Smart Borrower Blog

Archive for September, 2007

Avoiding Subprime Mortgages

The Federal Reserve has been making attempts to inject liquidity into our stalled-out housing market. However that doesn’t really address an underlying problem–the subprime loans. Now that we've had our little scare involving subprime lending, a lot of people are wondering exactly what it is all about. A subprime lender is a lender who will loan money to borrowers who wouldn't otherwise qualify for a housing loan. You might be surprised to learn that the subprime lenders are often branches of the "regular" lending institutions—they just operate under a different name. Subprime lending account for $600 billion in loans last... more »

Countrywide Financial Hustles To Regain Footing

In the bleak sub-prime market, Countrywide Financial Corporation is struggling to keep a good grip on its financial holdings.   Already laying off over 12,000 employees, they are feeling the fallout of the problems the housing market has rendered.   Countrywide has all but eliminated risky sub-prime loans in an attempt to regain footing.   The company, established in 1969 by a two man startup has become the nation’s leading mortgage lender by deftly riding out housing boom-and-bust cycles.   Their closest competitors are Wells Fargo. What Has Countrywide Done To Survive? Countrywide has been forced to borrow billions of... more »

Fallout From The Sub-Prime Woes

I have written about the trickle down effect from the sub-prime issues this year.   On a blog such as Loan.com, these gloom and doom reportings seem a bit out of place for a company that makes it easy for the consumer to find an ethical lender and not fall into the trappings of a predatory market.   Lenders here are screened very carefully, and have a reputation to uphold that is very strict according to Loan.com’s ethical standards.   The fact remains that these things are happening in our nation today, and cannot be buried in the sand.... more »

FTC To Crack Down On Deceptive Lenders

 If you watch the evening news at all, you have seen segments featuring people that are facing foreclosure stating that they had no idea of the terms of their contracts with the lending institution.   I witnessed just one example on NBC Nightly News.   The lady said that at closing they just kept shoving more and more paperwork at her, asking her to sign.   Becoming frustrated with the process, she failed to read the documents thoroughly.   She now faces foreclosure on a loan that has reset and placed her in a position where she can no... more »

Housing Market Will Remain Weak

Alan Greenspan, who has been called the “greatest central banker of all time,” is the former chairman of the Federal Reserve. He left that position in 2006, and was replaced by Ben Bernanke. Greenspan’s interview with 60 Minutes is going to be aired on Sunday night. Ironically, his new book is coming out on Monday. Funny how the Big Guys can get free publicity from shows like 60 Minutes. Anyway, all of this is to say that during his term as head Fed, there were tons of loose and questionable lending practices going on in the mortgage world. These have... more »

Bi-weekly Mortgage Payments

So you want to build equity faster? Did you know simply making one extra mortgage payment per year will shave approximately six years off a 30 year mortgage and save you thousands of dollars in interest payments? One of the easiest ways consumers can quickly build equity is to set up a bi-weekly mortgage payment plan. Bi-weekly payments are when you pay your mortgage every two weeks instead of once per month. When you pay bi-weekly you are actually making an extra month's payment by the end of the year which will save you thousands of dollars in interest over... more »

Should You Refinance Your Home?

One question a lot of people are asking right now is whether to refinance their home. Even people who aren’t going to feel the mortgage crunch–at least not directly–are questioning whether the rates will change significantly. If you’re old enough to remember the early 80s, when interest rates were roughly double what they are now, you can understand why. I financed a property in 1986 to the tune of 11.5%, and if I’d waited 20 more hours I could have had the honor of a 12% loan. The Mortgage Banker’s Association saw an increase in the mortgage refinance index, from... more »

Will The Feds Cut Rates?

Top companies like Countrywide Financial and Hovnanian Enterprises Inc have done a good job of painting a dire view of the condition of the market.   They feel that if the Fed doesn’t bail out the economy with a rate cut, that the economy will worsen and bring turmoil to the market place.   You have to wonder if this is self serving or not.   Right now, the key overnight lending rate, known as the federal funds rate, stands at 5.25 percent. It has stood at this rate since last summer.   This follows on the heels of 17... more »

Countrywide Financial Cuts 12,000 Jobs

Countrywide Financial Corporation is slashing about 20% of its work force, or about 12,000 jobs.   The report on Yahoo! News says that Countrywide is concerned about soaring foreclosures and defaults, and needs to slash costs.   Countrywide feels that new mortgages will fall about 25% in 2008 from where it is today.   Countrywide Chief Executive Angelo Mozilo stated in a letter to employees that the current market cycle is “the most severe in the contemporary history of our industry.”   Mozilo also stated in the letter that “During the past two years the growth in home price appreciation... more »

US Regulators Examine Credit Rating Firms

My research for the Loan.com blog takes me in a lot of directions. I subscribe to several top newspapers, get Yahoo alerts, and use my unique talents for research to stay on top of the news in the mortgage market today. Because I am not a mortgage broker or have a lot of experience in the loan industry, I can only make my opinions known on the research I do. This is a good thing, because it means my thought process is not slanted towards any one camp. I can offer what I feel is unbiased information to our readership.... more »