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I did a little searching and found a chart showing when many sub prime ARM loans will reset. The chart shows that in about 6 months we should see a reprieve in the number of loans going into foreclosure and we will all start trying to put this crisis behind us. Life probably won’t be much easier for those of us with homes going into foreclosure already. For those of you waiting to buy a home, this may be an indicator of when the market will be the most saturated with homes in foreclosure. For those of you who have had your home value slashed due to foreclosures in the area, this should show the point which abandoned houses quit appearing in your neck of the woods. Continue Reading »

I had an interesting conversation today with a friend of mine we’ll call Ed. His family is in the same situation of a lot of other people: his ARM interest rate has reset to over 10%, making it difficult to make mortgage payments on time or at all. He had been more than 30 days late on a mortgage payment 6 months ago, but he has been trying to improve his credit rating to refinance and get out of the mess he is in.

Lenders are rarely willing to take a chance in a market like this. Within a few months, Ed would have lost his home. I envisioned his situation as if he were in a movie, hanging onto a small plant just off the edge of the cliff hoping somehow he could keep his home. Luckily, someone reached out their hand.

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Yes, deceptive practices do work to catch people’s attention, but in this case there is no reason to deceive. Going through my daily routine of house hunting for bargains on the market, I came across a home that I had walked through last July of 2007. The house was then priced at $188,900. The house was decently nice and had some nice features including a fenced in yard, a dining room and all bedrooms on the 2nd floor. There were also materials left in the basement to finish it off. I knew the house was overpricedwhen I walked through it, but aparantly no one told the realtor or home owner that until it was too late. (just as an FYI I moved across the street) Continue Reading »

If you are the unlucky holder of an Adjustable Rate Mortgage, stay on top of things.  In an article last week by the Seattle Post-Intelligencer, they suggest taking out your loan paperwork and checking out the terms of your loan if you are unsure as to the date and amount of the reset.

Knowing when your loan resets may cause some undue stress, but it does help you to put your ducks in a row.   Many mortgage lenders look at the housing crisis and blame it on the consumer.  I think I would too if I were a mortgage lender, I wouldn’t want this mess pinned on me either.  Here is the issue:  Lenders look at people as intelligent beings who should care about their own welfare enough to read and understand paperwork before signing loans.  Whether you fall into this category or not, you should be trying like the dickens to get out of your loan, and showing some initiative is a good start.

If you are hopelessly lost when you read your loan agreements, ask a friend or even a mortgage broker.  The rate will reset on an ARM on a specific day at a margin over what the market rate is at that day (probably the LIBOR rate).  This means that if the LIBOR rate, or the London Interbank Offer Rate, is 5%, and your margin or markup is 2.5%, your new payment will be 7.5%.  Use a mortgage calculator on the Internet to figure what your monthly payment will be.   If you are in trouble, do something if you still can.  Perhaps you qualify for the ARM rate freeze, perhaps not, but get talking to professionals who can look at your situation and offer some advice.   Do what you can even if it isn’t easy.  Foreclosure is not fun.

President Bush is said to be signing a new bill that will allow (force) mortgage companies to freeze arm rates. As discussed in a previous article on this site, this will probably have some ramifications for previous owners that have already foreclosed on their properties. I can imagine that there will be a lot of people looking to cash in on this new bill. This bill will freeze current ARM mortgage rates for a length of up to 5 years so that income can possibly catch up to the interest rate that is being charged.

The way the bills is being signed is such that it will affect those that are currently not defaulting on their loans, but would not be able to survive a future increase in interest rate. Those that are currently defaulting on their loans will not qualify. This should help millions of Americans keep their homes, while we should see a decent amount of foreclosed homes until all the kinks of the system are worked out. Foreclosed homes are expected to increase next year, but should eventually taper off if this bill serves its actual purpose.

 Expect a follow up as the bill is signed and dissected.

Henry Paulson, the Treasury Secretary of this great country, has announced that he hopes mortgage companies will soon freeze their rates. He has also urged congress to push through legislation that would regulate the mortgage industry.

He fell short of announcing a 90 day moratorium on foreclosures, which both the Bush administration and Hillary Clinton are toying with.

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Click here to watch an interesting video on the housing crisis put together by PBS.  Seems to cover both sides of the issue fairly well.  The video is 20 or so minutes.   Add a comment with your thoughts on the video.

Sometimes it is difficult, when so many sources of information are conflicting, figuring out who to believe. The chief economist of the NAR (National Association of Realtors) seems to think things have already bottomed out and are starting to rebound, but he represents Realtors, many of whom are hurting right now from falling prices. Taking a stroll down almost any street in America would tell you otherwise.

Thousands upon thousands of subprime loans have yet to reset to higher interest rates, but when they do, you can expect the market to continue its decline. It looks like the bulk of the subprime loans will reset in 2008.

The increase in reset loans will likely mean more foreclosures if refinancing doesn’t take place, or the lending companies decide to reset rates to what borrowers are currently paying.   Some money has to be better than putting your company out of business, right?

Take a look at this chart from Bank of America Securities and you tell me when this housing funk we’re in might end.  Hopefully we’ll find a way out of this mess soon!