Smart Borrower Blog

Archive for the ‘Home Equity Loans’ Category

New MDIA Law Spells Danger for Home Buyers

If you read an article in your local newspaper that said the new Mortgage Disclosure Improvement Act (MDIA) helps protect home buyers, you’ve been misled. This new law that went into affect July 30, 2009 is a wolf in sheep’s clothing. I’ll explain. What Sounds Good: Lenders must provide you with the Truth in Lending (TIL) form at least seven business days before closing. This form shows the Annual Percentage Rate for your loan. Receiving this information in advance sounds great. But wait. There is a big catch. The Potential Deception: The Annual Percentage Rate is not the interest rate... more »

Consumer Delinquency Rates Grow, Unemployment to Blame

A recently released report from the American Bankers Association (ABA) showed that 3.35 percent of consumers were behind on their loans during the first three months of this year, compared with 3.16 percent in the last quarter of 2008. These consumer loans include home equity loans, home improvement loans, direct and indirect auto loans, marine and RV loans, mobile home loans and personal loans. Of those categories, the delinquency rate on direct car loans grew the most from 2.03 percent to 3.01 percent. ABA chief economist James Chessen said in a statement: “The number one driver of delinquencies is job... more »

Is A Home Equity Loan Right For You?

A big factor in the current mortgage crisis is the way real estate was valued.   Values of homes went up and up and unsuspecting consumers were like kids in a candy shop.   Want a new SUV?   Dreaming of a luxury vacation?   Then take out a home equity loan and have yourself a good time.   This worked fine until the housing bubble broke.   All of a sudden, homeowners found themselves with a mortgage underwater, and with unemployment at a 26 year high, often found themselves out of a job. Banks and credit card companies are... more »

Considering A Reverse Mortgage

People tend to get creative in times of trouble.   The last couple of years have been a real nightmare financially for a lot of people.   There is every indication that is only going to get worse.   Chrysler and   GM have slashed a record number of dealerships, putting a record number of people out of work.   I’d like to turn on the evening news some night, and get a little good news for a change.   I don’t see that happening for a while. One way that people are bailing themselves out right now is by... more »

Loan Modifications Without Payment Reduction Results in High Re-Default Rates

"Loan modifications" have been the buzz words for both the Bush and Obama administrations when it comes to fixing the mortgage foreclosure crisis. And millions of struggling homeowners have received such loan modifications over the past year, but new studies show that the types of modifications being made were largely ineffective in keeping homeowners out of default. A report released Friday from the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision, surveyed almost 35 million loans totaling roughly $6 trillion in collective value. The data showed that slightly more than 10 percent of all... more »

Top Dem Says Two-Thirds of Lenders Are On Board with Treasury Plan

According to Senate Democrat Charles Schumer Wednesday, two-thirds of the country’s mortgage servicers are willing to cooperate with the terms of the recently-released Treasury Department plans to prevent foreclosures nationwide. “Two-thirds of servicers are the large banks that are part of the [Troubled Asset Relief Program],” Schumer said. “They’ve already agreed they are going to refinance now that they are no longer worried about getting sued.” Schumer, a member of the Senate Banking Committee, reportedly got the two-thirds statistic from Housing and Urban Department (HUD) Secretary Shaun Donovan. The largest mortgage servicers in the country like Bank of America Corp.,... more »

Low Rates Spur Major Refinancing, But Not Home Buying

The demand for mortgage money shot up in the latest week, led heavily by an increase in refinance requests, according to the Mortgage Bankers Association Wednesday. The MBA’ weekly Market Composite Index, a measure of the number mortgage applications filed, grew by 8.6 percent in the week ended January 30, 2009, to 795.4 on a seasonally adjusted basis from 732.1 the previous week. By far, the majority of the applications during the last week were for refinance loans rather than home purchase loans. The refinance share of all applications rose to 73.2 percent from 72.8   percent the week before.... 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 »

Mortgage Demand Up 112.1 Percent As Interest Rates Fall

The  volume of U.S. mortgage applications shot up dramatically in the latest week as borrowers sought to take advantage of low interest rates, according to the Mortgage Bankers Association Wednesday. “Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship,” said Orawin Velz, associate vice president of economic forecasting for the MBA. GSE stand for government-sponsored enterprises, meaning mortgage companies like Freddie Mac and Fannie Mae. "When rates plummeted following the Fed’s announcement that it would buy GSE debt and MBS [mortgage-backed securities], many of those on... more »

Mortgage Interest Rates Fall on New Rescue Plan

Interest rates on long-term U.S. home loans fell in the latest week, a reaction to the newly announced Bush administration's $800 billion bailout package to provide more liquidity for consumer and mortgage debt markets, according to data from Freddie Mac. “Interest rates for 30-year fixed-rate mortgages fell for the fourth consecutive week as signs the overall economy is flagging lowered most interest rates market-wide,” said Frank Nothaft, Freddie Mac vice president and chief economist. “And economic growth in the third quarter was revised downward this week, led by the first decline in consumer spending since the fourth quarter of 1991... more »