Smart Borrower Blog

Archive for January, 2009

The Problem With The Bailout

On the NBC Nightly News this week, President Obama made it very clear that he thought the actions of Wall Street banks and lending institutions was “shameful” for their practice of giving out bonuses to employees when they are standing in line for bailout money from the Fed.  Many Americans, including myself, are enraged by this, and I hope that this issue is addressed.  It is common knowledge that John Thain, CEO of Merrill Lynch, issued bonuses just before the takeover by Bank of America.   Billions were paid out, and it doesn’t sit well with people because ML did this... more »

Fed Keeps Target Interest Rate in Zero Range

The Federal Open Market Committee  released its decision Wednesday to  leave its target interest rate unchanged in the range of zero to 0.25 percent. “The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” the Fed said in its statement, citing examples of recent weakness in housing starts, industrial production, and employment conditions. Although the Fed is constantly trying to find the right balance between inflation and enough market liquidity, because of the dim forecasts for energy prices and other economic factors, the Committee “expects that inflation... more »

Should The Market Take Its Course?

We see that 2.3 million homes have gone into foreclosure, and it is expected that 4.4 million mortgages will be 60 to 90 days past due by the end of 2009.  These estimates come from the FDIC, and although laws in several states have reduced the pace of foreclosure filings, this was not a one trick pony by any means. The problem is obviously cyclical – ARM’s are resetting, jobs are being lost by the tens of thousands, and the economy is ruined by lack of consumer confidence.  Those that have a little are hunkered down and are sitting on... more »

30 Year Mortgage Rates On The Rise

After my post last week about interest rates, and their decline, research shows me that they are once again on the rise.  Freddie Mac reports the average at 5.12 percent, up from 4.96 percent last week.  Fifteen year fixed mortgage rose from 4.65 percent to 4.8 percent.  Five-year adjustable mortgages fell to 5.24 percent, the lowest level since September 2005, and one-year adjustable rates rose to 4.92 percent from 4.89 percent last week. The market seems to be waffling a bit, which is understandable with a new administration coming in, and hopes for a brighter future for Americans.  I expect... more »

Foreclosure Activity Up 81 Percent in 2008

The number of foreclosure filings during 2008 shot up 81 percent over the previous year, according to foreclosure data company RealtyTrac Thursday. That growth accounts for at least one foreclosure filing notice for one out of every 54 American households. Filings include default notices, auction sales, and bank repossession notices. “Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami,” James J. Saccacio, chief executive officer of RealtyTrac, said in the report. State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth-quarter numbers... more »

Mortgage Rates At All Time Low

Mortgage rates are the lowest now that they have been since Freddie Mac begin tracking them way back in 1971.  Freddie reported on Thursday that 30 year fixed rate mortgages are now at 4.96%.  With the new administration being sworn in on Tuesday and President Obama poised to roll out an economic rescue plan, you might want to consider a refi on your mortgage. Mari Adam, a financial planner and owner of Adam Financial Associates Inc. in Boca Raton, Fl, said “The people who have done everything right are now going to benefit and will be very well rewarded.  “We... more »

Swindlers Take Advantage Of Distressed Homeowners

Every night, the nightly news tells us about more and more foreclosures, and people in trouble with credit card bills and other unsecured debt.  People, desperate to get out from under this staggering situation, are turning to every service and companies that can help them find relief.  With people in such distress, it is inevitable that unethical people come around to take advantage of them. In an article in The New York Times yesterday, the reporter wrote about a new breed of swindler.  These defrauders aren’t trying any longer to bilk people out of the little equity they may have... more »

A Look At the Bankruptcy Abuse Prevention and Consumer Protection Act

In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act.  This Act was heavily pushed by the credit card industry. Under the Act, households must file for bankruptcy under Chapter 13, which requires that they pay unsecured debt.  Before the passing of this Act, households could file under Chapter 7, which meant that they could write off unsecured debt, thus freeing up money to apply to the home mortgage to avoid foreclosure.  This is no longer the case. Now, three researchers at the Federal Reserve Bank of New York are saying that this legislation has shifted the risk... more »

Citigroup Steps Up To The Plate

In these days before the inauguration, Capitol Hill is a-buzz with many different meetings, strategy planning, and members of Congress trying to decide how to deal with the incoming President.  I look forward to Obama taking office, and hope he gets the support he will definitely need to take on these tough economic times.  A look at unemployment numbers, rate of foreclosures, and underwater mortgages gives one pause. On that note, I find that Citigroup supports measures giving courts a big say on mortgage reductions if the mortgage is underwater.  This is the first time since the mortgage crisis begin... more »

Mortgage Applications Fall Even As Rates Hit Record Lows

The demand for home loans decreased in the latest week, according to data from the Mortgage Bankers Association Wednesday, as borrowers wait for interest rates to fall even farther in coming weeks. The MBA’s seasonally adjusted weekly mortgage application index fell 8.2 percent to 1,143.8 during the week ended January 2, 2008, the first drop in four weeks. The number of home purchase requests actually increased with the purchase index rising 7.3 percent from the previous week but homeowners held back from refinancing causing the refinance index to sink 12.3 percent. Most analysts, including those from the MBA, attribute the... more »