Minnesota Mortgage Blog - MN Mortgage and Real Estate News, St Paul Minneapolis Blogging, mortgage, real, estate, mortgage blog

Minnesota Mortgage Blog - MN Mortgage and Real Estate News

Florida, Illinois, California launch probes of Lender Countrywide

February 1st, 2008 5:29 AM

Metzler Mortgage Group

FLORIDA LAUNCHES PROBE OF COUNTRYWIDE

The Florida attorney general is investigating mortgage lender Countrywide for unfair and deceptive business practices related to home loans. A subpena dated January 17 directs Countrywide to provide documents and other information describing procedures used to determine whether borrowers qualify for subprime loans.

The state also wants informaton on how Countrywide credited borrowers' payments any time after January 2005. It also asks for documents that track applications of borrowers payments to bankruptcy debt and a description of fees charged to mortgage holders during the same period. The Florida Attorney General's office started a mortgage fraud hot line last year. It has received over 150 complaints on Countrywide.

Attorneys general in Illinois and California are conducting similar investigations.

Posted by Joseph Metzler MMS on February 1st, 2008 5:29 AMPost a Comment (0)

Subscribe to this blog

Waiting to buy? Why NOW is a great time to buy a home!

February 17th, 2008 7:55 AM

metzler Mortgage Group Minnesota mortgage lender

IGNORE THE HEADLINES AND STOP WATCHING THE NEWS!

Saint Paul, MN. Foreclosure foreclosure foreclosure. That is all we see and hear. This would have you believing Chicken Little that the sky is falling. Yes, there are a lot of personal financial disasters with a record number of people losing their homes. The vast majority fall into two categories:

EXISTING homeowners who were encouraged to load up on debt by using home equity loans to pay for anything and everything, stripping away the safety and security of their equity position. I constantly speak to people who have owned their home 10, 15, 20-years, who owe 100% of TODAYS VALUE. I must ask. Is that a banking industry issue, or a consumer gone crazy issue?
NEW homeowners who over bought using 100% financing and high risk adjustable and interest only loans. Home owners were drawn to these loans like bugs to a bug zapper because they allowed them to buy more expensive homes while keeping payments low, albeit temporarily. Again, a banking industry issue, or a consumer gone crazy issue?

The reality, while the numbers are at record highs, the overall percentage is extremely low. Adjustable rate mortgages cover only a small fraction of homes. Sub-prime loans makes up only a fraction of adjustable loans. Furthermore, most foreclosures end up with the lender recovering much of the original principal. So why is there such enormous unease with consumers and the financial markets?

THE GOOD NEWS. For every foreclosure there is a first-time home buyer getting a fantastic deal! As values increased, many first-time buyers were priced right out of the market. With the finance everyone for anything party over, home prices have fallen nationwide around 5%. Some markets even more.

This won't last for ever. Yet many people are sitting on the sidelines waiting, hoping, for prices to fall further. Look at the chart below. If one assumes a little further drop in home prices, does it really make sense to wait to buy? Rates are low today, but as the economy recovers, rates should go up to stem inflation. A 30-year fixed rate under 6.00% may soon be only a distant memory.

Why Waiting To Buy may be a Bad Idea! Financing costs will rise as the economy recovers, so waiting to buy may not pay off like you think.
Home Price Put 20% down, get a 30yr fixed rate loan	Today $200,000	1-Yr from now $190,000
Interest Rates Example Rates	5.50% Today	6.00% Recession ends, rates go back up
Payment	$908	$911
Most people wanting to buy, but waiting to buy, do so on the idea home prices will fall further. This shows why waiting may not pay off.

THE BOTTOM LINE: If you are financially ready to buy a home, plan on living in it for 4 to 5-years or longer, you are almost foolish NOT to buy a home today.

Posted by Joseph Metzler MMS on February 17th, 2008 7:55 AMPost a Comment (0)

Subscribe to this blog

The Death of 100% Zero Down Home Financing

February 12th, 2008 5:58 AM

THE DEATH OF 100% ZERO DOWN FINANCING?

Minneapolis, MN: Lenders nationwide employ a variety of sophisticated risk modeling tools to help assess key factors that shape the future direction of the housing market, including housing supply, foreclosure inventory, delinquencies, employment rates, and price appreciation trends. Based on lender assessments, significant market downturns have been noted in many areas of the country.

HISTORY LESSON: For a refresher, up until the late 1990's, there really was no such things as 100% home financing EXCEPT for a VA loan. FHA 3% down was your only low down payment option, as standard loans required 5% down. The first zero down loans required excellent credit scores, and no real payment shock. If you had great credit, were successfully paying your rent, you could buy a home zero down if the mortgage payment was about equal or lower than your rent.

By 2005, Zero down 100% financing was the norm. Just about everyone could get financing. Furthermore, many loans were made to homeowners with somewhat non-traditional or "non-conforming" situations, be it a poor credit history, inability to document income, or any number of factors that do not fit within the traditional "box" for home loans. These loans are often called "Sub-Prime", or "Alt-A", meaning that they were somewhat riskier in nature than A credit, prime, or traditional loans.

WHAT'S HAPPENING TODAY: As a result of today's market, and in order to continue to provide loans for qualified borrowers, both lenders and the private mortgage insurance companies have been making dramatic changes across the board. The biggest change is what appears to be the imminent death of most 100% financing options.

Consumers looking to buy with 100% financing better get approved, pick out a home and close immediately. By March 1, 2008, these loans will be near impossible to find. New credit score requirements, and lack of availability to get mortgage insurance on anything over 95% loan-to-value will rule the land.

WHAT DOES THIS MEAN: Simply put, lenders again are demanding quality people with some skin in the game (down payment). What were the old rules (pre 1999) are back again. FHA with a gift from your parents for down payment is already very popular again. A few state and county bond programs will be available (like MHFA), but much harder to find. VA loans for Veterans still exist.

IS THIS THE END OF THE HOUSING MARKET? NO! Somehow we all managed to come up with down payment and buy homes we could afford before zero down and crazy lending helped create the boom that turned bust. Will it be difficult over the short-term, probably. But truly, the only challenge will be the time it takes for the consumer mindset to forget zero down, easy lending, and return to having good credit, with a little saving for down payment.

Posted by Joseph Metzler MMS on February 12th, 2008 5:58 AMPost a Comment (0)

Subscribe to this blog