The wasted 4.44% mortgage rate.
Author: michael | August 19, 2010
FORTUNE — It appears even the bright spots of this tired economy
are still working against heavily indebted homeowners. Mortgage rates have hit new lows nearly every week, but many borrowers are still unable to take advantage of them.
Like it is in so many parts of today’s sideways economy, relief is out of reach. Stimulus dollars are everywhere, but somehow never where they’re needed most.
Last week, U.S. mortgage rates fell for the eighth consecutive week to a record low after the Federal Reserve said it would buy more government debt to help the economy recover. A 30-year fixed-rate mortgage in the week ending Thursday dropped to 4.44% from 4.49%, according to Freddie Mac, which noted it was the lowest since the mortgage finance company began collecting data in 1971. The 15-year rate averaged 3.92%.
The fall in rates ostensibly means homeowners can lower their monthly loan payments by refinancing their existing loans. They’re certainly trying — the Mortgage Bankers Association reported last week that 78.1% of all mortgage applications fell under the refinance category, up from 58.7% in April.
But many of them are filling out all that paperwork only to get a rejection letter in response. The mortgage association does not quantify how many of those who apply for refinance actually get approved, but mortgage brokers say many homeowners are ineligible. Last year the Home Affordable Refinance Program, or HARP, was created to help homeowners get new loans, but the program has only resulted in a small fraction of the refinancings the government aimed to enable.
“The qualifications are so much stricter,” says Dale Robyn Siegel, CEO of Harrison, NY-based Circle Mortgage Group and author of The New Rules for Mortgages. “Banks have realized that even the best of borrowers have lost their jobs. A lot of people are really tapped out.”
Doors closing
The stricter qualifications include a higher FICO score of at least 620, a higher down payment and lower monthly debt service ratios. Additionally, lenders typically won’t loan more than the appraised value of a home. The troubled housing market has left an estimated 15 million U.S. mortgages — one in five — worth more than the value of the homes they helped purchase. The growing mountains of paperwork required and higher bank fees have also discouraged some from refinancing.
Add it all up, and you get a 4.44% rate that most Americans can’t have.
The government-controlled Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500) either own or guarantee half of the nation’s mortgages. Wall Street economists and analysts have called on the Feds to loosen lending standards and give breaks on fees so that more people qualify to refinance. In the short-term, this could free up household incomes and inject much-needed money into a slow-growing economy. But opponents argue it would only add to the hundreds of billions of dollars it will take to prop up troubled Fannie and Freddie.
The U.S. Treasury Department says it doesn’t plan to ease refinancing rules.
It’s easy argue against the idea of helping homeowners — even the debt-ridden and jobless — with their bills. After all, it can be said they bought too much house for their own good and bailing them out would only encourage the kind of irresponsible borrowing that sent the US economy into a financial crisis in the first place.
But lower interest rates, ideally, are meant to encourage investments – something the economy could use right about now. Instead, today’s mortgage rates are doing nothing more than tempting those investors who can’t have them.
Overnight avgs
| 30 yr fixed mtg |
4.53% |
| 15 yr fixed mtg |
3.95% |
| 30 yr fixed jumbo mtg |
5.37% |
| 5/1 ARM |
3.52% |
| 5/1 jumbo ARM |
4.10% |
Rates provided by
Bankrate.com.
|
|
Topics: Mortage Rates, National News |
No Comments » | Trackback
New home construction rises, but outlook weakens.
Author: michael | August 18, 2010
By Julianne Pepitone, staff reporter
August 17, 2010: 9:22 AM ET
NEW YORK (CNNMoney.com) — New home construction ticked higher in July, but indications of future building were weak, the government said Tuesday.
Housing starts rose 1.7% from June to a seasonally adjusted annual rate of 546,000 last month, the Commerce Department said.
Economists were expecting housing starts to rise to 555,000, according to a consensus estimate from Briefing.com.
On a year-over-year basis, starts fell 7% from July 2009.
“Activity in the housing market is likely to remain depressed for several years,” Paul Ashworth, U.S. economist at Capital Economics, said in a research note. “Housing is not going to lead the economic recovery.”
Future activity: Applications for building permits, a gauge of future construction activity, fell over the month. Permits dropped to a seasonally adjusted annual rate of 565,000 in July, down 3.1% from a revised 583,000 in June.
Economists were expecting a more modest drop to 573,000. Permits were down 3.7% from the same time last year.
“[The permits figure] is not an encouraging sign,” Ashworth said. “The ‘good’ news, however, is that housing is so depressed it is hard to see activity falling much further from such a severely depressed level.”
New homes by sector: New construction of single-family homes, the key sector of the housing market, fell 1.2% over the month to an annual rate of 421,000.
Mortgage Home Equity Savings Auto Credit Cards
See today’s average mortgage rates across the country. Source: Bankrate.com
| Loan Type | Today | Last Week |
| 30 Year Fixed | 4.52% | 4.53% |
| 15 Year Fixed | 3.94% | 3.96% |
| 1 Year ARM | 3.63% | 3.65% |
| 30 Year Fixed Jumbo | 5.38% | 5.42% |
| 5/1 ARM | 3.52% | 3.56% |
| 3/1 ARM | 3.37% | 3.42% |
Topics: Mortage Rates, National News |
No Comments » | Trackback
Author: michael | August 17, 2010
Special report: Flipping, flopping and booming mortgage fraud
Emilio Carrasquillo is shown in Chicago, July 21, 2010 in front of a home that was used in a mortgage fraud scheme. The house on the 53rd block of South Wood Street in Chicago’s Back of the Yards doesn’t look like a $355,000 home. There is no front door and most of the windows are boarded up. Public records show it sold in foreclosure for $25,500 in January 2009, then resold for $355,000 in October. In between, a $110,000 mortgage was taken out on the home, supposedly for renovations. This June, the property went back into foreclosure. To Carrasquillo, head of the local office of non-profit lender Neighborhood Housing Services of Chicago (NHS), the numbers don’t add up. He believes this is a case of mortgage fraud. Photo taken July 21, 2010. REUTERS/John Gress
On Tuesday August 17, 2010, 7:22 am EDT
By Nick Carey
CHICAGO (Reuters) – The house on the 53rd block of South Wood Street in Chicago’s Back of the Yards doesn’t look like a $355,000 home. There is no front door and most of the windows are boarded up.
Public records show it sold in foreclosure for $25,500 in January 2009, then resold for $355,000 in October. In between, a $110,000 mortgage was taken out on the home, supposedly for renovations. This June, the property went back into foreclosure.
To Emilio Carrasquillo, head of the local office of non-profit lender Neighborhood Housing Services of Chicago (NHS), the numbers don’t add up. He believes this is a case of mortgage fraud.
It may not make the blood boil like murder or rape, but mortgage fraud is a crime that cost an estimated $14 billion in 2009 and could be hampering an already fragile recovery in the housing market. The FBI has been fighting back, assembling its largest ever team to fight it. They have their work cut out for them, though, as a tsunami of foreclosures is making classic scams easier and spawning new ones to boot.
“There’s no way any property in this neighborhood should sell for that kind of money,” said Carrasquillo, standing outside the house on Wood Street in this poor, predominantly black area of Chicago’s South Side. “Even if it was in great condition.”
Carrasquillo has identified a number of properties in Back of the Yards that sold for between $5,000 and $30,000 last year and then came back on the market for up to $385,000. He said property prices are being artificially inflated, allowing fraudsters to walk away with vast profits and making it harder for honest local people to buy a home.
Mortgage fraud takes many forms, but a well-organized scam frequently involves a limited liability company (LLC) or a “straw buyer.” In this scheme, fraudsters use a fake identity or that of someone else who allows them to use their credit status in return for a fee. The seller pockets the money the buyer borrows from a lender to pay for the home. The buyer never makes a mortgage payment and the property goes into foreclosure.
In other words, the money simply disappears, leaving the lender with a large loss. Since the U.S. government is now backing much of the mortgage market in the absence of private investors, that means “taxpayers are ultimately on the hook for fraud,” said Ann Fulmer, vice president of business relations at fraud-prevention company Interthinx.
Back of the Yards was hit by fraud during the housing boom and Carrasquillo says the glut of foreclosures is now making it easier for scammers to pick up properties for a song and flip them for phenomenal profits.
Drug dealers and gang members have taken over abandoned houses, many adorned with spray-painted gang signs. Prior to touring the area, Carrasquillo attached two magnetic signs touting the NHS logos on his minivan’s doors to show he is not a police officer. He said he also prefers touring in the morning, as drug dealers and “gangbangers” tend not to be early risers.
“These properties are just going to sit there, boarded up, broken into and a magnet for crime,” he said. “And that makes our job of trying to stabilize this neighborhood so much harder.”
CRACKDOWN NETS MORE REPORTS OF FRAUD
The U.S. Federal Bureau of Investigation said in a report released on June 17 that suspicious activity reports (SARs) related to mortgage fraud rose 5 percent in 2009 to around 67,200, up from 63,700 the year before. The number had tripled from 22,000 in 2005 and the number of SARs for the first three months of 2010 hit nearly 38,000.
“We don’t see the number declining while foreclosures remain so high,” said Sharon Ormsby, section chief of the FBI’s financial crimes section.
Robb Adkins, executive director of the Financial Fraud Enforcement Task Force, is known as U.S. President Barack Obama’s financial fraud czar. He describes mortgage fraud as “pervasive” and fears it is exacerbating the nation’s real estate woes. “That, in turn, could act as an anchor on the economic recovery,” he said.
For the housing market to recover, potential homeowners need confidence in home prices and investors need confidence to get back into the secondary mortgage market, Adkins explained.
Since the subprime meltdown, a wide variety of scams have come to the fore. They include big cases like that of Lee Farkas, the former head of now bankrupt mortgage lender Taylor, Bean & Whitaker Mortgage Corp, charged in June with fraud that led to billions of dollars of losses. The scheme involved the misappropriation of funds from multiple sources, including a lending facility that had received funding from Deutsche Bank and BNP Paribas.
That appears to be the scam of choice. On July 22, for instance, seven defendants were indicted in Chicago in a $35 million mortgage fraud scheme involving 120 properties from 2004 to 2008 using straw buyers. Of the half dozen properties listed in the indictment, two were in Back of the Yards.
In the mid-2000s, the availability of easy money, poor due diligence by lenders and low- or no-documentation loans, acted as a magnet for fraudsters, who used identity theft and other scams to bag large sums of cash.
“During the boom it was almost like people in the real estate market could do no wrong,” said Ohio Attorney General Richard Cordray. “As ever more money rushed in, it attracted a lot of people who engaged in shady behavior.”
Instead of leaving them without a market, the crash has instead provided fraudsters with a glut of foreclosures, stricken borrowers and desperate lenders to take advantage of.
“There were plenty of opportunities for fraud on the way up and there are plenty on the way down,” said Clifford Rossi, a former chief credit officer at Citigroup and now a teaching fellow at the University of Maryland in College Park.
Alongside familiar scams like property flipping, the crash has added new terms to the lexicon: short sale fraud, builder bailouts and flopping. Rescue scams targeting struggling homeowners with false promises of help are also on the rise.
If some of the mechanisms are new, a lot of the fraudsters are not: in many cases, they turn out to be mortgage brokers, appraisers, real estate agents or loan officers. “Because they’re insiders, they see exactly what’s happening and they’re able to stay one step ahead of the game,” said Todd Lackner, a fraud investigator in San Diego. “They’re the same people who were committing fraud during the boom and they were never caught or prosecuted.”
BACK TO THE YARDS
Just a stone’s throw from downtown Chicago, Back of the Yards is the setting for Upton Sinclair’s classic 1906 novel “The Jungle,” a tale of grueling hardship and worker exploitation at the city’s stockyards. The book includes an act of mortgage fraud against an unsuspecting Lithuanian family.
“Mortgage fraud is nothing new,” said Christopher Wagner, co-managing attorney of the Ohio Attorney General’s Cincinnati office. “It’s been around for a long time.”
Saul Alinsky, considered the founder of modern community organizing, started out in Back of the Yards in the 1930s. Decades later, a young community organizer named Obama got his start near here.
The neighborhood has always been poor, but south of the old railway tracks at W 49th St, the housing crisis’ legacy of empty lots and boarded-up homes is evident on every block. There are few stores and services available — in four separate visits for this story, no police vehicles were sighted.
“This is what we refer to as a ‘resource desert,’” Carrasquillo said. “When no one pays attention to an area like this, it makes it easier to get away with fraud.”
Marni Scott, executive vice president for credit at Troy, Michigan-based lender Flagstar Bancorp, says there are virtually no untainted sales in the area. “There are no cases of Mr and Mr Jones selling to Mr and Mrs Smith.”
“We see cases of mortgage fraud around the country,” she added. “But there’s nothing out there that could match the mass-production, assembly-line fraud that’s going on here.”
In 2008 Flagstar instituted a rule whereby any loan applications here and in parts of Atlanta — another fraud hot spot — must be approved by Scott and the lender’s chief appraiser. In a Webex presentation, Scott rattles through a number of properties snapped up for pennies on the dollar in 2009 and then sold for around $360,000.
She provides an underwriter’s-eye-view of one property, on the 51st block of South Marshfield Avenue, sold in foreclosure in July 2009 for $33,000. In January of this year Flagstar received a loan application to buy the house for $355,000.
The property appraisal — compiled by an appraiser who Scott believes never visited the area — showed four nearby comparable properties of around the same age (100 plus years) sold recently for around $360,000. The trick to this kind of scheme is engineering the sale of the first few fraudulently overvalued properties to get “comps” — comparable values — to fool appraisers and underwriters alike.
“Miraculously, all of these properties were all within a very narrow price range,” Scott said with weary sarcasm. “This is a perfect appraisal for an underwriter. If you are an underwriter sitting in Kansas or California it all looks fairly straightforward so you can just hit the button and approve it.”
Using a $5 product called LoanIQ from U.S. title insurer First American Financial Corp called LoanIQ, Flagstar determined the application itself was fraudulent and there was a foreclosure rate in the area of nearly 60 percent. What is more, property prices here spiked 84 percent last year after 44 percent and 26 percent declines in 2008 and 2007.
“No neighborhood should look like this,” said Scott, who declined the application.
Last April, however, another lender approved a loan application for $335,000 on the same property from the same people.
FORECLOSURE MAGNET
Reports this year from Interthinx, CoreLogic Inc and the Mortgage Asset Research Institute (MARI) — which all provide fraud prevention tools for lenders — show foreclosure hotspots Florida, California, Arizona and Nevada are also big mortgage fraud markets.
MARI said in its April report that reported mortgage fraud and misrepresentation rose 7 percent in 2009, adding fraud “continues to be a pervasive issue, growing and escalating in complexity.”
Denise James, director of real estate solutions at LexisNexis Risk Solutions and one of the author’s reports, said reported fraud will continue to rise throughout 2010.
In its first-quarter report, Interthinx said its Mortgage Fraud Risk Index rose 4 percent to 151, the first time it had passed 150 since 2004. A figure of 100 on the index would indicate virtually no risk of fraud.
According to various estimates, the 30310 ZIP code in Atlanta is one of the worst in the country. An analysis of that ZIP prepared for Reuters by Interthinx showed a fraud index of 414, making it the eighth worst ZIP code in the country. Back of the Yards — ZIP code 60609 — had an index of 309.
“In some neighborhoods in Atlanta there hasn’t been a clean transaction in 10 years,” Interthinx’s Fulmer said.
In 2005 local residents here formed the 30310 Fraud Task Force. Members sniff out potential signs of fraud — such as repeated property flipped — and report them directly to the FBI and local authorities. Information from the task force led to the arrest of a 12-member mortgage fraud ring on September 15, 2008 — better known in the annals of the financial crisis as the day Lehman Brothers filed for Chapter 11 bankruptcy protection.
Brent Brewer, a civil engineer and task force member, said the arrests had a noticeable impact on fraud in the area. “It made a statement that if you come here to commit fraud there’s a good chance you’ll get caught,” he said.
But Brewer harbors no illusions the fraudsters are gone. “There’s no way they can catch everyone who’s involved in fraud. But if you’re dumb, greedy or desperate, you’re going to get caught.”
FBI GETTING INTERESTED
Law enforcement has come a long way in combating mortgage fraud, though officials freely admit that’s not saying much.
Ben Wagner, U.S. attorney for the eastern district of California, said as mortgages are regulated at the state and local level, for years there was little federal interference. Prior to the recent boom, he said, fraud simply “was not identified as a huge problem.”
“There has been a little bit of a learning curve,” Wagner said. “This was not something federal prosecutors had much familiarity with. Now we’re getting pretty good at it.”
Half of Wagner’s 50 or so criminal prosecutors focus on white-collar crime including fraud. Two new prosecutors will be dedicated solely to mortgage fraud.
Now mortgage fraud is a known quantity, Wagner said all U.S. prosecutors tackling it are linked by Internet groups. The May edition of the bi-monthly “United States Attorneys’ Bulletin” (published by the Executive Office for United States Attorneys) was devoted entirely to mortgage fraud.
The FBI has more than 350 out of its 13,000 agents devoted to mortgage fraud. There are also now 67 regular mortgage fraud working groups and 23 task forces at the federal, state and local level. “This is the broadest coalition of law enforcement ever brought together to fight fraud,” Adkins said. He admitted, however that limited resources to fight fraud still pose a challenge.
In June U.S. authorities said 1,215 people had been charged in a joint crackdown on mortgage fraud. Many of the charges were for crimes committed years ago.
Latour “LT” Lafferty, the head of the white-collar crimes practice at law firm Fowler White Boggs in Tampa, Florida, said fraud in the boom was so pervasive that many crimes will go undetected and unprosecuted. “Everyone had their hands in the cookie jar during the boom,” he said. “Lenders, brokers, Realtors, homeowners … everyone.”
OLD DOG, NEW TRICKS
A new mortgage scam born out of the housing crisis is short sale fraud. Short sales are a way for stricken homeowners to get out of their homes, whereby in agreement with their lender they sell their home for less than they paid for it and are forgiven the remainder.
But they have also proven a tempting target for fraudsters, usually involving the Realtor in the deal. Lackner, the fraud investigator in San Diego, described a typical scheme: “Let’s say you have a property up for short sale that you know as a Realtor you can get $350,000 for,” he said. “But you arrange a low-ball appraisal of $200,000 and have someone make an offer of that amount.”
“The Realtor says to the bank this is the best offer you’re going to get, take it or leave it,” he added. “Then they turn around and flip it immediately for $350,000. In cases like this, the lender is probably already stuck with a lot of foreclosed properties and doesn’t want more. So they go for it.”
Where the process of fraudulent appraisals overvaluing a property for sale is “flipping,” deliberately undervaluing them has become known as “flopping.”
Bob Hertzog, a designated real estate broker at Summit Home Consultants in Scottsdale, Arizona, says he gets emails from unknown firms offering to act as a “third-party negotiator” between the seller and the bank with what turns out to be a grossly undervalued bid.
Hertzog has tried tracing some of the LLCs, but describes a chain of front companies leading nowhere.
“The problem is it is so cheap and easy to set up an LLC online that sometimes they are set up for just one transaction,” Flagstar’s Scott said. “And if they’re set up using fake information or a stolen identity, it’s very hard to trace who’s behind them.”
Many web sites boast they can help you form an LLC online for under $50.
Another common target for fraud is the reverse mortgage. Designed for seniors to release equity from a property, according to financial fraud czar Adkins, they have been used to commit a “particularly egregious type of fraud.”
Fraudsters commonly forge their victims’ signatures and, without their knowledge or consent, divert funds to themselves. The scam is worst in Florida, a magnet for American retirees.
“Unfortunately it is often not until the death of the victim that their heirs realize that all of the equity has been stripped out of the property by fraudsters,” Adkins said.
But Arthur Prieston, chairman of the Prieston Group, which sells mortgage fraud insurance and has launched a patented system to rate lenders on the quality of their loans, said most mortgage fraud he comes across consists of ordinary people fudging figures to get a loan. “The vast majority of the fraud we see is where people intend to occupy a property, but can’t qualify for a loan,” he said. “They’ll do anything to get that loan approved.”
He added this is achieved with the active collusion of Realtors, brokers and lenders looking to make a sale and keep the market moving. Before his firm issues fraud insurance it reviews a lender’s loans and between 20 percent and the 30 percent of the loans reviewed so far have had “red flags.”
The problem with assessing the extent of the damage caused by mortgage fraud is that it’s not just the dollar amount of the fraud itself. It also hits property values, property taxes and often causes crime to rise.
“Most people interpret white collar crime as a victimless crime, where the bank pays the price and no one else,” said Andrew Carswell, associate professor of housing and consumer economics, University of Georgia. “This is a mistaken perception … neighborhoods and homeowners pay the price.”
UNCOVERING THE SCAMS
Companies like Interthinx, CoreLogic and DataVerify all have data-driven fraud prevention tools for lenders. Interthinx’s program, for instance, identifies some 300 “red flags” including a buyer’s identity and recent sales in a neighborhood, while CoreLogic uses pattern recognition technology. CoreLogic also aims to bring a short sale fraud product to the market soon.
Interthinx’s Fulmer said regardless of the source, on average solid fraud prevention tools can be had for as little as $10 to $15 per loan. “The tools out there enable us to see what’s going on out there right now in real time,” she said.
Apart from fraud insurance, Prieston Group’s new credit rating system for lenders should have enough data within the next year to start providing valid ratings.
Prieston said the firm’s insurance product is growing at more than 100 percent per month, while CoreLogic’s Tim Grace said the firm’s fraud prevention tool business was booming.
Many lenders are also sharing more information about bad loans, though LexisNexis’ James said it is not nearly enough. “If lenders don’t start to share more information then fraudsters will continue to go from bank to bank to bank until they’re caught,” she said.
The University of Maryland’s Rossi said what the industry needs is a “central data warehouse” to combat fraud. “There has been a failure of collective data warehousing across the industry,” he said.
Mortgage Bankers Association (MBA) spokesman John Mechem said members have no plans for a central database, but added “we view our role as being to facilitate and encourage information sharing in the industry.”
The U.S. Patriot Act of 2001 allows lenders a safe harbor to share information, but does not mandate it. “We always encourage more information sharing,” said Steve Hudak, a press officer at the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCen. “As of now, however, this is an entirely voluntary process.”
But Rossi said the government should step in. “The Federal government is probably going to have to take the initiative because I don’t see the industry doing this one on its own,” he said. “I am personally not a fan of big government, but we need more information sharing.”
Ultimately, the expectation is lenders will be forced either to improve due diligence, or face being pushed out of business as investors burned by sloppy underwriting during the boom urge them to adopt fraud prevention tools.
“Investor scrutiny is going to be higher than it ever has been,” Rossi said. “The days of a small amount of due diligence are gone.”
Many investors are also investigating their losses and forcing lenders to repurchase bad loans. This is resulting in “thousands of repurchases a month,” according to Prieston.
“When it comes to small lenders with only a few million dollars of loans, ten repurchases will absolutely put some of them out of business,” he said.
The government now guarantees more than 90 percent of the mortgage market and forms almost the entire secondary mortgage market, as private investors have not returned. The FHA, Fannie Mae and Freddie Mac are thus seen as playing an instrumental role in pushing improved due diligence to clean up the government’s multi-trillion dollar portfolio.
FHA commissioner David Stevens was appointed in July 2009. Since then the FHA has shut down 1,100 lenders, after decades in which the government closed an average of 30 lenders annually. He says most lenders he deals with are of a “very high quality,” but that “there are still lenders that either don’t have controls in place or are proactively engaging in practices that pose a risk to the FHA.”
Stevens does not expect to shut down lenders at the same rate as the past year, but added “the number will be much higher than the historical average.”
CoreLogic’s Grace said most large lenders have the tools in place to combat mortgage fraud, but admitted he was concerned about some smaller lenders. “The next shakeout of weak lenders will take place over the next 12 to 24 months,” he said.
The MBA’s Mechem said the U.S. mortgage market must be cleaned up if it is ever to return to normal. “The one thing private investors need to get back into the secondary market is confidence,” he said. “And investors won’t risk buying mortgages if they don’t have confidence in the quality of the loans. Restoring that confidence is going to play a pivotal role in restoring the markets.”
In the meantime, mortgage fraud is expected to cause more problems in areas like Back of the Yards in Chicago.
Three doors down from the boarded-up, foreclosed property that has aroused Carrasquillo’s suspicions, father-of-three Oti Cardoso says he and his neighbors try to cut the grass at the abandoned properties on his block and to keep thieves out. But he has heard most empty houses end up occupied by gang members.
“I want my children to be safe, I don’t want drug dealers here,” he said. “I have tried to find the owner of these houses so I can work with them to help keep their homes clean.”
“If they only knew what was happening here,” he added, “I’m sure they would want to do what was right.”
- Mortgage Home Equity Savings Auto Credit Cards
See today’s average mortgage rates across the country. Source: Bankrate.com
| Loan Type | Today | Last Week |
| 30 Year Fixed | 4.44% | 4.49% |
| 15 Year Fixed | 3.94% | 3.96% |
| 1 Year ARM | 3.63% | 3.65% |
| 30 Year Fixed Jumbo | 5.37% | 5.44% |
| 5/1 ARM | 3.48% | 3.54% |
| 3/1 ARM | 3.34% | 4.07% |
Topics: Marketplace, Mortage Rates |
No Comments » | Trackback
What the Double-Dip Recession Will Look Like.
Author: michael | August 16, 2010
“Nearly two-thirds of Americans believe the economy has yet to hit bottom, a sharply higher percentage than the 53% who felt that way in January,” according to a recent Wall Street Journal poll.
A growing and vocal minority of economists believes that there will be a double-dip recession primarily because of the intransigence of high unemployment and the rapidly faltering housing market. The notion of a “jobless recovery” has been around since the recessions of the 1950s and 1960s. It is a concept built on a relatively simple idea: employment lags during a recession but it is always part of a recovery cycle. Production rises as businesses see the end of a downturn and anticipate improving sales. They are reluctant to hire new workers until the recovery is confirmed, but once it has been, hiring picks up.
The 2008-2009 recession was — if it is indeed over — different from any other because of its depth and causes. The first trigger was the drop in housing prices, which robbed many people of their primary access to capital. As that access disappeared, so did the availability of credit. Consumer buying power evaporated and business cut inventory and production. Joblessness rose. Finally, consumer confidence plunged.
The last downturn was so great that in some months more than 500,000 people lost jobs. The unemployment rolls are now more than 8 million, and perhaps more gravely, over 1.4 million people have been out of work for over 99 weeks — which means they are no longer eligible to receive unemployment insurance benefits. This segment of the population has already begun to add to the number of indigent Americans and will continue to do so unless they can find homes with friends and family.
The second dip of the recession that ended in 2009, according to economists and the federal government, is likely to begin within the next two quarters if certain conditions are met.
Unemployment claims are running well above expectations, and recently hit a six-month high. The four-week average of initial claims rose 14,250 to 473,500 this week. The last peak, in February, was during a period when GDP was in the very early stages of recovery. There is nearly no jobs creation in the private sector. Real estate prices continue to drop, particularly in the hardest hit regions such as California, Nevada, Florida and Michigan.
The federal, state and local governments are in no position to lend assistance to businesses, most of which lack access to capital. Similarly, banks are not prepared to lend to small businesses, especially those with modest balance sheets and relatively low sales. This presents a problem for employment since companies with less than one hundred workers have traditionally been the largest creators of jobs.
This is what a double-dip recession would look like:
1. Housing
The cost of homes in the areas where prices have already dropped by 50% or more will continue to fall. These regions typically have the highest unemployment rates, the local governments are hard pressed to offer basic services, and potential buyers are aware that home prices could drop further. Real estate values in these areas could drop another 20%. In the rest of the country, protracted unemployment and the unwillingness of banks to lend would make otherwise attractive all-time low mortgage rates unappealing.
2. Unemployment
Unemployment would move back above 10% quickly. In the 1982 recession, the jobless rate was over 10% for 20 consecutive months and reached 10.8% for two months. During this period, the manufacturing base had not been destroyed. The economy is now arguably worse than it was in 1982. Many Americans who worked in manufacturing before the recession cannot be retrained, and the factories where they worked will not be reopened. Many companies have recently adopted the policy that they will keep as much of their work-force temporary for as long as possible. This keeps the cost of benefits low and allows firms to fire people quickly and without severance. A hiring strike by American businesses would contribute to putting 200,000 to 300,000 people out of work per month. At the peak of the recession that just ended, there were nearly six job seekers for every open job, according to the Labor Department. The job market could return to that point.
3. Consumer Spending
One of the primary reasons that consumer buying activity did not grind to a halt at the beginning of the last recession was that people still had access to a huge reservoir of home equity loans, most of which were taken out at the peak of the real estate market in 2005 and 2006. The New York Times recently reported that “lenders wrote off as uncollectible $11.1 billion in home equity loans and $19.9 billion in home equity lines of credit in 2009, more than they wrote off on primary mortgages, government data shows. So far this year, the trend is the same.” Retail activity was helped somewhat by the capital available on these lines of credit, so store closings were probably deferred to the latter part of 2008. With more than 11 million mortgages underwater, 24% of the national total, and several million more within a few percentage points of being negative, the consumer will have no cushion as the economy deteriorates over the next six months.
4. Consumer Confidence
Consumer confidence, the critical gauge of the activity that represents two-thirds of U.S. GDP, will plummet again. The Conference Board’s Consumer Confidence Index would certainly move back toward the all-time low it hit in February 2009 when it reached 25. Currently, the measure in most months is closer to 60.
5. Auto Industry
Auto sales, one of the primary barometers of consumer economic activity and manufacturing output, would probably drop back to recession levels. People concerned about employment will defer car purchases. Annual car sales in the U.S. were over 16 million in 2005 but dropped to just above 10 million in 2009. The car companies hope that domestic sales will rise to 11.5 million this year. In a double-dip recession, at least 1 million of those annual sales would be lost.
6. Trade
The nominal balance of trade would almost certainly drop, probably to a deficit of $25 billion a month, as the U.S. takes in fewer imports due to low demand for consumer goods and business inventory. Exports would also drop because an economic crisis in the U.S. would spread quickly worldwide. This is because of the tremendous size of the U.S. GDP in relation to that of any other country. The drop in imports would be a signal that business activity had slowed in China, the rest of Asia and Europe. Demand for consumer and business goods would drop in most regions, forcing a nearly universal cut in jobs outside the U.S.
7. Budget
The budget deficit would grow beyond the $1.5 trillion it should reach this year. Treasury receipts fell to $2.1 trillion in the federal fiscal year 2009 and are down to $1.7 trillion so far in the 2010 period. If history is any guide, receipts in a second recession could drop by as much as $200 trillion a year as tax receipts from both business and individuals falter. The demand on the federal government to render aid to the unemployed could add $50 billion to annual government outlays. Unemployment insurance will cost Washington $44 billion this year. As states run out of money to cover benefits, more of the burden could fall to the federal government.
8. National Debt
The rise in the deficit and a rapid increase in the American national debt would cause concern among the capital markets investors who purchase U.S. Treasuries. The inability of the Treasury to rein in spending will cause borrowing to increase. This in turn could bring the government’s debt rating down, in turn causing U.S. borrowing costs to rise. Increasing costs will then raise the annual expenditure to run the government by increasing debt service.
9. Stock Market
If the performance of the equity markets in 2008 and early 2009 is any indication, the S&P 500 would drop from its current level of about 1,100 to a low of 676, which it hit in March 2009. This would take trillions of dollars off business balance sheets and from consumer retirement and brokerage accounts. Businesses would become less likely to invest in new plants, equipment and services. For individuals, many would see a large part of their retirement disappear. That would cause a huge drop in consumer spending as people attempt to preserve cash, perpetuating further drops in the stock market.
10. Banking
The effect on most of the financial services industry would be catastrophic, particularly at the regional and community bank level where a number of home and commercial real estate loans are held. The FDIC would be forced to borrow money from the Treasury to cover bank closings. The number of failed banks could reach the level of the savings and loan crisis during which over 700 banks and mortgage lenders were shuttered.
11. Interest Rates
As the great majority of economists have pointed out, the Fed has already dropped interest rates to zero. This means the central bank is out of ammunition.
Mortgage Home Equity Savings Auto Credit Cards
See today’s average mortgage rates across the country. Source: Bankrate.com
| Loan Type | Today | Last Week |
| 30 Year Fixed | 4.52% | 4.56% |
| 15 Year Fixed | 3.95% | 3.96% |
| 1 Year ARM | 3.65% | 3.65% |
| 30 Year Fixed Jumbo | 5.37% | 5.44% |
| 5/1 ARM | 3.49% | 3.56% |
| 3/1 ARM | 3.39% |
Topics: Mortage Rates, National News |
No Comments » | Trackback
Great Deal For September 2010!
Author: michael | August 13, 2010
Beautiful 5-Bedroom, 2 Full-bath Colonial House For Rent in West Roxbury (Boston): $2400/month excludes utilities.
-Total 2300 Sq.ft, completely renovated 5 big bedrooms in a 2-floor colonial house for rent in Pleasantdale Rd., West Roxbury, MA 02132, a quiet street with nice neighbors. 2 car off-street parking+ on street free parking.
-1st floor: 1 Big living room; 1 bedroom; 1 dining room; 1 large sun room and 1 full bath and big kitchen; 2nd floor: 4 large bedrooms and 1 full bath; Window ACs, Gas ranger, Gas heating (3 independent heating zones) and Gas dryer. All new appliances.
-The whole interior is newly painted; new hardwood floor throughout? 1st floor to the 2nd floor; new carpet on 2nd floor 4 bedrooms; Large closet in each bedroom; Big sunroom for kids to play; a large basement and an extra storage room for plenty of storage space;
-Ideal location: close to major shopping malls (BJ’s, Costco, Whole foods, Sears, Stop&Shop, Lowes, Home depot etc), walk to Schools, playground and community pool.
-Walk to bus lines (Rt 34, 34E, 35) to Forest Hills Station (Orange Line and Commuter rail) (15-20 min); close to Dedham line commuter rail to South Station and downtown Boston. ~7.5 mile to Longwood Medical Area.
-Rent: $2400 + utilities. Suit for group people to share or big family.
-Available from September 1.
-No fee.
Pleasantdale Road (google map) (yahoo map)
Topics: Apartments |
No Comments » | Trackback
10 Best Places to Reinvent Your Life in Retirement.
Author: michael | August 13, 2010
Members of the massive baby boom generation have reinvented each stage of life as they passed through it. Their retirement years will be no different. Like previous generations, boomer retirees are going to take up new hobbies and volunteer. But those who didn’t save enough or choose to continue working will also start businesses and begin second careers. As life spans continue to increase, retirees are likely to embrace a mix of work and leisure activities.
Take Marie Hornback, 66, who runs two businesses in Fort Collins, Colo., and has no plans to retire. Hornback, a British-born American citizen and director of H.M.S. Protocol & Etiquette Training, opened a stationary store, Sign With Prestige, in May 2008. “I think if I didn’t have these businesses, I would not sit at home crocheting every day, even though I do crochet and embroider,” Hornbacks says. “I don’t tire easily and I like the excitement and the rewards of accomplishing goals, doing something that has value, and making an impact on other people.” Although business is sometimes slow, Hornback says it’s a challenge she enjoys. “I’ve only sold $27 worth of products today,” she says. “But it’s exciting to see a day when you get a rush of [consumers] and think, ‘Alright, now I can pay the rent.’ ”
To help retirees find a place to launch this new phase of life, U.S. News revved up our Best Places to Retire online search tool, powered Onboard Informatics, which provides the underlying data. We searched for places that provide plenty of recreational and cultural activities, including museums, concerts, and outdoor spaces, and that also offer affordable housing and a reasonable cost of living. We also screened the data for locales with employers or industries that are generally open to hiring older workers, and especially sought places that offer jobs in the relatively recession-resistant education, health care, and government sectors. Each place also has a nearby college or university, hospital, and in-home and residential long-term care facilities.
College towns such as Madison, Wis., and Tallahassee, Fla., offer an ideal mix of amenities and affordability. Schools give you a chance to stay intellectually active, host world class speakers, entertainers, and sports, and often provide great health care and cutting edge medical research. Many colleges allow retirees to take courses for free or a nominal cost. The University of Southern Maine in Portland, for example, waives tuition for Maine residents age 65 and older. In May, George Bilodeau, 76, received a bachelor’s degree in industrial technology from USM without having to pay tuition — his only expenses were books and fees. “I sat in a classroom with teenagers and people in their early 20s,” says Bilodeau. “They accepted me as one of their own and I enjoyed it.”
If you need or want to work in retirement, it’s a good idea to find a place with a strong and diverse economy, such as Nashua, N.H., or Overland Park, Kan. In 2007, Shawn Slome, 57, got out of the outlet clothing business and opened an eco-friendly products store, Twig, in Chapel Hill, N.C. The year before, he designed and built a solar home. “It feels like my business has more purpose than money alone or profit,” Slome says about his 1,800 square-foot store that’s located in a shopping center with Whole Foods. “My staff really enjoys their work and feels like they are making a contribution, and I am enjoying my work because my staff is so upbeat about working — it has really improved my day.”
You can also stretch your nest egg by moving to a place with a lower cost of living than where you live now. If the city has convenient public transportation, you can save even more by going car-less. Annette Mills and David Eckert sold their car two weeks after they moved from Falls Church, Va., to Corvallis, Ore., when they retired in 2006. The couple now gets around using a combination of bikes, public transportation, and walking. “Every time I get on my bike, I feel like I am eight years old again,” says Mills, 61, who carries groceries home from the farmers’ market and local food co-op in her bike baskets. Biking allows the couple to incorporate exercise into their routine as well as save money. “It is phenomenal all the bills that we don’t have anymore,” says Eckert, 62, a retired documentary filmmaker. “It’s like a huge burden has lifted.”
The retirement locations on our list strike a balance between small-town charms and big-city amenities. Georgetown, Texas, for example, is nestled between the scenic Texas Hill Country and Austin, which is only a half hour away.
It would be difficult to run out of things to do in the 400-year-old city of Santa Fe, N.M. Anne Anderson, 62, a retired textbook salesperson, chose to stay in Santa Fe when she retired in 2008. An avid art fan, she volunteers at the New Mexico Museum of Art, Spanish Market, and the International Folk Art Market, among other places. “We have monthly meetings for docents and you sign up for what comes in the door,” she says. When she’s not volunteering, Anderson enjoys soaking up the city’s culture. “Last night we were down on the plaza dancing. The night before, we listened to jazz at St. John’s College sitting on the lawn,” Anderson says. “If you want to do something every night of the week, you just have to choose what.”
RATES
Mortgage Home Equity Savings Auto Credit Cards
See today’s average mortgage rates across the country. Source: Bankrate.com
| Loan Type | Today | Last Week |
| 30 Year Fixed | 4.52% | 4.57% |
| 15 Year Fixed | 3.95% | 4.03% |
| 1 Year ARM | 3.65% | 3.65% |
| 30 Year Fixed Jumbo | 5.39% | 5.44% |
| 5/1 ARM | 3.51% | 3.60% |
| 3/1 ARM | 3.41% | 4.10% |
Topics: Mortage Rates, National News |
No Comments » | Trackback
Mortgage Disclosures Need a Serious Improvement.
Author: michael | August 12, 2010
The existing system of mortgage disclosures in the U.S. has long been a disgrace. Borrowers are inundated with garbage disclosures, and often the few pieces of critical information they need are either not there or concealed by the garbage.
As an illustration, a large proportion of the consumers who took option ARMs during the go-go years leading to the crisis believed that the initial interest rate, in many cases as low as 1%, held for five years. In fact, that rate was good for only the first month.
Borrowers taking option ARMs received a booklet about ARMs in general, a description of all ARM programs in which they expressed an interest, and historical or worst-case examples of how ARMs work. But the one piece of information they needed to avoid a horrendous mistake was not there. The default rate on option ARMs today is horrendous, and it is expected to be higher next year.
Too Many Cooks
A major reason why government-mandated mortgage disclosures are so bad is that there are too many agencies involved in the process. One consequence of multiple agencies is excessive disclosures, as each agency focuses on its own with little or no regard for the requirements imposed by the others. Voluminous disclosures tax the absorptive capacity of borrowers, and make it hard for them to find what is really important because it may be concealed in a sea of garbage.
Multiple agencies also lead to inconsistencies between the disclosures required by the different agencies, to the befuddlement of borrowers. For several decades now, borrowers have had to live with the Good Faith Estimate required by HUD and the Truth in Lending statement required by the Federal Reserve, with no way to reconcile or connect the two.
But perhaps the worst result of having too many cooks is a lack of clear accountability for the total package of disclosures. Since no one agency is responsible for keeping disclosures up to date, they are always behind the curve in responding to market developments.
The Wrong Cooks
Two of the cooks should not be in the disclosure business. By far the worst is the Congress, which is the least competent and the least responsive to the need to stay current. The original Truth in Lending legislation in 1968 included specific mandated disclosures that are as inane today as they were then. Once specific disclosures are mandated by law, it seems impossible to get rid of them, no matter how useless they are or have become.
I don’t believe the Fed should be in the consumer disclosure business either. While the Fed has always been the most competent of the federal agencies, it has done a wretched job with disclosures. The problem has been that consumer protection has had the lowest priority among its diverse responsibilities, and properly so. Monetary policy and bank regulation are its major concerns, and going forward its responsibilities in these areas will only get larger as it becomes the key player in dealing with issues connected to systemic vulnerability.
The third agency involved in mortgage disclosures is HUD, which is highly bureaucratic and politicized, but at least its responsibilities for mortgage disclosure are consistent with its overall mission and other responsibilities. The new Good Faith Estimate that became effective this year against fierce opposition is a substantial improvement over the old one, but it took forever.
Disclosures Under The New Law
Given this backdrop, the creation of a new consumer protection agency under the Restoring American Financial Stability Act of 2010 appears to herald a new beginning. The agency will assume authority for disclosures in all consumer markets, absorbing the disclosure responsibilities of the Fed and HUD. Indeed, the new agency is instructed to “combine the disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act of 1974 into a single, integrated disclosure…” [Sec. 1032 (f)]
However, while the agency would take over disclosure responsibilities from the Fed and HUD, Congress does not deal itself out of the disclosure picture. On the contrary, the Act may have more new mandated disclosures than the original Truth in Lending Act. Some of these are sensible, such as providing an early warning of a pending rate increase on ARMs, and the Act could have instructed the new agency to implement a disclosure for that purpose. Instead, the Act specifies exactly what the disclosure must be, making the agency responsible for a disclosure it did not design.
And it gets worse, because some of the specific mandated disclosures in the Act are nonsensical and will prejudice the ability of the new agency to do its job. For example, lenders will be obliged to disclose the “wholesale rate of funds”, whatever that is. They must also disclose the total amount of interest paid over the life of the loan as a percent of the loan amount, which is a useless number for any borrower making a financial decision. Yes, the Act, instead of using the creation of a new agency as the occasion for eliminating the role of Congress as a source of mandated disclosures,
Mortgage Home Equity Savings Auto Credit Cards
See today’s average mortgage rates across the country. Source: Bankrate.com
| Loan Type | Today | Last Week |
| 30 Year Fixed | 4.51% | 4.57% |
| 15 Year Fixed | 3.95% | 3.97% |
| 1 Year ARM | 3.65% | 3.65% |
| 30 Year Fixed Jumbo | 5.37% | 5.45% |
| 5/1 ARM | 3.49% | 3.60% |
| 3/1 ARM | 3.39% | 4.09% |
Topics: Marketplace, Mortage Rates |
No Comments » | Trackback
Continuing-Care Retirement Communities: Weighing the Risks.
Author: michael | August 11, 2010
Increasing numbers of older Americans are seeking out the security and comfort of a continuing-care retirement community. But a new report from the federal Government Accountability Office warns that such assurances often come at a steep price and “considerable risk.”
So-called CCRCs—which typically offer fine dining, health clubs and on-site long-term care—have grown in popularity along with the aging of the population, particularly among the upper-middle class and affluent, and are now a multibillion-dollar industry. At least 745,000 older adults live in such communities, according to the American Association of Homes and Services for the Aging. And those numbers are expected to rise as baby boomers near their 70s.
Now, though, some high-profile blowups are demonstrating that CCRCs need to be treated by consumers as a major investment and not just a place to live. The economic downturn is making it tougher for potential new residents to sell their existing homes and fill openings in new and expanded communities, which are generally regulated by state governments. As a result, low occupancy levels are challenging the industry’s financial models.
The GAO report, which was commissioned last year to probe the financial risks faced by the industry, concluded that state regulators need to be “vigilant in their efforts to help ensure adequate consumer protections for residents.”
Generally, CCRC residents pay a hefty deposit when they move in, which may or may not be refunded when they move out or die, depending on the contract. The average entrance fee for each unit is $249,857, according to the National Investment Center for the Seniors Housing and Care Industry, an Annapolis, Md., industry group.
Residents also pay monthly fees that vary depending on the contract type. “Life care” contracts typically charge the same amount per month whether residents live independently or have moved into an assisted-living or skilled-nursing unit. The monthly fee typically covers housing costs and amenities, meals and any needed health care. “Modified” contracts often have lower monthly fees but only some health-care services; when a resident’s needs exceed those services, the fees increase. Fee-for-service contracts require payment for all health-related services. Rental agreements, which generally require no entrance fee, are basically pay-as-you-go.
Keeping such communities full is crucial to funding general operations, building financial reserves and helping finance refunds—which are required under some contracts when a resident leaves or dies. And monthly fees collected from a full house of independent-living residents, whose cost to the facility is lower, help subsidize assisted-living and nursing care for others, the GAO report says.
Industry challenges you probably won’t read about in a CCRC’s marketing materials: A number of communities, along with one of the country’s largest CCRC developers, Catonsville, Md.-based Erickson Retirement Communities, have sought bankruptcy protection. (It was bought and is now called Erickson Living.) Some projects have been abandoned midconstruction. Others are cutting staff, reducing the number of meals served, or postponing opening assisted-living or skilled-nursing units.
In the case of a CCRC failure, residents can lose all or part of their entrance fee—or they may start being charged for services that previously were free. CCRC financial difficulties also can lead to unexpected increases in residents’ monthly fees, the GAO report says.
The Erickson bankruptcy caused anxiety among some residents who worried that their refundable deposits, often meant to be left to their children, might be at risk. But those deposits weren’t affected by the bankruptcy or subsequent ownership change, since those contracts were with the CCRCs themselves, which weren’t part of the bankruptcy filing, says Dan Dunne, a company spokesman.
Two Chicago-area CCRCs developed by Erickson recently filed for bankruptcy protection on their own, but residents haven’t been affected, he says.
There is still a potential catch: Residents, or their heirs, generally don’t get their money back until a new, replacement resident puts down a deposit. Depending on a community’s location, it might take longer now to reoccupy units than it used to, but the company has expanded its marketing efforts recently. “Never in the history of the company has a deposit not been given back,” Mr. Dunne says.
Another CCRC, then called Covenant at South Hills Inc., in Mt. Lebanon, Pa., filed for bankruptcy protection last year after losing a tax exemption. Although the facility was bought, residents lost the refundable portion of their entrance fees as part of bankruptcy-court negotiations with other creditors, says a spokeswoman for the new owner, Concordia Lutheran Ministries in Cabot, Pa. (The facility was renamed Concordia of the South Hills.)
Despite their risks, CCRCs still hold widespread appeal. They promise to alleviate one of the biggest worries facing families with aging loved ones: how to secure, and in many cases pay for, future long-term care.
So how do you delve into a retirement community’s finances before plunking down a hefty deposit? Two industry groups have come up with dozens of questions to ask. CARF International, which accredits CCRCs, has a free “Consumer Guide to Understanding Financial Performance and Reporting in CCRCs.” (It is available on www.carf.org.) The American Association of Homes and Services for the Aging offers “The Continuing Care Retirement Community: A Guidebook for Consumers.” (Go to www.aahsa.org, click on “Choosing a Provider,” “Continuing Care Retirement Communities,” and then “Consumer Guide.”)
Next, get a copy of the facility’s audited financial statements, which the facility should provide. (Any pushback is a red flag.) Be sure to look for the facility’s days of cash on hand, and compare it to that of other facilities, says Susanne Matthiesen of CARF International. Accredited CCRCs with one campus average 306 days of cash on hand; those with multiple sites average 281.
Also consider the facility’s cash-to-debt figure, which should be about 35%, says Jill Collins, chief operating officer of Pacific Retirement Services in Medford, Ore., which runs 11 CCRCs. She encourages people to ask a facility they are considering for its ratio calculations, along with how it stacks up against other facilities. Those doing well are generally in the 75th percentile or higher nationally, she says.
You also should ask for details on any bond financing, and whether the facility is meeting the terms. Typically, banks require 300 days of cash on hand and a minimum of 25% cash to debt, Ms. Collins says.
Watch out for facilities that rely heavily on investment income, donations or entry fees, which may signal an inability to run on income from operations, Ms. Collins says.
Finally, find out whether the facility is part of a larger group. Maybe it was acquired recently by a financially stronger operator. But if it is a financially healthy facility owned by an operator with flagging communities, ask how your investment would be protected from propping them up.
Write to Kelly Greene at familyvalue@wsj.com.
Mortgage Home Equity Savings Auto Credit Cards
See today’s average mortgage rates across the country. Source: Bankrate.com
| Loan Type | Today | Last Week |
| 30 Year Fixed | 4.53% | 4.56% |
| 15 Year Fixed | 3.96% | 3.96% |
| 1 Year ARM | 3.65% | 3.65% |
| 30 Year Fixed Jumbo | 5.42% | 5.46% |
| 5/1 ARM | 3.56% | 3.61% |
| 3/1 ARM | 3.42% | 4.10% |
Topics: Marketplace, Mortage Rates |
No Comments » | Trackback
Condos for less than a new car.
Author: michael | August 10, 2010
Home prices are plunging, and some of the best bargains are condos. Here are 8 that can be purchased for less than the cost of a new Prius.
Deerfield Park, Fla.
Price now: $25,000
Beds: 1
Baths: 1.5
Square feet: 770
Description: Money Magazine recently rated Deerfield Beach the top place to live for affordable homes. It’s just north of Fort Lauderdale on the Atlantic Coast and less than an hour from the attractions of Miami.
The condo is spacious and has a half bath, a screened porch, wood floors and is in move-in condition, according to agent Jana Brittenum of Keyes Real Estate. The corner location in the complex gives it nice garden views.
The condo community has good recreational facilities with a swimming pool, clubhouse and exercise area, but maintenance charges are a modest $180 a month.
The last time the unit sold was in 2005 when it went for $115,000. Why so inexpensive now? For one thing, it’s a short sale, which the lender will have to approve. Also, the condo association’s bylaws prohibit renters, so any buyers would have to want to live there.
| 30 yr fixed mtg |
4.53% |
| 15 yr fixed mtg |
3.96% |
| 30 yr fixed jumbo mtg |
5.42% |
| 5/1 ARM |
3.56% |
| 5/1 jumbo ARM |
4.12% |
Topics: Marketplace, Mortage Rates |
No Comments » | Trackback
Author: michael | August 9, 2010
0% of mortgages are underwater
NEW YORK (CNNMoney.com) — More than 20% of the nation’s mortgage borrowers owe more than their homes are worth.
At 21.5% for the third quarter, it is a small improvement over the previous quarter, when 23.3% of loans were underwater, according to real estate website Zillow.com.
This so-called negative equity is a hotly watched statistic because it is a prime predictor of foreclosure — second only to loss of income.
“It is the paramount challenge facing housing markets,” said Stan Humphries, Zillow’s chief economist. “We already have had record levels of foreclosure and, combined with high unemployment, negative equity is very toxic to the market.”
But don’t cheer about the slight gains in the past three months. Most of the improvement comes because so many people lost their homes to foreclosure
In some markets, residents were helped by improving home prices. As prices rise, it narrows the gap between what homeowners owe and what they could sell for. As a result, hard-hit metro areas such as Merced, Calif., and Orlando, Fla., recorded huge declines in the number of underwater borrowers. Merced was down to 40% while Orlando fell to 64.6%.
In fact, most markets trended up. Only 25 of 142 markets surveyed lost ground, led by Lansing, Mich., where negative equity grew to 31.5%.
Neighboring Detroit also worsened, jumping up to 31.4%, as did Grand Junction, Colo., where the it grew to 31.2%.
Las Vegas continued to lead the nation, with 73.9% of all mortgage borrowers owing more than their properties are worth. In Phoenix, that total is 66.8%; in Orlando, 64.6%; and in Reno, 61.9%.
Overnight avgs
| 30 yr fixed mtg |
4.56% |
| 15 yr fixed mtg |
3.96% |
| 30 yr fixed jumbo mtg |
5.44% |
| 5/1 ARM |
3.56% |
| 5/1 jumbo ARM |
4.14% |
Rates provided by
Bankrate.com.
Topics: Marketplace, Mortage Rates |
No Comments » | Trackback
« Previous Entries Next Entries »