Smart Borrower Blog

Archive for the ‘Mortgages’ Category

Will FHA Mortgages be the Next Mortgage Crisis?

Federal Housing Administration-backed mortgages are now the next market crisis waiting to happen, according to home builder Robert Toll, CEO of Toll Brothers Inc, the nation’s largest luxury builder. “Yesterday’s subprime is today’s FHA,” Toll said today at a New York builders conference. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.” Toll likely based his comments on reports last week from the FHA that its reserves ratio has fallen to 0.53 percent, well below the federally-mandated 2 percent designed to protect against fund default.... more »

New Association Aims to Combat Loan Modification Scams

NeighborWorks America, a non-profit created by Congress, has launched a national public education campaign aimed at helping homeowners, particularly those facing foreclosure, avoid mortgage modification scams. Their recently launched website, www.loanscamalert.org, provides information and resources to help spot scams, as well provides a central place to notify authorities of scams they may have encountered. In addition to the website, the campaign will draw on the support of public agencies at all levels of government as well as other financial institutions and non-profits to get the word out. According to their press release: The national foreclosure rate has reached an all-time... more »

Some May Avoid Foreclosure with Loan Modification

Thousands of people have recently been facilitated with the process of home loan modification during this recession. Recipients are able to repay their loan amount as they’re able, which protects them from ruining their credit and allows them to remain in their homes. Dealing with everyday living expenses and mortgage payments at the same time can become overwhelming and complicated. A majority of people are unaware of the details concerning the numerous qualifications for home loan modification. Don’t be discouraged to apply, even if you have bad credit, because there are many ways to get approval for a home loan... more »

Federal Reserve’s New Mortgage Lending Rules Go Into Effect October 1st

New rules to protect consumers from problem mortgages adopted by the Federal Reserve go into effect on October 1st. Individual states have adopted numerous laws to protect consumers, but the federal government is looking to prevent future problems like our current home foreclosure crisis by getting involved, as well. The new rules require mortgage lenders and brokers giving borrowers with weak credit to have more diligence. Home loans designed for people with weak credit are typically 1.5 percentage points higher in interest than the average prime mortgage rate. These rules were finalized in July of 2008, and prevent lenders from... more »

Will the First-time Home Buyer Tax Credit Really Disappear?

The Obama administration’s $8,000 first-time home buyer tax credit is set to expire December 1, but some legislators and real estate officials are fighting to extend it until the housing market fully recovers. Under its current form, first-time home buyers with an annual income of $75,000 or less ($150,000 for married couples) who are buying a primary residence can qualify for the credit. Here’s what people have said about the effect of the current tax credit: Federal Housing Administration Commissioner David Stevens - “That small amount of tax credit has been a significant motivational tool in getting first-time home buyers... more »

FICO Score Changes More Forgiving

Good news for those hoping to improve their credit. Changes to the FICO model that credit agencies use to determine your credit score is more forgiving for small credit blemishes, according to a recent article in the Wall Street Journal. The new formula, FICO 08, has been made available to lenders by the big three credit agencies; Experian, TransUnion and Equifax, since last month. Unlike previous versions, FICO 08 will not ding your credit score for bills in collections originally under $100. It is also less likely to lower your scores for occasional missed payments, although those with a pattern... more »

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 »

Frank Considers Reviving “Cram Down” Legislation

Barney Frank, House Financial Services Committee Chairman, is concerned that lenders aren’t doing enough to help modify home loans that are in stress. Frank is threatening to revive the “cram-down” legislation that failed to pass Congress earlier this year. Under this legislation, federal judges are given the power to cut interest rates, reduce mortgage balances and extend terms. The judges would have the authority to do this even if the lender protests. Although Congress has given the mortgage industry many tools to quickly and easily modify loans, the results have been dismal, according to Frank. An article on Bloomberg.com tells... 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 any service or company 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, 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 in... more »

What Are Banks Really Doing With TARP funds?

There have been 360 banks and lending institutions across that have received government funding from the Treasury Department’s Troubled Asset Relief Program (TARP). Have you been wondering what these financial institutions have been doing with your taxes? Well, a new report from the Office of the Special Inspector General, the oversight department for the program, has shed some light on that question. Apparently, 83 percent of these banks are using some or all of the money to make more loans, including things like commercial and residential mortgage loans, small business loans, and credit card loans. Yet 43 percent are using... more »