URBALO

The slide started innocuously in April after New Century Financial, a mortgage lender whose principle borrowers were Americans with less-than-stellar credit, filed for bankruptcy protection.

Its customers were people who may have been late on credit card payments, maybe even filed bankruptcy in the previous years, but still wanted that shot at the American dream: a home of one’s own.

Lenders, flush with cash and eager to exploit new markets so they could, in turn, lend more money and increase their profits, were only too happy to oblige.

Hedge funds and banks worldwide saw a market flush with opportunity and took their fill, buying mortgage-backed securities to bolster their own bottom lines. Read Full Article ->

Even if this is not something common, one day, your mortgage company might have to fill for bankruptcy. Of course, the question that will go through your head at that time is: What do I do? Am I screwed? Who owns my house?

Here is a simple advice:

1.Keep making your payments

Regardless of what kind of trouble the mortgage company may be in, you still need to send in your payments on time, says Greg McBride of Bankrate.com.Remember, your payments are considered an asset to the company. If a lender declares bankruptcy, those assets will just be sold to another lender.

In most cases, government-sponsored enterprises like Fannie Mae (Charts), Freddie Mac (Charts, Fortune 500) or Ginnie Mae will handle the transfer. But rest assured, there will be someone who wants to get your monthly check.

2: Know Your Rights

The terms of your loan should always stay the same, no matter who holds your loan. It’s important that you thoroughly review the details of your mortgage agreement. The interest rate and the type of loan you get should not change. If your lender does sell your mortgage, you should receive a letter from the company within 15 days that outlines the new mailing address and payment deadline.

You should also be given a toll-free telephone number that you can call if you have any questions. You must get a grace period of 60 days to get your payments to the right place on time. If you have any complaints or issues, write a letter to your lender. The company is required to respond within two months of getting your letter. Read Full Article ->

The stock market is going crazy. Hedge funds are going under. But for the average American looking for a home loan, the crisis in the subprime mortgage market may actually be good news.
Rates on 30-year fixed loans dipped last week, to 6.41 percent, according to the Mortgage Banker’s Association.

In addition, tightened lending standards stemming from the subprime crisis likely mean fewer buyers, pushing down home prices.
The one catch is this: You’ve got to be a buyer with good credit, a low debt to income ratio, a healthy down payment, verifiable income, and looking to finance less than $417,000 (the cutoff for so-called jumbo loans). Read Full Article ->

Rising competition is forcing mortgage sellers to generate new products to win customers.
NEW YORK (CNNMoney.com) — Following the subprime mortgage market collapse, new loans are down, and lenders are turning back to safer - less profitable - offerings. But with tougher competition and a shrinking market, they’re getting a little more creative.

In January, more than 60 percent of all mortgage loans were made to prime customers with FICO scores of 650 or more. Those customers most often go the traditional 30-year, fixed-rate route - a simple, unsexy product that offers lenders little room to differentiate or to squeeze more profits out of their loans.
That means there’s a smaller pie of less profitable loans to be divvied up, prompting lenders to come up with new ways to market their offerings.

“Everyone is trying to be a little creative,” said Bob Moulton, founder of Americana Mortgage Group.

Retail banker Washington Mutual, (Charts, Fortune 500) has weighed in with a flexible mortgage that allows borrowers to switch from a fixed rate to an ARM and back again - without refinancing - at little or no charge.

Bank of America, (Charts, Fortune 500) has been publicizing a no-fee mortgage that requires no application fees, lender fees, appraisal fees, origination fees or private mortgage insurance (PMI), even if the loan-to-value ratio is greater than 80 percent, the normal PMI cutoff point.
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MORTGAGE LENDERS make no bones about it: They are tougher on second-home loan applications than on primary-home loans. Why? Because the finances of a second-home buyer are, by definition, stretched thinner. The result is that second-home rates traditionally run one-quarter to one-half point higher than those for first residences. Ditto for origination points on vacation-home loans.

That said, however, the current environment for second-home lending is about as lenient as it has been in years. Banks are healthy again and a booming real estate market has them all rushing into the market at once. The result: heightened competition — especially in the second-home arena. “The typical profile of a second-home owner is someone more affluent than a single-home buyer,” says David Totaro, chief marketing officer for Dime Savings Bank of New York. “That’s the type of person we want to do business with.”

Using a Home-Equity Loan
With interest rates at historically low levels, many lenders will encourage you to take out a home-equity line of credit on your primary residence to fund all or part of your second-home purchase. Watch your step here. Most home-equity lines of credit float a point or two higher than the prime rate, so you could end up repaying this piece at a much higher interest rate than if you had simply taken a mortgage for the entire amount. Plus, unlike mortgage interest, which is deductible on up to $1 million of debt on your first and second homes combined, the home-equity cap is $100,000. (You get a break on $1.1 million total.)
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Great article on SmartMoney.com. Foreclosure properties are always risky and there are so many factors to take in consideration, which makes the whole process very unpleasant or, better yet, confusing.

LAST MONTH, 43-YEAR-OLD Daryl White and his wife Renée closed on their new home: a five-bedroom, four-bathroom 2,900 square-foot house in Valencia, Calif., a planned community 40 miles north of Los Angeles. They got quite a deal. The property was appraised at $830,000, yet they bought it for $660,000. “The house was only 10 years old, so it only needed light repair, like removing the wallpaper and painting, just some patchwork here and there,” White says.

Why the bargain? The house had been in pre-foreclosure. This means the owners had defaulted on their payments and received a notice of default from their lender. They then had a set period of time — which varies by state — to sell the home or become current on the mortgage, until the bank took it back.
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Applications for U.S. home mortgages rose last week, driven by an increase in loan refinancing, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 1.5 percent to 639.8 in the week ended Feb. 9.
The group’s seasonally adjusted refinancing index increased 4.5 percent to 2,031.7, overshadowing the 1 percent dip in the MBA’s seasonally adjusted purchase index to 400.7.

All three measures posted slim declines on a seasonally adjusted four-week moving average but were above year-ago levels.
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