Smart Borrower Blog

Archive for the ‘Bad Credit Home Loans’ Category

Obama Announces New Mortgage Refinance Aid

On Wednesday, President Barack Obama announced some modifications to his administration’s previous foreclosure-prevention plans in hopes of extending relief to more struggling homeowners. “I am sending Congress a plan that will give every responsible homeowner in America a chance to save about $3,000 a year on their mortgage by refinancing at historically low rates,” he told an audience in Falls Church, VA as quoted in a New York Times article. “No more red tape. No more runaround from the banks.” The President did admit that previous efforts have been less effective than expected, but he said this new round of... more »

Refinances Fuel Spike in Mortgage Activity

Even as more bad news on the economy came pouring in, mortgage loan applications continued to grow in number. According to the Mortgage Bankers Association, its market composite index, its measure of total loan application volume, increased 21.7 percent during the week ended August 10, from the previous week. Broken down into parts, a 30.4 percent increase in refinance loan applications was off-set slightly by a 0.9 percent decline in home purchase applications. “Amid substantial market turmoil last week, mortgage rates dropped to their lowest levels of the year, and refinance applications jumped more than 30% to their highest levels... more »

Home Sales Down, NAR Blames Lending Standards

Sales of existing U.S. homes fell 9.6 percent in February, according to the National Association of Realtors, the first drop in three months. The NAR is pointing its finger at lenders’ strigent loan standards as the reason for the continued housing market woes. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” said Lawrence Yun NAR chief economist. “This tug and pull is... more »

Americans Are Getting Fiscally Fit, and It Shows

It may have taken the Great Recession to break Americans out of their ‘pay as you go’ mentality, but they are starting to act more financially responsibly now. At least so say the latest reports from the Big Banks, according to a recent BusinessWeek article. Specifically, more American consumers are paying their bills on time, and defaulting less on credit cards and mortgages. Says BusinessWeek, “the reports are a sign that Americans are feeling more comfortable about their finances. Personal spending powers about 70 percent of the U.S. economy, and most economists say a fiscally fit consumer is critical to... more »

Mortgage Lenders Beg for Exemptions

The Mortgage Bankers Association sent out a letter Tuesday to 8 different government departments urging/pleading with them to go easy on the new mortgage lending restrictions that will be put in place no later than spring of next year. The Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) will require mortgage lenders to retain a 5 percent stake in all non-exempt loans that are sold off to investors. The idea was to ensure safer lending by giving lenders something to lose if loans sour. Obviously lenders are not crazy about the idea and now the MBO is pushing for... more »

Racially Predatory Loans Had Impact On The Foreclosure Crisis

A new study published in the American Sociological Reviews shows race played a factor in factor in the wave of foreclosures that hit after the subprime mortgage market went into free fall. The study conducted by Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and Jacob Rugh, analyzed data from 100 large metropolitan areas in the US. The study found that that highly segregated residential areas of African American and some Hispanic neighborhoods went into foreclosure at a higher rate that those with similar credit profiles and other common factors. Subprime loans... more »

Finally, Some Real Mortgage Help

Bank of America has announced a dramatic change to its mortgage modification efforts that may finally offer some serious relief for the most at-risk home loans on its books. The company announced yesterday that it plans to initiate a $3 billion loan forgiveness program that could help as many as 45,000 homeowners. “The centerpiece of these enhancements is a program of earned principal forgiveness that addresses severely underwater mortgages with some of the highest rates of delinquency,” said Barbara Desoer, President of Bank of America Home Loans. The “earned principal forgiveness” will be available to borrowers whose mortgages are more... more »

Credit Card Payments Now Trump Mortgage Payments

Time for mortgage lenders to totally rethink their business. A new survey from credit bureau TransUnion shows that the old rules and assumptions about the average American homeowner have been thrown out the window. The recent survey found that Americans, in record numbers, are now paying off their credit card bills before they try to keep up with their mortgage payments. This is a radical departure from the traditional financial thinking of most Americans. “Conventional wisdom has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages,” said Sean Reardon, the... 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 »

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 »