Posts Tagged ‘ mortgage ’

What is a Strategic Default?

A strategic default is when a homeowner walks away from their home when they owe more on the home than it is currently worth. In some circumstances, the homeowner can afford to make the mortgage payments, but due to the decreased value of the home under the current market conditions, they feel it is a financially sound maneuver simply to leave their home behind and rent or try to find another home which has also lost value.

Thousands of homeowners have strategically defaulted on their homes and have left the mortgage company holding the bag. The mortgage company now has an asset for which they do not have a revenue stream. Plus, the property is now a liability because the mortgage company is obligated to maintain the property so that adjacent homes do not further lose value.

Due to the enactment of new Fannie Mae regulations, a strategic default will now have more severe consequences for the homeowner than in the past. Continue reading this post

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Posted by: Peter McCullough on July 30th, 2010 under Financing, Mortgage and Home Loans, HomeGain

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Will Mortgage Underwriters Be Using Mapquest Soon?

commute-transportation-costsTransportation costs may soon become a recognized expense for mortgage applications if the Natural Resources Defense Council study holds up.

The San Francisco Chronicle reported that the study showed that higher transportation costs resulted in a higher foreclosure rate:

The draft report looked at trends associated with 40,000 mortgages in San Francisco, Chicago and Jacksonville, Fla.

The release date for the final study has not been announced. The research included borrowers’ income and expenses, credit scores and loan-to-home value ratio.

It focused on the average number of vehicles owned per household in a neighborhood, and through a complex formula, found that the likelihood of mortgage foreclosure increased as neighborhood vehicle ownership rates rose.

If transportation costs were as much as 17% of a household budget, as the study suggests, a $5/gallon price for gasoline could negatively impact a family’s budget. Recent years’ foreclosure activity suggests that compunction towards making mortgage payments has given way to liquidity concerns. Moreover, a legal scholar suggests that any moral consideration associated with a strategic default is passe.

Let’s consider the hypothetical case of a family, with jobs in Los Angeles County, who purchased a $400,000 Riverside, CA home in 2007. The home price has withered to $300,000 and the family has “lost” their $80,000 down payment; they are $20,000 “in the hole”. This has them feeling despondent about the future of the property as an “investment”. Continue reading this post

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Posted by: Brian Brady on February 3rd, 2010 under Financing, Mortgage and Home Loans

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Mortgage Brokers Need To Shut Up

Mortgage brokers need to stop complaining because customers think we have something to hide.

mortgage-brokers-shut-upForget how non-disclosure of yield spread premium gives direct lenders an advantage; the consumer thinks you’re trying to hide something.

Don’t complain about the Home Valuation Code of Conduct interfering with the transaction; the consumer thinks it gives her an unbiased valuation of the property she’s buying.

Definitely stop complaining about the new truth-in-lending disclosure law (enacted last month); ‘ consumers want to know what their rate and fees might be and how they change… immediately, when it happens.

NEVER complain about how lenders favor their retail sales forces over their wholesale channels; the consumer thinks the banks give better service when they read that.

Who cares if bank sales representatives don’t have to be individually licensed?  Consumer might and that gives us an opportunity.

Don’t even THINK about complaining about the new good-faith-estimate (due next year).  That document is one of the best sales tools I’ve ever seen.  An originator who explains that disclosure document properly, wins the loan engagement.  The consumer won’t even THINK about filling out the last page because he trusts YOU. Continue reading this post

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Posted by: Brian Brady on September 1st, 2009 under Financing, Mortgage and Home Loans, Guest Bloggers

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A Functioning Market Niche

The Home Equity Conversion Mortgage is  a  product created by Congress in 2008 to provide some liquidity to the struggling home market. The amount you can borrow depends on age, current interest rates, and the appraised value of your home or FHA’s mortgage limits,whichever is less. Generally, the more valuable your home is, the older you are and the lower the interest, the more you can borrow.

  1. No payments are necessary as long as the house is your principal residence.
  2. No need to repay the loan as long as you or one of the borrowers continues to live in the house
  3. You can never owe more than the value of your home at the time you or your heirs sell the home.
  4. When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and fees.
  5. The rest is yours.

The Rules Just Changed

More seniors are turning to reverse mortgages to supplement their retirement savings, which have been decimated by market losses. Continue reading this post

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Posted by: Howard Sobel on June 19th, 2009 under Financing, Mortgage and Home Loans

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The June 2009 Mortgage Rates Massacre

Mortgage rates, prior to June, were stabilizing after a volatile first quarter.  Potential home buyers and existing homeowners were settling in to the fact that a 4.5% conventional mortgage rate could be had; some days you had to pay a couple of points, some days only one.  FHA and VA loans were about an eighth of a percentage point higher.

Brighter days in the real estate market seemed inevitable.

Volatility hit the mortgage rates market like an unexpected tsunami.  Here’s how it unfolded:

What does this mean to you, the professional real estate agent? Continue reading this post

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Posted by: Brian Brady on June 8th, 2009 under Financing, Mortgage and Home Loans

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New, Unique Co-Marketing Model: AgentView and RateWindow

Here’s a unique co-marketing business model that combines RateWindow, the wholesale mortgage rate engine and HomeGain’s AgentView to give teams of mortgage brokers and Realtors an innovative online marketing presence. Using RateWindow and AgentView together will help position the Realtor and mortgage broker as a team solution for their local client base.

Please let me know what you think about the new marketing model.

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Posted by: Pat Kitano on March 24th, 2009 under Financing, Mortgage and Home Loans, Technology

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