Debt ceiling dilemma may push Treasury yields, mortgage rates higher

Friday, July 29th, 2011, 2:28 pm

A failure to raise the nation's debt ceiling by Tuesday could cause Treasury yields to drift higher and adjustable-rate mortgages tied to U.S. Treasurys to fluctuate over the coming months, real estate professionals say.
Despite having some concern about Treasury yields in the wake of a U.S. default, residential real estate investor Bruce Norris said he's not expecting an immediate, "exaggerated spike" in interest rates if lawmakers fail to raise the ceiling by Tuesday's deadline.
"I think the world is looking at this arm-wrestling contest as very frustrating, but not taking it to the level that the United States will stop actually paying its bills," Norris said.
If the U.S. does default on its debt, Gibran Nicholas, chairman of the CMPS Institute that trains mortgage brokers, warns "bonds issued by Fannie Mae and Freddie Mac will probably lose their triple-A status if the U.S. credit rating is downgraded."
Nicholas said in the wake of a default, the monthly payment on a $200,000, 30-year mortgage could go up as much as $240 a month if rates increase from around 4.5% to 6.4% or so. A smaller, 100 basis-point increase in rates would push monthly payments up by $122, Nicholas said.
He further warned that mutual funds can only invest in triple-A rated investments, which means they will either have to change their bylaws to continue holding U.S. Treasurys and mortgage bonds or they will have to offload their mortgage-backed securities and Treasurys, Nicholas explained.
"This will cause Treasury and mortgage bond yields to fluctuate considerably over the next few months, adding even more uncertainty to an already fragile mortgage and housing market," he said.
Paul Bishop, vice president of research for the National Association of Realtors, said a U.S. default could force mortgage interest rates higher in a market already battling weak demand, while also causing consumer confidence to plummet in the face of economic uncertainty.
"It would depend on how the financial markets react (to a default)," Bishop said. "If rates increase, of course, that would filter into mortgage rates."
Bishop said it's too early to know how much rates will be impacted by a failure to raise the ceiling on time or an actual default. "It would depend on how much the financial markets react to missing the deadline," he said.
But Ron Phipps, president of NAR, issued a warning to lawmakers.
"The indecision in Congress is paralyzing progress on other fronts, and it is harming homebuyer confidence and negatively affecting home sales," Phipps said.

BofA joins California principal reduction program

Wednesday, July 27th, 2011, 4:04 pm

Bank of America (BAC: 9.71 -0.82%) joined a program using the Hardest Hit Fund to reduce the principal balance of delinquent mortgages in California.
The California Housing Finance Agency received $2 billion from the Treasury Department's Hardest Hit Fund. Using the money, the now 27 mortgage servicers participating in the Keep Your Home California Principal Reduction Program would reduce the principal by as much as $50,000, matched by the investor for a total possible principal reduction of up to $100,000.
BofA started piloting the program in February. However, like other government-sponsored initiatives, Fannie Mae and Freddie Mac loans will not be eligible for the program, according to the Cal HFA.
"California has been particularly hard hit by reductions in property values," said Rebecca Mairone, national mortgage outreach executive for Bank of America. "By applying government-directed Hardest Hit Funds through the targeted Keep Your Home California program we create another potential solution for homeowners who are severely underwater, struggling to make their mortgage payments and who want to remain in their homes."
BofA will also participate in two other programs using HHF money. They include a mortgage assistance program for the unemployed, which provides up to $3,000 per month in aid, and another initiative to give up to $15,000 to help delinquent homeowners pay off past-due balances on first liens.
"We’re excited to have Bank of America on board for one more of the Keep Your Home California Programs," said Claudia Cappio, executive director for the California Housing Finance Agency. "We believe principal reduction can be an appropriate tool for helping qualified homeowners obtain an affordable and sustainable modification. We continue to work with other mortgage servicers to offer this to their customers."
A BofA spokesperson could not immediately comment on how many loans could be eligible for the principal reduction program.

THIS SENIOR CITIZEN NAILED IT...

THIS SENIOR CITIZEN NAILED IT...

Alan Simpson, Senator from Wyoming , Co-Chair of Obama's deficit commission, calls senior citizens the Greediest Generation as he compared "Social Security" to a Milk Cow with 310 million teats. August, 2010. Here's a response in a letter from a unknown fellow in Montana ... I think he is a little ticked off!   He also tells it like it is ! ------------------------------------------------------------------------- --------------------------------------------------- "Hey Alan, let's get a few things straight.. 1. As a career politician, you have been on the public dole for FIFTY YEARS. 2. I have been paying Social Security taxes for 48 YEARS (since I was 15 years old. I am now 63). 3 My Social Security payments, and those of millions of other Americans, were safely tucked away in an interest bearing account for decades until you political pukes decided to raid the account and give OUR money to a bunch of zero ambition losers in return for votes, thus bankrupting the system and turning Social Security into a Ponzi scheme that would have made Bernie Madoff proud. 4. Recently, just like Lucy & Charlie Brown, you and your ilk pulled the proverbial football away from millions of American seniors nearing retirement and moved the goalposts for full retirement from age 65 to age 67.  NOW, you and your shill commission is proposing to move the goalposts YET AGAIN. 5  I, and millions of other Americans, have been paying into Medicare from Day One, and now you morons propose to change the rules of the game. Why? Because you idiots mismanaged other parts of the economy to such an  extent that you need to steal money from Medicare to pay the bills. 6.  I, and millions of other Americans, have been paying income taxes our entire lives, and now you propose to increase our taxes yet again. Why? Because you incompetent bastards spent our money so profligately that you just kept on spending even after you ran out of money. Now, you come to the American taxpayers and say you need more to pay off YOUR debt. To add insult to injury, you label us "greedy" for calling "bullshit" on your incompetence. Well, Captain Bullshit, I have a few questions for YOU. 1. How much money have you earned from the American taxpayers during your pathetic 50-year political career? 2. At what age did you retire from your pathetic political career, and how much are you receiving in annual retirement benefits from the American taxpayers? 3. How much do you pay for YOUR government provided health insurance? 4.  What cuts in YOUR retirement and healthcare benefits are you proposing in your disgusting deficit reduction proposal, or, as usual, have  you exempted yourself and your political cronies? It is you, Captain Bullshit, and your political co-conspirators called Congress who are the "greedy" ones.  It is you and your fellow nutcases who have bankrupted America and stolen the American dream from millions of loyal, patriotic taxpayers.  And for what?  Votes. That's right, sir.  You and yours have bankrupted America for the sole purpose of advancing your pathetic political careers.  You know it, we know it, and you know that we know it. And you can take that to the bank, you miserable son of a bitch. If you like the way things are in America , delete this.  If you agree with what a fellow Montana citizen says,  PASS IT ON!!!! This would change everything and should be retroactive! No one has been able to explain why young men and women serve in the U.S. Military for 20 years, risking their lives protecting freedom, and only get 50% of their pay. While politicians hold their political positions in the safe confines of the capital, protected by these same men and women, and receive full pay retirement after serving one term. It just does not make any sense. On Fox news they learned that the staffers of Congress family members are exempt from having to pay back student loans. This will get national attention if other news networks will broadcast it. When you add this to the below, just where will all of it stop? 35 States filed lawsuits against the Federal Government Governors of 35 states have filed suit against the Federal Government for imposing unlawful burdens upon them. It only takes 38 (of the 50) States to convene a Constitutional Convention. This will take less than thirty seconds to read. If you agree, please pass it on. This is an idea that we should address. For too long we have been too complacent about the workings of Congress. Many citizens had no idea that members of Congress could retire with the same pay after only one term, that they specifically exempted themselves from many of the laws they have passed (such as being exempt from any fear of prosecution for sexual harassment) while ordinary citizens must live under those laws. The latest is to exempt themselves from the Health care Reform... in all of its forms. Somehow, that doesn't seem logical. We do not have an elite that is above the law. I truly don't care if they are Democrat, Republican, Independent or whatever. The self-serving must stop. If each person that receives this will forward it on to 20 people, in three days, most people in The United States of America will have the message.. This is one proposal that really should be passed around. Proposed 28th Amendment to the United States Constitution: "Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives in Congress;  that does not apply equally to the citizens of the United States ." You are one of my 20.

Buying Verses Renting A Home?

Buying Verses Renting A Home

When it comes to a home, you have two options: buy or rent.  What is right for one person may not be right for another, which is why it's important to know which is the best option for your individual situation. 

Why People Rent

There are a number of reasons why someone may either choose or be forced to rent, including sporadic or unpredictable income, a high debt-to-income ratio, a short sale, bankruptcy or foreclosure within the last six months, unpaid collection accounts or judgments, frequent relocating for employment or the inability to save enough money for a required down payment on the purchase of a home.

Maintenance Matters

As a homeowner, you will be responsible for any maintenance or repair issues that arise.  This is a big consideration when choosing whether to rent or buy.  When you rent, the property owner is responsible for repairs and it may not always be obvious that these issues can be very costly.

How To Know When It's Time To Buy

If you have steady income with a good employment history, can provide a down payment of at least 10 percent of the purchase price and are current with all debts, it may be time to consider buying a home instead of renting.  In some cases, the cost of rent may even exceed that of a typical mortgage payment.

When deciding to buy, job stability is a big factor.  If your job does not require frequent relocation and you plan to live in the home for at least 5-10 years, you may want to consider making the purchase.  If you need to relocate after that, you may have enough equity from the sale to use as a down payment on another home.

Home Buyer's Checklist 

If you can answer yes to the following questions, you may be ready for home ownership.  I can help you to find the perfect home based on your individual needs.

Have you been steadily employed for at least one year, but preferably two years?

Do you plan to live in the home long enough to build equity?

Can you provide a down payment and still have enough money left to pay for closing costs, utilities and home furnishings?

Are you current on all debts, including auto loans, credit cards, etc.?

In addition to any current debts that you may have, can you afford a monthly mortgage payment which will likely include property taxes and insurance?

Do you have the time to devote to shopping for a home and comparing interest rates from various lenders?

Have you checked your credit reports for inaccuracies and disputed anything that needs correction with each of the three major credit reporting agencies?

The decision to buy or rent is a very personal one that can only be determined after a careful evaluation of your situation. I can show you the perfect home and a lender can tell you whether or not you can afford it, but it's up to you to make the choice as to whether or not you are ready to make the move.

Freddie Mac authorizes HUD unemployment program

Thursday, July 14th, 2011, 3:00 pm

Freddie Mac directed its servicers to fully participate in the Emergency Homeowner Loan Program, which provides mortgage assistance for the unemployed.
The Dodd-Frank Act authorized the Department of Housing and Urban Development to allocate $1 billion toward EHLP in the form of interest-free loans to roughly 30,000 borrowers in 27 states and five others with a similar program. The loans can range as high as $50,000, but HUD expects the average amount to be $35,000. The borrower must put at least $150 toward the monthly mortgage payment themselves.
Borrowers have until July 22 to apply for assistance.
Fannie Mae directed its servicers last month to fully participate in the program as well.
Freddie said its servicers will suspend foreclosure proceedings once notified the borrower has been approved for EHLP assistance, regardless of the initial application date. This differs from Fannie's guidance which states the servicer could suspend a foreclosure as long as the application date comes more than 30 days before the foreclosure sale date.
Freddie servicers must contact the appropriate agency if the they do not receive payment in order to determine whether or not EHLP assitance was terminated. Borrowers are allowed to miss one monthly mortgage payment after receiving program funds. If they do not make it up the following month, the funding can be cut off.
"If assistance has not been terminated, servicers must communicate with the borrower to ensure payment is remitted to the appropriate agency," Freddie said. "If assistance has been terminated, servicers must resume appropriate collection efforts."

Attention: This program is not available in California. Here is a link for more information on the Program
http://www.nw.org/network/foreclosure/nfmcp/EHLPmainpage.asp