LENDERS TO HALT FORECLOSURE EVICTIONS OVER THE HOLIDAYS
Fannie Mae and Freddie Mac will suspend foreclosure evictions from December 19, 2009 through January 3, 2010. To help struggling families over the holidays, both owner-occupants and tenants living in properties foreclosed upon by Fannie Mae will not be evicted. Freddie Mac's suspension of evictions will be limited to properties up to four units.
In a similar move, Citigroup Inc. will suspend foreclosure sales and evictions for 30days through January 17, 2010 for loans it owns. Citigroup's foreclosure moratorium, however, does not extend to loans it services on behalf of other investors. Given these developments, other lenders may follow suit, so check with the lender if appropriate.
Showing posts with label home loans. Show all posts
Showing posts with label home loans. Show all posts
Friday, December 18, 2009
Thursday, June 4, 2009
Lender Checklist: What You Need for a Mortgage
Lender Checklist: What You Need for a Mortgage
Source: REALTOR Magazine
Source: REALTOR Magazine
- W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for everyperson signing the loan.
- Copies of at least one pay stub for each person signing the loan.
- Account numbers of all your credit cards and the amounts for any outstanding balances.
- Copies of two to four months of bank or credit union statements for both checking and savingsaccounts.
- Lender, loan number, and amount owed on other installment loans, such as student loans andcar loans.
- Addresses where you’ve lived for the last five to seven years, with names of landlords ifappropriate.
- Copies of brokerage account statements for two to four months, as well as a list of any other major assets ofvalue, such as a boat, RV, or stocks or bonds not held in a brokerage account.
- Copies of your most recent 401(k) or other retirement account statement.
- Documentation to verify additional income, such as child support or a pension.
- Copies of personal tax forms for the last two to three years.
Tuesday, March 3, 2009
By the Numbers: Amortize This
Source: Cirios Trends,Volume 1, Issue 2
March 2, 2009;
By the Numbers: Amortize This
When you go to get a loan and the banker starts yammering on about amortization schedules, listen.
While amortization choices have shrunk in the last few years as exotic lending has all but disappeared, there are still important decisions to be made on this front.
Amortization is the process by which you pay back your loan through regular payments. Most 30-year, fixed rate mortgages are fully amortized, meaning that on Day 1, your loan payment is calculated and stays the same for the life of the loan.
The formula to calculate this monthly payment is simple: Ok, maybe its not so simple, but the point is that there’s a standard way of calculating your payment that depends on only 3 variables:
A = Your monthly payment P = The principle amount (the amount you borrowed) n = The number of periods on your loan (for most loans, a period is a month), and r = Your interest rate (per period, expressed as a decimal).
For example, a $400,000 loan at 6.0% amortized over 30 years would work out to a monthly payment of $2,398.20. If you pay this amount every month for 360 months, you’re free and clear, having paid all interest and principle due the bank.
Over the life of our example loan, the portion of your payment that goes towards interest versus principle varies over time. In your first payment, $2,000 (83%) goes towards interest. At ten years, that drops to 70%. Twenty years, 45%. Your last payment is 99.5% principle.
An interesting consequence of this aspect of mortgages is that by making larger payments up front, you can make a huge difference to your personal bottom line.
If you tack on an extra $200 to each of your first 12 payments, every dollar goes towards reducing your principle balance. After 30 years, you save $13,000 in interest costs and finish paying the loan off 6 months early.
Perhaps more importantly (since not everyone holds onto their mortgage the entire 30 years), the day you pay down that extra $200 in principal, you begin to reduce your interest expense. It’s like putting money into a savings account earning 6.0%.
On top of that, each extra payment you make reduces the amount you owe the following month: So as long as you continue to make payments regularly, you’re ahead of schedule. In our $200-a-month example you are $2400, or one full payment ahead after just 1 year.
If down the road you have some unforeseen expenses and need to skip a payment, no problem, you won’t be considered delinquent.
And the kicker: Because your principle balance was reduced for the entire time you were ahead, more of your payments went towards principle each month, further reducing your principle balance. In our example, if you skipped a payment at the beginning of year five, you would still owe $750 less in principal then you would if you hadn’t gotten ahead of the curve.
Link: www.ciriosre.com
March 2, 2009;
By the Numbers: Amortize This
When you go to get a loan and the banker starts yammering on about amortization schedules, listen.
While amortization choices have shrunk in the last few years as exotic lending has all but disappeared, there are still important decisions to be made on this front.
Amortization is the process by which you pay back your loan through regular payments. Most 30-year, fixed rate mortgages are fully amortized, meaning that on Day 1, your loan payment is calculated and stays the same for the life of the loan.
The formula to calculate this monthly payment is simple: Ok, maybe its not so simple, but the point is that there’s a standard way of calculating your payment that depends on only 3 variables:
A = Your monthly payment P = The principle amount (the amount you borrowed) n = The number of periods on your loan (for most loans, a period is a month), and r = Your interest rate (per period, expressed as a decimal).
For example, a $400,000 loan at 6.0% amortized over 30 years would work out to a monthly payment of $2,398.20. If you pay this amount every month for 360 months, you’re free and clear, having paid all interest and principle due the bank.
Over the life of our example loan, the portion of your payment that goes towards interest versus principle varies over time. In your first payment, $2,000 (83%) goes towards interest. At ten years, that drops to 70%. Twenty years, 45%. Your last payment is 99.5% principle.
An interesting consequence of this aspect of mortgages is that by making larger payments up front, you can make a huge difference to your personal bottom line.
If you tack on an extra $200 to each of your first 12 payments, every dollar goes towards reducing your principle balance. After 30 years, you save $13,000 in interest costs and finish paying the loan off 6 months early.
Perhaps more importantly (since not everyone holds onto their mortgage the entire 30 years), the day you pay down that extra $200 in principal, you begin to reduce your interest expense. It’s like putting money into a savings account earning 6.0%.
On top of that, each extra payment you make reduces the amount you owe the following month: So as long as you continue to make payments regularly, you’re ahead of schedule. In our $200-a-month example you are $2400, or one full payment ahead after just 1 year.
If down the road you have some unforeseen expenses and need to skip a payment, no problem, you won’t be considered delinquent.
And the kicker: Because your principle balance was reduced for the entire time you were ahead, more of your payments went towards principle each month, further reducing your principle balance. In our example, if you skipped a payment at the beginning of year five, you would still owe $750 less in principal then you would if you hadn’t gotten ahead of the curve.
Link: www.ciriosre.com
Wednesday, January 7, 2009
Mortgage Rates are Low, but Loans are Difficult to Get
By Pete Carey
Mercury News
Posted: 01/06/2009 06:07:52 PM PST
Valley saw surge in foreclosure filings in 2008 Mortgage rates are at their lowest level in decades, but thousands of Silicon Valley residents are discovering that qualifying for a loan is tougher than it has been in years.
Banks are reluctant to lend at favorable rates to all but the most bulletproof of borrowers, according to area mortgage brokers. Unless you have a gold-plated credit score, low credit-card debt and a big down payment or a lot of equity, those rates of 5 percent or less on a 30-year fixed-rate mortgage may be out of reach.
Adding to the difficulty for many people hoping to refinance loans taken out in the past few years is that the collapse in home values has eroded their equity so much that they don't qualify for a new loan.
"It's like cable TV — there's 200 options and nothing worth watching," said Andy DelGesso, a hospital department manager who failed to qualify to refinance his loan on his San Ramon home because his equity had declined to less than 20 percent of its value.
"We were all spoiled the last few years when it was so easy to qualify," said Patrick Dudum, area sales manager for Equitas Capital in Los Gatos. "Relative to 2004 it is difficult, but if you have followed the market for any length of time, this is a normal market."
A couple of years ago, you wouldn't have needed much of a down payment. These days, to get the absolute lowest rate, it's likely you will need a big down payment and a credit score of 720 or above, and be able to document your income. Banks don't want to see much credit-card debt, either. They say much depends on individual circumstances, with no two borrowers exactly alike.
In any case, government actions to revive the housing market appear to be bearing fruit, even as the lending industry has returned to the tighter standards that prevailed before the housing bubble.
There are still loans for those who don't meet those requirements, but they cost more and carry higher interest rates. "The credit is available, it's just not as favorable," said Keith Gumbinger of HSH Associates, a New Jersey firm that tracks loan rates. A person with a 620 credit score putting less than 20 percent down "could be looking at 6.5 percent or more," he said. (Credit is rated on a scale of about 300 to 850 in a system known as FICO.)
"It's more back to the basics,'' said Cathy Warshawsky, president of the Silicon Valley chapter of the California Association of Mortgage Brokers. Warshawsky said people who have less than 20 percent equity or who are trying to take cash out in a refinance are being told they need to buy mortgage insurance. Also, loans above $417,000 but below $625,500 — Fannie Mae's limit on so-called "jumbo" loans that meet its standards — still cost half to three-quarters of a percent more in interest.
"Standards across the country absolutely have tightened," said Arlene Allert, a Wells Fargo Home Mortgage retail regional sales manager responsible for the Bay Area. She said Wells already had tight standards, so it hasn't had to change them as much as others have. But the biggest hang-up for refinancing is the decline in home values, Warshawsky said.
Jerry McClain of S&L Home Loans in San Jose, who is hospital department manager DelGesso's broker, said he's seeing lots of people who have perfect payment histories, good credit scores, stable income and low credit-card debt being turned down because their equity isn't enough to satisfy lenders.
"In the Bay Area, we not only have microclimates, we have micro-neighborhoods," McClain said. Some areas have lost value dramatically, while others are at least holding their own. If you aren't in one of those areas, unless you have a great deal of equity, you're having a rough time getting a loan.
The banks are demanding tougher appraisals, too. "Everything has to be explained in greater detail," said appraiser Greg Walker of San Jose. "Every appraisal I do, we look at what's happened in that neighborhood over the past year, and everything's declined over the past year with the exception of a few neighborhoods."
Among the stable areas, Walker said, are Los Gatos, Cupertino (within the Cupertino school district), Sunnyvale and the Almaden area of San Jose. East San Jose is down 38 percent to 50 percent, depending on the neighborhood, he said.
But if you qualify for a loan, the rates are truly great, the best in a generation.
So, despite the stricter standards, first-time buyers are beginning to snap up homes — still mainly foreclosures and short sales — tempted by the unique combination of lower prices and low interest rates. They're the people who sat on the sideline during the boom, saving money for a first home.
"I've been stoked about this market for the last three months," said Dudum of Equitas. "The government is going to throw everything in their power at this problem to fix it. We're going reap the benefits. We're going see a boom in the next 24 months, and the last one will pale in comparison."
Mercury News
Posted: 01/06/2009 06:07:52 PM PST
Valley saw surge in foreclosure filings in 2008 Mortgage rates are at their lowest level in decades, but thousands of Silicon Valley residents are discovering that qualifying for a loan is tougher than it has been in years.
Banks are reluctant to lend at favorable rates to all but the most bulletproof of borrowers, according to area mortgage brokers. Unless you have a gold-plated credit score, low credit-card debt and a big down payment or a lot of equity, those rates of 5 percent or less on a 30-year fixed-rate mortgage may be out of reach.
Adding to the difficulty for many people hoping to refinance loans taken out in the past few years is that the collapse in home values has eroded their equity so much that they don't qualify for a new loan.
"It's like cable TV — there's 200 options and nothing worth watching," said Andy DelGesso, a hospital department manager who failed to qualify to refinance his loan on his San Ramon home because his equity had declined to less than 20 percent of its value.
"We were all spoiled the last few years when it was so easy to qualify," said Patrick Dudum, area sales manager for Equitas Capital in Los Gatos. "Relative to 2004 it is difficult, but if you have followed the market for any length of time, this is a normal market."
A couple of years ago, you wouldn't have needed much of a down payment. These days, to get the absolute lowest rate, it's likely you will need a big down payment and a credit score of 720 or above, and be able to document your income. Banks don't want to see much credit-card debt, either. They say much depends on individual circumstances, with no two borrowers exactly alike.
In any case, government actions to revive the housing market appear to be bearing fruit, even as the lending industry has returned to the tighter standards that prevailed before the housing bubble.
There are still loans for those who don't meet those requirements, but they cost more and carry higher interest rates. "The credit is available, it's just not as favorable," said Keith Gumbinger of HSH Associates, a New Jersey firm that tracks loan rates. A person with a 620 credit score putting less than 20 percent down "could be looking at 6.5 percent or more," he said. (Credit is rated on a scale of about 300 to 850 in a system known as FICO.)
"It's more back to the basics,'' said Cathy Warshawsky, president of the Silicon Valley chapter of the California Association of Mortgage Brokers. Warshawsky said people who have less than 20 percent equity or who are trying to take cash out in a refinance are being told they need to buy mortgage insurance. Also, loans above $417,000 but below $625,500 — Fannie Mae's limit on so-called "jumbo" loans that meet its standards — still cost half to three-quarters of a percent more in interest.
"Standards across the country absolutely have tightened," said Arlene Allert, a Wells Fargo Home Mortgage retail regional sales manager responsible for the Bay Area. She said Wells already had tight standards, so it hasn't had to change them as much as others have. But the biggest hang-up for refinancing is the decline in home values, Warshawsky said.
Jerry McClain of S&L Home Loans in San Jose, who is hospital department manager DelGesso's broker, said he's seeing lots of people who have perfect payment histories, good credit scores, stable income and low credit-card debt being turned down because their equity isn't enough to satisfy lenders.
"In the Bay Area, we not only have microclimates, we have micro-neighborhoods," McClain said. Some areas have lost value dramatically, while others are at least holding their own. If you aren't in one of those areas, unless you have a great deal of equity, you're having a rough time getting a loan.
The banks are demanding tougher appraisals, too. "Everything has to be explained in greater detail," said appraiser Greg Walker of San Jose. "Every appraisal I do, we look at what's happened in that neighborhood over the past year, and everything's declined over the past year with the exception of a few neighborhoods."
Among the stable areas, Walker said, are Los Gatos, Cupertino (within the Cupertino school district), Sunnyvale and the Almaden area of San Jose. East San Jose is down 38 percent to 50 percent, depending on the neighborhood, he said.
But if you qualify for a loan, the rates are truly great, the best in a generation.
So, despite the stricter standards, first-time buyers are beginning to snap up homes — still mainly foreclosures and short sales — tempted by the unique combination of lower prices and low interest rates. They're the people who sat on the sideline during the boom, saving money for a first home.
"I've been stoked about this market for the last three months," said Dudum of Equitas. "The government is going to throw everything in their power at this problem to fix it. We're going reap the benefits. We're going see a boom in the next 24 months, and the last one will pale in comparison."
Monday, December 22, 2008
Mortgage Activity Surges at US Banks
By Saskia Scholtes in New York
Published: December 22 2008 19:37 | Last updated: December 22 2008 19:37
US banks are having trouble handling a surge of mortgage applications spurred by dramatically lower interest rates, after record loan defaults and thousands of job cuts have stretched mortgage industry resources to the limit.
Applications for home loans more than doubled in the two weeks after the Federal Reserve said it would buy mortgage bonds to help stabilise the market, prompting mortgage rates to fall by more than three-quarters of a percentage point.
EDITOR’S CHOICE
In depth: Global financial crisis - Nov-11In depth: US banks - Nov-22In depth: US downturn - Dec-05With average rates for a 30-year, fixed-rate mortgage now at about 5.2 per cent, growing numbers of borrowers have an incentive to refinance to bring down their mortgage costs.
However, tighter underwriting standards for prospective borrowers, combined with funding and staffing difficulties for mortgage originators, are likely to restrict the supply of new mortgages.
“The mortgage industry is collectively unprepared to deal with a cascade of business; staffs were pared to the bone as the market for mortgages shrank over the past year,” analysts at HSH Associates wrote in a note to clients.
Mahesh Swaminathan, mortgage analyst at Credit Suisse, said that as a result, lower rates would not necessarily create a wave of mortgage refinancing on the scale that was seen in 2003, when credit markets were healthy.
“There is a lot of pipeline congestion. Originators don’t have the staffing or the credit lines to fund a lot of loans,” said Mr Swaminathan. “You have more due diligence which requires more staffing. It is not something that can be changed overnight.”
Part of the problem is that banks have directed the bulk of their manpower toward their servicing arms in an attempt to stem the tide of mortgage defaults and foreclosures.
While banks have pledged to use capital they have received from the US Treasury to boost consumer lending, they are also under intense political pressure to modify loan terms for struggling borrowers as a matter of urgency.
Loan modifications have continued to grow more quickly than other strategies such as subsidy programmes or refinancing into government loans, according to the Office of the Comptroller of the Currency.
The number of new loan modifications grew 16 per cent in the third quarter to more than 133,000, said the OCC. The rate of loan modification is likely to be even higher in fourth-quarter data, say analysts, as a result of recent initiatives by Fannie Mae and Freddie Mac, the two large mortgage financiers, as well as private sector loan modification schemes.
However, modified loans can still require substantial servicing resources, as more than 55 per cent of modified loans fall back into default in the first six months, according to the OCC.
Additional reporting by Nicole Bullock in New York
Copyright The Financial Times Limited 2008
Published: December 22 2008 19:37 | Last updated: December 22 2008 19:37
US banks are having trouble handling a surge of mortgage applications spurred by dramatically lower interest rates, after record loan defaults and thousands of job cuts have stretched mortgage industry resources to the limit.
Applications for home loans more than doubled in the two weeks after the Federal Reserve said it would buy mortgage bonds to help stabilise the market, prompting mortgage rates to fall by more than three-quarters of a percentage point.
EDITOR’S CHOICE
In depth: Global financial crisis - Nov-11In depth: US banks - Nov-22In depth: US downturn - Dec-05With average rates for a 30-year, fixed-rate mortgage now at about 5.2 per cent, growing numbers of borrowers have an incentive to refinance to bring down their mortgage costs.
However, tighter underwriting standards for prospective borrowers, combined with funding and staffing difficulties for mortgage originators, are likely to restrict the supply of new mortgages.
“The mortgage industry is collectively unprepared to deal with a cascade of business; staffs were pared to the bone as the market for mortgages shrank over the past year,” analysts at HSH Associates wrote in a note to clients.
Mahesh Swaminathan, mortgage analyst at Credit Suisse, said that as a result, lower rates would not necessarily create a wave of mortgage refinancing on the scale that was seen in 2003, when credit markets were healthy.
“There is a lot of pipeline congestion. Originators don’t have the staffing or the credit lines to fund a lot of loans,” said Mr Swaminathan. “You have more due diligence which requires more staffing. It is not something that can be changed overnight.”
Part of the problem is that banks have directed the bulk of their manpower toward their servicing arms in an attempt to stem the tide of mortgage defaults and foreclosures.
While banks have pledged to use capital they have received from the US Treasury to boost consumer lending, they are also under intense political pressure to modify loan terms for struggling borrowers as a matter of urgency.
Loan modifications have continued to grow more quickly than other strategies such as subsidy programmes or refinancing into government loans, according to the Office of the Comptroller of the Currency.
The number of new loan modifications grew 16 per cent in the third quarter to more than 133,000, said the OCC. The rate of loan modification is likely to be even higher in fourth-quarter data, say analysts, as a result of recent initiatives by Fannie Mae and Freddie Mac, the two large mortgage financiers, as well as private sector loan modification schemes.
However, modified loans can still require substantial servicing resources, as more than 55 per cent of modified loans fall back into default in the first six months, according to the OCC.
Additional reporting by Nicole Bullock in New York
Copyright The Financial Times Limited 2008
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