Home Loan Modifications, Delinquencies, And Foreclosures Rose in The First Quarter
January 20th, 2010 by adminLenders and servicers were able to modify more troubled loans during the first quarter, according to a recently released government report, but the number of homeowners falling behind on their payments continued to increase as well, and at a faster pace.
The report by the Comptroller of the Currency and the Office of Thrift Supervision, the regulator for banks and thrifts across the country, stated that home loan modifications during the first quarter of 2009 jumped 55 percent from the last quarter of 2008 and 172 percent from the same quarter last year. The two agencies’ report represents data from 64 percent of outstanding first lien residential mortgages.
According to the report, most modifications decreased homeowners’ mortgage payments by lowering the interest rates and/or extending the maturity of the mortgages. Lenders and servicers are still reluctant to include principle reductions in loan modifications as witnessed by 1.8% of modifications that included a reduction. Principle reductions could increase dramatically since the passage in Congress of the Safe Harbor Bill in May. The bill gives loan servicers greater autonomy from mortgage investors in how they negotiate terms on home loan modifications, including principle reductions. It’s often been the case that the investors that own the mortgages prevent principle reductions from being granted.
The biggest negatives of the report were the disclosures that the number of delinquencies and foreclosure filings increased as well. Additionally, the number of seriously delinquent homeowners, who have missed at least two payments, is growing at an increasing rate as unemployment and reductions in pay are taking a toll on formerly solid borrowers. Post modification defaults also continued at high rates. “While I’m very concerned about the rise in delinquent mortgages and foreclosure actions, the shift in emphasis by servicers to more sustainable, payment-reducing modifications is a positive step that should show significant benefits in the coming months,” Comptroller of the Currency John C. Dugan said in a statement.
What stood out in the statistics is that the housing crisis is shifting away from risky borrowers in loans that were ticking time bombs to homeowners that have always been considered solid credit risks. The default and foreclosure rates in the risky subprime category are now being surpassed by those in the prime mortgage category. Prime borrowers, who are traditionally considered safer credit risks and compose the largest category of homeowners, are now falling behind on their payments faster as unemployment rises and home values drop.
The percentage of prime borrowers that have missed two payments on their mortgage rose 20.3 percent during the first quarter compared with the fourth quarter of 2008. It was up 163.7 percent compared with the same quarter a year ago. Prime borrowers make up approximately 67% of all U.S. mortgages. With 661,914 mortgages in serious delinquency up from approximately 250,000 in the same quarter of the previous year, industry watchers are wondering where the carnage will end in the category. In comparison, the percentage of subprime borrowers that were seriously delinquent rose only 1.5 percent during the first quarter. It was up 54.9 percent from the same period a year ago. As the first mortgage category to see massive numbers of defaults beginning in late 2006, most of the damage in the subprime category has already occurred, resulting in statistics that paint a relative level of stability.
The numbers reported by the Comptroller of the Currency and the Office of Thrift Supervision do not include any results from the Obama Administration’s “Making Home Affordable” plan due to its initiation at the end of the first quarter. The slow ramp up of the program has been a major concern for industry watchers, many of whom now think that the program by itself won’t have a major impact on the foreclosure crisis.
Sounding a more optimistic note, JP Morgan Chase announced that they had approved over 138,000 trial home loan modifications to date. A trial modification is one where the homeowner is granted lower payments for three months while a formal loan modification is finalized. The homeowner must stay current on payments for the three month trial period to see the modification through to its completion. JP Morgan Chase, through its purchase of Washington Mutual, is one of the largest lenders in the country.
“It has taken some time to put the resources in place to handle the extraordinary customer demand during this crisis, to incorporate each update to the administration’s Making Home Affordable Program, and then to properly evaluate each borrower’s situation,” Charlie Scharf, head of Retail Financial Services at JPMorgan Chase, said in a recent statement. “Over the last three months, we have made great improvements and we expect the numbers of approved modifications to continue to grow for some time.”
Another issue coming to light is that homeowners need assistance in navigating the loan modification process. The time needed, knowledge of the minutia in mortgage contract, and experience in negotiating terms for the most optimal outcome in a loan modification are proving to be beyond the purview of most homeowners. With foreclosure looming, it is becoming obvious that hiring legal counsel to negotiate new terms is the best single option for homeowners. With over 600 completed loan modifications, The Feldman Law Center has the experience to provide superior solutions tailored to the specifics of each homeowner’s needs. They can be reached at (800) 527 8497.
Author: Greg Feldman
Fabulous News for First Home Buyers
October 25th, 2009 by admin
What fabulous news for first home buyers, a whopping $21,000 towards deposit, expenses or even new furniture if you buy a brand new home before June 2009. So if you?re ready to take the plunge and sign up for what is likely to be the biggest commitment you?ve ever made, now, more than ever, seems to be the perfect time to get into the property market as a first home buyer. Even though your friends and family will be full of advice, as with any major decision in our lives, it?s always good to take their experiences and opinions on board, however your own research will give you peace of mind and assurance, before you sign up for the big purchase and possibly sign your life away to the mortgage company. Generally, most first home buyers already have an idea on the location and the type of home they want, so now it?s just a matter of finding out whether you can afford what you want to buy. Almost all the major banks and other lenders offer special packages with reduced application fees and lower interest specifically for First Home Buyers. With the help of some comprehensive search engines, shopping around not only for a home loan, but a property is almost as easy as 1 ? 2 ? 3, so jump on the internet and let your fingers do all the work for you. It?s important to remember that the bank can?t lend you all the money to buy your first home. As a first home buyer, at least a small part of your deposit will have to come from your own savings or alternatively a gift from your relatives. Once you find the right home loan, apply for a pre-approval. This can be done either online or in person. A pre-approval is the bank?s preliminary approval subject to an acceptable property. You will need to provide a completed application form along with requirements such as your identification, income evidence and savings (gift) verification. Once the bank is satisfied that you?re an acceptable first home buyer, they will issue a pre-approval and you can start shopping around for your first home.
So when and how do I apply for a First Home Owner Grant? The First Home Owner Grant is only available to Australian residents and citizens, so before you apply you should contact your state revenue office, alternatively visit their respective website for more information. If you satisfy all the first home buyer criteria and conditions, there are two ways you can apply for your first home owner grant. If you apply for your first home owner grant via your bank, you?re likely to receive the grant at settlement, so on the day you officially become a home owner. If you apply for the grant directly with the state revenue office, the grant is not likely to come through until after the settlement. The best way is to keep in regular contact with the lending manager of your chosen bank. Remember, they help first home buyers every day and are the best source of information and guidance, so don?t be afraid to call them if you have a question, after all, they?re here to help you.
The Australian Housing Affordability Crisis – Where Do First Home Buyers Stand?
October 22nd, 2009 by adminHousing affordability in Australia is reaching a crisis point with many individuals and families now finding the ?Australian dream? of owning their own home soundly out of reach. This has never been truer than for the first home buyer.
The average median house price in Australia is now around $412,000 a whopping 108% increase over the 1997 ? 2006 period with a corresponding 97% increase in the average home loan. It?s no wonder first home buyers are now contemplating a life time of renting.
The average first home buyer will now need to spend over 30% of their disposable income to service the minimum monthly repayments on a new home loan of around $2,332 a month. With rental prices for private housing rising sharply over the last couple of years the first home buyers capacity to save a deposit has been dramatically undermined and along with rising living costs the first home buyer is struggling.
The housing affordability crisis in Australia has come about because of a shortage of available housing and the excessive cost of raw land, long delays in planning approvals and the high cost of infrastructure to support community services. All of these factors are contributing to delays in residential construction.
A similar housing affordability crisis is occurring in the UK for first home buyers brought on by a prevalent housing shortage. The UK mortgage market has been pushing for longer fixed rate loan terms for periods up to 25 years as an immediate solution to ease the housing affordability crisis for first home buyers.
The impact on Australian First Home Buyers?
The emerging trend in Australia at the moment for first home buyers is a delay in home ownership with preference given to maintaining their lifestyle and being able to live in a suburb of their own choice rather than making sacrifices to purchase a home in a less desirable location. With rising debt, large deposit requirements and soaring house prices the first home buyer is opting to rent rather than face the uncertainty of being unable to meet the monthly loan repayments of a new mortgage.
Mortgage relief for the First Home Buyer?
Mortgage brokers like Altrust Finance, financial institutions and the Australian government are all working towards finding lending solutions to alleviate the current housing affordability crisis for first home buyers. Low doc loans and non conforming home loans are making it easier for families and individuals to own their own home. New shared equity schemes aimed at reducing the upfront costs of home ownership for the first home buyer as well as reducing loan repayments are emerging in the Australian mortgage market place. Non conforming loans, no deposit loans and family guarantee mortgages are all available to the first home buyer and are aimed at addressing the needs of the borrower. Australian mortgage brokers like Altrust Finance Group now have the flexibility to offer first home buyers a range of home loan options to beat the housing affordability crisis and purchase their first home.
It’s a Real Estate Boom for First Time Home Buyers
October 16th, 2009 by adminThe subprime mortgage real estate fiasco has created a glut of residential real estate in the real estate market. Foreclosures are on the rise and it doesn’t look like the end is in sight for at least another year. Thousands of home owners are losing their homes because adjustable mortgage rates have adjusted upward and caused increases of monthly mortgage payments so high that the affected home owners just can’t make the payments. It is inevitable, under these circumstances that many homes go into foreclosure and banks have to take them back.
While it is unfortunate that many home owners are losing their homes, the opposite and upside effect is that the real estate market is now a boom for the first time home buyer.
Mortgage interest rates are still low and banks and real estate lending institutions have 30-40 year fixed loans for home buyers. With home values in many areas around the country, such as California, plummeting anywhere from 30-50 percent of what they were a year ago, the market is wide open for buyers who have never owed a home and would like to do so now.
Lending institutions and sellers are very motivated now and are readily lending their ears to home buyers saying “lets make a deal” and deal they will. Here are some of the innovative and sensible ways home buyers can now acquire a home of their own when they are armed with some real estate homebuyer education.
1. Use government grants and loans for down payment assistance.
The federal government in 2003 established the American Dream Down Payment Act. This federal law has allocated $200 Million a year since 2003 to assist with arranging down payments for first time home buyers. This is a good indication of just how serious the government is about helping Americans make the American dream of home ownership come true.
Fannie Mae, one of the many federally supported programs for home buyers has programs such as the MyCommunity Fixed Rate Mortgage. This unique program is ideally suited for the first time home buyer. It provides for low down payment, high loan to value with broad flexibility, including nontraditional credit considerations allowing for the buyer to qualify for the loan. It also has special financial options to serve public servant professions such as teachers, police officers, firefighters and health care workers, and people with disabilities.100% financing is available with 30-40 year fixed rates. Check out the details at http://www.efannie.com.
These funds, in addition to other government funding sources, are made available through federal, state and local government agencies that provide down payment assistance to their citizens on a case by case basis.
Every major city and county has one of these programs. One need only exercise a little initiative and these funds can be acquired. Contact your local housing authority, city managers office or county administration department to find out about them and how to apply.
2. Use non-profit agency down payment assistance
Another little known, but long existing opportunity for first time home buyers to acquire help with down payment assistance is the numerous numbers of non-profit agencies around the country that provide free down payment assistance to home buyers. The Community Reinvestment Act of 1977, enacted by Congress in 1977 and revised in 1995, requires banks located within identified communities to make loans and reinvest the depositors’ deposits within that community.
For decades now and continuing into the future banks have been making huge amounts of funds available to invest in targeted communities. However, the availability of the funds was not publicized in a significant way and many people did not and still do not know about these funds. Many non-profit agencies became aware that they could help in the community revitalization effort by creating a means whereby the banks could channel the funds through various home assistance programs that non-profits created. The non-profits that specialize in this type of program have grown over the years. Some are very large and are nation wide such as the Nehemiah Corporation – www.nehemiahcorp.org.
They get funding from the banks via the Community Reinvestment Act and other funding sources and then provide for down payment assistance and other housing assistance to persons desiring to own a home.
One of the high points of these programs is that the funding is often times not limited to first time home buyers and certainly is not limited to only low income home buyers. This creates yet another source of down payment assistance for the prospective home buyer. Given the numerous avenues of funding to assist in buying a home and the present market swing in favor of home buyers, buyers are now firmly in the driver’s seat.
First Home Buyers Back in the Market in Australia
October 13th, 2009 by admin
All the signals are right if you are a first home buyer living in Australia. At no previous time has a first home buyer had access to a number of cash subsidies and savings that have resulted firstly from individual state government initiatives and secondly from initiative by the Federal Government to encourage first home buyers back into the market. By providing generous subsidies and grants it is hoped that more first home buyers will be out and about looking for a new home and this will provide the stimulus for increased construction activity in the home sector.
In NSW the state government introduced a New Home Buyers supplement Effective from 11 November 2008. Under this arrangement a NSW First Home Buyer who is purchasing a newly constructed home will receive a Supplement of $3,000.
This will be will be added to the existing $7,000 grant for eligible First Home Owner Grant applicants building a new home or buying a newly constructed home. For the time being, the $3,000 Supplement will only be available for 12 months (11 November 2008 to 10 November 2009 inclusive), at which time it will be reviewed in the context of the property market. One can probably assume that if the global crisis continues beyond November 09 then the first home buyer supplement will be extended for a further period.
This first home buyer supplement is on top of the $14,000 provided under the Commonwealth?s First Home Owner Boost scheme. This will give eligible First Home Owner Grant applicants i.e. first home buyers building a new home or buying a newly constructed home a total of $24,000 towards the cost of their new acquisition.
Effective from 1 July 2009 (still subject to Federal Government approval) the First Home Owner Grant and NSW New Home Buyers Supplement will be capped and only be available for properties valued up to $750,000. This is likely to include the majority of first home buyer purchases and is a terrific incentive for first home buyers to enter the market. Other Australian states also provide incentives at State level to first home buyers ? the Commonwealth ?boost? scheme obviously applies to all states and territories.
To date the most funding under the first home buyer schemes in NSW has gone to Liverpool ($98 million +), followed by Campbelltown ($70m +) Wentorthville (69m+) and Blacktown ($63m+). In NSW as at 8th January a total of $5 billion has been paid in subsidies and grants to first home buyers. These subsidies for first home buyers include:
First Time Home Buyer? Hip, Hip Hooray for Thda!
October 10th, 2009 by admin“In order to promote the production of more affordable new housing units for very low, low and moderate income individuals and families in the state, to promote the preservation and rehabilitation of existing housing units for such persons, and to bring greater stability to the residential construction industry and related industries so as to assure a steady flow of production of new housing units?”
Many times, people have heard of THDA and are confused, thinking that THDA is a certain loan type. In fact, it?s lending agency. All THDA mortgages must be insured by private mortgage insurance, FHA, VA or RECD And as these loans are intended for low to moderate income families or individuals, there is a income limit and acquisition cost limit. Also, you must be a first time homebuyer unless your home is in a targeted area.
Why is THDA so fantastic for a first time homebuyer? Well, it comes down to money. THDA offers a below market rate and will allow up to 100% financing. Have you been reading the papers lately? It?s not so easy to find 100% financing these days. Unless, that is, you?re a first time homebuyer. It also has programs that allow for down payment assistance via grants from certain approved agencies (if your loan type requires a down payment). If you have satisfactory credit and the home you wish to buy meets THDA?s standards, then you?re in business.
All THDA mortgages are 30 year fixed rate loans, so you needn?t worry about finding yourself with an ARM loan (adjustable rate mortgage) and a new payment you can?t afford in 3 years. And THDA allows lenders to only charge customers a standard 1% origination and .25% discount fee. It also closely monitors fees associated with the loan. THDA really looks out for the best interest of the first time homebuyer. If you are eligible for a THDA loan, you can feel pretty certain that an unscrupulous lender can?t take advantage of you because THDA won?t let them. For so many people, buying a home is pretty intimidating. THDA takes away the uncertainties a buyer faces with its guidelines and lending practices.
If you do apply for a THDA loan, be prepared to document your credit worthiness. THDA loans require slightly more documentation than your average loans because of the uniqueness of its product. In order to offer more, THDA asks for more ? ensuring you qualify for its pretty awesome program. Sounds like a fair trade, if you ask me.
What are the disadvantages of a THDA loan? Not many. They do have a federal recapture tax if you sell your home within the first nine years of owning it. But it sounds scarier than it really is. I?ve heard that only about 1% of THDA customers actually pay this tax. That?s because a bunch of really great things have to happen to you in order for it to actually apply to you. And if those great things happen to you, paying the recapture tax won?t matter much to you anyway. I?ve been in the business for 16 years and have only heard of one person actually having to pay one. He graduated from medical school and his income when through the roof. His property was sold above market value than for the area because it was adjacent to some property that a huge retailer wanted to purchase. Again, good things have to happen to pay the recapture tax. So, you shouldn?t be afraid of it.
More people need to hear about and take advantage of the THDA loan programs. It?s such a great product and really helps the community and the housing industry. If you?re a first time homebuyer or think you?re in a targeted area, make sure you ask about THDA to see if you would qualify for a loan. You won?t regret it!
Applying for Your First Home Mortgage? What You Need to Know
October 7th, 2009 by adminApplying for your first home mortgage at first might seem like an easy process simply because people buy and sell homes every day. However, buying a home is not like buying a new bike, and applying for a home mortgage can be a long and drawn out process requiring a lot of patience and fortitude. However, if you know what to expect up front the home mortgage process will be much easier and a lot less stressful. The following home mortgage tips will help you figure out how to best go about the home mortgage loan process for your situation.
Home Mortgage tip #1 Interest Rates Before applying for your first home mortgage loan you will want to shop around and see what average home mortgage loan rates are. Shopping for home mortgage rates online is a timesaver and frequently have lower rates as well. Your home mortgage rate will affect how much money you have to pay back over the term of the loan, so the lower the better.
Home Mortgage Tip #2 Fixed or Variable Interest Rate When it comes to your home mortgage loan there are more options than just a loan you pay back over a set amount of years. You can choose different home mortgage interest rates that work best for your current and future situations. So, before you apply for a home mortgage loan do some research on variable and fixed interest rates to find what will work best for you.
Home Mortgage Tip #3 Down Payment When applying for a home mortgage loan for the first time you might not be aware of the general down payment you will be required to make. Many times a home mortgage loan requires between 10 and 20% of the price of the home, but if you have good credit sometimes you can make a lower down payment and still get a good deal on your home mortgage. This depends on the home mortgage lender, so shop around.
