Mortgage Information For The Homeowner and Professional

The poor site took a long nap and now it is time to see if we can wake it up.

The poor jobs report may be the catalyst for the Federal Reserve to stop raising interest rates and give the mortgage industry a chance to catch its breath and slow down a bit. The marketplace has been in turmoil as the Federal Reserve has been raising interest rates putting pressure on new borrowers and those in Adjustable Rate Loans (ARMs).

Since the Fed controls short term rates, a pause by the Fed means that adjustable loans will benefit the most from their likely neutral stance on rates. However, fixed rates might or might not see a benefit even though it is widely believed the Fed will pause raising rates on Tuesday.

Fixed rates are based on investors that trade Mortgage Backed Securities, it is these investors’ perception of inflation that controls the direction of fixed rate mortgages. These same investors will be more interested in the Fed’s statement than the pause in rate increases. If the Fed, in its statement, indicates that inflation is anything but under control fixed rates may in fact increase even though short term rates are held steady. Although we believe this scenario remote, it is possible and has occurred several times in recent history.

The bottom line - In our opinion a neutral statement by the Fed in conjunction with a pause in rate hikes will likely stabilize or slightly improve the market, Although unlikely, any indications that a pause will be temporary or not sustainable will likely result in higher rates. via OriginatorTimes.com.

The next time that you apply for a mortgage the 3 credit bureaus will start smiling. Why, you ask? Well, once the information is requested by your mortgage broker, the credit agency will in turn sell your information to other mortgage brokers so they can contact you to get your business.

And the worst part of this is that there is nothing you can do to stop it. So from the time your mortgage broker pulls the report, your information will be on the so called trigger lists and sold to other brokers within 24–48 hours. And then expect your telephone to start ringing off the hook.

Lists of people who are applying for a new mortgage or a refinancing have become big business for the country’s three largest credit reporting agencies. The agencies sell the information that someone is seeking home financing - called a trigger, because the person’s identity is flagged when a credit report is requested by a mortgage broker - to competing brokers.

The brokers call the customers, presumably to offer a better deal and, they hope, land the mortgage business - taking it away from the broker or bank that first dealt with the client.

It seems like a consumer wins if he or she has several brokers competing for business, but the idea that the application process has become a piece of information for sale doesn’t sit too well with some people. via Maine Today

Loopnet, the top online resource for commercial real estate had a successful IPO today opening up. The last 5 Initial Public Offerings have all been flat so brokers were pleased that Loopnet’s IPO was successful and there is such confidence for the commercial real estate market.

LoopNet priced in the middle of its $11-$13 range and raised $72 million by offering 6 million shares with underwriters Credit Suisse, Thomas Weisel, Pacific Crest Securities and Pacific Growth Equities.

San Francisco-based LoopNet provides real estate listing services to businesses and individuals.

The company reported net income of $3 million and revenue of $10.2 million in the quarter ended March 31, compared with net income of $1.9 million and revenue of $6.2 million in the year-ago period.

In its featured IPO column, Renaissance Capital said that the company faces competition from CoStar Group, as well as rival efforts from Google Inc., Yahoo Inc., Microsoft Corp. and Craigslist Inc., which is 25% owned by eBay Inc. See featured IPO column.  via MarketWatch.

This is just a little spooky. I bet there are a bunch of people who are expecting the housing bubble to pop hard to saying I told you so to this news.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66%, up 0.05 percentage point from the previous week, and matching a four-year high touched two weeks ago. via USATODAY.com

 

 

 

 

While this is not surprising, it is a sign of things to come. With housing demand down and the interest rates up, mortgage activity is slowing down.  

U.S. mortgage applications fell last week, reflecting a decline in home refinancing loans as interest rates climbed, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 26 decreased 1.9 percent to 541.9 from the previous week’s 552.6.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66 percent, up 0.05 percentage point from the previous week, and matching a four-year high touched two weeks ago.via  MSNBC.com.

As the ARMs get broken and the interest only mortgages  turn venomous, a person who is facing bad times and owns a house can be in big trouble. There are a group that prey on homeowners who are facing foreclosure. They will search foreclosure reports and look for those that need to sell or lose whatever equity they have in the home.

And although I refer to these bottom feeders in not the most glowing terms, they do have a purpose. If the choice was to turn my home over to the bank or sell out to a shark, odds are the shark would win. Homeowners in the Northeast and West Coast who have appreciation in their homes but can not  pay their mortgage will be prime targets of these land sharks.

The slowdown in housing sales, after five years of frantic buying, has ended the party for many real-estate investors. But the cooler market is welcome news for a subset of investors — those who target homeowners facing foreclosure.

Most foreclosure investors run small, local operations, buying and reselling a handful of properties a year. Some are self-taught; others take courses touted on Web sites or in late-night TV ads. Invariably, they draw criticism from advocates for the poor, who accuse them of preying on the vulnerable.

“Our time has finally come!” proclaims a recent email advertisement from ForeclosureS.com, a Fair Oaks, Calif.-based company that markets training materials for would-be investors. A 90-minute telephone program promises to teach foreclosure specialists how to be a “white knight” and not “feel like a shark.”

More people are falling behind on their mortgages, according to the Mortgage Bankers Association. The percentage of loans on which payments are at least 30 days overdue rose to 4.7% in the fourth quarter of 2005 from 4.4% a year earlier. With interest rates rising, it’s harder for homeowners to refinance or sell quickly. via  the WSJ.com

The 9th Circuit Court has ruled that Quicken Loans violated state law in California by improperly overcharging on mortgage interest. The company according to the ruling may be required to repay millions of dollars to customers for mortgage interest that it charged illegally.

Quicken executives say they will look to appeal the case to the Supreme Court or ask California lawmakers to change the laws retroactively. That has to make you feel good that the company breaks the law and then wants to change the laws so they do not have to pay a penalty.

California law used to bar lenders from charging interest more than one day before mortgages were recorded in county offices, a process that could take weeks.
The law was changed in 2003 to let interest accrue one day before a lender disburses loan proceeds.
California, however, argued that Quicken had received interest payments that violated the earlier law. It sought refunds as far back as Oct. 14, 1999.
The appeals court panel rejected Quicken’s argument that the state statutes were pre-empted by federal law, and amounted to an unlawful taking that violated the U.S. Constitution.
Quicken said it made $500 million to $745 million of mortgage loans in California in 2001 and 2002, court papers show.

Stock Market News and Investment Information | Reuters.com.

The 50 Year Mortgage, a relatively new way to finance a home, has been seen on the marketplace as an antidote for those trying to find their way into a home loan with the high cost of housing. When one hears 50 year  mortgage, they immediately think that it is in the same category as the 15 or 30 year fixed rate mortgages that we hear about constantly. But au contraire real estate buyer, think again and think twice before getting into one of these hybrids.

The current 50-year deals are not fixed-rate for five full decades, but rather adjustable deals that carry their offered rate for just five or seven years — or which carry a balloon payment after 30 years — and which then could have the rate move up or down for decades to come.
Anthony Hsieh, president of LendingTree.com, said in a recent statement about the new 50-year deals that “mortgage lenders are getting craftier with their product offerings to get the attention of consumers.”
He did not say that consumers always benefit from that kind of creative thinking, and said in an interview that he doesn’t think 50-year mortgages will get much traction, in part because consumers may wake up to the idea that this is a deal borne more out of desperation than sound financial thinking.
“If a consumer looks at a 50-year mortgage as the only way to afford that home, to get into a hot real estate market or simply to afford the monthly payment in a refinance, they’re really not looking at the potential problems,” Hsieh says. “It’s a very small portion of the consumers who could use this the right way.”
The “right way” would involve using the longer amortization schedule to drop initial payments expecting that there will be a significant increase in income to cover any adjustment in mortgage rates or the costs of a refinance just a few years down the road. via the QCTimes.com

Recently I checked my FICO score. I was checking my credit report and they offered a FICO score  for only $7.95. What a deal, and I have to tell you I felt great when I saw the number as it was a good deal higher than I expected.

Then I saw this article over at the Miami Herald about how the credit agencies are selling fake FICO scores that can mislead a consumer that they are in better shape than they are.

A mortgage applicant says, ”Oh, I’ve already checked my credit score online.” Then the loan officer pulls the home buyer’s FICO score and finds that it’s 50 or 100 points lower than the generic credit score the applicant quoted.

”This is becoming a real problem — a lot of people simply don’t know the difference between FICO scores and other scores,” says Ginny Ferguson, immediate past chairperson of the National Association of Mortgage Brokers’ credit-scoring committee and co-owner of Heritage Valley Mortgage of Pleasanton, Calif. “They think it’s all the same.”

FICO scores, developed by Fair Isaac Corp., are the predominant credit measure used by the mortgage industry. The scores run from 300 to 850 and are used to predict a borrower’s likelihood of future nonpayment, with higher scores indicative of better creditworthiness. via the Miami Herald

If you are serious about checking your real FICO score, there is only one place to find it: Fair Issacs website, myfico.com. The site is not cheap, they charge 80 dollars a year for 2 reports and 11 dollars after that. But if you are looking to make a major purchase or looking to improve your credit, this is a good investment.