Should you take a mortgage break at Christmas?

Should you take a mortgage break at Christmas?

With Christmas on our doorstep, the extra costs of presents, catering and holidays can stretch the family budget. It would be great to not have to worry about paying your mortgage off during this period to help? Or would it?

There are many lenders who permit a mortgage break, where the homeowner takes a “break” from paying the mortgage for a short period of time – allowing them to use the normal mortgage payment to cover other expenses.

A word of caution though – it will come at a cost unless you plan ahead and save in advance.

Aussie founder and executive chairman John Symond says the best (and most economical) way to accommodate a break from making payments is to make excess payments onto the mortgage in advance, building up a buffer on the home loan.

“Making extra repayments is always a sensible option, and this way you’re using your own money to give yourself a break from the mortgage,” he said.

This type of payment break is dependent on the terms and conditions of the particular mortgage product, but they can last between two months to 12 months.

Another option is to switch to an interest-only loan for a period of time. This strategy doesn’t absolve the borrower of all payments, but it certainly brings down the amount required to pay each month.

“This may cost you to switch products, and should only be used as a short-term fix,” Mr Symond said. “It should be mentioned that anyone wanting to pay off a property eventually should be looking at principal and interest (P&I) loan.”

The third option, and one which should be the last resort according to Mr Symond, is to take what is called a “repayment holiday”.

“If you really are facing a challenge in making the loan payments, there are lenders who allow a repayment holiday,” he said. “But there are strict conditions such as length of time with the lender, have always made payments on time and the loan will need to be a P&I loan.”

Mr Symond said these repayment holidays will normally only be allowed for three months, and the loan will continue to accrue interest, which will add more to the outstanding balance.

“And the banks will probably charge a fee for this service,” he said. “I would strongly caution anyone from taking this path if they can avoid it.”

The above article appeared on "blog.aussie.com.au"
Read more..Please visit-http://blog.aussie.com.au/index.php/should-you-take-a-mortgage-break-at-christmas/

Raise My Taxes, Please, Say Rich People Upset Over Breaks for Millionaires

While the wealthiest taxpayers will gain financially if Republicans and the president successfully extend the Bush-era tax cuts in Congress, a group of millionaires and business owners said they will be disheartened if they pay less taxes next year. Members of the Patriotic Millionaires for Fiscal Strength, a group of 89 millionaires, petitioned President Obama to allow tax cuts on incomes greater than $1 million to expire at the end of the year, as scheduled.

Morris Pearl, a managing director with BlackRock and a petition signatory, said he was "sad" rather than angry at President Obama for agreeing to the proposed tax cuts.

"I don't care if the rate is this or that," said Pearl, who added he was not speaking on behalf of his employer. "But I feel that just by changing his mind, it gives people the feeling that he'll change his mind about anything."

Pearl also expressed concern over the possibility that Social Security premiums eventually may be affected, because the president's debt commission proposed reducing Social Security benefits and raising the retirement age to 68 by 2050.

Other members of the Patriotic Millionaires have expressed a wide range of emotions, according to Erica Payne, who helps coordinate the organization.

"There is a lot of general frustration that the White House couldn't get a better deal and didn't lay the groundwork for a better deal," said Payne, a founder of the political strategy group, the Agenda Project. "A few people are resigned. Several of them are pretty mad."

"I think it's a terrible deal for Democrats," said Guy Saperstein, founding member of the Patriotic Millionaires and a former civil rights attorney. "It's terrible on many levels but the most important one is the tax cuts for the rich."

The above article appeared on "abcnews.go.com"... read more to visit, -http://abcnews.go.com/Business/patriotic-millionaires-business-owners-disappointed-taxes/story?id=12358576

Is HAMP a failure?

According to Bankrate.com, "Failure" may be too harsh a word to describe the shortcomings of the U.S. Treasury's Home Affordable Modification Program, but HAMP hasn't exactly been an unqualified success either, judging by the Executive Summary of a 192-page report issued Dec. 14 by a Congressional oversight panel.

Here are three snippets, quoting directly from the report:

• The Panel now estimates that, if current trends hold, HAMP will prevent only 700,000 to 800,000 foreclosures -- far fewer than the 3 to 4 million foreclosures that Treasury initially aimed to stop.

• Many of the problems now plauging HAMP are inherent in its design and cannot be resolved at this late date.

• Absent a drastic increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help -- all because Treasury failed to acknowledge HAMP's shortcomings in time.

Reasonable folks may differ as to whether the U.S. government should help homeowners avoid foreclosure and whether this program was a smart idea from the start.

But setting aside those debates, HAMP clearly has fallen far short of what was promised, and many of the shortcomings were easily foreseeable from the beginning.

Among them, quoting again from the report:

• Banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer's interest may at times sharply conflict with those of lenders and borrowers.

• HAMP attempted to correct this market distortion by offering incentive payments to loan services, but that efforts appear to have fallen short, in part because servicers were not required to participate.

• Many borrowers have second mortgages from lenders who may stand to profit by blocking the modification of a first mortgage.

• Treasury has also failed to hold loan servicers accountable when they have repeatedly lost borrower paperwork or refused to perform loan modifications.

To be fair, 700,000-plus loan modifications is that many more than the zero which might have resulted without HAMP. But that's bound to small comfort for the 2 million-plus homeowners who seemingly were promised something more.

Read more: Is HAMP a failure? | Bankrate.com http://www.bankrate.com/financing/mortgages/is-hamp-a-failure/#ixzz18Relk2pq

Pipeline Press

Pipeline Press

Medical debt, a factor against refinancing activity.

Hidden medical debts can also kill refinancing. Well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes marring their credit, say mortgage bankers and real-estate agents.

Despite the record low mortgage rates this year, refinancing activity has been lower this year than was expected. According to Brian Wickert, president of Wisconsin-based lender Accunet Mortgage, "when consumers begin to refinance, there are real impediments spoiling the refi party."

According to The Wall Street Journal, some 14 million Americans have errors on their credit report because of medical collections, according to the Commonwealth Fund, a Washington-based nonprofit focused on health-care research. These routinely small-balance blemishes, which can go unnoticed for years, can be a death knell for refinancing because they can cause outright refusals—or make closing costs so high that borrowers opt not to refinance at all.

To read more on this article, go to www.wsj.com

PrivoCorp provides contract mortgage processing services to lenders, brokers, net branches across the country. We do not originate loans.

Modified version of Reverse Mortgages: Good option for the elderly homeowners

In October, the Federal Housing Administration that runs the reverse mortgage program known as Home Equity Conversion Mortgage, or HECM, introduced the Home Equity Conversion Mortgage Saver, or HECM Saver. HECM Saver, trims the upfront insurance premium due at closing to 0.01 percent of a property’s value, from 2 percent. But the amount that can be borrowed is also reduced, by 10 to 18 percent, compared with the standard HECM loan program.

To better understand the modified version of a reverse mortgage, we need to know what reverse mortgage is. Reverse mortgage is a type of mortgage in which homeowners can borrow money against the value of their house. Until the borrower dies or the house is sold, no repayment of interest or principal, is required. Often, the lender will require that there can be no other liens against the home. Any existing liens must be paid off with the proceeds of the reverse mortgage.
The loans don’t require a minimum credit score or have income limits. But borrowers cannot be underwater, or owe more on a current mortgage than the property is worth. Among the other restrictions is the age. Anyone who is an owner, and is listed on the title to the property, must be at least 62.

Since these reverse mortgages have large origination costs compared to other types of mortgage and since these costs become part of the initial loan balance and accrue interest, Senior citizen borrowers with good credit should carefully analyze the options of a more traditional mortgage, such as a home equity loan, against a reverse mortgage.

Consumers Union, the independent nonprofit testing organization that publishes Consumer Reports, says cash-needy homeowners should consider a home-equity loan before a reverse mortgage, because of the high closing costs and insurance fees. To read more about this click here Nytimes.com

Analysts at PrivoCorp suggest that elderly homeowners find out options from their loan officers and grab this opportunity to get a loan. PrivoCorp does not originate loans. We process loans.

Rise in mortgage rates have dampened refinancing

The rising mortgage rates have snuffed out a refinancing boom which began earlier this year. According to the government backed mortgage firm,Freddie Mac's survey, the rate of a 30 year fixed rate mortgage averaged 4.61% this week which is the highest since June24th.

The Wall Street Journal says that a host of factors have helped drive rates higher, most recently including this week's tax compromise between President Obama and congressional Republicans. The package includes some measures to stimulate the economy and will likely result in higher budget deficits—both of which are anathema to bond investors.

Since the increase in mortgage prices, refinancing has become unattractive to more than 5 million borrowers. Mortgage Bankers Association said earlier this week that its index for refinancing activity fell last week to its lowest level since the early June. Refinancing activity surged between April and the early fall, as Treasury yields tumbled from 4% to less than 2.5% and mortgage rates fell from more than 5%. After the surge in rates, refi activity is down 42% from its peak in August.

However the good news is that the rise in rates have not effected the steady increase in home purchase activity. According to the MBA, new mortgage origination rose last week, but its still down more than 12% from a year ago. The team of analysts at PrivoCorp suggests that this steady increase in home purchase is a sure indicator that the economy is slowly improving. PrivoCorp processes loans and we do not originate loans.

Practice of default on second homes and its aftermath

There is an increase in the number of homeowners who are walking away from a second home or investment property that is worth less than what is owed on the mortgage, even though they can afford to make the payments. But this practice of dumping a beach condo- called as "strategic default" is not the same as discarding a poorly performing stock or bond. This trend of strategic default is on the rise and is accounted for 35.6% of all foreclosures this year compared to a 23.6% from last year.

The after effects of strategic default is a wrecked credit as it stays on the credit report for 7 years and will disqualify the homeowner from getting a loan for the next 7 to 10 years. There is also the question whether the lender can go after the homeowner who has defaulted. The answer depends on the location of the property. If the property is in recourse states, then the lender can come after you and other primary assets to get the full loan amount back. In"non-recourse" states, the lender cannot sue for the full loan amount and will get only the amount what the property fetches at a short sale, foreclosure sale, or a deed in lieu, in which the property is taken back and not formally foreclosed on.Florida, Connecticut and Arizona are among the nonrecourse states, while Colorado, Maine, New Jersey and Hawaii are recourse states.

There is a third category of state, called “single-action” or “one-action,” which allows the lender either to foreclose on the owner or file a civil lawsuit for the full loan amount. New York, California and Idaho are in that category.

Even in a nonrecourse state, however, those homeowners who opt for a strategic default on a previously refinanced property may not be protected from lenders, because the mortgage in such a case was not accorded for a first purchase, said Philip Faranda, a mortgage broker for J. Philip Real Estate, in Briarcliff Manor, N.Y.

Though not illegal, strategic defaults are controversial, because they are viewed in some circles as unethical. The practice is common among property developers. For homeowners under water, experts say, it can make economic sense. “It’s a business cash-flow decision,” Mr. Faranda said, “but the risk is that you’re rolling dice with your future credit.” Panel of advisers at PrivoCorp suggests that homeowners should take advice from their loan officers before they take loans on a second mortgage and should be well informed as to the location of their property and the rules of the particular states before they buy a property. PrivoCorp does not originate loans. We are a processing company.
For more information regarding this blog, check out Nytimes

Rise in spending on residential construction.

According to Wall street Journal, spending on new construction rose in October for a second month in a row, due mainly to a pickup in residential construction, according to the U.S. Census Bureau. It rose to a seasonally adjusted annual rate of $802.3 billion, up 0.7% from September. Spending on residential construction was up 2.4% in October from the month before, to a rate of $240.3 billion, but was down 8% from a year earlier. Nonresidential spending fell 0.1% in October from September to $562.0 billion and was down 9.9% from October 2009.

This is a positive sign that builders are predicting that there will be a demand in residential homes. PrivoCorp is a processing company and we do not originate loans.

Mortgage Rates Rise to 4.66%

According to Wall Street Journal, mortgage rates rose last week to the highest since july.The 30-year fixed-rate mortgage averaged 4.66% last week, up from 4.56% two weeks ago. Rising rates are likely to further crimp refinance activity, which was down 1% for the week and down 8% from year-earlier levels.

But rising rates could encourage some fence-sitting buyers to close deals, and home-purchase mortgage applications jumped by nearly 2% last week, sending activity to its highest level since May.

PrivoCorp is a loan processing company and we do not originate loans.

Mortgage lending in family - The up and down side of it.

According to the NewYork TimesIn cases like Matt Rado, who is in the market for his first home is getting a loan not from a bank but from his retired parents. Mr Rado who is preapproved for a 30 year fixed mortgage at about 4.75 percent from a commercial lender, will get at least as favorable a rate from his parents along with lower closing costs. At the same time, his parents will get a higher rate of return than is offered by a traditional savings vehicle like a savings account.

With credit tight and interest rates at historic lows, such intrafamily loans can be a win-win for parents and children. “It’s an absolutely terrific time to make an intrafamily loan,” said Carol G. Kroch, head of wealth planning for Wilmington Trust. Rick Kahler, a financial adviser in Rapid City, S.D., said, the intrafamily loans are much riskier than other investments. With an intrafamily loan, parents are betting that their children and their children’s significant others will have the income to repay the loan. And even if the children have excellent credit scores now, their status could change drastically — much faster than a corporation’s — if a job loss or illness were to occur. To help lessen these risks, financial planners have specific recommendations about who should make and get such loans.

• Most financial planners recommend that parents make such loans only to children who would receive a loan on their own from a commercial lender.A loan to a child unable to get a bank loan, planners say, is more likely to be a bad investment with a greater chance of default. In such circumstances, gifts are a better idea.
• Intrafamily loans probably aren’t right for parents who “have a lot of opinions about the lifestyle of their children” because a loan could make them become overly critical of the grown child’s spending habits and potentially damage the parent-child relationship, said Lauren Locker, a certified financial planner at Locker Financial Services in Little Falls,

• To avoid tax consequences, the parents will need to charge an interest rate for loans with a set term that is at least what the government’s applicable federal rates are at the time the loan is created.
• To make sure the money is considered a loan and not a gift for tax purposes, experts also recommend that the loans be documented as formal promissory notes that state the terms of the loan, including repayments, the interest rates and what will happen if the loan is not repaid.

• To get the loan documentation drawn up, lenders can consult with lawyers willing to do the work for a lump sum, or check out companies like National Family Mortgage, which will help create notes for intrafamily loans. For $599, National Family Mortgage, which focuses on intrafamily mortgages specifically, will help families structure a promissory note, including penalty terms, and will also file the loan with the appropriate government authority.

Privocorp processes loans. We do not originate loans.

Three reasons to pay off the mortgage.

Reason #1--It Provides Peace of Mind: Peace of mind is worth a lot, and those who know that they would feel a lot better about their futures if they didn't have a monthly mortgage payment.

Reason #2--It Reduces Costs of Living. To obtain financial independence very early in life, we must reduce our cost of living and by paying off the mortgage, we achieve it.

Reason #3--It Diminishes the Fear of Job Loss. Job loss is the biggest fear that torments many families. But once mortgage is paid off then there is less worry in case of a job loss.

Privocorp is a mortgage processing company and we do not originate loans. Origination of loans is done by our clients and other loan officers.

Home loan demand rises due to low interest rates.

U.S. mortgage applications rose last week as there is an increase in demand for new loan purchase and refinance. More and more people are trying to take advantage of the low interest rates and lock in on them before it increases. Mortgage Bankers Association says there is an 5.8 % increase in the mortgage applications, which includes both purchase and refinance loans.

Michael Fratantoni, the MBA's vice president of research and economics, said in a statement that the increases in purchase application coincide with the October's employment report which indicates some improvement in the economic growth.

However this increase in home loans is very little, as the lending standards have become very tight thereby preventing many homeowners from taking advantage of the low interest rates. Cameron Findlay, chief economist at LendingTree.com in Charlotte, North Carolina, says "underwater mortgage" -- where the amount owed on the mortgage exceeds the home's value -- "are one of the biggest banes of the homeowners who want to refinance.This negative equity makes many homeowners unqualified for refinancing and prevents some from selling." Despite the slow progress, the very fact that there is an increase in the demand for mortgage application is an indicator of some positive activity in the housing sector and the team at PrivoCorp hope that this trend continues and the economy keeps on improving. To read more on this, check out msnbc.com

Rates fall to record low : Good time to lock in on these low rates.

According to Bankrate.com, the bench mark 30 year fixed rate mortgage fell 9 point, from a 4.45 last week to 4.42 this week. Rates haven't been lower since 1953, according to the National Bureau of Economic Research's statistics on FHA-insured loans.

The benchmark 15-year fixed-rate mortgage fell 9 basis points, to 3.81 percent. The benchmark 5/1 adjustable-rate mortgage fell 10 basis points, to 3.57 percent, and the 30-year, fixed-rate jumbo fell 6 basis points, to 5.04 percent. All of those are record lows in Bankrate's weekly survey.

The team at PrivoCorp, suggests to all borrowers to consult with their loan officers and lock in on these low rates. If the rates do dip further down, there is no need to be concerned as you can always refinance.

PrivoCorp is loan processing company and does not originate loans. This activity is performed by our clients - brokers or lenders.

Stable housing markets - Balanced economies, right supply

No longer are the sun belt areas the "hot" mortgage markets anymore. According to Zillow.com, 21.5 percent of the nation’s single-family homes with a mortgage were underwater (in a negative amortization scenario) at the end of second quarter 2010, down from a peak of over 23 percent a year earlier. (Zillow.com estimates 60 percent of all U.S. homes are mortgaged, with the rest owned outright). 

The two major factors that contribute to being underwater are home value declines and the size of a home buyer’s down payment, Humphries notes. A larger down payment combined with smaller price decline in some markets can prevent a homeowner from going underwater. Of course in the case of disastrous markets like Phoenix down payment wouldn't matter much.

Another measure impacting a local market’s underwater status is a market’s “transactional velocity” — or the rate of transactions per year. Even in markets that have seen major home price declines like Detroit, Humphries says, a slower-moving market where fewer properties change hand each year may indicate that owners have more history — and thus, more equity—in their homes, and thus may have a higher likelihood of escaping an underwater situation.

The following are markets that have come out relatively unscathed from the mortgage crises that has hit the US recently

• Pittsburgh, PA
• Tulsa, OK
• OKC, OK
• Cape Cod Area, MA
• Yakima, WA
• Springfield, MA
• Lancaster, PA
• Hartford, CT
• Boston, MA
• Utica, NY

20% of mortgages underwater???

According to the a report in the real estate website zillow.com, more than 20% of the nation's mortgage borrowers owe more than their homes are worth. At 21.5% for the third quarter, it is a small improvement over the previous quarter, when 23.3% of loans were underwater, according to real estate website Zillow.com. This so-called negative equity is a hotly watched statistic because it is a prime predictor of foreclosures.

To read the entire article go to  cnn.com

Vanguard - Weekly update

According to a Vanguard report citing the  Commerce Department's report on gross domestic product (GDP) for the second quarter; it confirmed what many had expected ... Although the economy has grown for the fourth straight quarter, the rate of growth has slowed. Moreover, the nation's recovery from recession has been tougher than previously thought, based on revised GDP figures indicating that the economy from 2007 to 2009 was weaker than originally estimated. 


The mortgage market continues to hobble along. PrivoCorp lost a good sized client to bad lending practices of the past which seems to continue to haunt the entire industry. The ghosts dont seem to be going away any time soon.


For more information on our processing capabilities visit www.privocorp.com

Mortgage Players Look to Soften Bill !!

As Congress moves to finalize new financial regulations, the mortgage industry is working to soften a series of provisions that reshape how most Americans obtain home loans. This was according to the Wall Street Journal.

The provisions in the legislation seek to eliminate questionable practices that proliferated during the housing boom by outlining clear underwriting standards, holding lenders more responsible for loans, and changing the way loan originators are paid. In addition, consumers would get new rights to seek damages when the mortgage process goes awry, according to The Journal.

Read more at-http://bit.ly/aPVd4g (The Wall Street Journal)

Texas mortgage delinquencies drop

Less than 9 percent of Texas homeowners missed a mortgage payment in the first quarter of 2010, according to first-quarter data from the Texas Mortgage Bankers Association.

Texas’ 8.7 percent delinquency rate is down from 10.3 percent one year ago. Nationwide, mortgage delinquencies increased about 1 percent to 10.1 percent.

Just more than 2 percent of Texas mortgages were in foreclosure proceedings at the end of the first quarter, the group said. The national foreclosure rate is 4.6 percent, said Scott Norman, president of the Texas Mortgage Bankers Association.

The above article appeared in the bizjournals of Atlanta and can be accessed @-http://dallas.bizjournals.com/dallas/stories/2010/05/17/daily35.html

Georgia foreclosure rate rises 31%

Georgia had the sixth-highest rate of foreclosures in America in May, according to RealtyTrac’s monthly foreclosure report-

The state had 13,778 foreclosures, or one for every 292 households, last month. This marked a jump of 31 percent over May 2009 and a 1.3 percent decline from April 2010.

Foreclosures are defined as default notices, scheduled auctions and bank repossessions.

There were 322,920 foreclosure filings, or one for every 400 households, in the United States in May. This was a 0.45 percent rise over May 2009 and a 3.3 percent drop from April 2010.

“The numbers in May continued and confirmed the trends we noticed in April -- overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months,” said James J. Saccacio, RealtyTrac CEO, in a statement. “Defaults and scheduled auctions combined increased by 28 percent from 2007 to 2008 and another 32 percent from 2008 to 2009, creating a build-up of delayed bank repossessions. Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed.”

The above article appeared in the bizjournals of Atlanta and can be accessed at  http://atlanta.bizjournals.com/atlanta/stories/2010/06/07/daily32.html

PrivoCorp provides contract mortgage processing services to lenders, brokers, net branches across the country.

Bankrate.com : Mortgage rates chug along

According to bankrate.com, mortgage rates have settled into a groove since last Thursday. Yields on mortgage bonds have chugged along at more or less the same level since then, and that implies that mortgage rates haven't moved much, either. Today is the day when Bankrate conducts its weekly rate survey; I predict that it will say that the benchmark 30-year fixed is 4.98 percent this week, up from 4.92 percent last week.

The Mortgage Bankers Association says there aren't many people applying for mortgages to buy homes; most customers are applying to refinance their current loans. Purchase applications are at their lowest level since April 1997, according to the MBA.

It's easy to figure out why home sales are down so much. The home buyer tax credits stole home sales from the future. We might come to regret this policy choice, because we will discover that some homeowners bought a few months too early, with an insufficient financial cushion. Some people will lose their homes because they bought in March instead of saving more money and waiting until the end of the year.

The above article appeared on bankrate.com

PrivoCorp - best contract mortgage processor

Biz Journals - Existing home sales jump 7.6%

The business Journals quoting the National association of Realtors said that the sales of existing homes in April were up 7.6 percent in March, led not only by the homebuyer tax credit, but by improving consumer confidence and favorable affordability conditions.

This is great news for processing companies like PrivoCorp who are on the verge of getting licensed  throughout the country to be able to process loans in accordance with the recent NMLS and SAFE guidelines. For more information on PrivoCorp - check our website at www.privocorp.com, and for more information on the article, check the Washington Journal here

WSJ - 72 Banks closed so far

Four months in to 2010, 72 banks have closed, with experts predicting there are many more to come, according to a report in the Wall Street Journal.

On Friday (May 14th 2010), Akron-based FirstMerit Corp. agreed to take over the branches and deposits of Illinois-based Midwest Bank & Trust Co., which had $3.17 billion in assets, but was in deep financial trouble, according to the Journal. Elsewhere, regulators in Georgia, Illinois and Michigan closed three one-branch banks.

For more information check out the WSJ (paid subscription required)

Vanguard: US Economy looking up?

The United States continued to show signs of recovery this week as retail sales, industrial production, and business inventories all increased. Although the good news was somewhat dampened by a widening trade deficit in March, many economists believe the continued increase in both U.S. exports and imports is another signal of an economy that is beginning to strengthen.For more information visit the Vanguard website. We at PrivoCorp regularly look out for signs of how the overall economy is performing in order to track the mortgage markets.

Global view of the housing bubble - old stuff but interesting

According to this MGI research although the current crisis started with the bursting of the US housing bubble, other economies around the world are feeling the effects of their own real-estate booms and busts. From 2000 through 2007, a remarkable run-up in global home prices occurred (see exhibit). But that trend has reversed abruptly. In 2008, the value of US residential real estate fell 10 percent; the global average fared only somewhat better, declining by almost 4 percent. We estimate that falling home prices erased more than $3.4 trillion of household wealth in 2008. And because home prices are slow to correct, the current slide may persist for some time, which could depress global consumption.

Check the McKinsey article (Global capital markets: Entering a new era.)  for more details

MBAA - Annual Origination Volume Summation

According to the Mortgage Bankers Association's 2009 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation , commercial and multifamily mortgage origination volumes decreased 46 percent in 2009 among repeat reporters, with mortgage bankers reporting $82.3 billion of closed commercial and multifamily loans.

Commercial banks and savings institutions were the largest single investor group for commercial and multifamily mortgages - responsible for $19.8 billion, or 24 percent, of the closed loan volume. Multifamily properties were the dominant property type - representing $36.5 billion, or 44 percent of the lending total.

"Relatively few commercial mortgages were made in 2009, as the recession curtailed both the supply of and demand for new mortgage debt," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research.  "As the recession has receded, origination volumes have picked up slightly, but the absolute levels remain low."

Here are some key findings as it relates to the residential market

Decreases were seen across most property types and investor groups, and were led by declines in loans intended for Credit companies, REITS, mortgage REITs and investment funds, and Commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO) and other asset-backed security (ABS) conduits.
$15.9 billion of multifamily loans were closed for Fannie Mae, a 32 percent decline from 2008.
$15.2 billion of multifamily loans were closed for Freddie Mac, a 24 percent decline from 2008.
$5.8 billion of loans were closed for FHA/Ginnie Mae, a 168 percent increase from 2008.
Loans for Fannie Mae and Freddie Mac accounted for 85 percent of the total reported multifamily volume in 2009.

While this data is historical (2009); we at PrivoCorp hope that the increased volumes resulting from the incentives by the Fed on first time home purchases, will result in improvement in the housing market which is one of the pillars of the US economy.

PrivoCorp Investors

Here are some of the investors PrivoCorp works with in the US

• Bank of America
• Wells Fargo
• Franklin American
• Provident Bank
• NationStar
• American Financial Resources
• Fifth Third Bank
• Polaris

and so on. This list is by no means exhaustive and is subject to change without notice.

Good news for mortgage industry? ...New home sales jump from record low

According to the Associated press, sales of new homes surged 27% last month, bouncing off the previous month's record low and blowing past expectations as government incentives and better weather boosted sales.

 

The Commerce Department said Friday that new home sales rose in March to a seasonally adjusted annual sales pace of 411,000. It was the strongest month since last July and the biggest monthly increase in 47 years - this seems to be a very positive sign for the real estate finance industry as well.

Median prices of these homes were also up to $214k. For more information please check out the Yahoo!-AP website

The jump is probably the result of people trying to capitalize on the home buyers tax credit which has been used by about 1.8 million households and has cost the IRS $12.6 billion. This hopefully, is a small price to pay for the stimulation of the economy and creation of new jobs which will in turn get the engines of growth revving smoothly ... in short order.

PrivoCorp is looking to process more of these mortgages - and help these home buyers close on their homes faster.

BoA Chief to testify on Capitol Hill - BLEAK !!!

A few numbers from Barbara Desoer's prepared speech that will be made on the state of affairs of BoA's mortgage portfolio. Does not paint a very good picture though.

•1.4 million borrowers, or 10 percent of the entire BofA residential mortgage portfolio, are more than 60 days delinquent.
•More than 16,000 BofA employees are dedicated to helping troubled borrowers work out a solution.
•BofA has taken $10.4 billion in write-downs tied to mortgages over the past two years.

For more information check out the Charlotte Business Journal: Bank of America's Barbara Desoer paints ugly picture on Capitol Hill

National foreclosure rate

Did anyone know that the national foreclosure rate is 8.78% ? This is according to First American CoreLogic in a business Journals article today.Thought this might be useful in the light of the previous article on flippers getting active in the US real estate markets.

PrivoCorp is one of the best FHA contract mortgage processors. in the country.

House flippers a good thing for the market?

During the boom days and in initial days of the bust - the "dreaded" houseflipper was a "bad person"; and unwanted character in the whole real estate landscape. But now with the real estate markets the way they are and the unemployment picture what it is - it seems like now these flippers are a welcome sign to the markets. 

A recent Business Week article talks about the number of foreclosed homes that are changing hands within 6 months of being purchased is a sure sign of flippers getting in on the action.

PrivoCorp - the best contract mortgage processing company in the country for FHA loans -has been seeing a lot of previously foreclosed homes coming back in to the market and being purchased in a short time frame.This is an obvious sign of good things to come in the future.

BW: Home prices in 20 cities rose 0.3% in Jan 2010

According to a recent article in business week online, home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands. The article mentions that the S&P/Case-Shiller home-price index climbed 0.3 percent from the prior month on a seasonally adjusted basis, matching the gain in December, the group said today in New York. The gauge was down 0.7 percent from January 2009, the smallest year- over-year decrease in three years.

The probable causes for the increase ...??

• Cheaper homes
• low borrowing costs 
• government incentives

Gains in hiring are the best bet to overcome mounting foreclosures that keep the pressure on prices and pose a threat of renewed declines in real estate.

Growth in new home sales will definitely help companies like PrivoCorp which help close mortgage loans as contract processors. PrivoCorp specializes in the contract processing of FHA loans across the country.

Lower monthly payments for some?

Here are some proposals under the new plan

• lenders would grant three months forbearance to homeowners who are out of work
• require mortgage servicers to consider cutting a loan's principal if it is up to 15% more than the home is worth
• principal would be reduced over three years as long as the borrower stays current on payments.
• Servicers will get more incentives — double the amount the government now pays to lenders — if they reduce the unpaid balance of second loans

The current program provides modified mortgages to homeowners who show proof of income. The current tight labor market is seen as the driver for the current wave of foreclosures while the earlier wave was the result of the sub-prime crises. For more information visit the USAtoday website.

PrivoCorp has been processing conventional and FHA mortgage loans right through the sub-prime crises and now through the lean job growth market.

WSJ: Supply of Foreclosed Homes on the Rise Again

According to the Wall Street Journal the supply of foreclosed homes that banks need to sell is rising again, signaling further downward pressure on home prices in some parts of the U.S.

Mortgage analysts at Barclays Capital in New York estimated that banks and mortgage investors held a total of 645,800 foreclosed homes in January, up 4.6% from 617,286 a month earlier.

The question in everyone's minds is how long will this last? The answer to this can only be got if one is able to accurately predict the jobs scenario; what the unemployment numbers will be, how many jobs will be added to the economy, etc.

PrivoCorp - the fastest processor of home loans in the state - have seen a lot of purchases recently, quite a few of which are purchases of foreclosed homes (which is a good sign of sorts).

Vanguard: New home construction drops

While mortgage activity is slowly picking up, it remains to be seen whether this is due to the fact that homes that continue to be snapped up are the ones that were in foreclosure or some kind of distress. For more details on this report please visit https://personal.vanguard.com/us/insights/article/economic-week-review-03192010

PrivoCorp is the fastest contract mortgage processing company with its assembly line approach to processing of loans.

HUD webcast clarifying new RESPA rules

The U.S. Department of Housing and Urban Development (HUD) will offer a live RESPA Webcast on clarifications to the new RESPA Rule. NAMB strongly urges members to attend the free webcast to help answer any questions on the new rule.

When: Thursday, March 18, 2010 at 1:30pm-3:30pm EST (12:30pm-2:30pm CST; 11:30am-1:30pm MST; 10:30am-12:30pm PST)

To view the webcast, please click on the following link: http://portal.hud.gov/portal/page/portal/HUD/webcasts/schedule

Live links for the webcast and training materials will appear in a box on the webcast page approximately 1/2 hour before the broadcast taking you to the video.

2,3 or 4 unit FHA

Wanna purchase a 2,3, or 4 Unit property FHA... Not a Shot... At least not any more... If an Investor can't verify Income, doesn't matter if it's personal income, Non - owner income, and now...Rental Income... If it is not claimed on Tax Returns and verifiable thru a 4506T... your done! Believe it or not you can do a refi, but not a purchase... Proposed leases are not acceptable anymore.

Only way to use rental income is if it has been claimed by the borrower on their tax returns for the past 2 yrs now... (and this income is of course... verifiable thru a 4506T...

FICO scores and the FHA

The aftermath of the credit crisis is going to have some serious implications on the FICO scores of those getting FHA insured loans. These changes are expected to come in to force in the summer of 2010 and could mean different things to different people as it relates to the cost and affordability of mortgages and most important as it relates to this post - the credit worthiness of the borrower.

• Higher insurance requirements – this change requires that an upfront mortgage insurance premium required of a borrower would be raised from 1.75% to 2.25%.
• Larger down payment – only those borrowers with FICO scores about 580 would qualify for the low 3.5% down payment. Those borrowers with a score lower than 580 would need a down payment of at least 10%.
• Lower seller concessions – this is the money returned to a borrower in exchange for agreeing to a higher home sales price. This seller concession would drop from 6% to 3%.
• Higher minimum FICO score requirements – in addition to needing a minimum FICO score to qualify for the lower down payment option, it may be difficult for a borrower to even begin the process with FICO scores below 600. This higher FICO score requirement is not limited to FHA loans, but is being adopted throughout the mortgage industry; what was once a fair FICO score may now only be considered a poor score.

PrivoCorp (www.privocorp.com) is a large (and fast) processor of FHA loans - but we have not seen a whole lot of scores around the 580's. Probably an indicator of the type of clients we work with. Anyway, these are steps in the right direction - to get loans to deserving people at lower costs. Am sure these new changes will effect some genuine folks who have seen their credit score go down due to the down turn in the economy and consequent unemployment, but unfortunately, that's the way the world works.

Mortgage Market Question?

What are the current market conditions...? Is volume predicated by the Secondary Market, Int Rates, or Regulation?

My feeling is "Sh*t always rolls downhill" ... The Fed has slowed down purchase of MBS, hence, the secondary market has begun to tighten up. They see the exit strategy being not quite so easy come March. Investors (the BOA's and Wells of the world) are booking huge margins of profit on new loans. However, private money is who they will be answering to next. It's a good thing, but in the short term, it's gonna be rough. Watch the MBS ... everything else is truly "Secondary".

Vanguard weekly update (1/23/10)

According to the Vanguard weekly update, bonds and stocks tumbled this week after a proposal by the Obama administration to impose new regulations on the banking sector. The economy continued to send mixed signals, including a surprising 4% decline in new housing starts and a spike in jobless claims. Meanwhile, on a positive note, the Conference Board's index of leading indicators rose for the ninth month in a row. For more details on this please check http://www.vanguard.com/econweek012210.

It goes without saying that job creation should be at the center of the recovery for things to look up long term. The incentives provided by the administration have provided the shot in the arm for job growth (if not arresting the decline) and economists and businesses like Privo Corporation (where mortgage home loan processing is an important activity) are hoping that these will provide the momentum for the general market to improve. For more information on mortgage loan processing and how PrivoCorp helps closes loans faster - check out our website @ privocorp.com

CNN: Record 3 million households hit with foreclosure in 2009

According to CNN Money almost 3 million homeowners received at least one foreclosure filing during 2009, setting a new record for the number of people falling behind on their mortgage payments.

RealtyTrac, the online marketer of foreclosed homes, reported that one in 45 households -- or 2,824,674 properties nationwide -- were in default last year. That's 21% more than in 2008, and more than double 2007's total.

For more information on this article visit CNN Money.

Vanguard weekly update (First in 2010)

Its been a while since we posted the Vanguard's weekly update. Fortunately there is good news on the economy front. The Federal Reserve's most recent Beige Book showed continued signs of economic growth,while many businesses increased their inventories, signaling an expected pickup in sales. Consumer prices continued to rise slowly, but inflation remains in check. Meanwhile, December's retail sales were less than expected,despite a relatively good holiday shopping season.

For the details check http://www.vanguard.com/econweek011510