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President Pardons Mortgage Scammer: A Trend?

March 29th, 2008

In keeping with lame duck Presidential tradition, George W. Bush recently pardoned a number of convicted criminals including Timothy Alfred Thone, who was convicted of making a false statement to the US Department of Housing and Urban Development (HUD) to get a mortgage loan. During the past year, several federal indictments have been made including multiple counts connected with various types of mortgage fraud including house flipping schemes, “straw” buyers, and fraudulent mortgage applications for FHA/HUD mortgages.

Will Bush pardon more mortgage scammers? Will he encourage current and potential mortgage fraud by pardoning more criminals who’ve helped bring the mortgage industry to its knees, while cronies such as John Mc Cain continue to blame homeowners for the mortgage mess? Stay tuned, folks.

Backward and Forward

March 27th, 2008

30-year mortgage rates settled in below 6.0% for the second consecutive week, amid continued discussion of how much the economy would slow:

  • The latest GDP estimate indicated that the U.S. economy slowed to nearly a standstill in the final quarter of 2007.
  • Housing prices continued to slide, with year-over-year declines now reaching double digits.
  • Meanwhile, President George W. Bush reminded Americans that help may be on the way, in the form of tax rebate checks that are due to start arriving in May.

When considering what to make of all these reports, mortgage shoppers would do well to minimize discussions of the past and the future, and focus on the status of the here and now. In that light, there are concrete indications that this is a good time to act.

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California Moves to Provide Tax Break for Troubled Homeowners

March 26th, 2008

California legislators are in the process of approving a bill that would provide state tax relief for eligible homeowners who’ve had debt forgiven by mortgage lenders through relief provisions including mortgage modifications and short sales. This is another step toward cleaning up the mortgage mess; If homeowners facing the loss of their homes can also expect to lose their shirts paying taxes, what’s their incentive for staying in their homes and cooperating with lenders?  No one wants more people to walk away from homes they can’t sell, or mortgages they can’t pay.

The bill, which has been unanimously passed by California’s state Senate, is now in the hands of the state Assembly. It’s important to note that tax relief would be available only to owner-occupants.

Can’t Make Mortgage Payments? Beware the Scammers

March 24th, 2008

It’s great that community services agencies, the government, and some lenders are working with homeowners who are having problems making their mortgage payments, or refinancing mortgages they can’t afford. Unfortunately, the scam artists are out to make a from borrowers facing foreclosure.

Foreclosure proceedings are a matter of public record. Scammers can get your name and property address from these records. Yes, folks, there are people who will send offers of quick help, no money required “solutions,” and they may also offer to pay you to stay in your home. These kinds of schemes can result in losing your home, your money, and your credit rating. Don’t get involved in any deal that seems too good to be true; it probably is!

Fixing the Mortgage Mess One Home at a Time

March 21st, 2008

Well-intentioned community agencies are hitting a brick wall as they try to re-work subprime and other mortgages threatened by foreclosure. Mortgage counseling programs are not getting much cooperation from mortgage lenders. Oops, make that mortgage holders. Gone are the days when you could buy a home and your local bank held the mortgage. Nowadays, mortgage loans are promptly packaged and sold to obscure entities that often have legal agreements preventing mortgage servicers from changing the terms of mortgages sold into the secondary market.

Is Wall Street the only street that matters when it comes to owning a home? Does the entire US economy have to tank before the broken mortgage industry is fixed?

A Good Week (!) For Mortgage Markets

March 20th, 2008

While the action of the Federal Reserve to lower its rate to 2.25% grabbed the headlines, a little further behind the scenes were several positive indications for the mortgage markets:

As much as the regulatory actions indicate a desire to ease the mortgage crisis and stimulate the economy, it is the financial market developments that could indicate a fundamental improvement in conditions on the way.

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Mortgage Industry Cash Infusion: Good News or Bad?

March 19th, 2008

Reducing capital requirements on lending giants Freddie Mac and Fannie Mae from 30% to 20% could provide an additional $200 billion to the ailing mortgage industry. These funds can be used for refinancing sub-prime loans and for making mortgage loans according to Freddie and Fannie’s recently increased loan limits.

On the surface, this is great news, as anything that boosts the depressed housing market could be good for the US economy. On the other hand, let’s proceed carefully and avoid taking on excessive risk. Responsible approval of mortgage applications is essential to cleaning up the meltdown mess and stabilizing the housing market

News Flash: Federal Reserve Makes Dramatic Interest Rate Cut (Again)

March 18th, 2008

In the latest move to both stabilize financial markets and shore up a flagging economy, Ben Bernanke and the Federal Reserve took dramatic action on March 18th, cutting interest rates by 0.75%.

This move is part of a growing patchwork quilt of government economic initiatives which have emerged since year-end. That quilt includes:

  • Three separate Federal Reserve rate cuts
  • A sweeping tax rebate program
  • Extraordinary measures to provide liquidity to financial institutions

The maddening thing about economic policy moves is that it will take months to know how they will pan out. However, while Washington and the heartland wait to see what the results of these stimulative measures will be, one group that should not be waiting is mortgage shoppers. For anyone looking to refinance, and especially for prospective home buyers, the best time to act might be the present.

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Federal Funds Rate, Federal Discount Rate, Prime Rate - what’s the difference?

March 17th, 2008

With all of the recent news regarding the Fed cutting rate, the Fed’s anticipated rate cut on March 18th, 2008 and some rates going up, it may be difficult to keep track of which rate we are all taking about. The Fed and the economic headlines often use the word “rate” to refer to a variety of interest rates that help steer the economy and provide liquidity to the credit market.

In most cases, whenever one uses the word “rate” and the Fed in a single sentence, they are usually referring to the Federal Funds Rate. Read the rest of this entry »

It’s Time to Help Homeowners and Investors

March 17th, 2008

The latest government mortgage assistance proposal, dubbed Help Now, would allow the government to buy defaulted mortgages at a discount. Mortgage servicing companies could then eliminate problematic mortgage terms and also reduce mortgage balances and interest rates. The modified mortgage loans would then be resold in the secondary mortgage market.  The demise of Bear Stearns strongly suggests that Help Now could effectively assist in stabilizing questionable mortgages that are causing untold financial grief for homeowners and investors alike.

Ignoring the needs of homeowners in favor of investor interests hasn’t worked. Let’s do something that can help homeowners and investors recover.