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Americans losing faith in mortgage loans and real estate

Peter Stone — Mon, 28 Feb 2011 21:13:28 +0000

Fewer Americans believe homeownership and real estate are worthy investments. Photo Credit: Infrogmation/Wikimedia Commons/CC-BY

Americans are becoming less convinced that getting mortgage loans to buy real estate is a good idea. A recent survey found that the number of people who believe owning a home is a worthy investment has dwindled to the lowest level in years. Home sales have been sluggish to recover from the housing crash.

Fewer see homeownership as good investment

American real estate has been shaken to its core during the past few years. One of the side effects has been that fewer people believe homeownership is something to aspire to and that owning a home is not as good an investment as once thought, according to Reuters. Mortgage investment house Fannie Mae performs a quarterly survey on attitudes about home ownership, called the National Housing Quarterly Survey, which found that 64 percent of respondents believed that the tradition of going to a bank or loan company to get a loan and buy a house was a good investment. That marked a declined from early 2010, when 70 percent of respondents thought so. In 2003, the figure was 83 percent.

More people turning to rentals

As fewer are buying houses, more are going with paying landlords instant cash through renting. The percentage of vacant rental units declined over the fourth quarter of 2010 to 9.4 percent from 10.3 percent in the summer of 2010. That is the lowest percentage of available rental units since 2007. The same survey from Fannie Mae found that nearly 75 percent of respondents said they thought it would be harder to get a mortgage from a loan lender than to rent.

Home sales fall

New home sales plunged over the month of January 2011, according to CNN. Some areas where prices are dropping are able to sell more inventory, but areas like Arizona and other places with highly inflated prices have difficulty liquidating housing inventory. However, after stops and starts over the fall, new home sales fell 11.2 percent over January 2011, marking an 18.2 percent reduction between January 2010 and January 2011. The housing market is down more than 80 percent overall from a peak point in 2005.

Sources

Mortgage modification programs under fire from Republicans

Peter Stone — Fri, 25 Feb 2011 22:04:22 +0000

Congressional Republicans are looking to cut mortgage modification programs that don't work. Photo Credit: respres/Flickr.com/CC-BY

The federal mortgage modification program is fast becoming a target for criticism as a failed program. Congressional Republicans have announced intentions on scrapping federal mortgage relief programs, which have been dismal failures. Foreclosures on failing mortgages have slowed, but procedural issues are hampering the foreclosure processes nationwide.

Failed mortgage relief programs prime target for spending cuts

Congressional Republicans are taking aim at failing programs that throw money down the drain, and mortgage modification programs are prime targets, according to CNN. Republican members of the House of Representatives have announced intentions to put federal programs aimed at saving failing mortgages on the chopping block in order to cut about $38 billion in instant cash from the budget. The Home Affordable Modification Program is a prime target, as Inspector General for the Troubled Asset Relief Program Neil Barofsky described the program as a failure.

On the chopping block

Other programs slated for demolition include the Neighborhood Stabilization Program, refinance programs under the Federal Housing Administration and the Emergency Homeowner Relief Fund, all of which lend emergency loans to aid troubled mortgages. However, these programs haven’t been smashing successes, either. Spencer Bacchus, a Representative from Mississippi and chair of the House Financial Services Committee, said that “it’s time to pull the plug” and end programs that don’t work. Only about 500,000 permanent mortgage modifications have been performed on troubled mortgages through these programs, which is a success rate of less than 50 percent. Foreclosures are also taking far longer to process.

Foreclosures take longer

Because of new procedural rules for foreclosure and increased scrutiny of foreclosure practices, loan lenders are taking far longer to foreclose on a home, according to USA Today. A distressed homeowner will spend about 19 to 20 months living in a foreclosed home at current rates, which may increase to 22 to 23 months. The average person in a foreclosed home would normally have gone 250 days without making a payment prior to the mortgage crisis, but that stretched from 410 days in January 2010 to 507 days in December 2010. Increased scrutiny due to the “robo-signing” controversy has led to foreclosures taking far longer, which causes loan lenders to lose considerable amounts of money.

Sources

Housing prices decline, but home sales are rising

Peter Stone — Thu, 24 Feb 2011 00:08:22 +0000

Home sales have been increasing, but home values are declining. Image from Wikimedia Commons.

Nationwide home prices are declining, but home sales are beginning to rise. The past year has been volatile for real estate, but more people have been consulting with loan lenders to purchase a home. The low prices are thought to be the reason for the spike in purchases.

Wealthy and investors buying houses again

Figures for nationwide home sales from the National Association of Realtors indicate that an increasing number of people are purchasing homes, according to CNN. Home sales rose 2.7 percent over January 2011, to a seasonally adjusted rate of 5.36 million per year. The increase is also a 5.3 percent improvement over January 2010, marking the first time in seven months that home sales have been higher than figures from a year ago. However, the increase may be bolstered by people who don’t need to go to loan lenders to finance a home purchase. The number of cash purchases was 32 percent of all sales, up from 26 percent in January 2010. Sales to investors made up 23 percent of sales, which accounted for 17 percent of home sales in January 2010.

Foreclosures may have made up difference

The increased number of cash and investor purchases likely is due to deep discounts available on foreclosed properties. Distressed properties, according to Bloomberg, accounted for 37 percent of January 2011 home sales. More homes are available at rock bottom prices, and many a loan company is anxious to get a home off its balance sheet. There aren’t many people who have enough instant cash to pay for a home out of pocket, even one sold at half its value. The median home price has declined 3 percent since January 2010, to $158,800.

Home prices dropping

Many major metropolitan areas are still experiencing declining home values, according to USA Today. The Standard & Poor’s Case Shiller Index recorded drops in all but one of the 20 major cities it tracks. Only Washington D.C. did not see home prices decline. Areas with inflated real estate values such as Arizona, California and Florida have experienced the worst in decline, but southern states like Mississippi and Alabama are also experiencing price declines. The rise in sales may signal reversing demand, and many economists believe 2011 will be a year of dramatic recovery.

Sources

Large banks could place limits on debit card use

Peter Stone — Sat, 19 Feb 2011 00:43:56 +0000

The nation's largest banks may start limiting debit card usage, as legislators are targeting usurious bank fees. Image from Wikimedia Commons.

The largest banks in the nation may institute limits on how often debit cards can be used by account holders. Large banks are said to be hurting from laws which limit how much can be charged to retailers by banks when customers of those banks swipe their debit cards. Various acts of legislation have been aimed at curbing fees paid demanded by banks.

Cap on fees charged to retailers could prompt backlash

A law passed last year will cap the fees banks charge retailers when customers make purchases with debit cards. When a person pays for something with a debit card, the merchant is charged a fee by the bank that the customer belongs too, called an interchange fee. Last fall, the Durbin Amendment of the Dodd Frank Act gave the Federal Reserve powers to place limits on the fees that banks charge to retailers, according to ABC. The Fed proposed that fees be limited to 12 cents per transaction. The current rate is about 63 cents per transaction, though it isn’t likely that any of the largest banks in the nation will have to run for a cash advance to cover losses anytime soon.

Possible curb on debit purchases

It is rumored that the largest banks in the nation may begin imposing a limit on how many purchases people can make with their debit cards, or how large a purchase made with debit may be. The limit could be set as low as $50 to $100 in order to restrict customer use of debit cards, and thus not lose too much revenue. Interchange fees currently make up about $80 billion in revenue for the banking industry. Vikram Pandit, CEO of Citigroup, maintains that the fee caps will restrict available credit for banks and loan lenders, according to Bloomberg.

Trend of rising fees

The nation’s largest banks have been raising fees and cutting programs such as free checking for months, as an overall trend has been emerging of commercial banking trying to extract more revenue from customers. However, people can avoid dramatic fee increases by banking with community banks and credit unions. Just about every city in America, from Scottsdale to Birmingham, has a credit union or two open to just about anyone.

Sources

ABC

Mortgage delinquencies decline, but foreclosures rise

Peter Stone — Thu, 17 Feb 2011 18:47:08 +0000

Foreclosures rose during the past few months, but the number of mortgage delinquencies declined. Image: Brendel/Wikimedia Commons/CC-BY

The number of mortgage delinquencies has declined, but the number of foreclosures has risen. Though loan lenders can rejoice over more borrowers making payments, the inventory of foreclosed properties is at a record high. However, this may be a sign that foreclosures will slow in the future.

Foreclosure inventory nears all time high

The number of foreclosed properties loan lenders retain has hit an all time high, according to Bloomberg. A report was recently released by the Mortgage Bankers Association detailing the economic trends in real estate, and the number of foreclosed homes had risen to 4.63 percent of all mortgages at the end of the fourth quarter of 2010, which ended Sept. 30, 2010. The number of foreclosed properties is nearly the highest on record. That figure had risen from 4.36 percent at the end of the third quarter of 2010. At that time, nearly 14 percent of all mortgage loans, or one in seven, were in foreclosure or homeowners were behind on payments to their loan company.

Delinquencies decline

Though the number of foreclosed properties has risen, the number of delinquencies has fallen. From July to December, 2010, the number of bank loans that were one payment behind dropped from 9.13 percent to 8.22 percent, according to CNN. Mortgage delinquencies have therefore dropped to the December 2007 rate, which marked the beginning of the recession. Seriously delinquent loans, or mortgage payments at least 90 days past due, declined from 5.02 percent in March of 2010 to 3.63 percent in December, 2010. This means more people are getting payday cash, and able to make payments.

Foreclosures stalled for now

The controversy over improper foreclosure procedures, or the “robo signing” affair, has led to a temporary slowing of foreclosures, but that may reverse itself as those issues are resolved. Florida is still the state most affected by foreclosure, with more than 14 percent of all homes in foreclosure. Mississippi had the highest delinquency rate, with 13.3 percent of homes behind at least one payment.

Sources

Falling home values put record number of mortgages under water

Peter Stone — Thu, 10 Feb 2011 18:28:28 +0000

Up to 27 percent of homeowners could be under water on their mortgages. Image from Wikimedia Commons.

It is estimated that a record number of people are now under water on their mortgages because of falling home values. The value of houses nationwide has been steadily sliding downward as foreclosures, unemployment and tight credit take a toll on real estate. Values could continue to fall.

Nearly a third of all mortgages could be under water

Home prices have been falling for the past few years during the recession. Because of continuing foreclosures, high unemployment and fewer homes being sold, the value of houses has continued to trend downward. It is estimated that 27 percent of American homeowners could be under water on their mortgages, meaning payments to the loan company cost more than the home is worth, according to Bloomberg. Real estate information company Zillow released a report stating that more than 15 million home loans were under water. Home prices are estimated to have fallen by almost 6 percent in the last year and almost 3 percent since September, 2010. Values are expected to decline 5 percent more in 2011.

Deceptive decline in foreclosures

Foreclosure activity has been closely watched over the past year in the hopes that a slowing rate of foreclosure would mean a real estate market close to recovering. A decrease in foreclosures occurred in January, but that doesn’t mean that the crisis is over, according to CNN. Because of the “robo-signing” scandal, where foreclosures were initiated by banks without reviewing the paperwork, the foreclosure process has been held up. The number of homes and installment loans foreclosed on will likely increase once the backlog of foreclosure cases in courts and at loan lenders is reduced.

Areas with inflated value still reeling

Areas where real estate values are the highest are still plagued by high foreclosure and rates of negative equity. Nevada, Arizona and California still lead the nation in foreclosure-affected states. Florida, though, has started to improve, falling to ninth place nationally in foreclosure rates.

Sources

Possible end in sight for mortgage giants Fannie and Freddie

Peter Stone — Wed, 09 Feb 2011 17:23:32 +0000

Treasury Secretary Timothy Geithner is due to unveil some proposals concerning Freddie Mac and Fannie Mae soon. Image from Wikimedia Commons.

Mortgage backing companies Freddie Mac and Fannie Mae could become a thing of the past. An upcoming Treasury report will make proposals about what should be done with the two government sponsored enterprises. One proposal is to let them both go under.

Proposed cut of Freddie and Fannie would take years

The Department of the Treasury has several proposals about what to do with government sponsored mortgage insurance companies Fannie Mae and Freddie Mac, according to CNN. The mortgage backing companies were placed in conservatorship when the real estate market crashed. Since then, more than $150 billion in emergency loans was lent to Freddie and Fannie to keep the housing market afloat. The government has been trying to figure out what should be done with Freddie and Fannie. One proposal is to withdraw the government from the mortgage market altogether. However, that would mean that low cost loans for homes would likely become a thing of the past.

Other possibilities

Freddie and Fannie own or insure half of all mortgages in the United States, from Birmingham, Alabama, to Anchorage, Alaska. Phasing the mortgage houses out, according to Bloomberg, or other proposals will take time to implement. It is also rumored that the size of loans that the companies can insure will be reduced. Currently, only loans less than $729,500 can be backed by either company. It is also thought that Freddie and Fannie could be reduced to being mortgage backers of last resort.

Vital role in keeping mortgage costs low

Freddie Mac and Fannie Mae play a role in keeping risks and costs in the mortgage market low. The companies repackage mortgages as securities that are sold to investors and guarantee lenders and investors compensation if borrowers default. The goal is to make sure loan lenders are willing to lend by creating more lending capital and decreasing risks that lenders will lose money if borrowers default. If Freddie and Fannie are axed, the cost of mortgages could increase and make it difficult for anyone other than the wealthy to get a loan for purchasing a home.

Sources

Fannie and Freddie raising mortgage loan lenders risk fees

Peter Stone — Wed, 02 Feb 2011 22:51:58 +0000

Fannie and Freddie have raised risk fees for mortgage loan lenders, making it that much harder to buy a home. Image from Wikimedia Commons.

Fannie Mae and Freddie Mac have announced a raise in the risk fees they will charge mortgage loan lenders. The mortgage insurance houses are charging lenders more to buy the loans and sell them to investors. Higher costs for obtaining loans may be passed on to borrowers.

Fees charged to mortgage loan lenders to rise

Fannie Mae and Freddie Mac, the mortgage insurers that received billions from bailouts, are raising risk fees charged to mortgage loan lenders, according to USA Today. The fees aren’t being raised astronomically, but risk fees are now being assessed on mortgages lent to some of the least risky borrowers. The way Freddie and Fannie work is that when a bank or other loan company lends a mortgage to someone trying to get a loan, Freddie or Fannie buys the loan and guarantees lenders that they will receive payment and not lose money on the loan, should the borrower default. Then Freddie or Fannie can sell the loan to investors as an investment. The loan lender is charged a fee by the mortgage insurers for taking on the risk.

Fees to include least risky borrowers

Freddie and Fannie are now including fees on all mortgages, not just the risky ones. Previously, risk fees were not assessed on loans to borrowers who had credit scores of 711 or better and paid at least 20 percent down. From now on, anyone who borrows a mortgage loan without a credit score of 740 and 25 percent down is likely to warrant a risk fee assessed to the lender by Freddie and Fannie. These fees are likely to be passed on to consumers. The amounts will vary, depending on the credit score and amount of down payment of the borrower.

Least likely to affect wealthy borrowers

Those least likely to face risk fees are those who have perfect credit or who are well off enough to not worry about it. People trying to get a piece of the American dream of home ownership, whether it’s in Jackson, Mississippi, or in Scottsdale, Arizona, now have one more thing to contend with. Risk fees are expected to be incorporated into new mortgages nearly immediately.

Source

Bailout official labels mortgage modification program a failure

Peter Stone — Thu, 27 Jan 2011 20:52:24 +0000

At a recent congressional hearing, the government mortgage modification program was blasted as being a "failure." Image from Wikimedia Commons.

The Inspector General of government bailout programs has labeled the mortgage modification program a failure. Neal Barofsky, appointed to oversee the bailout programs including the Home Affordable Modification Program, blasted the program in a Congressional hearing for being ineffective. More than half a million applicants have gotten their mortgages modified.

Mortgage modification program blasted in hearing

Recently, there was a joint Congressional hearing about whether certain programs in government bailouts had been effective, including the mortgage modification program. The program, which was nicknamed Make Home Affordable, but titled the Home Affordable Modification Program or HAMP, was blasted in the hearing as “a failure,” according to USA Today. Neil Barofsky was appointed as a special Inspector General in charge of bailout programs and funding and told the Congressional oversight committee that the mortgage modification program was not working. He went on to say that an increasing number of people will continue to want the program canceled, “and understandably so.” However, some have pointed to slow moving loan lenders as being part of the cause of the program’s problems.

Call to repeal HAMP

An increasing number of people are calling for the HAMP program to be cut. On the same day that the oversight committee met, three House Republicans submitted a bill that would end the HAMP program. Doing so would cut $30 billion from unused funding for bailout emergency loans. HAMP was intended to help 3 million to 4 million people avoid foreclosure by modifying existing loans with loan companies, but only 549,620 mortgages have been successfully modified. However, the cash advances lent to banks, more than $341 billion, have been viewed as very successful.

Foreclosures still epidemic

The rate of foreclosure has started to fall in the worst hit areas, especially states like Arizona with higher than normal real estate values, according to CNN. Las Vegas, the worst hit city in the United States, has seen the rate of foreclosure fall by 7 percent over the last year, but one in nine homes there has been in some form of foreclosure activity. However, in a survey of more than 200 metro areas by RealtyTrac, the overall foreclosure rate rose by 72 percent in 2010.

Sources

Mortgage Lenders Network USA told loan documents are protected

Mary Rice — Wed, 26 Jan 2011 18:14:58 +0000

Some failed mortgage lenders are destroying original loan documents, causing long-term legal problems. Image: Flickr / nerdcoregirl / CC-BY-SA

A U.S. bankruptcy judge has handed down an order preventing mortgage documents from being destroyed. The judge ruled that the mortgage documents could potentially be evidence and must therefore not be destroyed. This specific ruling was against Mortgage Lenders Network USA, but could affect most mortgage lenders.

The ruling against Mortgage Lenders Network USA

A federal bankruptcy judge ruled on Monday that Mortgage Lenders Network USA would not be allowed to destroy 18,000 boxes of original loan files. These files include everything from initial loan documents to servicing files. The stay issued by the judge lasts for 30 days. After that, the documents are again at risk of destruction. These documents may be destroyed as part of the liquidation of the sub prime mortgage company, which closed in February of 2007. The company serviced loans in Maryland, Delaware, Connecticut and other East Coast states.

Why original loan documents are important

The judge issued the stay on destroying loan documents because they may be evidence in criminal investigations. Original loan documents have become increasingly important in court cases about foreclosure. Numerous lenders have been unable to prove their ownership of loans, which means they have no legal standing to foreclose on the homes. This is leaving millions of mortgages in a legal limbo — nobody can prove ownership of the mortgage or foreclose on homes that may or may not be paid on. Some people have managed to turn this fact into a free bad credit loan. They take out a bad credit mortgage, then simply quit paying because the lender can’t prove they owe money.

Why loan documents are destroyed

In a separate ruling on Monday, American Home Mortgage, another defunct mortgage company, was allowed to destroy original loan documents. While original loan documents are incredibly important for providing proof of debt, they are not kept around forever. After a certain length of time, the expense of keeping documents is outweighed by the potential benefit of keeping them around.

Source

Rising tuition leads to more defaults on student personal loans

Peter Stone — Mon, 24 Jan 2011 23:35:54 +0000

College students have to larger personal loans to pay for school, and have fewer good paying jobs to look forward to, leading to more defaults. Image from Wikimedia Commons.

College students have to take out personal loans these days with increasing frequency and size to fund their educations. A college education is great to have, but the huge expense that has to be taken on may have led to a rising rate of default. The students profit least from the current system.

Rising tuition costs lead to more personal loans for students

There has been a somewhat unsettling trend at many universities across the nation for years now, which is the rising cost of attending and graduating from institutions of higher learning. It has meant more students have had to borrow some sizable personal loans to get an education. Loan lenders don’t mind it, of course. The lenders of the installment loans that students have to take out to get a college education have to bear in mind that student loan defaults are at about an 11-year high, according to Fox News. Unfortunately, the most common lender that students have to get a loan from is from Uncle Sam, which means that if students take on more debt than they can afford to get an education, it’s the taxpayers who get stiffed.

Billions lost through defaults

Currently, the Department of Education has about $880 billion in federal loans on the books in 2011, and defaults have been on the rise at the same time that costs of tuition and room and board have. From 2005 to 2008, the cost of a year’s tuition and living expenses rose from $28,505 to $30,258. During the last three years, or the period of 2008 to 2011, the amount of loans that were defaulted on rose from $33.5 billion in 2008 to $58 billion in 2011.

College graduates enter unstable work force

Rising costs of tuition are just one of the daunting prospects students face today. More college grads have fewer jobs available to them, and at lower wages. This means that students have to borrow more just to have a smaller chance chance of getting a job — and a smaller paycheck.

Source

Fox Business

Largest loan lenders may settle with attorneys general quickly

Peter Stone — Tue, 04 Jan 2011 18:50:37 +0000

The largest national loan lenders might settle quickly in the investigation of "robo signing." Image from Wikimedia Commons.

The largest loan lenders may be the first to settle with various state attorneys general. All 50 states are investigating foreclosure practices and procedures of various banks and loan companies. The findings indicate not everyone has played by the rules.

Quick settlement may be forthcoming from large loan lenders

As every state attorney general is looking into foreclosure practices, especially the “robo-signing” controversy, the nation’s largest loan lenders for mortgages are lining up to reach a settlement as quickly as possible, according to Reuters. A widespread probe into mortgage foreclosures began several months ago, conducted by attorneys general from all 50 states, so foreclosures from Scottsdale, Arizona, to Birmingham, Alabama, will be scrutinized. It appears that the nation’s largest loan lenders are ready to settle, including Bank of America, Wells Fargo, Ally Financial, JP Morgan Chase and Citigroup, according to a recent statement from Iowa Attorney General Tom Miller. No concrete settlement has been reached, and no instant cash handed over for fines yet, but that could be the case fairly soon.

States shun bad practices

The finance industry has been under heavier scrutiny over the past few years, and the revelation that banks may have mechanically produced foreclosure documents without merit, which is called “robo-signing,” certainly does not paint the largest loan companies in the nation in a good light. People may have been issued foreclosure notices even though they were up to date on the installment loans they borrowed for their homes; this explains why all 50 state attorneys general are looking into the matter.

Housing market still down

The housing market is still on a shaky foundation. Homes have been losing value, and fewer people are confident about buying. If consumers become less confident that the institution that their mortgage was obtained through is honest or trustworthy, it could be a recipe for disaster.

Sources

B of A buys bad guaranteed loans back from Fannie and Freddie

Peter Stone — Mon, 03 Jan 2011 20:27:20 +0000

Bank of America has just set aside some cash to compensate Freddie and Fannie for bad guaranteed loans the bank is responsible for. Image: MoneyBlogNewz/Flickr/CC-BY

Bank of America has reached an agreement to compensate Freddie and Fannie for selling them toxic guaranteed loans. The largest bank in the nation will pay more than $3 billion to the troubled mortgage houses. B of A is expected to take a loss on the deal.

Bank of America to make amends for bad guaranteed loans

Bank of America has finalized an agreement to compensate Freddie Mac and Fannie Mae for toxic mortgage assets sold to the two mortgage houses, according to MSN. Not all of the bad guaranteed loans were sold to Freddie or Fannie by Bank of America, however. The settlement is largely over loans that were originated by Countrywide, which was purchased by and merged into Bank of America in 2008. Prior to that, Countrywide had been one of the largest loan lenders in the nation for mortgages. Of all people who bought a home from New York to San Diego and all points in between before the 2008 mortgage crisis, about one in five got their home loans from Countrywide. Bank of America took over responsibility for all Countrywide assets, including settling with Fannie and Freddie.

Expected loss for largest national bank

It is expected that Bank of America, the largest bank in the nation, will file a $2 billion loss for the fourth quarter of 2010. The bank has set aside more than $3 billion for Freddie and Fannie for Countrywide mortgages and others sold to the mortgage houses. B of A has already bought more than $11 billion in bad bank loans from the two houses, with around $2.7 billion left. Still, Bank of America probably won’t need a cash advance to see the agreement to the end.

Mortgage houses still owed

Numerous large banks still owe Freddie Mac and Fannie Mae some considerable sums, as toxic mortgage assets sold to the two have to be either bought back or compensated for. The government still runs the two companies.

Source

MSN

Fewer people are under water on mortgage bank loans

Peter Stone — Fri, 17 Dec 2010 00:04:38 +0000

The number of people underwater on bank loans for homes they bought is declining, but not fast enough. Image from Wikimedia Commons.

Fewer people are getting under water on the bank loans on their homes. Underwater is when a person ends up owing more to the mortgage company than the home is worth. However, part of it is thanks to the number of foreclosures.

Fewer bank loans are getting underwater

The number of people under water on their homes — owing more in bank loans than the home is worth — is diminishing, according to USA Today. Underwater mortgages have become a problem for a lot of American homeowners, who went out to get a loan for a home, only for the value to plummet. Recreational and retirement hot spots like Nevada, Arizona and Florida were hit hard, with greater numbers of foreclosures and real estate values dropping through the floor.In some urban areas, such as Chicago, the rate of foreclosures has’t been as bad as in other cities, especially in metro areas that are still heavy industrial centers.

Foreclosures played a part

The decline in underwater mortgages has been slight, only 0.5 percent. A large portion of the reduction in people paying installment loans for more than a home is worth is likely due to the sheer number of homes that have been foreclosed, taking numerous mortgages off the books. There have been some incentives offered from the government, but talking loan lenders into reducing debt when many a loan company is struggling is a tough sell.

Home values likely to stay down

It is likely that the housing market is not going to be at its best for some time. Record number of foreclosures, and fewer people confident enough to purchase a home or able to qualify for the financing due to tougher restrictions on credit, will work against the housing industry’s favor. However, growth has been slowly taking place, and a slower recovery than desired has appeared to be the most likely scenario.

Sources

Peer to peer loan lenders bypass bank middlemen

Peter Stone — Tue, 14 Dec 2010 22:13:20 +0000

People can bypass the bank completely with a peer to peer loan lender. Image from Wikimedia Commons.

Someone who needs to get a loan but doesn’t want to go to a bank can look into peer to peer loan lenders. With peer to peer lending, people who want to borrow money are put in touch with people who have capital. It is becoming a booming business.

Peer to peer loan lenders cut out the middleman

Those looking to get a personal loan for whatever reason — be it for home improvement or for debt consolidation — don’t always have to go to traditional loan lenders like banks. There’s a new service called peer to peer lending that become popular in the last few years. Peer to peer lending is fairly simple. A person interested in borrowing money goes to a website and applies to get a loan. If the service accepts the applicant, then the person who applied may get offered a loan by any party that has money to lend. Then the applicant can decide to accept or decline the loan that’s offered. The funding comes from investors, which is how a lot of banks get lending capital. It also has returns for investors equal to or better than the stock market, according to Forbes.

Services differ

There are numerous peer to peer lending services, and there can be differing manners in which the loan is offered. For instance, investors can pledge money together in a loan bundle. On the peer to peer service Prosper, lenders or investors can make competing offers to loan applicants. Interest rates and terms can vary, so it isn’t guaranteed people will get loan offers they want.

That does not mean easy money

Most of these services are as discerning as banks and won’t accept an applicant with a credit score in the tank. However, interest rates can often be a lot lower than an installment loan from mainstream financial institution like a bank or finance company.

Sources

Forbes

Foreclosures halted by loan lenders for holidays

Peter Stone — Sat, 11 Dec 2010 13:44:12 +0000

Loan lenders are going to freeze foreclosure activity for the holidays, as is customary. Image: Brendel/WikiMedia Commons/CC-BY

Every year, most home loan lenders halt foreclosures through the holidays. This year, most mortgage lenders are halting foreclosure activity for Christmas, as it is customary to do so. It isn’t unusual, but a foreclosure freeze was already in effect for some lenders anyway.

Loan lenders customarily halt foreclosures

Typically, mortgage loan lenders halt all foreclosure activity from late December until after New Year’s Day, according to CNN. This year will be no exception. Freddie Mac and Fannie Mae have a freeze on foreclosing on any outstanding installment loans that either company lent or backed. Freddie and Fannie are still a long way from emerging from conservatorship, as both companies are still under the direct control of the Treasury, but auctioning a few homes would not help the troubled mortgage houses. Both are still suffering from the weight of toxic mortgages, regardless of how many emergency loans either company has received from the government.

Large lenders freezing foreclosures as well

The nation’s largest loan companies are freezing foreclosures for the holiday as well, as is the custom. JPMorgan Chase, Bank of America and Wells Fargo are all halting evictions from foreclosed properties where the people who were borrowing money lapsed on payments. However, Bank of America and JPMorgan Chase are both embroiled in the “robo-signing” controversy and cannot necessarily evict anyone to begin with. Both companies are accused of automatically signing off on foreclosures without having done the due diligence as to whether the action was legal.

Much needed reprieve

Currently, about 100,000 people lose their homes to foreclosure per month. Foreclosures have been a scourge of the real estate industry, but the bright side, if there is one, is that the rate hasn’t been accelerating lately. However, the key to fixing the real estate market is for unemployment to further decrease.

Sources