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Fannie Mae and Freddie Mac vs. Washington D.C.

admin — Sun, 14 Mar 2010 09:22:15 +0000

What is the future for Fannie Mae and Freddie Mac, considered the whitest elephant of the American tax payer? Are these two giant government owned and operated enterprises (GSEs) be left solid or are they to broken into pieces? These questions are everyone’s minds in Washington D.C. Left unanswered these will become a battle royal the likes of which has not been seen in the American economic history.

The Treasury Department is not helping with its little or no transparency activities of using up taxpayer’s money and buying up more and more mortgaged-backed securities. Fannie and Freddie have lost billions of dollars and have been on life support from the government for the past two years.

Before a Congressional subcommittee could shed light to the future of the two giants, the hearing scheduled for next week was inexplicably cancelled. Rep. Barney Frank (D- Mass.), head of the House Financial Services Committee who scheduled the hearing to examine the two companies, vehemently said that the two troubled government lenders should be eradicated and replaced.

Secretary Timothy Geithner stated that the Obama administration has delayed any proposed reforms until 2011.Treasury’s assistant secretary for financial institutions, Michael Barr, said, “We want to make sure that as we move to reform the GSEs, we are focused on retaining market stability in our housing sector. We cannot rebuild securitization markets on the old infrastructure. We look forward to seeing future reform efforts.”

So what are the stakes at risk? Should the government keep the two giants in business at the expense of the taxpayers, or should they be left to die? One or the other, the economy will surely suffer. More than 80% of all U.S. mortgages written are sold to Fannie and Freddie.

After more than a year and a half, there is still no agreement in Congress on the financial reform that could control the financial instruments that ignited the financial crisis rooted in the housing market through risky and dangerous dealing on Wall Street. This same dangerous trading still goes on daily in the shadows of Wall Street, unencumbered by government regulations to dampen the risks that triggered the financial meltdown.

Fannie and Freddie, which stock is still publicly traded on the New York Stock Exchange, are now being directed to operate by the White House. While the Congress and the Treasury Department are working together with little or no guidance, and definitely no direction, to work on the future.

Mortgage Market Post-Recession

admin — Sun, 07 Mar 2010 12:26:05 +0000

While the US is trying to make its way out of the recession, it is a bitter truth that there is still much woe where mortgages are concerned. However, there is some glimmering hope as there are signs visible that the real estate markets are working their way towards stabilization.

One such visible sign of this rebound can be obtained from a report issued by the Mortgage Bankers Association that shows a decline in the mortgage defaults for first residential mortgages in the last quarter of 2009. A survey conducted by the same association also found that late repayments for these loans had fallen to 9.47% of all loans taken for mortgages from October to December 2009. This figure is also lesser than that recorded in the 3^rd quarter of 2009. However, this figure remains above the 7.88% figure in the last quarter of 2008. While the decline from the 3^rd to 4^th quarter may be small, the sign is still positive as it reflects a decrease in the loan numbers which could lead to foreclosure. It is known that the occurrence of late payments began in mid 2006 with the numbers increasing in 2007. A surge in sub-prime defaults caused late-payment rates to increase beyond imagination.

With the number of troubled loans decreasing, experts expect the number of serious delinquent loans and foreclosures to eventually reduce. This increases confidence that the problem is not bad as people think of it to be.

In the whole of the US, mortgages which were in some stage of foreclosure stood at a figure of 4.58% at the end of last year. This was an increase from the 4.47% recorded in September. Florida ranks first in the list of states with mortgages in foreclosure stage. Subprime mortgages have also increased from 15.35% in September to 15.58% at the end of 2009 across the US. Nonetheless, there were signs of recovery in the last quarter. Loan numbers which were in foreclosure dropped to 1.20% from 1.42% in September 2009. Subprime foreclosures also decreased to 3.66% from 3.76%.

The Home Affordable Modification Program introduced by Obama’s administration was designed to help prevent mortgages from reaching foreclosure. This scheme could have contributed to the reduction in last quarter foreclosure actions. However, this program is showing mixed results. With only 1 million home owners under the program, only 116300 were reported to have received modified loans permanently. About 62,000 owners have dropped out of the program for reasons such as failure to make payments even after they had been reduced. The small reach of this program may cause foreclosures to increase even more with unemployment rates on the high. So, it may take longer for the program to cause a widespread positive impact on the foreclosure rates and mortgage defaults.

Deconstructing bad Credit Mortgage Loans

admin — Tue, 02 Mar 2010 13:54:47 +0000

Bad credit mortgage loans are loans endowed to people unfortunately do not enjoy good credit history. The problem with most people is that they are not informed that these loans can be very confusing at first try, and the deluge of information contained in loan contract will be sufficient to drown any average mind any day. Hence, the probability of facing problems in the future (like conflicts on the schedule of the bills, when the payments are due, fixed amount of interest, and the charges included in the package) is much higher, making the granting of and enjoying the loan a messy business for most people.

Before consenting to any loan contracts or even before you think about signing that enticing package, it is good to understand few concepts that are considered standards in the loan industry. We can do so by deconstructing the general provisions of mortgage loans, what they mean to us, and what privileges we enjoy under their tenets.

Credit rating. Credit rating is basically a system of ranking of people’s financial condition. It a measurement of how much people can borrow based on their past financial performance. This is obtained by evaluating the person’s assets and existing liabilities, his or her income, status (married couples with kids and only one partner working will have lower ranking), and other factors. It is extremely important for future loans; the interest and charges of bad credit mortgage loans will depend heavily on this factor.

Mortgage. Mortgage is a property or asset of the borrower that is put up as a safety net for the lender when everything falls to worse situation, which is that the borrower cannot do the part of the bargain. For example, if a borrower has not paid the dues for six months and in spite of the repeated solicitation from the lender, the loan is considered consummated and the lender will have the right to transfer the ownership of the mortgage under his or her name. A mortgage loan is also called a secured loan for the fact that the lender is protected from any untoward incident in the future, like the death of the borrower, or when the borrower files bankruptcy and will be under socialized endowment from the government.

Principal. Principal is the amount that the borrower is asking the lender to grant. The amount will not be as is when given to the borrower for some cases, because the lender would deduct some charges and fees. For some companies however, the principal will be given as is, with the charges and fees being deducted in the future bills.

Base rate. Base rate is the interest as stipulated in the contract. This is the interest rate that you expect that your loan will have, which means that you will be paying more than the principal. Another interest, called standard variable rate, is a two or three percent interest added to your regular bills; as a variable interest rate, your total mortgage rate will therefore be subject to change.

By knowing the universal features of bad credit mortgage loans, you will have better understanding in loan contracts and heightened sense of discernment in deciding what kind of loans you are ready to bind yourself into.

Future of Mortgage Lending

admin — Mon, 05 Oct 2009 15:00:19 +0000

Over the last couple of years we have witnessed one of the biggest collapses in the property market and probably the biggest crisis of the financial system to cause chaos that will be remembered for generations. Residential and commercial mortgage lenders from around the world have turned off the taps of credit flow and the future of mortgage lending seems bleak. This is especially true for borrowers who previously enjoyed a healthy flow of bad credit mortgage lending from sub prime mortgage suppliers. With so much going on in the property and the mortgage market, one wanders if mortgage lending will ever recover.

Well if we look at the current market, it seems that the mortgage lending will never increase. But on the other hand, the restriction of lending cannot continue to be restricted either. People will always need property and in turn always require mortgage lending to take ownership of homes.

Once the cases of property repossessions start declining and builders start building new homes, the mortgage lenders will need to start considering more credit into the system. This may take a few years and at the same time will give mortgage lenders who have seen the biggest problems a chance to fix their balance sheets, but ultimately, there will have to be an increase in mortgage lending to keep the world economies going.

The current trend that we are witnessing is simply part of an overall cycle that is experienced by the property markets and although it may be difficult to see and end to the current crisis, history teaches us that the future will normally bring stronger and healthier economies to drive the mortgage lending ahead once more.

Informations About Loan modification

admin — Tue, 02 Jun 2009 22:53:32 +0000

A loan modification is an accord that is negotiated with your current lender that changes the terms of your current loan. The Lenders are willing to bargain when borrowers are facing financial difficulties and can’t obtain other financing alternatives. You must show the lender why it would be in the lender’s most excellent interest to agree to a workout agreement. If influenced, a lender may be willing to reduce the loan interest rate, decrease monthly payment amounts or change other loan terms. A loan modification usually occurs where the parties to a problem loan mutually agree to workout the problem by creating new and better loan terms. The trust is that the new loan will facilitate to the borrower to meet their responsibilities.

When concerning for a loan modification, make a game plan on how exactly you are going to approach them. These people are skilled in minimizing loss for their company and they get paid to by getting the most amount of money out of you as possible or declare that your case is un-workable and foreclose on you. That is how they lessen loss. If you appreciate this, then you’ll know that you have to move toward them and all chats very carefully. The whole thing can and will be used against you.

These are the Items that you require While Applying for a Loan Modification Document income and operating cost. Keep all communication even the envelopes before negotiating a deal, collect all the information you need, starting with any messages from your lender. That comprises anything that you have unopened from the lender. Do not throw away envelopes from the service provider — postmarks sometimes can make the difference between being qualified or disqualified for release.

Gather everything that relates to income and operating cost. Find your last four pay remains. They want to see at least one month of earnings. If your income is very irregular then the support of your story by showing how you are getting paid so we can calculate an average over time. Collect at least three years worth of W2s and tax returns, plus three to six months of bank statements. Find all of the mortgage paperwork and attach that to the file. Organize all bills, paid or not, from the times you were falling behind on the house payments until now. Comprise utilities, auto payments, credit cards, student loans, child support and medical bills. Find the winter and summer heating and cooling bills that you have. You require including everything that documents why you fell behind. The employees gives the announcement of reducing hours or a layoff, an invoice for an auto repair or a furnace replacement, a shutoff notice from a utility and lots more.

React to your lender, but don’t be rushed into making a promise that you cannot keep. Before making a deal with your lender, explain your situation to an attorney, accountant or a well-informed mortgage person. You require to make sure that it is reasonable and not an accord that will stop foreclosure for a month or two. A lot of lenders are likely to offer forbearance. Theses are only good for a short term band support and not for the long term. Most usually, this entails adding a set amount to each month’s payment. A forbearance plan can go as long as 36 months approximately. But numerous are set to fail and are completely unreasonable for borrowers to pay back. Generally this will require placing the criminal amount on top of your monthly mortgage payment. If you had problem making your mortgage payment before, good luck paying your new larger more high-priced payment. If all else fails, look out for a third party to handle this for you. There are many non-profit housing therapists, attorneys and for profits that are very experienced in loan modifications and loan workouts. If follow these steps it is sure that it will be safe and you can get lots of benefit from loan modification.

Equity release

admin — Sun, 31 May 2009 18:30:05 +0000

Equity release plans can offer a much needed cash boost to older people who own their home outright and are struggling to enjoy their retirement due to a lack of income. There are lots of different equity release plans available and specific types will suit some better than others, but the fundamental principle is the same; the lender recovers their money owing as a proportion of the property upon the homeowners death. Equity release is a financial plan which serves to get you the cash after calculation of your property value, and which can be repaid after death, in the form of the property thus mortgaged. There are mostly two types of equity release mortgage plans. The first one is home reversion and the other is lifetime mortgages. But the general point is that all equity release plans mostly cater to the same concept: that is, to free up the net equity worth tied up in your home, your property. This is being oral of is the cash you can get in return for your property.

Due to the nature of the financial plan, equity release is a system best suited for the older folks and it is mostly people above sixty who are eligible for it. You can able to use the cash you get through equity release mortgage to help your retirement benefits. On the other hand, you have to carefully take a few facts into thought. You will able to get some welcome cash in your kitty, but then, if you have heirs, you need to take care of what you leave behind. You may want to write out a will for them, and may not like to deprive them of what you would like to ideally leave for them. Legacy is an important issue to consider. One more important thing to be careful about is negative equity balance. This means your amount overdue should also reduce, in case the market interest rate falls. As it is much about what comes about in the prospect, you have to be careful as to what you decide in the present. All points need to be cautiously considered, all clauses weighed, rather with the help of financial experts to decide the best for yourself and before you head towards the mortgage papers to sign the scattered line.

The best benefit with equity release is that occupants do not have to sell their home to free up funds. Even though some older people may choose to cut back and move to a smaller property to release cash, others may not wish to go through the problem and cost of moving and therefore could consider equity release as a viable plan. Anyone without children or instant family may well wish to use the value of their property while they are still alive, yet continue to live in it. Equity release is a more beautiful proposition for those in that situation. in addition, equity release allows you to obtain funds that you can then use for whatever reason you so desire, which could include making those new developments to your home that you have always wanted or perhaps even taking a well earned luxury holiday.

Buy to Let Rates Should Be Compared

admin — Wed, 27 May 2009 13:08:58 +0000

Buy to let rates have dropped considerably from what they were some years back. This is because of the increase in the number of people investing in buy to let deals and the resultant narrowing gap amongst lenders because of competition.

There are many lenders offering buy to let mortgage deals; therefore it is better to use the help of the internet to find out which lender provides the best buy to let rates to you. There are websites of mortgage lenders worth visiting that not only provide you with rates, but also give you instant quotes for your deals so that you can make comparisons and decide on which is the best deal for your investment.

Collect some quotes from a few reputable lenders and make the comparisons. You then choose the buy to let mortgage dealer who offers you the best rates, with which you will be able to afford your buy to let mortgage.

Don’t forget to look for a tenant offering a good monthly rent to live in your buy to let property. The rent is considered good if you are able to pay your monthly mortgage, any associated fees and still have some money left over for a rainy day. This is why you have to place emphasis on buy to let rates.

Investment Property – Finance It Creatively

admin — Wed, 28 Jan 2009 14:11:53 +0000

When the sweetest of deals fall into our laps unannounced, should you pass it up? Definitely not, however, if you are finding low levels of financial resources, you may have to get a little creative in terms of financing. When you are looking to finance your investment property creatively, you have come to the right place. Here you will discover different and creative methods of financing your deals. If you do not want to use these methods, they will definitely get the creative juices flowing, at the very least.

Need a loan? Consider No Doc or Low Doc

These are perfect for those who have little documentation that proves the extent of your income or creditworthiness. Furthermore, it is particularly beneficial to those that work at home. A no doc or low doc loan works exactly as it sounds. Depending on the specific type, you will either be required to present very little documentation or none at all. There is a downside to these particular types of loans however, you will probably only receive the loan for around 80% of the value or purchasing price of the investment property.

A Friend in Need, is a Friend Indeed

Being creative in financial deals, means pulling all of your resources together, this could mean talking to your friends. Your friends may be the answer to all of your financial issues. They could be looking for an investment property, just like you, this could be a great solution for the both of you. You should, however, ensure that your friend is someone you have full trust in and know extremely well. How would it work? Well, both of you would place money to go towards the down payment; therefore, you both would have an investment property. Each of you would also have a hold and say so in both the mortgage and the title.

Family for Life

Family members are often an excellent resource when it comes to financing an investment property. Many people really do not want to go to there family and ask them to give you money. However, you could take a different approach instead of asking them for a gift or a handout consider asking for a loan. Much like a bank, only these are your family members. You should always offer to pay the loan back, within a specific period of time, at a predetermined rate of interest.

Remember this is an investment for them as well, an investment in you. Therefore, you should make the offer of paying back with interest. It is highly likely as a family member, that they will refuse the offer of interest and just want the initial sum paid back, but you should never assume and always make the offer.

Summary:

What should you do when you have run out of financial resources, but you have a sweet deal on the table for investment property? Get creative!

Author: Brooke Hayles Check Out More Helpful Information About Investment Property.

http://www.investment-property-that-works.com

How to Get Started in Real Estate Investing Without Cash

admin — Thu, 18 Dec 2008 23:16:16 +0000

So you want to take part in the investment real estate, but you just do not have any extra money to get started? It happens, but what most people do not realize that you may already have enough resources to get started. If you have your own house, you can use the asset, and will be well on your way many times.

If you bought a house with interest only loan, you are building equity every time you make a mortgage payment. To find out how much equity in your home, subtract the balance on your mortgage from the value of your home. If you have any other loans tied to home, or other obligations, to subtract them. Most people were surprised to see how many shares they have in reality. In many cases, it is more than enough for a down payment and to improve the investment property.

There are several ways you can use your home equity to raise cash for real estate investments. Here’s the basic:

1. Refinancing your home. You can refinance your home in order to increase interest rates, but you can also get cash out refinance mortgage loan, and the use of cash for the purchase of investment property, or you must have at least enough for a down payment. Your current lender may be entitled to cash in refinancing, so check with your mortgage consultant before you start this process. Keep in mind, cash out refinance mortgage may have higher interest rates of mortgage loans than others.

2. Take Home equity loan. Home equity loan is a loan using the equity in your home as collateral, and regardless of your mortgage. The amount of credit on the basis of shares in your home, you can get 90% or more of the value of your home, and less if you are taking out home equity loan on a second property that you do not occupy. The advantages of home equity loan to pay back a loan early without penalty, and you can pay off those high interest credit cards.

3. Go to home equity line of credit. Home equity line of credit loans, like credit card. As home equity loan amount limit based on credit and equity in your home. You can transfer money from your home equity line of credit, or even write checks directly from your account. Interest rates are generally lower than cash out refinance mortgage loans, and are tax advantages as well. Another advantage of this is just the interest payments and payments on the amount you must, but not the entire amount of the loan. You can also have the opportunity to review in the future at a higher line of credit when the equity in your home increases, especially if you made the minimum payments on a timely basis, or to improve housing conditions.

Investing in real estate not only for the rich, the average homeowner can be a real estate investor, even without a lot of money in your bank account. You can use the cash from the refinancing of mortgage loans, home equity loans, home equity lines of credit for the purchase of the first investment property, as well as many other properties in the future.