Archive for the ‘Interest Rates’ Category

The Not So Perfect Storm

Tuesday, March 16th, 2010

This blog author still has a key chain that reads “Captain’s Stateroom — SS Titanic” given to him in a going away party a good while back when he was leaving Federal employment.

Roll time forward and the analogy to sinking cruise ships may be a current day fit, as the Fed’s continue to pursue their “QE2″ program. (the Fed’s “Quantitative Easing” program and the cruise ship “Queen Elizabeth 2″ seems to be an obvious allegory).

The author has taken to the sidelines and a lifeboat as the mortgage industry continues to flounder. That’s a poetic way of saying I’ve let my mortgage broker license go inactive. It just isn’t fun anymore putting on a happy face that low interest mortgage money is abundant and is readily available for submitting an application, when the reality is pretty much the opposite for most borrowers.

Loan originators, as mortgage brokers are now called, are generally able to offer the current under 3.99/4.25 rates on agency conforming loan amounts primarily to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs.

Except for government employees, whose credit hasn’t been dinged by the economic events of the past few years ? Whose credit score is still above the 740 high water mark?

And if your credit score has miraculously floated like burning oil on the churned up seas, whose mortgage isn’t at least partly underwater ? I have friends whose HELOC’s (home equity lines of credit) have been trimmed back severely in this period of reduced home equities.

Then to add insult to injury, if the terms of your loan application trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will most likely be higher.

Bottom line : if you do not fall into the “perfect borrower” category, batten down your hatches and stand by for the “perfect storm”. And prepare to get wet.

Loan originators find themselves shouting into the wind in this kind of economic weather, and at least this originator doesn’t find that to be productive, fruitful, or helpful to potential clients. A “perfect borrower” should be able to go into their local credit union and do just fine.

I’ll continue to post here and on my twitter blog “a1mortgageinfo” with opinion and information that I think cuts thru the chase and tries to make sense of it all.

I continue to be a strong advocate of the Reverse Mortgage Program for qualifying seniors.

Hang in there … keep your life vest inflated … and hopefully we’ll all wind up having stayed the course !

Walk Away (Renee) … an old song … now a new financial survival tactic ?

Saturday, January 9th, 2010

I’ve previously blogged in favor of toughing it out and not walking away from your  upside down/underwater mortgage  if you could afford to maintain your payment.   Been there, done that.  In my scenario, it was a hurricane that drove prices down for about five years, but they did come back to original levels and more.

An article in New York Times Magazine in the last few days somewhat said for some it was o.k. to abandon their mortgage commitment. I posted a good bit of that article yesterday because I agree  that everyone is unfairly putting this decision burden entirely on the shoulders of the Borrower. If Lenders have been given a big slice of the Stimulus Package Pie, why can’t they meet Borrowers half way or more, and modify their mortgages, specifically lower their interest rates ?

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Lenders Should Help You … Not … Walk Away From Your Mortgage

Friday, January 8th, 2010

The excerpts below are quoted from :

“Walk Away From Your Mortgage”
By Roger Lowenstein
Contributing writer for the New York Times Magazine
Published:  January 7, 2010

Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work.  But the housing collapse left 10.7 million families owing more than their homes are worth.  So some of them are making a calculated decision to hang onto their money and let their homes go.  Is this irresponsible?

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Market Commentary – 10 Surprises for 2010

Tuesday, January 5th, 2010

I don’t know if this entire commentary has a place here, perhaps only parts of it, but for now I’m going to post it for no other reason than to archive it and refer to it from time to time as 2010 unfolds.

Mr. Wien reviews his predictions for 2009 and how they fared, in addition to laying out 10 new ones for 2010.   As he himself writes “everyone keeps score on everything”  so time as always will reveal the clarity of Mr. Wien’s crystal ball and researched opinion.

Market Commentary by Byron Wien of the Blackstone Group

Fed to Maintain Low Interest Rates into 2010

Monday, November 9th, 2009

The Federal Reserve could remove some of the extraordinary support it has extended to the U.S. economy once the recovery looks solid and monthly job growth has returned.   St. Louis Federal Reserve Bank President James Bullard said he would not favor tightening monetary policy before recovery was well-established.

The central bank, wary of undercutting the fragile recovery by withdrawing its support too soon, is also on guard for any indication that its emergency lending efforts are fueling an unwelcome bout of inflation as the economy heals.

The Fed cut the benchmark the federal funds rate to near zero last December and put in place a vast array of emergency liquidity facilities in an effort to combat the worst financial crisis and recession since the 1930s.

As part of its emergency efforts, it has bought long-term government and mortgage-related debt to try to drive down borrowing costs.

The central bank has pledged to keep interest rates extraordinarily low for “an extended period”. Most analysts expect it to hold rates near zero until mid-2010 or later.

Source :  cnbc.com