Smart Borrower Blog

Archive for March, 2009

Banks Walking Away From Foreclosures

An interesting development in the mortgage market is banks that are starting to walk away from foreclosures.   In an article in the New York Times, reporter Susan Saulny tells of a situation in South Bend Indiana.   A homeowner had received notice that she had lost her rental property to foreclosure.   A date for a sheriff’s sale had been set. The landlord had the tenants move out of the rental property.   The property stood empty and was damaged by looters and vandals, soon falling into disrepair. Not long after, the landlord received a notice from the city... more »

Mortgage Fraud Reaching Emergency Levels

One of my favorite tools for posting to the blog is the alerts I get from Google and Reuters.   Once or twice a day I get an e-mail digest that gives me all the latest headlines in the mortgage market. Here is what I’ve been seeing. “Seven indicted in states biggest mortgage fraud scheme” “Florida mortgage fraud crisis called state of emergency” “Former nightclub owner pleads guilty to defrauding banks on mortgage loans” The list goes on. It seems everyone is getting into the mortgage fraud game.   From reading these articles listed here, you get the feeling that... more »

Treasury’s Geithner Wants More Government Regulation

The Obama Administration is planning a broad, dramatic set of new regulations for the U.S. financial system, a plan that is being met with criticism from both the banking industry and many Republicans on the Hill. In an appearance before the House Financial Services Committee Thursday, Treasury Secretary Timothy Geithner claimed that “our system failed in basic fundamental ways” and needed “not modest repairs at the margin, but new rules of the game." “The most simple way to frame it is: capital, capital, capital,” he added. “That’s something we have to impose through standards set in regulation.” Some of the... more »

Obama To Make Changes In Regulation

This week, the Obama administration will outline changes in regulations to avoid a repeat of the financial crisis that has hampered the banking system and put the economy in the deepest recession since 1982. Deregulation doesn’t appear to have been the best way for the banks to play.   When it came about in 1999, driven by the Clinton administration and the Republican Congress, the role of the bank was pretty clear-cut.   After deregulation, the banking industry could then enter into insurances and brokerage businesses.   Other factors were interstate banking, and states’ deregulation of banking.   It appears... more »

Is It Time to Refinance?

The Fed announced Wednesday that it is planning to purchase up to $300 billion in treasury securities over the next six months.   It will also purchase another $750 billion of mortgage backed securities between now and the end of the year.   The 10-year treasury dropped 50 basis points on this news. This caused a plunge in rates on fixed mortgages.   According to Bankrate.com, these rates dropped to 5% after the news. It would appear that now would be a good time to refinance.   If you’re considering this, SmartMoney.com suggests you look at these signals: If home... more »

Mortgage Interest Rates May Have Hit Bottom

Many market analysts are predicting that mortgage interest rates will not fall much lower than 5 percent   in the next few years, as plummeting rates have caused a flood of homeowners to start refinancing again. The average rate on a traditional 30-year fixed rate mortgage has fallen from around 6 percent in November 2008 to the current historic low of about 5 percent. January rates were the lowest on record in the past 30 years of the Freddie Mac mortgage rate survey. Economists are forecasting rates in the 5 percent to 5.25 percent range for the next quarter or... more »

Details Of The Refinancing Plan

This week, the Web is aflame with the news about AIG and its bonus plan.   Many taxpayers, including myself, are enraged to see millions of dollars paid in bonuses to the people that put us in this spot to begin with. President Obama, of course, will take heat for things like this happening.   He already meets a great deal of resistance for his plans laid out this far.   It is rather hard for American taxpayers to understand what Obama is doing, and much of this is due to the fact that we know little about his plans.... more »

More Woes In The Financial Sector

Mortgages insurer MGIC investment Corporation took a hit this week from Fitch Ratings on Thursday.   The company’s operating subsidiaries are also on a negative watch. MTG currently carries a “BBB-” rating, the lowest that is considered investment-grade.   If the insurer is downgraded to junk status, it would hamper their ability to generate new business. The rating from Fitch indicates increasing financial pressure on the company and the mortgage insurers sector as a whole. Since the collapse of the mortgage market in the middle of 2007, this sector has taken a bad beating.   Business has dried up because... more »

Greenspan: Fed Actions Did Not Cause Recession

Although admitting that "we are in the midst of a global crisis that will unquestionably rank as the most virulent since the 1930s," former Federal Reserve Chairman Alan Greenspan contended Tuesday that the interest rate actions of the Fed were not to blame for the current recession. In an opinion article on the Wall Street Journal’s web site, Greenspan argued that the true cause of the trouble was in the mortgage lending industry itself.   "The interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages," he wrote. "Between 2002 and 2005, home mortgage... more »

Obama Announces Details of New Housing Plan

President Barack Obama announced the details of his $75 billion plan Wednesday to help roughly 9 million struggling homeowners avoid foreclosure. “The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly, by refinancing loans for millions of families in traditional mortgages who are underwater or close to it,” he said in a speech at an Arizona high school. The funding for the Obama plan will come from the $275 billion stimulus package announced last month. It focuses on two major objectives. The first is to aid homeowners in refinancing into new, affordable mortgages,... more »