Is There Really A Fast Answer To Our Mortgage Mess?

There are a lot of ideas being tossed around on how to fix out market. It is very likely that the "fix" will be a answer no one really wants to hear. That is the magic of TIME. The reality is a huge amount of the mortgages out there belong to borrowers who NEVER could afford the home they bought and may NEVER be able to afford a home at any mortgage payment that would let them keep their house. These mortgages were done out of greed from the entire financial sector all the way down the line because of the high interest rate they were going to get (as long as the borrowers MADE their payments)to collect and all the high up front fees they earned. There was little if any regard to quality rather it was quantity the lenders were after. These existing borrowers will default because they simply cannot and could not afford the payments. THEY DID NOT QUALIFY FINANCIALLY FOR THE MORTGAGE. The answer to these problems are that these borrowers will lose their homes and these homes will have to be absorbed by borrowers who CAN afford the home. This will take time because of the glut of homes that were built to satisfy the thought that EVERYONE can afford a home. Some individuals just cannot afford to own a home. Some of these individuals refuse to control their spending habits to qualify and some just do not make enough to buy the home they think they deserve. This is not everyone situation but it is the bigger part of the mess. www.rateinformer.com

More Problems For Freddie Mac and Fannie Mae?

If the Feds raise the loan limits for Freddie and Fannie next month they will be able to buy loans that were previously "Jumbo" loans and had higher interest rates. Why did these loans have higher rates? THEY WERE HIGHER RISK LOANS! Now all of the sudden the feds want to put this product in the last(at least partially) stable part of the mortgage market. This part of the market has stayed mostly (but not fully) away from the problem loans and now could be taking on product that could cause these securities to become problems themselves. This was suppose to help the high end market areas of the country but will come out of the taxpayers pockets if there are problems with the loans down the road. www.rateinformer.com

Today's Rates Are ???

Mortgage rates will vary widely for the next few days as the turmoil of the financial markets continue. Yesterday rates dropped a full .50 BUT only for PART OF ONE DAY. Today rates are back up again so this gives you a little feel of what rates can do in just a few hours time. Keep house hunting and look for pre 2000-2001 prices if possible to give you a base for property values to reach reasonable values . www.rateinformer.com

Can I OR Do I Want To Save My Home?

If you have decent credit scores and have not been late on your mortgage payments the odds are good you can refinance at a lower rate with rates moving down. The BIG problem is many borrowers do NOT WANT to refinance because they owe more than their home is worth with property values dropping out of the sky. No Government intervention or program will give them the motivation to do so unless a portion of their loan is forgiven which would bring their mortgage back in line with the real value of the home. The chances of a program of this nature are slim to none as neither taxpayers or lenders want to be stuck with these losses coming out of their pockets. Many more foreclosures are ahead of us. Future home buyers will have many homes to choose from at much lower prices than previously thought. www.rateinformer.com

Bank Of America Throwing Good Money Away In a "forced" Sale of Countrywide

B of A's announcement was not a big surprise in the fact of WHO bought them. It was a big surprise that they would throw away another 4 billion after lending them 2 billion a short time ago. It has been reported that half of that first loan has been lost in value in this short time. Countrywide made billions of dollars in doing "garbage" loans for almost anyone who could breathe just because of greed. Their returns were huge. Where is all of that money that was made for the last 5 years? This buyout will not make these bad loans turn into gold! They will still default no matter who owns the company. These loans were made to borrowers who DID NOT QUALIFY for their mortgages. Underwriting guidelines went out the window for years as these loans were made. Billions of dollars of "liar" loans (as the Stated Income Loans are known in the mortgage industry) were made by CW and now the truth is coming out about their real income and ability to make their mortgage payments. Do not get caught being one of these borrowers. Is Bank of America "throwing good money after bad" as the saying goes? It brings into question their financial wisdom. www.rateinformer.com

Are Consumers Having a Last Big Fling In Spending?

November showed a huge increase in consumer spending and December will be high because of the holidays. Are consumers having a buying binge and spending money they do not have to ease their fears of the economy and surround themselves with new goodies that they think will make them feel better? Is this a larger sign of the "I do not care" attitude that consumers are developing as they sink further into debt? Are they running up their charge cards with no intention of paying them off? Time will tell us the answer to these questions. The credit card companies should be getting worried about the bad debt they will be left holding on to. This is more trouble for the financial markets. As a homebuyer be careful where and what you spend and keep your debt load down as it could mean the difference in getting that house you want. www.rateinformer.com

Many More Homes to Come on the Market

It is estimated that 1.8 Million sub prime loans are scheduled to reset to sharply higher rates in the next 2 years. How much of that will end up on the market for sale is anyone's guess but it will be enough to flood the resale market. This housing issue is much deeper and will last much longer than anyone previously thought. The Real Estate Industry cannot wish the problem away by telling everyone it is getting better. This could very well be the worse housing market in the last 50 years. Some areas of the country are holding their own in prices but a huge part of the country is having or beginning to have very large home devaluations. That is money that is coming out of the economy that was available for purchasing power in the form of second mortgages or home equity loans. It will put a huge damper on the economy as time goes on and billons of dollars in home values (even though these values were inflated and false) are lost. The owners of these homes will not feel like spending when they feel their net worth has dropped dramatically. www.rateinformer.com

Rates are coming down But at What Cost?

Our interest rates are dropping but at what cost to the economy. As the dollar weakens so does our economy. Goods cost more from imports and almost EVERYTHING we buy is imported. Oil at $100 per barrel is really putting a burden on homeowners. The dollar weakens because of the low interest rate investors (mainly from overseas) are getting on the US bonds and securities. They will go elsewhere to get a higher return ( in Euros or other currency). It is true consumers are still spending but what are they spending? They are running up huge credit card debt that they will not be able to pay back. That makes a false economy of spending money they do not even have. Does this not remind you of all the rich equity homeowners had just a short while ago? Many homeowners took their "equity" out in the form of larger loans or second mortgages and cannot pay them back either. If you are careful with your spending you can still become a homeowner. There are starting to be some reasonable buys on homes in many parts of the country. www.rateinformer.com

"Good" Credit will make a BIG difference in your Rate in 2008 !

Starting in January good credit has been redefined as 680 and above by Freddie Mac and Fannie Mae who are the primary buyers of mortgages. If your credit is below that you will get a interest rate of about .125 - .375% higher in rate (or pay a additional fee of .50 - 2.00 points). No matter what the Feds do with rates you will get a higher rate than last year. The only way around this rule is if you have a 70 LTV or less (which is almost worthless to most borrowers). We foresee many more changes are coming such as lower LTV's for cash out's and investor property. On the flip side the cost of the home will be much less than last year. Your credit now will make a much bigger difference than ever before so start working on it now. www.rateinformer.com