25 Feb 12 Bank Loans
There are many different types of bank loans available and we are going to look at a few here. First we have the 15 and 30 year mortgage loans. a 15 year mortgage is they type of mortgage that requires higher monthly payments. The flip side to this though is that it builds equity a whole lot faster. a 30 year mortgage is the type of mortgage that generally costs more in the end but will give you a lower down payment.
Next we have adjustable rate mortgages also known as ARM’s. these differ from fixed rate types of mortgages because in an ARM the interest rate and monthly payment can increase and decrease depending on the market rate.
Now we have what is called a home equity loan. this loan is sometimes abbreviated HEL. The HEL is the type of loan where the borrower will use the equity that they have built up in the home they own as collateral. these loans can sometimes be very useful when it comes to helping finance any medical bills, large home repairs, or even your child’s college education. The only downside to a home equity loan is that it creates a lien against the home thereby reducing your homes equity. this is also considered a second home mortgage.
Next we have an interest-only loan. An interest-only loan is a loan that is set for a specific term and the borrower will pay only the interest on the principal balance.
Another type of loan is a consolidation loan. a consolidation loan is the action of replacing multiple loans with a single loan. this type of loan often comes with a lower monthly payment but a longer repayment period. this can also be called debt consolidation.
A line of credit is a certain type of revolving credit in which you’re home or other property will serve as collateral. No matter which loan you choose the general basis as to whether you get it or not will be based on your overall credit. you don’t get much with bad credit.
25 Feb 12 Fixed-rate mortgage rates rise, ARMs fall
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — after three weeks of record lows, rates on 30-year fixed-rate mortgages rose this week, averaging 3.95%, according to Freddie Mac’s weekly survey of conforming mortgage rates, released Thursday.
the 30-year mortgage averaged 3.87% last week and 4.95% a year ago.
Rates also rose for 15-year fixed loans, averaging 3.19% for the week ending Feb. 23, up from 3.16% a week before; the mortgage averaged 4.22% a year ago, the survey found.
But rates on adjustable mortgages fell this week, with the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaging 2.8%, down from 2.82% last week and 3.8% a year ago. the 1-year Treasury-indexed ARM averaged 2.73%, down from 2.84% last week and 3.4% a year ago.
to obtain the rates, the fixed-rate mortgages required payment of an average 0.8 point, the 5-year ARM required an average 0.7 point, and the 1-year ARM required an average 0.6 point. A point is 1% of the mortgage amount, charged as prepaid interest.
in a news release, Freddie Mac’s chief economist, Frank Nothaft, noted that recent data releases show a housing market that is gradually improving.
“Loans that were seriously delinquent (90 days or more past due plus the foreclosure inventory) fell to 5.3% of prime mortgages at the end of 2011, representing the lowest quarterly share since the start of 2009, according to the Mortgage Bankers Association. the Census Bureau reported new residential construction starts in January outpaced the market consensus forecast, led by condominiums and apartment buildings, and December’s figures had upward revisions,” Nothaft said. Read more: January housing starts rise 1.5%.
the National Association of Realtors reported that existing home sales in January were at their strongest pace since May 2010, he said. Read more: Sales of existing homes up 4.35% in January .
Amy Hoak is a MarketWatch reporter based in Chicago.
25 Feb 12 Spain protest movement fights housing evictions
16 February 2012 last updated at 21:02 ET Share this page By Tom Burridge BBC News, Madrid
As Tom Burridge reports from Madrid, a protest movement is running a nationwide campaign to stop the evictions
As the pain of Spain's property crash continues to hit people hard, a nationwide movement is now fighting back.
Regular protests are being staged as banks repossess the homes of those who cannot afford loans taken out when the economic outlook was more rosy.
Young Spanish couples and immigrants are the two groups worst affected. Spanish Economy Minister Luis de Guindos recently announced that the government would hold talks with Spain's banks to try and find ways to lessen the impact of the repossessions.
Housing ‘a right not a luxury’
On the morning that the banks were due to take control of Ronale de la Cruz's house, more than 150 people turned up to stop the eviction.
Protesters at Ronale de la Cruz's house on the day it was to be repossessed
"having a house is not a luxury good, it's a basic right," said the 48-year-old immigrant from the Dominican Republic, who bought the house in 2004 and lives there with his wife and four children.
"I'm one of many," he tells me.
"If the bank decides today to give me social housing, it doesn't solve anything. It's a problem that's affecting more and more people."
Protesters crowded around the front door as several police vans and cars arrived to enforce the repossession order on behalf of Ronale's bank.
Tatyana Roeva was one of the protesters who went to the house the night before the eviction.
Protester Tatyana Roeva says people were "tricked" into taking out loans
"Surely someone who enters into a mortgage has a duty to meet their payments?" I ask her.
"I don't agree, because we were tricked. they created a property bubble and they gave mortgages to everyone. It was a fraud in every sense of the word."
Bankers’ defence
Savings banks, known in Spanish as "cajas", issue more than half the total value of mortgages in Spain.
One of the biggest problems for the savings banks is the amount of property they own. many of them are now referred to as "bad assets" because their value has fallen so sharply.
However the Confederation of Spanish Savings Banks (CECA) rejects the notion that, prior to 2008, its members were guilty of irresponsible lending.
"I think we should take into account the climate in which lending contracts were issued," said Antonio Romero from the CECA.
"they took place at the peak of the cycle in the Spanish economy, when credit was easy to get and when the unemployment rate was really low."
Since Spain's economic boom came to a resounding end at the beginning of 2008, banks have repossessed more than 150,000 properties.
The latest figures from Spain's legal authorities show that in the third quarter of 2011, there were 10,869 properties repossessed in Spain. in the previous quarter, that figure peaked at 16,464.
But according to the CECA, 97.5% of people with mortgages in Spain are currently meeting their payments. It argues this shows that the property portfolio of Spanish savings banks is, on the whole, healthy.
Protesters win concessions
The protesters had been camped outside Ronale de la Cruz's house for several hours when he was called, along with his lawyer, to a meeting with an official from his local authority and a representative from his bank.
Ronale de la Cruz says he is one of many fighting repossession
The four men stood, surrounded by the media and the police on the main road near Ronale's house, after the bank had agreed to suspend his eviction for a further eight days.
Irene Montero, 24, was one of the protesters celebrating as Ronale de la Cruz returned to his home with his fists punching the air. she described the number of empty properties and housing repossessions in Spain as "inhumane".
"at the very least we want things changed, so that when someone's house is repossessed they don't still owe the bank money," she said.
However, in Spain, people can buy into certain types of mortgages where the debt is wiped out if the property is repossessed.
As Antonio Romero explained, the problem is that the rates on those mortgages are much higher and so very few people buy them.
20 Feb 12 The Banks & Mortgage Companies’ Dirty Little Secret
I am always amazed at how much bad information gets spewed from what people think are reliable sources. First of all, I’m not some conspiracy theory type of guy, but the information coming out of Washington DC about the foreclosure mess is just bull fertilizer.
Property owners are being told that there is all sorts of help from various government agencies and in reality, you still have to deal with the individual mortgage companies and in the worse case scenario the loan servicing companies. the truth is that there is still such resistance on many fronts from lenders to work with property owners who have a real interest in working out a solution to their foreclosure mess. there is a dirty little secret the banks will not tell you or the government fails to disclose.
Since my background was in Accounting which included almost 3 years in Public Accounting, I do understand some how the banks operate when it comes to what they call on their books special assets. These special assets are not so special after all; they are what we know of as bad mortgages taken back in foreclosure. here is where it gets down right sick in my mind.
The banks and mortgage companies are allowed to write off a portion of these bad debts or the recorded amount the house was foreclosed at. So, big deal you say? When they finally write down the bad debt to a point that they can finally sell it at market value, they will book a profit from the difference of what the book value was on their books. So they write down a bad debt to maybe $150K and then when they sell it for $180K at market value, they show a profit of $30K.
The banks and mortgage companies get to write off the bad debt against any income and they get to book a profit for the shareholders at the end. So the question is still: what incentives do the banks and mortgage companies have for working with property owners if they are given such a favorable tax advantage if they just foreclose on the property, sit on it for a while until it’s written down to a point where they can show a profit? the answer is NONE
Now, I’m sure I have just made a very simplistic explanation to what must be much more complex IRS regulations that the banks follow, but the principal remains. the banks have no real incentive to expend the effort to work with homeowners in many cases. I have found since writing the book referenced below that things are always changing with the banks and mortgage companies. It is in your best interest to know your rights and responsibilities.
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