race Gap? (New York Times)

There is probably no single explanation for the concentration of high-cost subprime mortgages in minority neighborhoods, though the history of banks? avoiding these places is a good place to start.

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[Source: Yahoo! News Search Results for mortgages]

Scarcity, cost of jumbo mortgages portend big home-price drops (Market Watch)

WASHINGTON (MarketWatch) -- Home buyers with the very best credit are still having a difficult time getting mortgages in California, raising concerns that the real estate market in the nation's most populous state could fall much further, sending home values spiraling lower and toppling the state's economy into recession.

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[Source: Yahoo! News Search Results for mortgages]

Scarcity, cost of jumbo mortgages portend big home-price drops (MENAFN)

Scarcity, cost of jumbo mortgages portend big home-price drops

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[Source: Yahoo! News Search Results for mortgages]

UPDATE: Analyst Says WaMu Faces Taking Back Securitized Mortgages (Nasdaq)

SAN FRANCISCO (Dow Jones) -- Washington Mutual may have to set aside some $412 million to $2.1 billion in extra reserves if a lawsuit filed by New York state's attorney general against the mortgage lender succeeds, a Keefe Bruyette & Woods analyst estimated on Friday.

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[Source: Yahoo! News Search Results for mortgages]

Truth Squad: Reverse Mortgages (KBCI Boise)

Local banks and mortgage companies are pushing a unique mortgage loan that sounds more like you just won the lottery. Instead of making monthly payments, you get monthly payments, and you don't have to pay it back. They're called reverse mortgages, but you need to proceed with caution.

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[Source: Yahoo! News Search Results for mortgages]

GMAC suffers $1.6 bln loss on mortgages (Reuters via Yahoo! News)

GMAC, the finance company once controlled by General Motors Corp , reported a $1.6 billion third-quarter loss on Thursday, as housing and capital market disruptions caused losses to hemorrhage at its home lending unit.

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[Source: Yahoo! News Search Results for mortgages]

Richer homeowners find reverse mortgages useful (The Nashua Telegraph)

R ... - By TIM GRANT Pittsburgh Post-Gazette

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[Source: Yahoo! News Search Results for mortgages]

GMAC has $1.6 bln loss on mortgages (Reuters via Yahoo! News)

Finance company GMAC posted a $1.6 billion third-quarter loss on Thursday as housing and capital market disruptions led to hemorrhaging losses from home lending, triggering credit rating downgrades.

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[Source: Yahoo! News Search Results for mortgages]

Rates on 30-year mortgages fall (Pioneer Press)

WASHINGTON - Rates on 30-year mortgages fell to the lowest level in five months as evidence mounted that the economy is slowing down.

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[Source: Yahoo! News Search Results for mortgages]

Reverse mortgages for seniors (KETK 56 Tyler)

EAST TEXAS-- Seniors who need some extra cash for retirement may be living right there in the answer. Experts say there has been a lot of confusion on whether reverse mortgages are a scam and who they benefit.

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[Source: Yahoo! News Search Results for mortgages]

Big banks get tiny showing in 250 best mortgages (The Scotsman)

HOMEOWNERS are being short-changed by mortgages from Britain's biggest banks and should stick to traditional building societies, a consumer investigation has found.

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[Source: Yahoo! News Search Results for mortgages]

Mortgages plc set to makes redundancies (Money Marketing Online)

Mortgages plc has started a consultation process to make a number of roles redundant. The firm expects 20 per cent of staff to be affected in Glasgow, London and regionally.

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[Source: Yahoo! News Search Results for mortgages]

Defaults on Insured Home Mortgages Rise 22 Percent (Update2) (Bloomberg.com)

Oct. 31 (Bloomberg) -- U.S. homeowners defaulted last month on 22 percent more privately insured mortgages than a year earlier after house prices fell the most in at least six years, an industry report today showed.

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[Source: Yahoo! News Search Results for mortgages]

IAC/InterActive Net Falls 4.2% as Mortgages Decline (Update1) (Bloomberg.com)

Oct. 31 (Bloomberg) -- IAC/InterActiveCorp, the Internet and media company assembled by Barry Diller, said third-quarter net income fell 4.2 percent as mortgage sales declined at LendingTree.com.

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[Source: Yahoo! News Search Results for mortgages]

Defaults on Insured Home Mortgages Rise 22 Percent (Update1) (Bloomberg.com)

Oct. 31 (Bloomberg) -- U.S. homeowners defaulted last month on 22 percent more privately insured mortgages than a year earlier, an industry report today showed.

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[Source: Yahoo! News Search Results for mortgages]

Help wanted: Merrill Lynch CEO (CNN Money)

Taking on the top job at Merrill Lynch could turn an executive into a Wall Street legend, but it also has the potential to ruin anyone who takes the CEO post from the just-departed Stanley O'Neal. That stark choice may be one of the reasons Merrill hasn't lined up anyone just yet to lead the firm out of the crisis sparked by large losses from junk mortgages.

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[Source: Yahoo! News Search Results for mortgages]

Subprime mortgages: Danger ahead (Corvallis Gazette-Times)

Lori DeBord knows how to keep a lot of plates spinning. A 40-year-old mother with three boys, she kept the bills paid by running her own small business, the Albany Dance Academy.

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[Source: Yahoo! News Search Results for mortgages]

Best Mortgage Deals - Avoid Big Banks

Research suggests that the top 10 Biggest mortgage lenders offer amongst the most expensive mortgage deals in the UK. The council of mortgage lenders made a list of the best 250 mortgage deals and then worked out what % of these deals were offered by the big companies.The top 10 lenders offered only 11% of [...]

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[Source: Mortgage Blog]

Forecasts for UK Housing Market

Recent evidence of a slowing UK housing market emerged.Number of Mortgage approvals fell. According to the Bank of England, the number of mortgage approvals by UK banks fell to 102,000 per month. This is the lowest rate for over 2 years. see more at BloombergHouse repossessions forecast to rise. The council of mortgage lenders [...]

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[Source: Mortgage Blog]

UBS HIT BY SUBPRIME (New York Post)

ZURICH, Switzerland - UBS AG swung to a third-quarter net loss yesterday, largely as a result of bad investments in U.S. subprime mortgages, and said the problems aren't over. UBS had a third-quarter loss of 830 million Swiss francs ($712 million)...

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[Source: Yahoo! News Search Results for mortgages]

Mortgage Training Should Not Be An Option

Filed under: Mortgage servicing

When I first started in this business, I signed a contract that stated that I would be "fully trained" by the company that I signed on with. What a surprise it was to find out that I was supposed to "fake it until I make it." Many times when I would ask for help I was told that the answers would come to me over time, and to speak with confidence - that way the customer would have confidence in me.

Prior to getting into the mortgage business, I studied real estate in two states, Oregon and California. I was required to take many hours of courses and to have a certificate of completion prior to taking any tests for my licensure. But years later, as I sat with a blank expression on my face in my mortgage broker's office, I found myself wondering something I'm sure I wasn't alone in: Why don't mortgage brokers and loan officers face such a rigorous learning program?? I still to this day have not come up with an answer.

Today, more than ever, I am pushing for loan officers and consumers alike to educate themselves. I would highly recommend that ALL borrowers take a class or two, do internet research, and talk to many loan officers before locking yourself in with the first LO you find. It's not enough anymore to "trust" that brokers and LO's know what they are doing, many of them do know what they are doing - and many times - it's not good. My father had the best advice growing up: "If you want something done right, do it yourself." I've rambled and vented, and I believe that my point is this: education, education, education. Whether you are an industry professional, or a consumer, if you are educated - even self educated - you stand a better chance at obtaining the desired results.

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[Source: The Mortgages Weblog]

National Mortgage Regulation System As Soon As 2008

Filed under: News by state, Mortgage servicing

The National Association of Securities Dealers, Inc. and the Conference of State Bank Supervisors have entered into an agreement to develop a nationwide licensing system for state residential mortgage regulators. This 18-month effort, which involves CSBS, the American Association of Residential Mortgage Regulators and the industry to develop uniform mortgage licensing applications that would be used by each state mortgage regulator. Industry leaders are hoping that the system will lead to benefits from access to a national licensing and enforcement repository, and will likely be the result of the uniform application process and produce more closely related regulations throughout the states.

There are quite a few industry skeptics with growing concerns about how such a system will be implemented, but there are a few states that are currently testing the forms for new license applications. We could be seeing this new system available as early as January 2008, and so far a total of 30 state agencies have agreed to participate in the system. An online mortgage banking compliance service, iComply, suggests that careful consideration should be taken when deciding what information will go into the new system. A pilot program was tested in Illinois, in which implementation issues were much more dificult than anyone anticipated.

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[Source: The Mortgages Weblog]

The Dangers of 125% Financing

There are two main factors that determine how much equity you have in a home: The value of the home, and the amount owed on the home. In other words, if you have a property that is valued at $250,000 and a mortgage loan on which you owe $175,000 then you have $75,000 equity in your home. Since the amount of the loan in a 125% leaves the buyer with no equity, and in most loans, owing more than the home is worth, these loans generally pose the greatest risk and are not usually offered by most lenders. If the homeowner defaults on the mortgage, and the lender forecloses on the property, the lender will require the homeowner to repay the difference - and lose the home.

The present danger with the 125% loan is that many homes values are not rising at the pace they once were. This not only poses a problem for the homeowner, but for the lender as well. At this juncture, if there are lenders out there that are still offering home loans that are above the value of the home, this should be considered a red flag - unless you are taking out the loan to make major improvements on the home that will definitely raise the value of the home.

Some states actually have laws that prevent lenders from loaning out more than the value of the home. Tax deductions are not available on any part of a home equity loan that exceeds the fair market value of the home. The IRS has been monitoring the 125% loans with a watchful eye, making sure than homeowners aren't incorrectly trying to write off too much interest.

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[Source: The Mortgages Weblog]

Distractions in the Mortgage Office - Part One

Filed under: Mortgage servicing

One of the more common "distractions" in the office (granted, this issue is not limited to the mortgage industry) is a non-producing attitude in co-workers. Although there are many techniques to avoiding the distractions associated with workplace sloths, you're going to need a bit of self control and discipline to pull it off, whether you choose to remain in the office, or take your work home with you.

One very realistic solution for many mortgage professionals is to set up shop in your home office. One of the most important factors in originating mortgages from the home is local and state laws. In some states, there may be laws regulating how the information is stored (such as in a locked room, locked file cabinet, etc.) If you're considering working from your home, you should also be aware of the possibilities of distractions in the home, such as T.V., family members, too many breaks, or other potentially distracting factors. Be sure that you set up your home office to prevent distractions, such as using a spare room with a door that you can close, and telephone line, computer & internet, a file cabinet and a fax machine.

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[Source: The Mortgages Weblog]

Distractions in the Mortgage Office - Part Two

If you plan to continue working in the office, you may want to consider a few things that are sure-fire distractions. For example, you will definitely want to avoid these time consuming activities: Gossiping co-workers, personal phone calls, phone calls from rate shoppers, driving aimlessly while wondering how to get more business, discussions of recent television shows or office politics, dreaming up other money making ideas (other than mortgages), surfing the net, and one of the most common work-stoppers - Solitairre. Recent studies show that the average office worker (in any field) will spend about two hours on productive activities. In other words, before you put all the blame on your slothful co-workers, you should consider adding a few more productive hours to your day.

If you find that distractions are seeking you out, then you may need to consider a different work environment (such as shutting your door, or working at home.) In the event that you are unable to do either, consider pointing out to your fellow mortgage originators or brokers that with less than two hours of productive work in any given day, by the end of the 40-60 hour work week, the total number of "working" hours is lowered to just 10 hours. This makes sense in a job where you are paid by the hour, but it sure makes you wonder what your total monthly income would be in a commission only career if you were to actually WORK for the entire 40 hours per week - you'd be amazed.

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[Source: The Mortgages Weblog]

Using Home Equity to Pay Off Credit Debt

Many homeowners around the world are turning to home equity loans, and home equity lines of credit, and even their IRAs and 401(K) funds to decrease or eliminate their credit card debt. Partly fueled by the recent growth in home equity and home values, partially due to lower interest rates on home loans, thousands of people per day are shifting their debt from their cards to their homes. While in some cases this can be beneficial, there are some very real hidden dangers to be aware of when chosing an option that involves taking from your home equity.

One thing that many borrowers are not aware of - or are chosing to ignore - is the definite possibility of homes in your area experiencing a "leveling off" of home values. While over the past few years the equity seemed to grow at an unreasonable rate - without much effort on the part of the borrower, that same equity could essentially disappear just as quickly. In addition to leveling home values, most ARMs are scheduled to begin to reset as early as 2007, and many homeowners will find themselves with a much higher monthly mortgage payment. For those who have a large enough monthly income to compensate for the higher payments, the jump in interest rates may not have as severe of an effect. But most borrowers will experience payment shock - even without adding in the credit card debt, and have a hard time with the monthly payments.

If a borrower has a low monthly payment now, and a higher than normal property value - it can cause a false sense of security, and lead to choices that would not otherwise be made based on the equity in the home. One of the most important thing to remember, is that there are collectors paid to collect on the credit card debt, and by not making the monthly payments on the debt - you could have your cards taken away. When you struggle to pay your monthly mortgage payments, the price is much higher - you could eventually lose your home. Taking the extreme risk of paying off credit card debt may seem like a wise decision due to the difference in interest rates between credit cards and mortgages, but weighing your options as well as the risks may save your home. And the biggest danger of all?? Most Americans who use their home equity to pay off their credit card debt refuse to change their habits and lifestyles, and actually see their zero-balance cards as an invitation to go shopping - perpetuating the cycle. However, in this cycle, there is one detrimental factor - home values will probably not continue to experience the rise, leaving the borrower with very few recovery options for the future.

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[Source: The Mortgages Weblog]

Need Mortgage Education? Here are a few places to start...

Filed under: Mortgage servicing

One of my favorites is Mortgage Professor, run by Jack M. Guttentag. It is indepth, it covers a huge number of subjects that can be useful not only to buyers, borrowers, and sellers, but to mortgage professionals - and it's not written in mortgagese. You can visit their website for quick tips, better understanding of specific loan types, and more. Another well-put-together informational geared towards educating consumers against mortgage fraud is the "Stop Mortgage Fraud" website. They cover a great deal of information that can educate borrowers and mortgage professionals alike. For "lender specific" education, such as information about Freddie Mac, Fannie Mae, or HUD, visit their websites. Each has training and educational tools, and some even have classes or scheduled internet events that you can be a part of.

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[Source: The Mortgages Weblog]

Homeowners "Needed" Creative Lending

In recent years, it borrowers were finding it more and more difficult to find a home loan that they could afford. But now it is catching up with all of us. Renters were crying out for solutions to high interest rates, bad credit loans, and in general - a way to jump on homeowner's bandwagon. It led the way for the interest only loans, the exotic loan, or as someone once put it - the "toxic loan". The question is, can lenders be creative enough to save millions of homeowners from sure financial disaster? The 40 and 50-year loans aren't gaining momentum the way it was once thought, and refinancing might become an impossibility since lenders are correctly hesitant to hand out 130% loans. Many people were unwittingly victim to the "scare tactics" used to create an urgency to buy before prices skyrocketed beyond affordability. Others bought their homes convinced that they would double their profits over the next few years. Creative lending may not be able to pull troubled homeowners out of the pending crisis at hand - and yet lenders don't seem overly concerned.

In my last post, I reflected on a comment made by a hopeful in the industry, who believes that the troubles that overburdened borrowers could experience may be an "opportunity" for lenders to cash in on the need to refinance. However, what he did not mention was the probability that many homeowners are using their equity as a cash giving ATM machine, and actually facilitating financial doom. A huge portion of buyers who were approved for either interest only or exotic loans would not have qualified under traditional standards. I have probably hit a nerve with some homeowners who feel entitled to own a home even though they can't afford one, but I speak from experience. I am a renter not only due to circumstance, but choice. I could have easily for a creative loan, but under the advice of my father, an attorney, I read the fine print. By doing so, I realized what my payments had the potential to become, and "disqualified" myself as a buyer at that time. I couldn't be happier that I made that decision. Signing the documents that were set before me would have nearly tripled the sticker price of the home. While I stood back and watched the housing market over the past 10 years, I can honestly say - right now the grass is greener in my rented yard, while my landlord stuggles with the rising interest rates and increasing mortgage payments.

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[Source: The Mortgages Weblog]

Colorado Enacts Mortgage Licensing Regulations

Filed under: News by state

Colorado becomes the 49th state in the U.S. to enact licensing or registrations of mortgage brokers, leaving Alaska as the last state lacking regulation on the mortgage industry. Governor Bill Owens signed the house bill enacting the Mortgage Broker Registration Act, which will require a mortgage broker (as defined below) to register with the state by January 1, 2007, although the act went into effect July 1, 2006.

The act defines a mortgage broker as anyone negotiating, originating, or offers to attempt to negotiate or originate. Originate (under the act) means to submit an applications or documentation to a lender or underwriter in an attempt to obtain a loan. After January 1, 2007 a person may not broker a mortgage, offer to broker a mortgage, act as a mortgage broker, or offer to act as a mortgage broker without first obtaining registration through the state of Colorado.

The act will also require registrants to pass a criminal background check, submit a disclosure of specified administrative discipline, and application fee, fingerprints, and a $25,000 bond or equivalent alternative. It also establishes criminal penalties for those who engage in any of these regulated activities without first obtaining the proper registration.

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[Source: The Mortgages Weblog]

Possible Dangers in Home Equity Loans

Filed under: Interest rates, Mortgage servicing

Now, more than ever, home equity loans have become the "thing to do". With credit cards holding interest rates higher than the rate on most mortgages, homeowners are have been looking towards home equity lines of credit (HELOCs) to buy the toys that they have always dreamed of. Now this may not sound like much of an issue to the untrained ear, but to those in "the know", there is a huge problem brewing in the real estate and mortgage industries. Home prices are beginning to drop in previously booming areas, interest rates slowly climbing, and a burst the number of exotic loans have increased the risk for homeowners, borrowers, and industry professionals. So why are so many mortgage professionals remaining calm? This type of build-up of financial burdens on homeowners brings about a perfect opportunity to cash in on the increasing need to refinance to keep their mortgage payments under control. According to Brad Brunts, with Citi Mortgage, these changes will bring him more business, "It offers an opportunity."

Freddie Mac estimates that Americans took $556 billion in home equity loans or cash-out refinancing programs. With little or no equity left in their homes, many homeowners will find that when their mortgage adjusts, that their payments could nearly double. This may even leave the borrowing homeowner with very few choices, and none of them good. The homeowners could choose to sell their home, but would most likely be in a position in which they owe more on the house than it's worth, and many similar homes on the market.

So is there hope? There is, take action before it's too late. In fact, it would be better to act on it before millions of other interest-only or exotic mortgage holders join the rush to dump their homes on the market.

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[Source: The Mortgages Weblog]

Getting Your Docs Signed Faster and Easier

I received a free disc in the mail, and I am truly impressed with the program. I usually don't like to try out the programs because there are so many so-called free programs that turn out to be demos. But this one said it was fully free, so I thought - what the heck.

The program is called SureDocs (some of you may already use the program.) The best thing, and worth mentioning first, is that it's FREE until January. So what does it do? Well - the part I like the best, it works within any LOS or application you are already using, sort of like a docs printer for your PC, and makes it clear where to sign with some really nifty "Sign Here" and "Date Here" symbols. Documents are immediately sent to you with an audit trail of when it was received, read, and signed. It can be easy to use either electronically with digital signatures, or the docs can be produced in PDF format for easy printing and faxing. It's definitely worth a try, and it's totally secure. Pick up a copy of the SureDocs program if you don't have a disc by visiting their download site.

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[Source: The Mortgages Weblog]

More Australians defaulting on mortgages: report (Australian Broadcasting Corporation)

With the next critical meeting of the Reserve Bank only a week away, there is fresh evidence of growing mortgage stress across Australia.

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[Source: Yahoo! News Search Results for mortgages]

Buy-to-let for those who can't pay debts (BBC News)

Why are some lenders prepared to offer buy-to-let mortgages to people with bad credit histories?

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[Source: Yahoo! News Search Results for mortgages]

Rodobens Signs Partnership with Santander for 30-Year Mortgages (PR Newswire via Yahoo! Finance)

Rodobens Negocios Imobiliarios S.A. and Banco Santander S.A. signed a partnership agreement for the offering of 30-year mortgages at interest rate of 9%p.a.+TR to the homebuyers of units valued up to R$150,000 to be launched by Rodobens.

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[Source: Yahoo! News Search Results for mortgages]

Beware of Lenders That Promise the World

Filed under: Mortgage servicing

When you make the decision to purchase a home, there are generally three types of financing you can opt to use to pay for the home: Cash, owner-carry, or obtaining a loan from a mortgage broker, lender, or loan officer. Chances are that you are least likely to pay cash, finding an owner to finance the purchase limits your choices in which home you would like to buy, which leaves the most popular choice: a mortgage loan. There is one very important thing to remember when looking for a lender or mortgage company - they are in the "sales" business. This is not to say that there aren't honest mortgage professionals in the industry - because there are many truly honest mortgage professionals. But because your purchase means part of your purchase price will include the paychecks of several individuals.

There are many loan officers and brokers that would like you to believe that they are not in a sales related industry, but that would be far from the truth. The reality is that all mortgage brokers, lenders, and loan officers have products that they offer, and if they are a successful sales person, their customers will "buy" their products. I have been involved in the mortgage industry for a long time, however, I believe that consumers have the right to make an informed decision about their purchases. I found a very commonly worded advertisement on Craigslist.org this evening, and thought that I would share something that I found interesting (and common) in the ad.

"Credit score is a big factor as a qualifying tool, but it's not the only one. There is a lot more to it than that and I would be happy to go over with and show you your options. You may qualify for more than you think. So give me a call for a complete NO cost evaluation even if you simply have questions." The first thought when I read the ad is that there are people out there that have bad credit, which could indicate that a buyer is not financially stable, and they are offering to find the most money available for a buyer's purchase. Okay, so in other words, more debt on an already financially strapped individual.first time buyer who does not know what they can or cannot afford, it may mean they are more likely to end up with a low introductory rate that leads to a future rate hike - and a mortgage payment that they can't afford to maintain.

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[Source: The Mortgages Weblog]

ABC Bank gives home mortgages a second try (BizJournals)

American Bank of Commerce has started offering mortgages in the Austin area after a 15-year hiatus from home loans.

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[Source: Yahoo! News Search Results for mortgages]

Mike Pero Mortgages Announces Scholarship Winners (Scoop.co.nz)

Three outstanding Year 13 high school students are the recipients of Mike Pero Mortgages Foundation tertiary education scholarships for the 2008 year.

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[Source: Yahoo! News Search Results for mortgages]

Wachovia unit sued over option-ARM mortgages (BizJournals)

A lawsuit filed against Wachovia Corp.'s mortgage unit and World Savings Bank alleges the bank was less than honest in explaining its option-adjustable-rate mortgages to consumers.

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[Source: Yahoo! News Search Results for mortgages]

Correcting Prices and the Interest Only Mortgage

There's been quite a bit of talk over the exotic loans and their affects on homeowners' equity lately. The more "leveling" we see in home values and prices over the next few years will have a great impact on how the loans will affect the borrower, and their ability to pay off the mortgage. Combine the "correcting" home values with the lack of payments toward the principal amount, factor in the borrowers' stretched incomes, and you have a recipe for disaster.

The interest only or I/O loan was originally set up and geared towards someone who is financially set and well prepared for the purchase of a home. However, many borrowers "stretched their buying power" with the interest loan, using the bulk of their monthly income to pay the mortgage payments. People who would not otherwise have qualified for a loan - instantly became qualified. The changes and adjustments that the rates may bring, added to the fact that many of these loans are in areas with inflated housing prices, may cause many homeowners to lose their homes and walk away with nothing due to lack of equity built up during the I/O period.

I watched a home go from $250K skyrocket to a range of $450k to $500k in just two years, then "corrected" back down to $350,000 in just a few months. If during that time a buyer "stretched" their buying limits to afford the home at $450k, in less than six months they are owing $100,000 more than the home can sell for, and with rising rates - possibly a mortgage they are no longer comfortable with. Of course, don't forget - there's relatively no equity built up in the first few years, and none for the first 10 years if the borrower obtained an interest only mortgage. Just a hypothetical - yet very real example.

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[Source: The Mortgages Weblog]

A False Sense of Equity

With so many Americans living with a false sense of security (called home equity), it's no wonder that spending has risen to an all time high. If it's not the pressure to take out a home equity loan to pay off credit card debt, there's the pressure of wanting the big kid toys like boats, cars, and oversized electronics. But what has fueled this excess spending? In part - inflated home values - in which homeowners can borrow money against their equity. The problem is, in some areas of the country, the equity in their homes is due to a temporary "bloating" of the value. This equity used to be viewed as security for the retirement years, but more and more individuals are watching their equity dwindle away while experiencing the rising debt on their home, and payments extending into their golden years. In a world where reality TV is a new form of entertainment, it's like watching a high-stakes game of "reality Monopoly".

Here's just a brief example I was able to witness in my lifetime: A home was purchased around 1970 for a price in the $40k range, and a 30-year mortgage with a monthly payment of around $80. By the mid 90's, the home was nearly paid off, but the car was getting old. The logical solution seemed to be at the time to take out a home equity loan, and buy a new car. Why not - it was becoming an increasingly popular way of obtaining the things that would otherwise not be affordable. Several years later, another new car, then an expensive sewing machine, and finally - a cruise with friends. Today - the home is valued around $300k, and the total monthly payment is in the range of $700. Not one of the more extreme examples, but a great example of the way homeowners view their home equity as a checking account - rather than a savings account.

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[Source: The Mortgages Weblog]

Foreclosures Rates Jumped in June

Filed under: News by state

In May of 2006 the national foreclosure numbers came in with a grand total of 62,432. This number quickly jumped up by 7.4% with one in 1,726 households in foreclosure by June. While the total number for June topped out at 67,024 - six states have made up for more than half of the nations total.

Texas, Florida, Georgia, Ohio, and Illinois hold rates higher than the national average. California also made it into the top six states, with an increase of 19%. These six states together account for over 37,000 of the national foreclosure totals. In June alone, Texas had the highest foreclosure rate, totalling 12,693 - a 69% increase from May, raising the state's foreclosure rate to 2.7 times the national average.

This data was compiled using RealtyTrac, and many have speculated that these numbers are a small indication of what we may be seeing in the years 2007 and 2008 due to the large numbers of mortgage resets scheduled to begin in January. So far, there is very little to indicate that these numbers are not a forecast of what is to come. With the great number of exotic loans and interest only mortgages in the hands of homeowners that are already financially strapped, there is a great chance that these numbers will continue to rise, and many will find foreclosure unavoidable.

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[Source: The Mortgages Weblog]

The Mortgages Welbog reaches the end of its term

It is my sad duty to inform all readers that this blog is retiring as of today. Our editorial priorites have gradually changed here at Weblogs, Inc., and while we are glad to have published in this space, the time has come to concentrate our resources elsewhere. As usual with our retired blogs, the Mortgages Weblog will remain visible and accessible, an archive of the excellent posts it holds. Thanks to everyone for reading!

(For fresh blogging about investing news, head over to the dynamic BloggingStocks.)

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[Source: The Mortgages Weblog]

You've Got Mail - Mortgage Mail

Filed under: Mortgage servicing

So over the next few years, many mortgage holders will find that their mailboxes may be filling up with offers to help you refinance your mortgage. This is a serious time to consider your options. If you have a mortgage that has a low introductory rate, and you are nervous that your interest rate may rise out of control - you may actually be a prime candidate for the opportunity to break out of the adjustable rate mortgage. Although there are many people that are actually benefiting from the ARM - if your payments are already as much as you can handle - consider your options before the mortgage resets. When this happens, (for many borrowers, this could as much as double the payments) the payment shock can be overwhelming, and many borrowers could be in danger of default.

There are options that can prevent the drastic rate hike, and talking to a lender or broker that you trust can be the best option available. If you don't already have someone you trust, ask your friends and family. If you still don't have anyone you can talk to, the best thing you could do would be to talk to several mortgage and loan companies. Don't take the first answer you get as written in stone, you should definitely shop around. Also, don't be afraid to tell them that you are shopping around, you may actually get a better response, and a fair quote. Some loan officers will quote you the low introductory rates, and then you are subject to the same problems you may already have been experiencing. Not all mortgages are the same, and not all of them work in the same way. Use a mortgage calculator to come up with some figures that you are comfortable with, and then bring those figures to your lender. Discuss the possibilities with your loan officer, there are definitely things you can do to prevent disaster before your mortgage resets.

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[Source: The Mortgages Weblog]