Home Loans – The New Rules
Home Loans – It’s not your father’s mortgage
New federal regulations require mortgage lenders to verify that prospective borrowers can meet the repayment terms of their mortgage loans.
- Under the Dodd-Frank Act, the rules prohibit the “no-doc†loans commons during the housing bubble. Before making a loan, lenders must document the borrower’s job status, income and assets, debt, and credit history.
- Lenders must calculate a borrower’s ability to pay the principal and interest over the length of the loan, and they may not base their calculation solely on the payment due when an introductory “teaser rate†is in effect.
Prime Mortgage Delinquencies Move Up
The Office of the Comptroller of the Currency published 4th quarter data for loan delinquencies late last week.
From the report’s executive summary: “The biggest percentage jump was in prime mortgages, which is the lowest risk loan category and accounts for approximately two-thirds of all mortgages in the overall portfolio. The percentage of seriously delinquent prime mortgages increased from the very low starting rate at the end of the first quarter of 1.11 percent to 2.40 percent at the end of the fourth quarter—an increase of over 115 percent—with a significant rise from the third to the fourth quarter.”
Prime delinquencies always go up with unemployment. Add in the fact many are underwater or have little equity to protect and you have an additional reason to walk away from a loan. This is the second shoe to drop from the sub-prime/alt-a issue! San Diego real estate
Home Mortgages – One in Ten Behind in Payments
The Mortgage Bankers Association in a report issued today, showed that the percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier.
Plus, this same report stated that one in 10 American homeowners with mortgages, were either at least a month behind on their payments or in foreclosure at the end of September.
One in Five Homeowners has Negative Equity
Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens.
About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic. The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.
Seven hard-hit states — Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio — had 64 percent of all "underwater" borrowers, but just 41 percent of U.S. mortgages.
Related prior posts:
More homeowners than ever are selling at a loss!
San Diego Real Estate … The Coming Next Wave of Foreclosures
Home Sales Fall In March… Seventh Month In A Row
Home Values Fall in England and Wales
29% of Homeowners Have Larger Mortgage Than Home’s Value
From a Moody's Economy.com report it shows that 12 million households, or 16%, owe more than their homes are worth. Moody's chief economist, Mark Zandi, said: "it is very possible that there will ultimately be more homeowners under water in this period than (at) anytime in our history."
An estimate by real-estate Web site Zillow.com shows that among people who bought within the past five years, about 29% are under water on their mortgages. San Diego California real estate agents
Govt. Take Over Of Fannie Mae and Freddie Mac Could Cost Billions
The Wall Street Journal's Web site noted that it seems certain the Government may take over the nation's mortgage giants Fannie Mae and Freddie Mac this weekend.
Fannie Mae and Freddie Mac lost a combined $3.1 billion in the second quarter. But, just in the last two weeks both companies said they had enough resources to withstand the losses. Now, one must question these statements.
Together these two mortgage giants hold about half the U.S. mortgages. This news, together with the grim falling home values makes me question why the major news media are still not using the correct terminology for this situation … HOUSING DEPRESSION. Some of our prior popular posts on Fannie & Freddie were:
Stocks of Housing Giants Suffer Huge Losses
Summary of the “Housing and Economic Recovery Act of 2008
Real Estate – Jim Rogers says Fannie and Freddie are a ‘disaster’
Nation’s Mortgage Lender Records Loss of $2.2 BILLION +$1.1 BILLION Charge Off
Fannie Mae and Freddie Mac pump up to $200 billion into real estate market