Smart Borrower Blog

Archive for October, 2007

What Is In the News?

I have spent a better part of the day sifting through the news to try to bring something worthwhile to the blog this weekend.   As I post every weekend, it sometimes gets a bit hard to find anything besides news that is not so good.   Today I will recap the things I have been seeing. News from the Treasury Secretary Secretary of The Treasury Henry M. Paulson, Jr. reports that housing starts are off more than 40 percent from the peak of 2.3 million units in early 2006. Employment in residential building, including specialty trade contractors, has dropped... more »

The Other People Involved

Buying a home is a complicated transaction.   Consumers are often overwhelmed with the decisions and implications.   It is not as easy as it looks on HGTV!   The process has a number of professionals involved whose job is to ensure that the transaction goes smoothly and various interests are protected.   It is in your best interest to know whose these other people are and what their roles are in the process of your home purchase. Mortgage Broker/Banker (Loan Originator):   They provide the money to purchase the home.   Unless you are independently wealthy, you will need... more »

Preparing to Buy your First Home

When deciding to purchase a home, you should not sign any documents unless you are confident that you are able to make the mortgage payments and pay for all the other related costs. Many people only consider the monthly mortgage payment, and are surprised at the "real" costs of home ownership. The hidden costs—which are not hidden at all, but perhaps obscured by our enthusiasm– include the down payment and closing costs, as well as "settling in costs"—things like buying new appliances or repairing those that are already in the home. The down payment could be as little as three... more »

Michigan Fights Foreclosures

Michigan is taking aim at foreclosures and is fighting to help people stay in their homes.   The financial picture in Michigan is not good, with the nation’s highest unemployment rate. According to the real estate information company RealtyTrac Inc, Michigan is currently 4th in the US for number of foreclosures. Statistics show that Detroit and its suburbs are probably the hardest hit area of Michigan.   This does not bode well for Michigan’s economy. What The Parties Are Doing Democrats, including State Governor Jennifer Granholm (D, MI), are hoping that their plan will help homeowners facing foreclosure secure fixed... more »

HOPE NOW - Help With Foreclosure

The Bush administration has announced that there has been a new program set up for help with foreclosure assistance.   Eleven loan servicers that handle an estimated 60 percent of U.S. mortgages have agreed to participate in this program.   The focus of this program is to   coordinate the efforts of mortgage counselors, servicers, lenders, investors, and state and local government to help people who are in default and make every attempt to stop foreclosure. This partnership, announced on October 10th, is ground breaking news.   Treasury Secretary Henry Paulson is very happy with the results, but wants more... more »

Levels of Documentation

Despite the clever advertising, obtaining a mortgage is not an easy process. When you finally get to closing you have shared every bit of personal information with your loan officer, just short of a DNA sample. To be honest, I wouldn't be surprised if DNA isn't part of a mortgage application within ten years. One of the complaints loan officers often hear from clients is that there is too much paperwork and lenders are too invasive. While this may be true to some extent, borrowers also have to look at it from the perspective of a lender. A bank is... more »

Base Loan Decisions on Finances, Not the Lender

Borrowers who want to get a mortgage have always approved–or not– according to a cut-and dried formula. The lender adds up your PITI (that’s your monthly mortgage payment, along with the taxes and insurance) and compares it to your gross pay. That number should not be greater than 28 percent. Then you total all your debts, including the possible mortgage and make sure it does not exceed 36 percent. If it works, you’re in. But these days, buyers should be a lot more careful with their purchase, especially first-time buyers. Figuring your Payment Before you decide whether to purchase a... more »

Mortgage Lenders Who Are Taking a Hit

Fallout continues in the mortgage market.   Every day brings more news of companies that are struggling or going under because of the shake out in the sub prime market.   Keeping up with them can be a full time task, as more and more report on lost revenue and employee layoffs.   I am listing the ones I found today in search of mortgage news.   These are significant leaders in the mortgage market. Merrill Lynch Merrill Lynch warned investors Friday it will post a third quarter loss.   The investment banker and brokerage reports that they blame this... more »

Scams Target People Facing Foreclosure

With every thing going like it is in the sub-prime market, it was only a matter of time before the con artists and scammers came out of the woodwork to prey on the people who are unfortunate enough to face foreclosure.   In these situations, people are desperate, and will usually fall for just about any thing that will get them out from under the burden of foreclosure.   Listed here are some of the favorite scams being run today. Who Is Targeted? Generally, the con artists go after the elderly or non English speaking population.   However, we now... more »

The Trouble With Workouts

A lot of people are wondering why mortgage lenders are reluctant to do workouts for people on the verge of foreclosure. I have reported on Countrywide Financial Corporation, and their efforts to do workouts for this segment of the population. Let’s look at a little background information first. What’s A Workout? Any workout agreement is a last-ditch effort by you and your lender to avoid foreclosure and keep you in your home. Mortgage lenders do not want to see you in foreclosure. This situation means to them that they need to consider whether or not to cut their losses... more »