OREGON REAL ESTATE ROUND TABLE

Tag: Finance

  • Seller Financing Web Site OregonLandSalesContract.com Updated: New Listings Available


    New listings have been added to OregonLandsalesContract.com:  Homes are  located in the following areas:

    Canby
    Lake Oswego
    Oregon City
    Portland

    Each home listed on the site the seller will consider cash out and contract terms offers.

    Visit OregonLandSalesContract.com and see if any of the homes listed can fit your needs.

    Just because you cannot qualify for a conventional or FHA  loan, does not mean you cannot buy a home.  Many sellers are willing to sell their home on private contract to qualified buyers.

    Oregon Land Sales Contract
    http://oregonlandsalescontract.com

  • Multnomahforeclosures.com Updated: New Notice of Default lists for the first week of October 2010


    Multnomah County Courthouse in Portland, Orego...
    Image via Wikipedia

    Multnomahforeclosures.com was updated  with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com

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  • Refinancing, Not Foreclosures, is the Issue; Richard Alford on Bill Dudley and QEII, The Institutional Risk Analyst Blog


    One good rule thumb in trying an understand what’s happening with the [global] economy is listen to what Mr. Geithner says, and know that’s not possibly right. So, last week when Mr. Geithner states there’s no currency wars, that pretty much means it’s raging full scale, and the Fed’s dropping the biggest bombs.

     

    Joe Costello
    archein21@googlegroups.com
     

    One of the deepest, most sincere human illusions is the faith that there is (or can be) “real money” as opposed to “unreliable” money that does not hold a certain value and purchasing power. I discovered long ago from reading the history of money that this kind of certitude has never been the case except for very brief periods. Money is man-made and therefore subject to all the myriad fluctuations and follies in human arrangements. Obviously, this upsets people, especially goldbugs. They need to get over it though I doubt they ever will. I suspect Chris (maybe Joe) would like to get back to the Gold Standard, though he is too practical to say so directly. That regressive choice would be our true road to serfdom. If gold is the only “real” money, then working people should be paid for their labors in real gold, not paper certificates. 

    William Greider
    “The Last Word on Funny Money”
    9/29/10

     

    In this issue of The Institutional Risk Analyst, we return to a subject which we have awaited for nearly three decades and which many of the inhabitants of Wall Street have only recently discovered, namely the imperfection of collateral liens on mortgages underlying asset backed securities or ABS. The failure on the part of the largest banks to perfect the liens on the home, office building or other real property that underlies a securitization is turning out to be not merely a legal headache — and it is — but also the operational catalyst for the next crisis in financials. But the foreclosure mess is not — repeat not — the crux of the biscuit, to paraphrase the late great composer Frank Zappa.

     

    We also feature a comment by our contributor Dick Alford on the recent speech by NY Fed President William Dudley regarding the resumption of quantitative easing or “QE.” Suffice to say that Dudley has adopted the happy face messaging seen in use by Fed Chairman Ben Bernanke and other members of the compliant Federal Open Market Committee in Washington. Yet as we shall be telling an audience later today at American Enterprise Institute, the best part of the financial crisis lies ahead.  Click here to download the slide deck, “Pictures of Deflation.”

     

    We noted in previous comments that the Fed’s zero interest rate policy or “ZIRP,” in conjunction with QE, is draining something on the order of $1 trillion annually in income from individual and corporate savers to subsidize the banking sector. The key thing to understand about the continuing crisis in the mortgage sector is that the process of foreclosing on homes is reducing assets of commercial banks by an amount that is far larger than the $1 trillion in total tangible capital of the U.S. banking industry.  Read that last sentence again.

     

    While the Fed has been attempting to refloat these same banks — and their bond holders — on a sea of cheap money, the central bank is ignoring the larger, structural problems in the real estate sector. Forget mere valuations losses on ABS and derivatives on same. The real surprise heading for Washington and Wall Street is when everyone realizes that the big risk facing the U.S. economy is not from the foreclosure crisis, but from the actions of the “Big Five” financial monopolies — Fannie Mae, Freddie Mac, Bank of America (BAC) (Q2 2010 Stress Rating “C”), Wells Fargo (WFC) (Q2 2010 Stress Rating “B”) and JP MorganChase (JPM) (Q2 2010 Stress Rating “C”) to prevent tens of millions of American homeowners from refinancing their performing mortgages.

     

    But first, let’s take a stroll down memory lane.

     

    A few years back, a young analyst from the FRBNY named Chris Whalen went to work at the London branch of Bear, Stearns & Co. During the morning we sold German bunds and the other debt issued by what are now the EU member nations.  In the afternoon we sold mortgage-backed securities. Terms like CMO and convexity were soon heard on the trading floor as we vigorously stuffed large quantities of these very early private label RMBS into every open orifice on the European continent, including a number of large Japanese banks and insurance companies. Thus was coined the term “yield to commission.”

     

    During this period, we stayed in touch with our colleagues at the Fed, particularly a courageous attorney named Walker Todd , who was then working at the FRBNY. We described in previous comments how members of the Fed’s Washington staff persecuted Todd and other Reserve Bank officials for having the temerity to object to some of the more ridiculous policy positions pursued during the tenure of Fed Chairmen Paul Volcker and Alan Greenspan (See “IndyMac, FDICIA and the Mirrors of Wall Street’, January 6, 2009”). There is an entire chapter devoted to the good works of Chairman Volcker and his protege, Gerald Corrigan, in the upcoming book, Inflated: How Money and Debt Built the American Dream.”  And we answer the question: Is Paul Volcker the father of “Too Big To Fail?”  Click here to see the new target page for inflated.

     

    The Fed’s Washington staff was particularly infuriated by Todd’s writings regarding the amendments to the Federal Reserve Act contained in the FDICIA legislation in 1991. The amendment pushed by then-Fed staff director Donald Kohn was adopted without vote during a late-night Senate conference committee session chaired by none other than Christopher Dodd (D-CT). In a very real sense, Dodd, Kohn and armies of Wall Street attorneys from the large banks who drafted the amendment are the authors of the great bank bailout of 2008.

     

    One of the topics we discussed at length with Todd in the mid-1980s was the way in which Wall Street firms underwriting of residential mortgage backed securities or “RMBS” failed to perfect the collateral lien of the securities against the home or other real estate. This was a serious legal problem, especially if you believe in property rights and due process of law. Yet because the value of the real estate that served as collateral was rising pretty much continuously during the past several decades (Hello — What’s wrong with this picture?), the issue of imperfect collateral liens in ABS received little attention from the Fed or other regulators. See our comment: “No True Sale: Interview with Joseph Mason’, March 3, 2008”

     

    Now let’s walk through the process of creating an RMBS to illustrate the problem facing many home owners, lenders and investors. We’ll use the actual example of IRA cofounder Christopher Whalen. Back in 1998, Chris and his wife bought a home in Westchester County NY. The primary mortgage was originated by and independent broker and placred with Roslyn Savings Bank, which retained the paper for its own portfolio. In 2001, Chris refinanced with the Bank of New York Mellon (BK) (Q2 2010 Sress Rating: “A”), which immediately sold the “Alt-A” loan to the firm formerly known as Lehman Brothers. But that was only the start of this mortgage’s journey.

     

    The loan was then resold by Lehman Brothers to a special purpose vehicle (SPV) and then sold again to a Delaware trust created to securitize the mortgage into an ABS. Lehman controlled the trust, but the vehicle was administered as though it were in fact separate. Servicing was provided by Aurora Loan Servicing, a wholly owned subsidiary of Lehman, which is now being liquidated. When the time came to sell bonds to investors, the trustee for the Delaware vehicle issuing the securities repeated the process performed thousands of times before and merely took the documentation describing the mortgages into a file folder and went on to the next deal.

     

    Here’s the problem. If you go down to the Courthouse in White Plains, New York, and pull up the title record for the property purchased a decade ago by the Whalens, the only indication of any encumbrance over the collateral that is supposed to back up the securitization sold to investors by Lehman Brothers is the original assignment to Roslyn Savings and later to the Bank of New York. There is no change in recordation of the collateral lien on the property to Lehman Brothers much less the SPV or the Delaware trust that acted as the securitization vehicle in the ABS.

     

    In the event of a default, it could be argued that Lehman Brothers never owned the loan and thus never had the power to assign ownership to the SPV or the Delaware trust. Indeed, in plain legal terms, Bank of New York (and now JPMorgan, the successor to the Bank of New York retail business), is the only party with legal standing to enforce the lien on the property. But as far as Bank of New York is concerned, the loan was sold to Lehman Brothers more than a decade ago.

     

    Now you are probably wondering why the good people at Lehman Brothers never bothered to send a paralegal to the New York State Courthouse in White Plains to record a change in the collateral lien — at least regarding the sale to Lehman Brothers. The cost of perfecting the lien on the hundreds or even thousands of loans in a typical ABS costs money, but in aggregate would have added less than half a point to the cost of the deal. But the investment bankers at Lehman Brothers took that half point as profit instead of doing their jobs. No doubt claims for fraud, RICO and other misdemeanors are possible against Lehman and other RMBS underwriters, as with the civil RICO lawsuit againstCitigroup (C) (Q2 2010 Stress Rating “C”) and Ally Financial (Q2 2010 Stress Rating “A+”).

     

    You can argue that the banks were greedy and stupid for failing to perform their legally required duties as securities dealers and fiduciaries. You can also argue rightly that many banks are doing stupid things in foreclosures as they are being overwhelmed by mortgage defaults. But these very real concerns miss the larger issue. The bigger point that members of the media and the other happy campers who are following the foreclosure mess need to understand is that a poorly managed documentation trail does not change the fact that the loans are bad.  Focusing on the foreclosure mess at the expense of paying attention to the larger, secular threat from the deflation of the mortgage sector could be a fatal choice for American consumers, banks and the nation as a whole.

     

    House Speaker Nancy “Red” Pelosi (D-CA) and all of the other politicians clamouring for inquiries of bad home foreclosures are simply playing to their ill-informed audience. Neither Pelosi, most members of Congress nor the vast majority of Americans understand that the real crime by the Big Five banks is not the failure to perfect the loan documents on a mortgage a decade ago, but the active steps being taken today to prevent millions of American households from exercising their contractual right to refinance their mortgages when interest rates fall.

     

    The focus by Washington on the very real mortgage foreclosure mishaps committed by many lenders is the functional equivalent of putting Al Capone away for tax evasion. The real, continuing act of racketeering and criminality being committed by the Big Five banks is the cartel behavior which prevents home refinancing for performing borrowers and also renders Fed monetary policy largely ineffective. Instead of suing American Express (AXP), the Department of Justice should be suing the Big Five for anti-trust violations, price fixing and criminal RICO. Until the blockade erected by Fannie Mae and Freddie Mac to prevent refinancing of performing mortgages is removed, Fed monetary policy will be stymied and no amount of QE will be effective in stabilizing much less re-inflating the U.S. economy.

     

    Why Does Bill Dudley Want More QE?
    By Richard Alford

    New York Federal Reserve Bank President William Dudley gave a very well received speech last week. It is easy to see why Wall Street applauded the speech. It promised further steps by the Fed to support asset prices. It is less clear why anyone outside Wall Street would applaud the speech, as it contained arguments that were disingenuous, logically inconsistent and possibly dangerous.

     

    Dudley addressed a number of questions, including: “How much would the Fed have to purchase to have a given impact on the level of long-term interest rates and economic activity? Dudley asserts that recent experience suggests: “that $500 billion of purchases would provide about as much stimulus as a reduction in the federal funds rate of between half a point and three quarters of a point.” This was the take-away money passage and was quoted frequently in the press.

     

    However, the full answer is neither as precise nor as certain. A little later in that discussion Dudley went on to say: “Suppose the Fed was indeed successful in reducing long-term interest rates further-what then? Some claim that lower rates would have no effect on economic activity-that the Fed would be ‘pushing on a string.’ This is too dark a view. Although the responsiveness of demand to reductions in interest rates is probably lower in a world in which balance sheet constraints are important, the responsiveness is not zero. I believe that it remains significant.”

     

    Dudley asked: “How much would the Fed have to purchase to have a given impact on the level of long-term interest rates and economic activity? And asserting without qualification that QE is stimulative (and stimulative is generally understood to imply increase economic activity) in the first statement, Dudley backtracks in the second statement even as he dismisses the opposing view with an unsupported assertion: “This is too dark a view.”

     

    After presenting a precise quantitative link between QE and long-term rates, the best Dudley can offer in regard to the link between changes in long-term rates and economic activity is: “I believe that it is significant”. In fairness to Dudley, it is the best any supporter of QE can do. Given the failure of QE to stimulate the Japanese economy, there is no evidence that QE will stimulate economic activity in the US today.

     

    We need to recognize that assertions regarding the effectiveness QE are just part of a belief system unsupported by data — the definition of most modern religions.  This is troubling enough, but Dudley goes on to sketch the mechanism by which he believes that QE would support economic activity:

     

    “Even in today’s challenging circumstances; lower long-term rates would support the economy through a number of channels. Lower long-term rates would support the value of assets, including houses and equities and household net worth. Lower long-term rates would make housing more affordable and support consumption by enabling households to refinance their mortgages at lower rates. This would increase the amount of income left over for other spending.”

     

    In short, Dudley supports QE partly because he believes that it would lead to a policy-based, higher asset-price, easier credit, consumption-driven boom much like but more widely based than either the NASDAQ technology stock or more recent real estate bubbles. This ought to be very troubling as it suggests that the Fed has not learned from past mistakes.  The Fed believed that the financial markets without serious oversight were efficient and robust enough to weather a prolonged period of a near zero real and then unusually low Fed funds rates, as well as a tidal wave of financial innovation. The Fed’s fundamentalist faith in efficient markets was misplaced, as shown when risks they had dismissed were realized. Currently, the markets is pricing-in the Fed ushering in QE2 with “shock and awe” after the next FOMC meeting. It appears that the Fed will expose the economy to risks it has cavalierly dismissed as “too dark” in pursuit of returns that it “believes” exist. The public deserves better. It deserves a good faith analysis and honest presentation of both the upside and downside risks attached to QE.

     

    Early in the speech, Dudley applauded the rise in the personal savings rate and deleveraging as necessary steps to restore sustainable growth. However, late in the speech he argues that QE will work because it will depress savings and encourage the re-leveraging of the economy. But how can we re-leverage the economy when, as discussed above, banks are shrinking because neither the Treasury or the Fed have the courage to immediately restructure these institutions?  Logical consistency ought to be a necessary component of policy and explanations of policy, but apparently not at the Fed.

     

    Dudley remains mute on a number of ancillary issues. For example, he does not mention the transference of more than three-quarters of a trillion dollars annually from savers to the banks due to low rates even though this decreases the amount of income available for consumption spending. He also remains mute on the blurring of the distinction between the Fed and Treasury. From the Fed financing the public ownership of AIG to the apparent willingness to commit to monetizing (though QE) of the fiscal deficit, the Fed has moved in the direction of allowing both the Executive and Legislative branches of government to avoid their responsibilities.

     

    It is October in an election year. One expects speeches such as this from candidates running for public office, but not from Fed officials.

     

    Questions? Comments? info@institutionalriskanalytics.com About IRA Products and Services

     

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  • Thoughts on the New Mortgage Insurance Premium for FHA loans – by Jason Hillard | homeloanninjas.com


    (originally posted on October 2nd, 2010)

    I have had this rolling around in my head for a few weeks now, and with the change in FHA mortgage insurance monthly premiums bearing down on us in a few days, I had to share my thoughts. We’ve been doing a lot of FHA loans in Oregon & Washington, as I’m sure is the case all around the country, and this change is going to affect a lot of people. (I apologize for the low quality of the video, I have successfully screwed my phone’s camera up!)

    Again, everything that’s changing about the mortgage industry is done under the auspices of avoiding another meltdown, curbing foreclosures, and making the mortgage-backed security a good investment. So, if you have an insurance policy which is designed to avert the risk of a loan in default to the lender, why would you want the premium on that insurance policy to be collected over time?

    From a simple risk-assessment perspective, it would seem that the more time you are exposed to loss, the greater the likelihood that it will happen. The fear is that homeowners will default on their loan payments, so why would you push more of the premium to the monthly payment side (rather than the upfront funding fee) if the reason for the policy is to protect the investor from people who default on those payments?

    It seems like the reasonable position would be to get the premium covered from day one. This reminds me of when the downpayment requirement for FHA went from 3% all the way up to a whopping 3.5 per cent. Does that extra .5% really invest the homeowner so much more that it reduces their likelihood of default? I’m not saying their should be less “skin in the game”, but if that’s going to be your approach, why not really DO IT? Make the downpayment 5%, or make some portion of the upfront mortgage insurance on an FHA home loan payable from the borrower’s own funds?

    It may just be that I am making the age-old mistake of applying logic to government policy, but I am thinking that the intended purpose isn’t really what we are being told.

    You can read some related posts on FHA loans and mortgage insurance:

    What is mortgage insurance?

    We can do FHA down to 580 FICO, but should we?

    Video: mortgage terminology – mortgage insurance

    If you have any questions about FHA financing, mortgage insurance, or home loans in general, feel free to send us an email or comment on this post! And if you have any thoughts on why the monthly mortgage insurance premiums for FHA mortgages are increasing while the upfront funding fee is decreasing, we’d love to hear them!

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  • New HUD program offers up to 24 months of mortgage assistance to unemployed, by CHRISTINE RICCIARDI, Housingwire.com


     

    Seal of the United States Department of Housin...
    Image via Wikipedia

     

    A new program run by the Department of Housing and Urban Development allows delinquent borrowers who are unemployed or suffering from a severe medical condition to receive assistance with mortgage payments for up to 24 months.

    The Emergency Homeowners Loan Program offers up to $50,000 to eligible borrowers at a 0% interest rate. HUD officials called it a true bridge loan because all deferred payments are forgivable provided the borrower lives in a home and remains current on payments for five consecutive years.

    But the program isn’t for everyone. Brian Sullivan, public affairs representative for HUD, said borrowers must have a consistent track record of making mortgage payments on time. A household’s yearly income also may not exceed 120% of the area median income and must have had its income reduced by at least 15% in two years due to sudden unemployment, underemployment or a medical condition.

    The property must be the borrower’s primary residence and at risk of foreclosure.

    “This is about families who were paying their mortgage, were current, were working, and then something happen,” Sullivan told HousingWire. “It’s for low- to middle-income, working families.”

    HUD announced plans for the program in August, after the agency was designated under Dodd-Frank to create an emergency homeowners assistance program with an allocated budget of $1 billion. Funding through the new program is only available in the 32 states and Puerto Rico that were not otherwise funded by the Hardest Hit Fund.

    Borrowers must meet with their local NeighborWorks division or state finance agencies with HUD approved standards to receive funding. NeighborWorks is a national nonprofit organization created by Congress to provide financial support, technical assistance and concealing services to homeowners.

    HUD hopes to begin accepting applications by the end of the year. HUD announced Tuesday how the $1 billion would be divided by state (chart below, in dollars):

    Write to Christine Ricciardi.

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  • Wells Fargo Curtailing Short Sale Extensions, by Kate Berry, Americanbanker.com


    In a move that will expedite some foreclosures, Wells Fargo & Co. has stopped granting extensions for certain distressed homeowners to complete short sales.

    The change last month preceded recent revelations of faulty documentation at two major mortgage servicers — JPMorgan Chase & Co. and Ally Financial Inc. — that suspended thousands of foreclosure actions to review their processes. Wells said it does not have the same problems as those servicers.

    The company said it changed its policy on short sales at the behest of investors for whom it services mortgages, including the government-sponsored enterprises.

    Early last month, Fannie Mae told its servicers to stop unnecessarily delaying foreclosures. The GSE said it would hold servicers responsible for unexplained delays to foreclosures with fines and on-site reviews.

    In a memo e-mailed to short sale vendors last month and obtained by American Banker, Wells said it will no longer postpone foreclosure sales for those who do not close short sales by the date in their approval letter from the company. Only extension letters dated Sept. 14 or earlier would be honored, Wells said.

    Mary Berg, a spokeswoman for Wells, confirmed that the memo was genuine. But she said it had “caused confusion,” and stressed that Wells still grants extensions on loans in its own portfolio (including those it acquired with Wachovia Corp.) and in cases where investors allow it. For those two categories, Berg said, Wells allows one foreclosure postponement, provided these conditions are met: a short sale has been approved by Wells, by junior lienholders and by mortgage insurers; the buyer has proof of funds or approved financing; and the short sale can close within 30 days of the scheduled foreclosure sale.

    Berg would not say how often Wells’ investors allow extensions.

    The new policy on short sales was put in place “over the past couple of months … in response to various investor changes,” Berg said. Those investors “would include the GSEs, HUD and those investing in private-label” mortgage-backed securities.

    In a short sale, a home is sold for less than the amount owed on the mortgage and the lender accepts a discounted payoff. The transactions are often less costly to the lender than seizing and liquidating the home.

    “As long as there is a short sale possibility, the loss will always be less,” said Rayman Mathoda, the president and chief executive of AssetPlan USA, a Long Beach, Calif., provider of short sale training and education. “Basically foreclosure sales should be delayed for any responsible homeowner that has a real buyer available.”

    Wells’ decision also follows efforts by the Obama administration to encourage short sales for borrowers who do not qualify for loan modifications.

    “It makes no business sense why they are doing this, since it’s wrong for the borrowers and for the government,” said Eli Tene, the CEO of IShortSale Inc., a Woodland Hills, Calif., firm that advises distressed borrowers.

    But experts on short sales said that in recent months servicers have been reluctant to approve the transactions out of concern that they will fall through, further prolonging the process.

    “There is also a growing issue with the new buyer and financing issues, either losing their jobs ahead of closing or the new lender not being ready to close, which then gives rise to the buyer running out of patience and walking,” said Jim Satterwhite, executive vice president and chief operating officer of Infusion Technologies LLC, a Jacksonville, Fla., provider of short sale services.

    Satterwhite said many servicers have reached the point where they know which borrowers do not qualify for a modification and are moving those borrowers through to foreclosure to deal with the backlog of inventory. “A lot of servicers are just falling in line with Fannie,” he said.

    Moreover, the expectation that housing prices will fall further is forcing servicers — and the GSEs — to push for a quicker resolution through foreclosure, since short sales can involve further delays. “Values are dropping faster and that also means the losses on short sales are going up,” Satterwhite said.

    Of course, the recent reports of “robo-signing” at Ally Financial’s GMAC Mortgage and at JPMorgan Chase could gum up the foreclosure works again. For example, on Friday, Connecticut Attorney General Richard Blumenthal asked state courts to freeze all home foreclosures for 60 days to “stop a foreclosure steamroller based on defective documents.” The day before, Acting Comptroller of the Currency John Walsh said he had told seven major servicers, including Wells, to review their foreclosure processes.

    Another Wells spokeswoman, Vickee J. Adams, said the company’s “policies, procedures and practices satisfy us that the affidavits we sign are accurate.”

  • Multnomahforeclosures.com: Updated Notice of Default Lists and Books for the Week of September 24th, 2010


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com

  • Fannie mae to provide mortgage payment forbearance for certain military homeowners, Thetruthaboutmortgage.com


    Government mortgage financier Fannie Mae announced today new measures to help those serving in the military avoid foreclosure.

    The company said it will provide mortgage payment forbearance for up to six months where the death or injury of a service member on active duty leads to a hardship for military families with a mortgage obligation.

    Fannie has also created a hotline, 877-MIL-4566, available to all service members looking to receive guidance about their mortgage options and subsequent assistance.

    “The men and women of our Armed Forces have shown extraordinary commitment to our country while facing unique challenges as a result of their service,” said Jeff Hayward, Senior Vice President of Fannie Mae’s National Servicing Organization, in a release.

    “No family impacted by a death or injury in the line of duty should have to face the additional burden of foreclosure as a result of the hardship. We want to do all that we can to provide support to these families at a time of need as we honor their sacrifices and service to our country.”

    Service members or surviving spouses who may be eligible for the special forbearance should contact their bank or mortgage lender.

    Any forbearance will be granted under Fannie Mae’s “Unique Hardships” guidelines with Fannie Mae’s approval.

    Under forbearance, the bank or lender may reduce or suspend the borrower’s monthly mortgage payments for the specified period.

    Credit bureau reporting will also be suspended during the forbearance period to minimize any negative credit scoring impact.

  • Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


    Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

    The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

    Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

    The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

    Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

    Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

  • Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


    Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

    The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

    Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

    The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

    Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

    Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

  • Wealthbridge Mortgage Corp. – Retail – Agency, FHA/VA


    The Portland Business Journalyesterday reported thatWealthbridge Mortgage Corp.(view snapshot) had let go of 16 workers and would “lay off the remainder of its 109-member staff” as of 2010-10-15 based on a recent filing with Oregon under the Worker Adjustment and Retraining Notification Act.

    “Wealthbridge Mortgage Corp. intends to close its business and permanently lay off employees due to unforeseen circumstances outside of the company’s control and its inability to obtain the necessary capital to remain in business,” President Scott Everett said in a letter to local and state officials.

    Based in Beaverton, OR, the company had changed its name to Wealthbridge Mortgage from Gateway Financial Services at the beginning of 2008. Information given to us at the time implied the company had been hit with a lot of repurchases due to first payment defaults, although we did not see any evidence to support the allegation. An inside source reported a large number of LO’s and telemarketing staff were let go in the early months of 2008 as a result of the alleged buybacks, along with a handful of managers.

    The company originated an average of $16.62 million per month in residential mortgage loans during 2008, down from the previous year’s average volume of nearly $20 million per month.

    Cited most recently as the reason for the company’s “collapse” was the failure by Delaware investment firm Venn Capital Group Holdings LLC to close a deal to purchase the company on 2010-09-20. Branch offices in MN and NV will also be closed.

    If you have additional information to add, please post your comments below or send us an email.

    http://www.bizjournals.com/portland/stories/2010/09/20/daily45.html

  • GMAC Halts Evictions Related to Foreclosures in 23 States When News of Forged and Robo-Signed Documents Comes Out, by Mandelman


    I’m sorry, but is GMAC… no, wait… Ally Financial… I keep forgetting they’re my “ally” now… run by a 40 Mule Team of morons?  Don’t answer that, it was clearly rhetorical.

    Okay, so here’s the story… some attorneys representing homeowners in foreclosure noticed that GAMC was saying things that weren’t true, which is sometimes referred to as “lying,” and then in a deposition it came out that a middle manager at GMAC was actually signing 10,000 foreclosures a month without reading the paperwork like he was supposed to… or, one might consider… like any normal human being would do given they had a job signing 10,000 of anything each month.  I mean… what the… can you even imagine?

    Well, here’s your job.  We’ll need you to sit here and sign your name roughly 10,000 times a month.  So, if there are 21.67 work days per month, which there are, according to Amswers.com, then that would mean signing your name about 462 times per day, or 58 per hour, assuming one were to work eight hours a day without breaks of any kind.  That’s one per minute, and it assumes there’s some sort of catheter involved.

    No problem you say.  Except how will I be able to read what I’m signing? “Oh, no need for that, silly rabbit,” your boss says… “kicks are for trids.”  What in the world was going on here, pray tell?  Why, it’s time to play “Fraudulent Foreclosure Mill,” of course.  It’s the game where laws don’t matter and all the houses go back to the bank no matter what!  I’m not sure, but it sounds like something that might have been developed by Saddam Hussein, no?  Or, maybe Vikram Pandit and Jamie Dimon, I suppose.

    NPR reported: “The company recently halted evictions in dozens of states, after news of the robo-signer came to light.”

    Oh come on… I HATE it when people treat me like I’m six.  Is this “news” to GMAC, or any of the other banksters?  That’s what I’m to believe?  Really?  Well I don’t usually say what I’m about to say but this is my blog and I don’t work for anyone but me, so… GMAC… F#@k you.

    I worked in corporate America for some 20 years, and quite a few of those years I even worked for banksters, including JPMorgan, and there’s absolutely NO CHANCE whatsoever that this is “news” to anyone there.  I absolutely guarantee you that there are secretaries at GMAC that know about this practice… they’ve been having meetings about it for years.  There are enough CYA memos floating about at GMAC that if you stacked them on top of each other they’d be taller than Shaquille O’Neal standing on Lord Blankcheck’s throat in a pair of 4” stilettos while on the roof of a Yukon, an image that I’d go pay-per-view to see, I don’t know about you.

    No, it’s not “news,” although I guess I have to be happy that the lamebrain media has finally caught on that something might be amiss in Foreclosure Land.  And it’s about damn time.  As I recently said to a producer at American Public Television: “Thanks for coming, media people, you’re a little late, but come on in, there’s still plenty of food.”

    No, even though NPR, the Washington Post, the New York Times, and just about every news site, publication and blog on the planet reported on the story, it’s not “news,” except that perhaps because it’s us the taxpayers that actually own most of GMAC, it is.  Yep, it’s “us” that are paying that robo-signer to sign his name a gazillion times a month, thus creating fraudulent documents that are then used by lawyers with fewer ethics than pond scum to throw “US” our of our homes illegally.

    We, the taxpayers, have given GMAC $17.2 billion in TARP funds, none of which have been repaid, by the way.  And I love the way the media reports that the “Treasury invested” in GMAC.  The U.S. Treasury doesn’t have any money, folks.  That’s U.S. citizen paid or borrowed tax payer money they’re “investing”.  And if we the tax payers are going to invest in companies, why do we have to invest in all the shitty ones?  (I apologize for my language in this article, but it’s just not a good day for me to play nice.)

    NPR also reported that:

    “The case — which could allow thousands of homeowners to challenge their evictions — has triggered other reports this week of sloppy foreclosure practices.”

    Now I happen to like NPR, I’ve been listening to them on the radio for years.  But, “sloppy foreclosure practices?”  “SLOPPY?”  “SLOPPY?”  What the hell, have we all forgotten how to use the English?

    Fraudulent, forged, bogus, fake, illegal, spurious, sham, false, phony, suppositious, illicit, unlawful, criminal, immoral, sinful, vicious, evil, iniquitous, peccant, wicked, wrong, vile, in violation of the law… damn it, don’t make me go find my thesaurus.

    It reminds me of when that Senator was molesting that 16 year-old boy… the White House page, by at the very least, sending him repulsive, repugnant emails, and Newt Gingrich referred to them as “naughty emails”.  I mean… OH MY GOD!  “Naughty,” Newt?

    Even the venerable Financial Times chimed in a couple of days ago saying:

    “An official at JPMorganChase said in a deposition earlier this year that she signed off on thousands of foreclosures without verifying the details.”

    Wow, really?  Who could have possibly known about that?  Oh wait… ME, among God-only-knows-how-many-others.  Here’s my story on the JPMorganChase robo-signer from LAST JUNE 4th, 2010.  Yepsiree… they call me “Scoop Mandelman,” yes they do… Oh, please.

    And the Washington Post had their two cents to add:

    “And an employee of a Georgia document processing company falsely claimed to work for dozens of different lenders while signing off on tens of thousands of foreclosure documents over the course of several years.”

    Here’s what GMAC… oh, that’s right they’re my “ally,” had to say:

    “Ally says that its review of the GMAC Finance issue has ‘revealed no evidence of any factual misstatements or inaccuracies’ in the documents that weren’t properly reviewed. And the company says it has fixed its process for reviewing foreclosure documents.”

    Pardon me?  Did you just… I mean, what the… I can’t believe I just heard you say… what the… somebody oughta give you such a…  And what about the other 27 states?  Are they all fine and dandy?  People have lost homes here… God damn it…

    Alright… STOP.

    Look, there’s more to this story and you can bet your boots that I’m going to write about it all weekend… in great detail.  I’m going to tell you WHY they’re having to forge documents in order to foreclose on homes all over the country.  And you’re going to hate this even more than the forgeries themselves.

    (Attorney Max Gardner and attorney April Charney, of Jacksonville Legal Aid, are the country’s leading experts on this and related injustices, and they’ve been gracious enough to give me enough information to write a book covering this topic on a scale of Gone With the Wind, the Next Ten Years.  I’m going to run my next piece by them before I post, but it’ll be up this weekend if it kills me.  Don’t miss it.)

    But not right now, because right now I’m going to head down to my local watering hole to toss back a couple of pints.  Then I’m going to ask a friend of mine to back over me with his car to make the pain go away.

    Oh, and what follows is GMAC’s “CONFIDENTIAL” memorandum… they labeled it “privileged & confidential,” but anyone want to guess how much I care about that?  Read it and weep… I know I did.

    Mandelman out.

    Urgent: GMAC Preferred Agents

    Privileged & Confidential 9/17/10

    Attorney/Client Privilege

    Dear GMAC Preferred Agents:

    GMAC Mortgage has determined that it may need to take corrective action in connection with some foreclosures in the following states:

    Connecticut
    Florida
    Hawaii
    Illinois
    Indiana
    Iowa
    Kansas
    Kentucky
    Louisiana
    Maine
    Nebraska
    New Jersey
    New Mexico
    New York
    North Carolina
    North Dakota
    Ohio
    Oklahoma
    Pennsylvania
    South Carolina
    South Dakota
    Vermont
    Wisconsin

    As a result of the above, effective immediately and until further notice, please take the following actions only in the states identified above:

    Evictions:

    Do not proceed with evictions, cash for keys transactions, or lockouts. All files should be placed on hold, regardless of occupant type.

    REO Closings:

    Do not proceed with REO sale closings. GMAC Mortgage will communicate instructions to the assigned agent regarding the management of the properties in Pending status. If the contract has already been executed by both parties, the Asset Manager will request an

    amendment to extend the closing date by 30 days or as otherwise designated by the Asset Manager. Please provide appropriate notice to the REO purchaser that, pursuant to Section

    1 of the GMAC Mortgage Addendum to Standard Purchase Contract, GMAC Mortgage is exercising its sole discretion to extend the Expiration Date of the Agreement by 30 days at this time. If the REO purchaser wishes to cancel the contract, GMAC Mortgage will terminate the Agreement and return the earnest money deposit.

    You will receive further instructions regarding the status and handling of these assets from your asset manager. There could be asset level exceptions and you will receive direct communication from GMAC on the handling of those exceptions. Please send any questions or concerns regarding these matters to your asset manager.

    Please ensure your staff is aware of these requirements immediately.

    GMAC Mortgage

    GMAC Mortgage LLC 2711 N. Haskell Ave, Suite 900, Dallas, TX 75204

    http://mandelman.ml-implode.com/

  • The Art of the ReFi, by Jason Hillard, Home Loan Ninjas Blog


    I was asked by Portland Realtor Fred Stewart recently if I wanted to write an article on refinancing for his blog, Oregon Real Estate Round Table. This became a challenge that I was not expecting.

    I set out to see what the competition is “blogging” about the topic of refinancing. What I found is more of the same: advertisements disguising themselves as blog posts. I guess I should keep in mind that my blood pressure usually skyrockets when I read other mortgage blogs.

    So let me walk you through how/why to refinance in the current mortgage environment. The first step is admission, and is perhaps the hardest thing to come to grips with:

    You do not own your home.

    If you have a home loan, then the bank owns your home. You own the equity. You may not have equity. You may just own a mortgage. This idea may sound counter-intuitive, but once you accept it and move on, your view on refinancing may change. You should now be thinking, “how can I leverage the portion of my home’s worth that I actually own?”

    If you’re still having trouble, consider this. You are thinking about your “home”. I am talking about your “house”, and the debt instrument against it, which is owned by a bank. Separate your emotions from this exercise.

    Now, I am a firm believer in the concept of Mortgage Planning, which has at its core a very simple concept:

    Untapped equity does you no good.

    Let me give you an example. If you own $60,000 in home equity, well then let’s start by saying that you are in much better shape than most. However, if you choose to leave that equity in the “untapped ether”, it is nothing more than the theoretical result of a process that you may or may not engage in. In other words, if you are not selling your home in the next 3 years, who cares how much equity you have? Who knows what your home will be worth in 3 years?

    Now let’s take it one step further: what if you lose your job? What if you could really use that $60,000 while you look for a new job? Well, good luck qualifying for a refinance without any income. It won’t happen. So, having $60,000 in untapped equity, which is the percentage of the house you ACTUALLY own, is completely useless. Had you taken that equity out when it was readily available, you would have a $60,000 slush fund for a rainy day.

    This method of managing equity requires restraint and discipline, but you can see that it illustrates the outdated concept of homeownership. We are all for people “owning” homes, but you have to understand that while you may be a home “owner”, the bank actually owns the lion’s share of the four walls that comprise your house.

    So, when I hear some mortgage agent saying “rates are at historic lows” and “now is a great opportunity”, my stomach does a backflip. We agree, rates are low. But that is an awfully generic statement. And yes, now is a great opportunity, but for who? The fact is that when it comes to refinancing, the circumstances which need to be considered are highly individualized. What if you can’t get the “lowest rate” because of credit score?

    Well, maybe you shouldn’t be so hung up on the rate.

    Well, now what in the world would I say that for? Let’s break it down. Say you have a rate of 5.5% on your current mortgage and $40,000 in equity available (“equity available” in this case refers to the portion of your equity which you could actually pull out by refinancing, not the total amount of equity). You also happen to have about $800 a month in credit card payments.

    You call up a mortgage professional to inquire about a refinance. Your credit score and LTV (loan-to-value) conspire against you though. The rate you would qualify for is less than .375 lower than your current rate. You ask yourself, “why would I pay $6000 in closing costs for what is essentially the same rate I have now?”

    The answer is that by doing so, you have leveraged your available equity to save something like $600 a month on your total monthly “out-go”. This is the equivalent of getting a $600/mo raise in your salary. Also, you have transferred all of the interest from your credit cards to your mortgage, which is tax deductible. This saves you more money. The lesson: don’t get so hung up on the rate. Focus on the outcome.

    Time for disclosure: I have avoided using “exact numbers” and precise monthly payments because that requires all kinds of math and figures, which people hate reading and would only serve to muddy the point. You can get exact numbers for your situation by contacting us, or any other mortgage professional.

    Let’s review one more situation; one which is much more common for the current market. You have a pretty good rate from a couple years ago, but don’t want to miss out on this “historic opportunity” because it’s all you have heard on the radio for the last 2 years. Of course, since your last refinance was a couple of years ago, you probably don’t have a lot of available equity. So you aren’t looking for any cash out, just a simple rate & term refinance.

    Let’s say that your loan amount is such that lowering your rate about .75% on a new refinance only saves you about $120 a month. The old school mentality says “why pay $6275 in closing costs to only save $120 a month?”

    After all, that would mean that it would take 52.29 months to pay off your refinancing costs. ($6275/$120 = 52.29)

    You’re probably thinking you are losing $6275 in future earnings, which seems like a lot to trade for $120 a month now. However, what if you don’t sell your home? What if the value drops further, and that $6275 isn’t there in the future? What if your salary gets cut at your job? The $6275 is theoretical. The $120 a month savings is tangible. You need to frame the question this way:

    Which is more valuable to me? The tangible savings now, or the possibility of return in the future?

    We are not recommending you tap yourself out just to save a few bucks every month. That’s the point. The answer to this question should be as unique as the person asking it.

    However, you do need to start thinking about your mortgage in this way. It’s a brave new world, and it is likely here to stay.

    http://www.homeloanninjas.com/2010/09/23/mortgageblog-the-art-of-the-refi/

  • Refinance Boom or Bust: The Scoop from Melissa Stashin of Pacific Residential Mortgage LLC


    Melissa Stashin, Pacific Residential MortgageMelissa Stashing

    Pacific Residential Mortgage, LLC
    4949 Meadows Road, Suite 150
    Lake Oswego, OR  97035

    (503) 699-LOAN (5626)
    (503) 905-4999    Fax

    Over the last few months refinancing has seen what could be deemed a “boom” in our current lending climate; yet, according to the Bloomberg report, the refinance index decreased 3.1 % in the beginning of September, so why the recent slow? When I turn on the radio, open a paper or see a pop-up in my email, I am bombarded with phrases like; “Lowest Levels on Record! Historic Lows! Lower Your Payment! Rates as Low As.”  Mortgage companies are using confidence boosting words to create hype in their marketing strategies, and this is important, but more crucial is providing information and education to consumers so they understand their options.  In a time when we have some of the best rates in history, getting the word out about refinancing options is fundamental.

    One of the best things you can do is dig through your file cabinet, find your mortgage statement and check your current interest rate. If it’s anything over 4.5% it’s worth a phone call. Just like your mom said, “you won’t know until you ask” and really, there are a lot of options. Many consumers who refinanced two years ago may have an incentive to refinance again and this is a good thing. From a local perspective, when consumers seek a lower monthly payment it increases disposable income which creates consumer spending and helps Oregon’s economy as a whole.

    So here’s the scoop, there are programs that allow you to refinance without equity in your property or very little. There are options for large loan amounts and those for small. Each program has its own set of guidelines which we, the mortgage banker, will walk you through. Credit issues may not disqualify you if they can be resolved; it’s just a matter of looking at everything carefully. It’s our job to determine the best program for your situation and your ability to repay. The magic recipe for low rate bliss requires four basic ingredients from you: assets, income, credit and property. Although this may seem daunting, if you tell us what your situation is and we can verify it, you may be able to save a significant amount of money. The reality is that rates still are historically low and there is a lot of opportunity for consumers to improve their interest rates. Choosing a local company like Pacific Residential Mortgage helps make for a smart consumer because we have the skills and local expertise to educate our borrowers. In this new mortgage market, the difficulty isn’t in qualifying our consumers it’s simply a matter of gathering information, stirring the ingredients together, and you may be the one that takes the cake!

    ~ Melissa Stashin

    Sr. Mortgage Banker/Branch Manager

    NMLS# 40033

  • Mortgage Bond Rally Centers on Least Likely to Refinance: Credit Markets, by Jody Shenn and Alan Goldstein, Bloomberg.com


    Investors in U.S.-backed mortgage bonds are shifting into securities tied to debt from homeowners who are the least willing or able to refinance as the Federal Reserve helps keep interest rates near record lows.

    Fannie Mae-guaranteed securities with 5.5 percent coupons that are backed by 30-year mortgages with average balances of less than $85,000 have jumped to 2.4 cents on the dollar more than similar generic debt, according to FTN Financial. The gap has more than doubled from 1.1 cents in late July.

    Homeowners with smaller loans don’t benefit as much from a drop in monthly payments as borrowers with bigger mortgages, while facing similar closing costs, and are thus less likely to refinance. Premiums for debt tied to mortgages with low balances have generally soared to the highest since at least 2004 after refinancing applications climbed to the most in 16 months.

    “Prepayment protection is worth a lot more than what you’ve seen historically,” said Bill Bemis, a portfolio manager who oversees about $7 billion of securitized debt at Aviva Investors in Des Moines, Iowa. “Payups” for mortgage bonds filled with smaller loans “have gone a little bit too far” because it may take investors as long as two years to recoup such premiums through the extra interest payments by borrowers keeping their loans outstanding, he said.

    Willing Fed

    The Fed, which said yesterday it’s willing to ease monetary policy further to spur growth, has helped drive down borrowing costs by purchasing government and mortgage bonds, increasing its assets to $2.3 trillion from about $906 billion at the beginning of September 2008. U.S. two-year yields fell to a record low after the central bank’s statement.

    Elsewhere in credit markets, the extra yield investors demand to own company bonds instead of similar maturity government debt was unchanged at 171 basis points, or 1.71 percentage point, the lowest since May, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. Yields averaged 3.512 percent, down from 3.566 percent.

    The spread is narrowing at the same time as the number of U.S. companies at greatest risk of default dropped to the lowest level in two years, in part due to Federal Reserve efforts to bolster the economy, according to Moody’s Investors Service.

    Companies rated B3, or six steps below investment grade, with a negative outlook or below that level declined to 195 as of Sept. 1 from a high of 288 in June 2009, Moody’s said. Clear Channel Communications Inc. and Energy Future Holdings Corp., formerly named TXU Corp., were among the biggest companies on the list.

    IStar Debt

    IStar Financial Inc., the commercial real estate lender seeking to restructure some of its $8.6 billion of debt, may seek bankruptcy protection after creditors blocked it from amending loans. IStar expects to begin meeting with creditors in coming weeks to discuss potential terms of a so-called pre- packaged bankruptcy, which wouldn’t occur until sometime next year, according to people familiar with the matter who asked not to be identified because the plan isn’t public.

    Outside of bankruptcy, the company is weighing a proposal to extend maturities on its debt as well as a potential exchange offer, according to two people familiar with the situation. Andrew Backman, a spokesman for iStar, didn’t return a phone call or an e-mail message seeking comment.

    IStar’s $501.7 million of 8.625 percent bonds due in 2013 fell 5.6 cents to 78 cents on the dollar, the lowest since March, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

    Chrysler Financial Corp. plans to issue $2 billion of bonds backed by auto loans this week in its first asset-backed securities sale since March, according to a person familiar with the transaction who declined to be identified because terms aren’t public. Toyota Motor Corp. is marketing $1.29 billion of similar debt, also slated to sell this week, a person familiar with that deal said.

    Auto Loan Delinquencies

    While delinquencies are down 23 percent from a year ago, late payments on auto loans rose to 2.1 percent in August, a 4.7 percent increase from the prior month, Standard and Poor’s said in a report.

    Debt tied to auto lending accounts for a majority of asset- backed securities issued this year, or 53 percent of the $85.2 billion in sales, according to Bank of America Merrill Lynch data.

    Bonds from DuPont Co. were the most actively traded U.S. corporate securities by dealers, with 167 trades of $1 million or more, Trace data show. The Wilmington, Delaware-based company’s $1 billion of 3.625 percent notes due in January 2021 rose 1.2 cent from its issue price on Sept. 20 to $101.04 cents on the dollar.

    Bondholder Protection

    Credit-default swaps on the Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, climbed 2 basis points to a mid-price of 108.7 basis points as of 5:23 p.m. in New York. Yesterday was the first full day of trading after index administrator Markit Group Ltd.’s semi- annual adjustment of companies included in the measure.

    The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan increased 1.5 basis points to 122.5 basis points as of 8:22 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show.

    In emerging markets, the extra yield investors demand to hold corporate bonds rather than government debentures rose 22 basis points to 292 basis points, the highest since Aug. 31, according to JPMorgan Chase & Co. index data.

    Leveraged loan prices rose for a 10th straight trading day, climbing 0.15 cent to 90.21 cents on the dollar, the highest since May 19, according to the S&P/LSTA U.S. Leveraged Loan 100 index.

    Mortgage Refinancing

    Mortgage refinancing can hurt bondholders by returning their money more quickly than anticipated. That’s particularly punitive if investors paid more than face value for their securities because of their relatively high coupons and instead receive their principal back at par.

    The average rate on a 30-year mortgage fell to 4.37 percent last week, from this year’s high of 5.21 percent in April, according to McLean, Virginia-based Freddie Mac. The rate touched 4.32 percent earlier this month. Rates on loans in Fannie Mae’s 5.5 percent bonds average about 6 percent.

    The Fed has held its target rate for overnight loans between banks at zero to 0.25 percent since December 2008. The 2-year Treasury note yield dropped 4 basis points to 0.43 percent after touching a record low 0.4155 percent.

    Fannie Mae

    Washington-based Fannie Mae’s 5.5 percent, 30-year securities fetch 106.44 cents on the dollar in the so-called To Be Announced market, where orders to buy debt can be filled with bonds with a range of characteristics through a type of futures contract, Bloomberg data show. That’s down from the record of almost 108 cents on July 27, though up from 104.72 cents on Dec. 31.

    Mortgage-refinancing applications rose to the highest levels since May 2009 last month, according to data from the Washington-based Mortgage Bankers Association. While applications have declined, last week’s pace was more than double the level at the end of 2009.

    “Right now, we have some pretty dramatic concerns about prepayments, so we’re looking at the specified pool market as an area where you can generate excess returns,” said Paul Colonna, who oversees $58 billion as chief investment officer for fixed income at GE Asset Management in Stamford, Connecticut.

    ‘Seasoned’ Debt

    General Electric Co.’s investment arm likes mortgage bonds backed by lower-balance loans, and “seasoned” debt, which also offers protection against homeowners falling out of the pools after turning delinquent, Colonna said.

    Aviva’s Bemis said he’s willing to pay for bonds backed by loans made in recent months, whose borrowers “are much less likely to want to go in anytime soon and refinance again.”

    He also favors debt tied to property investors and homeowners owing the most relative to their properties’ values who will find it more difficult or expensive to qualify for new loans. While the latter debt may not prepay as slowly as smaller loans, it may cost only 0.5 cent on the dollar more than generic securities, he said.

    Some types of mortgage bonds are in “bubble territory” in relation to the TBA market, according to Tae Park, a money manager in New York who oversees mortgage-bond investments at Societe Generale SA, France’s second largest bank.

    “This bubble will last as long as the refi uncertainty continues,” he said. “It’s like when people are willing to pay-up for bottled water, when the tap water is from an unknown source.”

    Hubbard, Mayer

    In a New York Times op-ed this month, Columbia University’s Glenn Hubbard and Chris Mayerproposed a new program through which the government would direct Fannie Mae, Freddie Mac and federal agencies such as Ginnie Mae to streamline refinancing. Hubbard, who served as chairman of the Council of Economic Advisers under President George W. Bush, is dean of the Columbia Business School, where Mayer is a senior vice dean.

    Higher payups “certainly illustrate the anxiety mortgage investors are feeling about government policy,” said Julian Mann, who helps oversee $5.8 billion in bonds as a vice president at First Pacific Advisors LLC in Los Angeles.

    Changes in the mortgage market amid the worst U.S. housing slump since the Great Depression are eroding the value of some typical characteristics investors seek for “prepayment protection,” Mann said. Bonds of older 15-year mortgages with low balances, for example, are refinancing faster than First Pacific Advisors expected, he said.

    Mortgage bankers and brokers pursuing “slam dunk approvals,” rather than spending as much time on potentially more lucrative larger loans, are responsible, Mann said. The 15- year debt tends to be taken out by borrowers with better means to pay it off than 30-year loans, and pays down more quickly, giving homeowners lower loan-to-value ratios when they seek to qualify for a refinancing, he said.

    To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net.

    To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

  • Refinancing Your Home : Has the time arrived?, by Chris Wagner, American Capital Mortgage Inc.


    Chris Wagner, CMPS
    American Capital Mortgage Corporation
    555 SE 99th Ave., Suite 101
    Portland, OR 97216
    503-674-5000 Office
    503-888-3372 Cell


    The mortgage industry has gone through more transitions in the past few years than Lady Gaga has had costume changes!  Since mid-2007, qualifying has gone from just being able to fog a mirror to having to document your high school transcripts before your loan gets funded!

    All joking aside, we are seeing some outstanding refinancing opportunities that simply did not exist a short while ago.  Despite the current economic adversity, chances are good that you can significantly improve your current mortgage, simply due to the fact that we are seeing rates that haven’t been around since the 1940’s!

    Here are just a few highlights

    For those with an existing FHA loan: a streamline refinance will allow you to lower your rate without an appraisal or income qualifications!   VA loans offer a similar program called IRRL (interest rate reduction loan)

    For those whose conventional loans are owned by Fannie Mae or Freddie Mac: A “refi-plus” or the Home Affordable Refinance Plan (HARP) allows you to refinance, often without an appraisal, and if an appraisal is required, they provide for lowered values without paying for mortgage insurance while often allowing for limited income documentation as well.

    Getting qualified is simple! Within a short 5 to 10 minute phone call, your mortgage professional should be able to learn everything they need to update your file and determine which program is the best fit.  Realistically, most of the information are top of mind items and should be enough to get the ball rolling without the completion of a formal application. This will allowyou to get a good idea if refinancing now is a good idea for you.

    Let’s get down to business……

    Once you get a feel for what can be done based on your current circumstances and loan type, you will have the information necessary to make a good decision to get the best results you can, but there is more to it than just APR.  Call it cultural training, but we have all been conditioned to pursue an interest rate like a raccoon runs after whatever is shiny.  In both cases, what you end up with is not always good.

    There are essentially four categories that when surveyed, the vast majority of clients will describe their satisfaction or dissatisfaction based on how the following transactional components were executed.  You may consider keeping this list in the back of your mind as a scorecard while you are considering the individuals and institutions you will or are working with.

    1. 1. Communication: This is the number one source of concern that clients describe as a source of anxiety and ill ease.  Our imaginations tend to work against us when we are left to our own and there are few things that are crueler than being ignored.  Your broker/banker’s job is to effectively quarterback all of the people involved with your transaction and to report the progress and timelines to you in a pre-described manner.  This is the only way that expectations can be set properly.  Much like a safari guide, every trip is a little different, but there are enough similarities that your professional should know what to look out for, what to do if it is encountered and how it will affect your outcome.  If you have trouble getting your calls or emails returned promptly when you are initially inquiring about a loan, you can only count on it getting worse down the road.

    1. 2. Honesty and Integrity: This should be obvious, but it is not.  We are not talking about premeditated deception here.  The level of disclosure required by all parties is geared towards virtually eliminating that.  What we are talking about is a mortgage provider who quotes rates and terms prior to gathering the details of your transaction, thus paving the way toward disappointment.  What would you think of a doctor who gave you a prescription without asking questions or examining you first?  This kind of malpractice is due to an urgency to get a commitment from you and may indicate a lack of experience on the part of the interviewer.  Internet advertisers often employ phone-room type data input clerks that often work from a script.  Ask your provider for a written closing cost guarantee prior to spending any money besides the charge for a credit report.  This will go a long way to indicate to you if the numbers are real.

    1. 3. Smooth and Complete Process: Perhaps you have already been, or know of someone who was the victim of the “Oh, just one more thing” series of phone calls requesting additional information that never seem to end once started.  Granted, there are circumstances that in fact do generate requests that could not be anticipated initially, however you should receive a list of items required that you need to begin gathering immediately once your application has been taken.  In addition, you should be given a timeline of the various milestones that will occur during your transaction.  Examples would be, when appraisal is ordered, received, underwriting timelines, and ultimately when you will be signing.  You might get a super low rate, but if it feels like you had to crawl over broken glass to get it and you have been working on it for 4 months, much of the shine will have worn off that apple by the time you actually close.
    1. 4. Rates, terms and fees: This also seems fairly straightforward, as it has to make economic sense to proceed.  In reality, you may initially consider this to be the most significant detail when considering a lender.  The fact is, the lenders and individuals who are still in business after the past few years had to be competitive, or they simply would not be around.  It is wise to determine what your real savings is after all costs are considered.  If it costs you $5000 to lower your rate and that saves you $100 per month, you want to be aware that it will take you 50 months before you reach the break even point of expenses versus savings.  That could be an excellent strategy based on other criteria, but each situation needs to be considered individually in order to be genuinely accurate.  In this case, one size does NOT fit all.

    Action step: Don’t Wait!

    Find out what can be done in your present situation.  Don’t make assumptions regarding employment, home values or credit.  You owe it to yourself to know for sure.  Don’t wait until rates start creeping up, because they most certainly will.  You are under no obligation to act once you do get qualified, and if you do nothing else, you can get an updated credit report from all three major credit bureaus.  You have a historic opportunity to impact you and your family’s financial future, don’t wait!

  • Fixed rate home loans are history, by Sarbajeet K Sen


    The fight may be intense among the top housing finance lenders to woo customers with special offers and teaser rates even as festive season is round the corner. But, if you are someone looking for a home loan that bears a fixed rate of interest for its entire tenure, you may not be as welcome.

    While the State Bank of India and LIC Housing Finance do not offer products with interest rate remaining fixed for its entire tenure, HDFC and ICICI Bank are pricing their offering at a level that would discourage consumers to opt for it, prompting housing finance experts to say the offers are virtually not on the shelf.

    While HDFC’s fixed rate loan comes at 14 per cent rate of interest, against its teaser rate home loan offering that starts at 8.5 per cent up to March 31, 2011, ICICI Bank has priced its offering a shade higher at 14.5 per cent, while its teaser rate begins at 8.25 per cent for the first year.

    “The rate that the lenders are offering on their fixed rate product for the entire tenure essentially means that there is no such product available. The pricing appears to be aimed at discouraging borrowers to opt for the offer,” RV Verma, executive director of National Housing Bank, said.

    Out of the total home loan providers including all banks and housing finance companies, the four largest players — HDFC, SBI, ICICI Bank and LIC Housing Finance, between them accounted for nearly 53 per cent of the market at the end of 2009, according to Icra report on the mortgage loan market in the country.

    According to data available on the NHB website for interest rates on housing finance as on September 1, Axis Bank and DFHL Vysya Housing Finance have similar high rates of 14 per cent and 13.75 per cent, respectively on their fixed rate products, while the likes of Punjab National Bank and IDBI Bank have comparatively lower rates. IDBI Bank’s offer comes at 11 per cent, PNB has the lowest rate of 10.50 per cent among the 15 primary lenders.

    The remaining eight lenders in the list do not have such fixed rate offers.

    A senior official of SBI felt that the fact that providers are actively discouraging fixed rate products is a sign of the market coming of age. “It is a sign of the market maturing. When most housing loan providers were offering fixed rates for the entire tenure some years ago, many of them were new to the whole concept of retail banking and did not know of its intricacies. The competition for drawing in fresh borrowers was making them offer such products,” the official said.

    So, what is it that is forcing the major lenders to discourage borrowers from taking a fixed offer or deciding to not offer such a product at all? Lenders say that the sole reason is their inability to raise long-term funds to match such lending.

    “Cost of funds keeps varying over the longer term. Hence, it is rather risky to take a long-term call on the lending rate and deciding to keep it fixed for the entire tenure,” the SBI official said.

    Srinivas Acharya, managing director of Sundaram BNP Paribas Home Finance, said inability to raise long-term funds makes designing of long-term fixed rate products difficult. “We don’t offer a fixed interest rate product over the entire tenure because it is risky proposition. It is difficult to pattern fixed rate products over a 20-year period, since there is no matching funding available in the market,” he said.

    Verma says besides the difficulty of raising long-term funds, such funds often come at a higher cost, if available. “It is difficult for lenders to take a call because of uncertainties. Long-term fund raising has become difficult or comes at a price that is not attractive,” Verma said.

    ICICI Bank and HDFC did not want to comment on the issue. “Yes we do offer fixed interest for the entire tenure of the home loan,” was all that an ICICI Bank spokesperson said, without willing to discuss the subject when probed further.

    sarbajeetsen

    @mydigitalfc.com

  • Reverse Mortgage Applications Rise to Highest Level Since September 2009, Reversemortgagedaily.com


    The number of reverse mortgage applications increased 8.1% to 9,686 in August according to the latest report from the Federal Housing Administration.

    While down 12.4% from the same period last year, the application totals for August are the highest since September 2009.
    The run up in applications before the end of FHA’s fiscal year is normal and is likely to increase as reverse mortgage borrowers rush to complete the process before the Department of Housing and Urban Development lowers the principal limit factors in October.

    The total amount of FHA applications for the month was 200,907 with a significant rise in prior FHA refinance cases. This included 86,569 purchase transactions, 104,652 refinance cases and 9,686 reverse mortgage cases. Included in the refinance count were 55,103 prior FHA’s (46.9% over last month), and 49,549 conventional conversions. In addition, 39 H4H cases were included in the refinance total.

    There were also 6,645 HECM’s insured in August and 6,175 were the traditional reverse mortgage type.

    As of the end of August, FHA has 558,316 mortgages in a serious delinquency category, yielding a seriously default rate of 8.5 percent. This includes all mortgages in bankruptcy, in foreclosure and 90 days or more delinquencies.

    So far this fiscal year 270,964 claims have been paid. The bulk of these were for loss mitigation retention (164,744) and property conveyance (87,807).

  • Multnomahforeclosures.com: Updated Notice of Default Lists and Books for the Week of September 17th, 2010


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com

  • Ally’s GMAC Mortgage Halts Home Foreclosures in 23 States, Bloomberg.com


    Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.

    GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Oleckiconfirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.

    The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.

    GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to industry newsletter Inside Mortgage Finance. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

    GMAC was created in 1919 to provide financing for buyers of General Motors Co.’s vehicles. GMAC converted into a bank holding company in 2008 as it received more than $17 billion of government funds during the financial crisis. It rebranded itself Ally Financial last year, and continues to offer auto loans and mortgages.

    Following is a table of the affected states.

    Connecticut
Florida
Hawaii
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Nebraska
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Vermont
Wisconsin

    To contact the reporter on this story: Denise Pellegrini in New York atdpellegrini@bloomberg.net.