1/3 of all ARMs in California will end in forclosure One of the things I love is little tidbits that sometimes get buried in articles about the implosion of the sub prime market. This article is about how lawmakers are blaming mortgage bond investor should be held liable for deceptive loans. Well there is plenty of blame to go around for the sub prime market (starting with Alan Greenspan's decision to keep the prime artificially low). But four paragraphs in we get this little tidbit

Economist Christopher Cagan projected about a third of all adjustable-rate loans originating from 2004 to 2006 will default because of reset, when the initial "teaser rate" expires and borrowers must start making regular payments that include principal, he said in a study by First American CoreLogic released last month.
While many consumer and civil rights groups want government intervention, not everyone is pleased about any legislation costing taxpayer dollars.

"People have bought houses they can't afford, period," said Christopher Thornberg, economist and principal of Beacon Economics. "So unless the government is going to give them $100,000 to $200,000 each, what option do they really have?"

Given that sub prime East Bay borrowers who are sixty days late have risen from 4.29 to 12.23 percent, that rate adjustment is going to come as a complete shock.

The problem is of course is that there isn't a clean happy solution to the sub prime borrowing situation. It's going to end in foreclosures, tighter lending standards and an overall tightening of credit.

Labels: CAMortgageNews, EastBay, EastBaySubprime, forclosure, novastar, refinance, Subprime, subprimeforeclosure, subprimemortgagelending

  ¶ 1/3 of all ARMs in California will end in forclosure 0 Comments

The Horror, The Horror (of re-financing) Hopefully the HUD's efforts to change the on the Real Estate Settlement Procedure won't be derailed this time. In the mean time here are some tips to minimize the horror of re-financing based on the current rules.

• "Shop around. When you apply for a home loan, the lender or mortgage broker is required by law to give you a good-faith estimate of your settlement costs. Trouble is, there's no penalty for low-balling. Many borrowers say their actual costs have no earthly connection to the good-faith estimate."
  
  
• Look for ways to save on title insurance. Title insurance protects the lender if there's a dispute over ownership of the property. If the house you're buying was owned by the seller for just a few years, ask the seller's title company for a re-issue rate. The premium will likely be lower. You may also qualify for a re-issue rate if you're refinancing.
  
  
• If you're refinancing, go to your existing lender and ask for a streamlined refinancing. These typically require less paperwork, which translates into lower fees. Alternatively, ask your lender if you qualify for loan modification. With these deals, you keep your existing loan and pay your lender a fee in exchange for a reduction in your interest rate.
  
  
• Ask to see the HUD-1. This is the official name of your settlement statement, which lists all your actual closing costs and charges. Borrowers have a right to review a draft of this document one day before closing, but hardly anyone ever asks for it. That's a mistake, because when it's time to close, it's usually too late to challenge inflated costs
  

Important Links
A Consumer Guide to Settlement Costs from the Federal Reserve

Labels: HUD, refinance, refinancingmyths, zebra.html

  ¶ The Horror, The Horror (of re-financing)