by
Peter G. Miller
March 30th, 2009
In the world of mortgage lending there’s one thing every lender wants to avoid. That one thing? Quickie defaults.
In other words, if you make a loan you absolutely want the borrower to make at least a few payments. Here’s why:
Imagine that Smith mortgage originates a loan with Mr. Johnson. Smith gets a lot of fees and charges from its work and the loan is promptly re-sold to an investor. If Smith makes all payments for the next 120 days all is well — Smith gets to keep its money. However, if Mr. Johnson defaults during the first 120 days then the buyer of mortgage can demand that Smith buy it back.
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by
Peter G. Miller
March 23rd, 2009
HUD has announced that beginning April 1st that it will limit the ability of borrowers to refinance and take cash out of their properties.
“Effective for case number assignments on or after April 1, 2009,” says HUD, “the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser’s estimate of value.
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by
Peter G. Miller
March 16th, 2009
Freddie Mac reports that you could get a 30-year fixed-rate loan last week at 5.03 percent with .7 points. Since that’s an average, you have to figure that some people are actually borrowing at less than 5 percent.
Meanwhile, you could also get an adjustable-rate loan at 4.80 percent with just .5 points.
The adjustable is plainly cheaper — it’s also a lousy deal.
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by
Peter G. Miller
March 9th, 2009
With awful numbers to report just about everywhere, let us take a moment and look at the good news from the FHA.
It turns out that a lot of people want FHA mortgages — no surprise given that the marketplace is not exactly crowded with alternatives. In fact, the FHA program has done stunningly well, a testament to financial sanity.
Since October 1st — the start of the government’s fiscal year — HUD reports that 716,641 borrowers have received FHA loans — that’s up 125.4 percent when compared with the same period last year, and 2008 was a strong year for the FHA.
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by
Peter G. Miller
March 2nd, 2009
Should millionaires be able to get lousy loans?
When it was passed last year as part of the FHA reform package, the Hope for Homeowners program was a federal mortgage refinancing plan designed to help some 400,000 people who now have toxic loans. In fact, the program has been a complete bust. As of January 31st, HUD figures show that there have been 465 Hope for Homeowners applications — and not one approval from the government.
Hope for Homeowners has gone nowhere because it’s complex. It requires lenders to take a loss and borrowers to share profits and make big payments to Uncle Sam. While the intention is good, the program is just too complex to succeed.
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