How to Renegotiate your mortgage

Many Americans are finding it increasingly difficult to make their mortgage payments due to the struggling economy. If you find yourself in this situation, it may be worth calling the lender that services your loan to discuss a mortgage renegotiation. Here is how to go about it:

1. Call and ask for the loss mitigation department or the department that handles renegotiation inquiries.
2. Explain why you can’t afford your payment and be ready to prove it!
3. Send them your pay stubs and proof of monthly obligations (other debts, childcare, etc.). The goal is obviously to prove that your ability to pay the debt has declined.
4. Once the lender gets the information from you, they will run a debt-to-income analysis to see if you are a good candidate for renegotiation.
5. If they decide to renegotiate, they will send you new terms and conditions to sign.
6. Let us know if you are unsuccessful in renegotiating with your lender. You can call us for recommendations on organizations that specialize in renegotiation.
7. The government is looking to potentially contribute to the cost of re-writing the loans to slow foreclosures as soon as the new administration takes office. So keep this in mind, as it would be very helpful in adding to the willingness of the lenders to help.

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Okay, so Chase is out of wholesale. (1) They have no more wholesale division, (2) they won’t buy loans from correspondents who got their loans from brokers, and (3) Chase’s warehouse lending division apparently won’t issue lines to mortgage bankers who do more than a small amount of third party business. As we started saying 6-9 months ago, wholesale may not go away entirely, but there’s clearly a trend against it. We hope you’re working hard on building your retail business. The good news is I’m not them and still use Chase as on of my top lenders.
If we had to guess, we’d say that yes, a year or three from now there will still be some sort of wholesale. But brokers will have significant net worth requirements, they’ll have some kind of buy-back responsibility, and there will be all sorts of barriers to entry, for the brokers and the bankers. That’s our guess.
If you measure company size by their market cap, we were curious how many of the top ten world-wide were American. The answer is five, and we found it so interesting that we’ll run the whole table here. All numbers are in billions.

1. $406 Exxon Mobil
6. $177 Proctor & Gamble

2. $214 Wal-Mart Stores
7. $169 Microsoft

3. $209 China Mobile
8. $168 Volkswagen

4. $183 Industrial Bank of China
9. $166 Royal Dutch Shell

5. $178 General Electric
10. $161 Petrochina

Of the next ten biggest, four were American.

The Chicago Tribune (owner of the L.A. Times) is in bankruptcy, the Seattle Post-Intelligencer may not survive the month, and newspapers across the land are barely staying alive. But the New York Times will be forever, right? Well, think again. They have $1.0 billion of debt on their books, $400 million of which comes due over the next five months, and only $46 million of cash reserves.

It’s always fun to compare Presidents by certain metrics. Now that Bush has finished his eight years, the following numbers were just compiled for how the Dow Jones Industrial Index did on average each year for him and a few others:

28% Clinton
11% Bush (the dad)

21% Eisenhower
6% Johnson

17% Reagan
6% Kennedy

16% Ford
0% Carter

16% Truman
-2% Bush (son)

One thing to remember, though: Correlation is not causation.

Everyone knows one or two of Satchel Paige’s six rules of life, but every so often, it’s worth reading them all: (1) Avoid fried foods cause they anger up the blood, (2) If your stomach disputes you, lay down and pacify it with cool thoughts, (3) Keep the juices flowing by jangling around lightly as you move, (4) Go very light on vices such as carrying on in society. The social ramble just ain’t restful. (5) Avoid running at all times, and (6), Don’t look back. Someone might be gainin’ on you. This all must have helped, as he was pitching in the Major Leagues at age 48.

Foreclosure Filings Up 81% in 2008

More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81% increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices. Nationwide, more than 860,000 properties were actually repossessed by lenders, more than double the 2007 level, according to RealtyTrac, a foreclosure listing firm based in Irvine, Calif., which compiled the figures.  About 55 percent of loans modified in the first quarter of 2008 were 30 days or more delinquent six months later, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a Dec. 22 report.  Nevada had the highest foreclosure rate in 2008, with 7.3 percent of housing units in some stage of default. Florida had the second-highest rate with 4.5 percent of housing units in default. Arizonahad the third-highest rate at 4.49 percent, said RealtyTrac, which collects data from more than 2,200 counties that are home to more than 90 percent of the U.S. population. California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey were also among the states with the 10 highest rates. New York ranked 35th with 50,032 properties receiving default notices. California had the most properties with filings: 523,624, representing a 110 percent increase from a year earlier and a six-fold jump from 2006. Florida was second and Arizona third, followed by Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.  

Fannie and Freddie give borrowers more time

By Les Christie, CNNMoney.com staff writer
January 8, 2009: 1:12 PM ET

NEW YORK (CNNMoney.com) — Mortgage giants Fannie Mae and Freddie Mac have extended a moratorium on foreclosure suspensions for another three weeks, directing the mortgage servicers they work with to postpone any foreclosure or eviction proceedings through January 31.

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) projected that, under the original moratorium, which began Nov. 26 and was scheduled to lapse on Jan. 9, 6,000 homeowners would avoid bank repossession and eventually qualify for mortgage modifications. The companies don’t have any actual statistics tracking how many borrowers the moratorium has helped.

The extension should give servicers more time to help these at-risk homeowners enroll in the companies’ Streamlined Modification Program.

That program is aimed at helping borrowers who are 90 days or more late on payments, who own and occupy their primary residences and who have not filed for bankruptcy to reduce mortgage payments to no more than 38% of their income. It was launched by Freddie and Fannie on December 15, 2008.

“Freddie Mac is committed to pursuing every responsible opportunity to reduce foreclosures and accelerate the return of stability to the U.S. housing market,” said Freddie Mac CEO David Moffett in a prepared statement. “Today’s announcement will provide Freddie Mac and its servicers additional opportunities to help put more families on the path to stable homeownership.”

Renters benefit too
The foreclosure grace period applies to owners of single family homes as well as multiple family houses of two to four units that are occupied by renters. In addition to cutting the number of foreclosures, it could also help some families who rent apartments remain in their homes.

In the past, when building owners were foreclosed on their renters often faced immediate eviction, even when the renters were up to date with their payments.

In December, Fannie announced a new policy for renters called the National REO Rental Policy, which allows these renters to stay in their homes as long as they have legitimate leases and keep up with their rent payments.

The company said the additional three weeks of the moratorium will enable Fannie to put this new REO Rental policy more fully into operation.

It will also give Fannie more time to make sure all of its seriously delinquent borrowers who are eligible receive help from the company’s “Second Look” initiative.

Under this program, which launched early last fall, Fannie Mae personnel work with servicers to make sure that all homeowners facing foreclosure have been contacted and told of the possible workout options available to them.

Half of modified mortgages in default

WASHINGTON (AP) From CNNmoney.com Dec 2008– More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.

The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.

“I do have concerns about allocating federal resources” Reich said.

However, many experts claim the bulk of loan modifications don’t actually provide much financial relief for borrowers.

The government’s data don’t include enough detail about the types of the loan modifications that were made, said Sheila Bair, chairman of the Federal Deposit Insurance Corp. “The quality of the [modifications] are not what they should be,” she said.

The U.S. economic picture has darkened over the past month. One in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.

Unemployment stands at 6.7%, and the worldwide credit markets have only improved modestly from the freeze that led Congress to approve a $700 billion bailout before the election.

Discussion on Monday’s focused on how broad the government’s intervention should be, rather than whether the government should play any role at all. The U.S. is on track for 2.25 million foreclosures this year.

“We need a bottom-up approach, in my view, by modifying people’s mortgages and helping them stay in their homes,” said New Jersey Gov. Jon Corzine.

Corzine called for a three to six month halt to foreclosures while the government works out a more aggressive plan.

Mark Zandi, chief economist at Moody’s Economy.com, said the public is likely to be more sympathetic to efforts to assist troubled borrowers, because the link between the foreclosure crisis and the sinking economy is increasingly clear to most Americans.

“It’s now in every corner of the country,” Zandi said. “I think that people understand that this is a broader issue.”

During an interview that aired Sunday on NBC’s “Meet the Press,” President-elect Barack Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not already acted when Obama takes office next month.

For nearly a year, some consumer advocates, lawmakers and think tanks have advocated a dramatic government response. The effort, they say, should be similar to created the Home Owners’ Loan Corp. in 1933 to help borrowers refinance troubled home loans during the Great Depression.

The Bush administration has focused mainly on voluntary industry efforts to modify loans, and those have not stopped the surge in foreclosures.

Rates at 4.5%…. MAYBE

The European Central Bank delivered the biggest interest-rate cut in its 10-year history by cutting their benchmark lending rate by 75 basis points to 2.5%. And here in the United States, lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%. How? As we saw last week, an increased demand for mortgage-backed securities would prompt mortgage rates to drop, which enables homeowners to refinance into lower-cost loans and make it cheaper for potential homebuyers to get into the market. Of course, the plan is not without its critics, especially since the markets have naturally pushed rates higher since last week. They say that only a narrow slice of credit-worthy borrowers would benefit, and the proposal would do little to help troubled borrowers who have fallen behind on their payments, have no equity in their homes or have lost their jobs. And remember those tight guidelines! Mandated low rates could keep private investors out of the mortgage-backed securities market, forcing the government to remain the primary buyer of such investments

It’s official: Recession since Dec. ‘07

The National Bureau of Economic Research declares what most Americans already knew: the downturn has been going on all yearonubscribe to Economy

By Chris Isidore, CNNMoney.com senior writer

 

 

NEW YORK (CNNMoney.com) — The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .

The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.

“The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment,” said the group’s statement. “This series reached a peak in December 2007 and has declined every month since then.”

Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.

The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.

In addition, the NBER also considers the gross domestic product, which is the reading most typically associated with a recession in the general public.

Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining. That has yet to take place during this recession.

This downturn longer than most

The current recession is one of the longest downturns since the Great Depression of the 1930’s.

The last two recessions (1990-1991 and 2001) lasted eight months each, and only two of the 10 previous post-Depression downturns lasted as long as a full year, according to the NBER.

In a statement, White House Deputy Press Secretary Tony Fratto said that even though the recession is now official, it is more important to focus on the steps being taken to fix the economy.

“The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus,” he said. “Addressing these areas will do the most right now to return the economy to growth and job creation.”

What’s going on in the economy?

 GDP was -.5% in the 3rd quarter, Consumer Confidence moved up from 38.8 in October to 44.9 in November, and the Case Shiller Home Price Index for 20 U.S. Cities Declined 17.4% in September from a year earlier. But the big news yesterday was the Fed’s announcement mentioned above. This morning we’ve seen that MBA mortgage applications are out with a 1.5% increase last week. Purchases were +5.3% and refinances were -2.1%. Durable Goods orders (items lasting 3 or more years) plummeted in October by 6.2%, double what was expected, and was the largest drop since October of 2006. Jobless Claims fell by 14,000 last week to 529,000 in the week ended Nov. 22 from an upwardly revised 543,000 the previous week. And consumers cut spending during October by 1.0%, the steepest rate in more than seven years. Given that consumer spending accounts for two-thirds of economic activity in the US, this is significant.

 

Thanks to Bob Hagerty of the Wall Street Journal for the great stats.

FHA new down payment and loan limits

 2009 FHA Loan Limits

The 2009 FHA loan limits are calculated at 115% of the area median sales price.  For 1-unit, the FHA floor remains at $271,050 and the ceiling is now at 150% of the conventional floor, or $625,500.  Below is a table illustrating the 2009 FHA loan limit Floor and Ceiling:

 

2009 FHA Loan Limits
	1 – Unit	2 – Units	3 – Units	4 – Units
Minimum (Floor)	$271,050	$347,000	$419,000	$521,250
Maximum (Ceiling)	$625,500	$800,775	$967,950	$1,202,925
Alaska & Hawaii	$938,250	$1,202,150	$1,451,925	$1,804,375

 

 In order to determine the FHA Loan Limit for your area, please follow the link below, type in County where your property is located and click on the “down arrow” next to “Limit Year” and select “CY2009” before you click on “Send”.  This will bring up the FHA Mortgage Limit in your desired area for 2009.

 

https://entp.hud.gov/idapp/html/hicostlook.cfm

 

 FHA Down Payment Requirements

Effective with new case number assignments on or after January 1, 2009, the minimum down payment requirement on purchase transactions increases to 3.5% (from 3%) of the lesser of the appraised value or sales. This amount is in addition to any borrower closing costs.

 This change eliminates the previous loan-to-value limits that varied by property value and average closing costs for the state.

 For all refinance transactions, including streamline refinances, the maximum loan-to-value is 100% of the appraised value, including the financed upfront mortgage insurance premium.

 The new down payment requirements only apply to FHA 203(b), 234(c), and streamline refinance loan programs.

When is Bankruptcy the Answer?

Filing for bankruptcy becomes a viable option when an individual’s cash flow is “upside down” with no reversal in sight. But before proceeding, it’s important to first look at the structure of one’s assets and liabilities. For many homeowners, an experienced and qualified mortgage professional may be able to help them restructure debt and avoid bankruptcy altogether.

If this isn’t possible, then it’s critical not to let negative cash flow go on for too long. Instead, quickly seek references for a reputable bankruptcy attorney and a credit counselor. One of the worst mistakes consumers make is to borrow more money in an attempt to pay off debts.

When declaring bankruptcy, it is important to be very accurate and honest in one’s filing, especially when it comes to any recent changes in income. Remember, a bankruptcy hearing is a federal proceeding, complete with courts, judges, and representatives who coordinate with the Department of Justice, the FBI, and the IRS.

During the proceeding, homeowners should develop a budget and try to live below their means. They should use this time to save cash as well as examine the causes of their bankruptcy. Also, they should keep organized, saving all their paperwork and taking note of their discharge date. Having this information on hand will prove extremely useful in the future.

Once the bankruptcy is final, it’s time to begin rebuilding credit. Secured credit cards are an excellent place to start. This is also a good time to hire a reputable credit repair specialist who can offer advice regarding the best ways to re-establish credit. There is definitely life (and credit) after bankruptcy. The trick is to get the help and advice you need from professionals you trust.