Timely, Accurate Pre Foreclosure Data

Bank of America has announced that it will no longer be working with mortgage brokers for loans. Thus far, it have allowed mortgage brokers to originate loans, but believe, like others in the lending industry, that loans originated in-house end up having a higher performance rate.

The move comes as a result of complaints and lawsuits that have stemmed out of the housing industry downturn. Many homeowners believe that their homes have been seized improperly, and others in the industry believe that the paperwork to get many of the loans that were pushed through were not scrutinized enough.

At the peak of the housing market, many companies were reportedly hiring a lot of people that had little to no training in the area, and that loan documents were simply signed and pushed through. Because of this, there have been many people coming back with complaints that the loans were carelessly originated and approved.

JPMorgan Chase was the first to drop mortgage brokers, doing so in 2009, and the year before that Citigroup also took measures to downsize their wholesale venture. Those companies that are refraining from dealing with mortgage brokers are doing so in an effort to have more control over the process, which they hope will lead to a more successful outcome for homeowners.

Additionally, Bank of America recently placed a stop on foreclosures in many states around the country. This was because they believe there were too many paperwork errors involved in the foreclosures. Following their lead, GMAC Mortgage and JPMorgan followed Bank of America and halted their foreclosures.

Meanwhile, most of the other large lenders are not putting a stop on their foreclosures, but have reported that they are reviewing their procedures.

Wells Fargo, who has also announced they will not stop current home foreclosures as Bank of America has, remains the only major bank that is working with wholesale mortgage brokers.

There is a lot of advertisement and talk about how, if you file for bankruptcy, you will be able to save your home and avoid a looming foreclosure. While this may seem like a good plan, it very well could be the law offices that are touting it more than anyone else, because it brings them a lot of business in this current economy. Even so, it is worth exploring, if you are in a position of needing to take action that will save your home from foreclosure.

When it comes to filing for Chapter 13 bankruptcy, it is important to realize that this route is one that still has you paying off all your debt. So, if not being able to afford all your bills was an issue, then this route may not be all that helpful. This form of bankruptcy is for individuals and businesses, and allows the person to propose a repayment plan on all their debt.

While it will usually save the debtor money in the long run, it does not eliminate any debt that they may have. All in all, Chapter 13 bankruptcy could help to save a person’s home from going into foreclosure.

Chapter 7 bankruptcy, an option only individuals can file for, will eliminate outstanding debt so that the person never has to pay it off. However, not everything is included in that debt, some things, such as school loans for example, cannot be included, so those will still need to be paid off. When it comes to the person’s home, some states do allow for a home exemption, which would keep the home from being lost in the bankruptcy.

Bankruptcy, whether Chapter 13 or 7, is not a perfect system. For those who are considering this option as a way to save their home, the best route is to speak with a bankruptcy attorney to explore the options. The bottom line, however, is neither will save a home if a mortgage continues to go unpaid.

In what is seen as a slight improvement in the housing market, the National Association of Realtors (NAR) has recently announced that the country’s pending home sales has seen a rise of 4.3 percent. Favorable affordability conditions are being credited with the increase in rates.

The data reviewed by the NAR focuses on home sale contracts that are pending, rather than actual closings. Typically, the pending contracts would close a month or two later. Recently, home sales across the country have slowed down. Right now, housing affordability is at a high level. Any rise in inflation would lead to a rise in interest rates.

Experts suggest that while this is good news for homeowners and sellers, the housing industry recovery could be slowed if there is any rise in the mortgage rates. Right now, low interest rates have been an appealing reason for many people to purchase a home.

Additional factors that are believed to play a factor in the home sales recovery include how many jobs are created, so that people can afford and qualify for mortgages, and consumer confidence. When consumers feel more confident in the market, they are more apt to make a purchase.

When it comes to geographic impacts and pending home sales index (PHSI), in the South there was an increase of 6.7 percent, there was a 6.4 percent increase in the West, a 2.1 percent increase in the Midwest, and a 2.9 percent decline in the Northeast. Even with the slight rises in price this year; all geographic areas are still down from one year ago. The area seeing the biggest decline from one year ago is the Northeast, as it is 28.8 percent below what it was in August 2009.

If you have ever dreamed of owning a vacation home, now is the time to get serious about doing it! Many people may be finding it difficult to sell their homes, and others are losing theirs to foreclosure, so it is a perfect time to be a buyer. Because of this, many buyers across the country are reaping the rewards of the downtrodden market and coming up holding the keys to a beautiful vacation home.

There are several reasons why right now is a great time to consider buying a vacation home, including:

• Low Prices and Interest Rates. In just about every corner of the country, home prices as dropped, even up to 40 percent in some places. Right now, that vacation home you have been dreaming of on the beach or in a warmer climate is a good deal. And while you will get a great bargain on the home price, you will also find historically low interest rates, making the purchase an even better deal.
• Investing and Profiting. If you plan to have the vacation home for the long haul, you will no doubt see a return on your investment. The real estate market is going to bounce back and, as home rates rise, you will get a nice return.
• Great Selection. Because so many homes have been lost to foreclosure and so many people are trying to sell theirs, you have a great inventory to choose from. If you are a little flexible about what you are looking for, you will be able to find even better deals. If you really want a bargain, do your homework first and take the time to look around.
• Vacation Rental Incentives. Right now, many people are seeking vacation rentals. If you purchase a second home right now and would like to help have it paid for each month, rent it out for part of the month. Doing this will essentially get your second home paid for without incurring out-of-pocket expenses.

Buying a second home in this market makes sense. There are plenty of affordable prices, great selection and many ways to help profit off your investment.

Arizona has felt the housing market crash every bit as much – or, in some cases, more – than other states around the country. And now they are trying to do something about it, to make sure it never happens again. While mortgage loan officers never had to be licensed before, a new law that was passed in 2008 and just went into effect will require them to all be licensed.

In becoming a licensed mortgage loan officer, the individual will have to apply with the state. The process of becoming licensed includes being finger-printed and undergoing a background check. Additionally, anyone licensed to handle loans will have to demonstrate that they have an understanding of the ethical and legal implications of the loan process. They will need to know the laws, and the state is going to make sure they do before they are permitted to practice. Requiring people to be licensed will make it easier for the state to monitor the practices of loan officers, to ensure that they are not breaking the law.

This new law, which will impact some 10,000 people who are working as loan officers in the state, will also give consumers a way to legally report any misconduct they encounter as they seek loans. It is believed that the unethical and illegal actions of some loan officers helped lead to Arizona’s housing crash.

Although mortgage brokers have been regulated by officials for years, loan officers and originators have not been. Many believe that this allowed them to engage in the process of writing up loans and selling them to Wall Street firms and lenders, making money off each one. The riskier and higher the interest rate of the loan, the more money the loan officer made, which was an incentive to push through loans for which people were not actually qualified.

Because loan originators were making money off the loans, many pushed through loans that were sub-prime, risky, or had higher interest rates. The fee structure they were following was an incentive to push through more loans at higher rates.

Right now, there are great home deals across the country. With all the foreclosures and sellers who are eager to get out of their home, prices are good if you are a buyer. And while there are plenty of buyers who are lining up to try to snag these good deals, many are finding that they are being denied mortgage loans. Lenders have absolutely refined their practices, making it more difficult to get approved, and are giving out less loans as a result.

There are several big reasons today why so many people are being denied mortgage loans during a time when reduced-price housing is available in abundance. Here are some of the most common:

• Credit and Debt. Low credit scores are one of the biggest reasons that people get turned down for mortgage loans. Additionally, if the buyer has a lot of debt, they may also be denied, as lenders don’t want to take a risk that they will not be paid back.
• No assets. Today, banks want you to have 20 percent cash to put down when buying a house, and/or excess liquidity.
• Insufficient income. With unemployment high and many people making less than they used to, not having a sufficient income is a reason for loan denial. With lenders looking at the past five years of employment records, this may pose a hurdle for those who are retired. Lenders like to see a steady employment history for at least the last couple of years.
• Application honesty. Many people try to fudge the numbers and/or leave out information on their application. Lenders may have fallen for it in the past, but are now scrutinizing them more closely, and turning down those who were not completely honest.
• Self employed. People who are self employed may have a difficult time being approved for loans, as the mortgage industry examines their applications more closely.

Home prices are low, and it’s a good time to be a buyer. But those in the market to buy will need to make sure they meet the above criteria first, or they may find they are also turned down.

Starting in the early 1990s, Japan went through a period of deflation that they refer to as the “lost decade.” During that decade, the country saw continuous price declines and stagnant growth. Some experts are now predicting that America is on the path to do the same thing, according to Genji Tsukatani.

As head of a Japanese unit of Schroder Investment Management Ltd., Genji predicts that America has lost its global economic position and may suffer a deflation within the next three years. He cites the combination of a credit bubble and an aging population as the culprit, and says that if the real interest rate in the U.S. falls, it will also bring down those in Japan.

Deflation, which increases the fixed payment bond value, was used in making this prediction. The results of the real interest rates came by subtracting inflation rates from the 10-year bond yields. The real interest rate in the U.S., which recently fell to 1.82 percent, is below the rate of 2.51 percent in Japan where, for the last 18 consecutive months, core consumer prices have been dropping.

Faced with uncertainty about when the economy will begin to pick up, the 10-year Japanese benchmark recently fell to 0.995 percent, which matches a 7-year low.

Last month, the International Monetary Fund forecast that the U.S. economy will see a 2.9 percent growth in 2011, well behind the predicted 9.6 percent growth in China and the 8.4 percent in India.

Experts believe that the U.S. economy will not grow at as rapid a rate as those other countries because more of an emphasis has been placed on debt reduction, and the country’s population growth has slowed.

In America, almost 13 percent of the population is over the age of 65, while in Japan that number is just over 22 percent.

While many confusing and frustrating changes have taken place in the mortgage industry lately, there are even more to come. As of June 1, 2010, Fannie Mae issued new lender mandates. The FNMA LL-2010-03 Loan Qualifying Initiative, as it is called, was first implemented by Fannie Mae, but many other lenders have already begun following the mandates. It is believed that soon they will be nationwide, making it that much more important for people to understand the effects these mandates can have on home buyers.

In short, the new mandates will result in lenders checking out and verifying a person’s information immediately preceding a home closing. Let’s say, for example, that someone completes an application for a home loan in September. At that time, their credit information is checked, as is the verification of their income, etc. Nevertheless, when those buyers find the home they want to buy, that information will be re-checked, right before the closing.

So what does this mean for buyers? Even though the lender is doing what is called a “soft pull” of the person’s credit to view it again, doing so could have a negative impact on the person’s credit score, because pulling your report actually lowers your score. Plus, any changes might warrant them doing a full credit pull to verify all the information.

If the home buyer’s credit changes between the time they apply for the loan and the time of the closing, it could prevent the closing from taking place. Lenders are essentially tightening the purse strings and are waiting until the closing date to make sure the home buyer still qualifies for their loan.

What this means for home buyers is that they will need to make sure that no changes take place from the time they apply for their loan until the closing date. Changes that could negatively impact a credit score or prevent the loan from going through include changing jobs, using credit cards more than normal, taking out additional loans, etc.

According to Zillow, a real estate Web site, the number of people who are ‘underwater’ with their mortgages has declined in the second quarter. Despite this, more homes continued to enter the foreclosure process, even as declining prices of homes appear to have slowed up.

Underwater mortgages are those where the home owner owes more on the home than the home’s value. When this happens, it can create problems for the homeowner, because it can prevent them from being able to refinance their mortgage, which is something they may need to do in order to make the payments more affordable, and also because it prevents many people from being able to sell their homes.

Reducing the number of people considered to be underwater with their mortgage is a plus for the entire housing industry because it can mean that fewer homes will continue to go into foreclosure. Those people who are not underwater with their mortgages will be able to seek refinancing and have the opportunity to sell, if those are routes they need to consider.

In the first quarter of 2010, the number of American homeowners whose homes were in negative equity stood at 23.3 percent. In the second quarter, that number had fallen to 21.5 percent. A year ago, it was also at 23 percent. While it may be a small decline, it is a welcome one for many homeowners seeking opportunities for relief.

The negative equity rates are expected to remain high for the rest of the year, as national home prices will likely continue to fall. For 14 consecutive quarters, there has been a decline in home values. In the second quarter of 2010, values were down 3.2 percent from the past year and 0.6 percent quarter-over-quarter.

Zillow also reported that there were home declines in 99 out of 144 metropolitan areas, year-over-year.

Home prices have dropped significantly over the past couple of years. Sellers are desperate, slashing prices in an effort to attract buyers. And mortgage rates are low and plentiful. So what’s the problem? Unemployment!

The many good deals to be had in the housing market have to be balanced against the problem of nearly 10 percent unemployment across the nation. This prevents many people who would like to buy a home at these low prices from doing so, because they don’t have steady employment.

According to Trulia, located in San Francisco, people selling homes in the 50 largest cities in the country reduced their home prices by a collective $30.1 billion, as of August 1^st. The price of the homes is not so much the issue, as there are some good bargains on the market. But so many people have either become unemployed or seen a reduction in their earnings that it is impacting home prices even further, because if people were able to buy, it would keep prices from being slashed even further.

Additionally, many lenders have made it more difficult to obtain loans. The options to get them are readily available, but they make meeting the requirements more difficult for many people.

The unemployment rate and falling home prices become a Catch-22. Those interested in buying know that there are good deals on the market, along with low interest rates. But many can’t qualify, due to pay cuts or unemployment, which have a ripple effect on the housing market and help the prices to continue being slashed.

The largest spike of sellers cutting their prices has been in Las Vegas, followed by New York. Collectively, California cities saw the most reductions in listing prices.