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Posts tagged ‘Mortgage loan’

New Home Sales Plunge as Mortgage Rates Rise.

Americans cut back sharply in July on their purchases of new homes, a sign that higher mortgage rates may weigh on the housing recovery.

The Commerce Department said Friday that U.S. sales of newly built home dropped 13.4 percent to a seasonally adjusted annual rate of 394,000. That’s the lowest pace in nine months. And it is down from a rate of 455,000 in June, which was revised sharply lower from a previously reported 497,000.

New-home sales have risen 7 percent in the 12 months ending in July. The annual pace remains well below the 700,000 that is consistent with a healthy market.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

The housing market has been one of the strongest performers this year in an otherwise sluggish economy, helped by steady job gains and low mortgage rates. But mortgage rates have risen a full percentage point since May and have started to steal some of the market’s momentum.

“The spike in mortgage rates is slowing the pace of improvement,” Dan Greenhaus, chief global strategist for BTIG, an institutional brokerage, said in an email. “Given the speed at which housing was improving, and the growing talk of a renewed bubble, some moderation, assuming it doesn’t materially worsen, is not a terrible outcome.”

In July, builders began work on the fewest single-family homes in eight months. And mortgage applications from potential buyers have fallen since rates have risen more than a full percentage point.

The impact of higher mortgage rates has surfaced in the new-home market faster because the July sales report reflects signed contracts. Sales of previously occupied homes reached a nearly four-year high last month. But that report measured completed sales, which typically reflects mortgage rates locked in a month or two earlier.

The jump in previously occupied home sales likely reflected a rush by home buyers to lock in lower rates. Some economists expect those sales to fall back in August.

Even so, most economists expect the housing recovery will persist. Mortgage rates remain relatively low by historical standards. The average rate on a 30-year mortgage this week was 4.58 percent, according to Freddie Mac.

Slower sales pushed up the supply of new homes for sale to 171,000 at the end of July, the most in more than two years. Tight supplies of new and previously owned homes have led to sharp price increases. An increase in the supply could moderate those price gains.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders association.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Banks Outsource Mortgage, Foreclosure Work to India.

Image: Banks Outsource Mortgage, Foreclosure Work to India

Employees work on computers at an outsourcing center in Simayal, India.

By Courtney Coren

U.S. banks are outsourcing mortgage and foreclosure work to India to keep costs down and keep up with growing regulatory demands created since the financial crisis of 2008.

The banks are using technology firms on the sub-continent to supplement some of the needed work rather than hire more people in the United StatesThe Wall Street Journal reports.

But regulators worry that there is poor supervision by banks of third-party vendors. And consumer advocates fear that in the long run, it will be harder for banks to be sure that the work is done properly.

“The lack of oversight so far away may be too much for these banks to handle, considering how badly they’ve handled overseeing their own staff,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

After 2008, the U.S. government demanded changes to every aspect of the mortgage and foreclosure process. Banks are outsourcing to meet the changing rules and demands.

The Indian companies say that their role won’t be giving final approval for mortgages or foreclosures.They will help the banks by preparing the necessary documents that the banks will have to sign off on.

“We never judge the cases,” said Abid Ali Neemuchwala, vice president of Mumbai-based Tata Consultancy. “What we do is make it easy for the banks to make that final decision by putting together all the information and letting them know their checklist is complete.”

According to The Wall Street Journal, this move increased revenues for Indian outsourcing firms to $316 million in mortgage work for this year — double the revenue from similar work in 2009.

While some argue that outsourcing may help banks maintain their bottom line, there is concern that customer service will suffer.

“If their solution is to minimize costs, that’s the solution they’ve found,” Rheingold said. “If the solution is better customer service, they have clearly not found it. The solution is not overseas; it’s within their own practices.”

© 2013 Newsmax. All rights reserved.

Bank of America in $10B-plus mortgage settlement.

CHARLOTTE, N.C. (AP) — Bank of America says it will spend more than $10 billion to settle mortgage claims resulting from the housing meltdown.

Under the deal announced Monday, the bank will pay $3.6 billion to Fannie Mae and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide banking unit sold to the government agency from Jan. 1, 2000 through Dec. 31, 2008. That includes about 30,000 loans.

Its shares briefly edged up 9 cents to $12.20 in morning trading, its highest level since May 2011.

CEO Brian Moynihan said the agreements were “a significant step” in resolving the bank’s remaining legacy mortgage issues while streamlining the company and reducing future expenses.

Bank of America bought Countrywide Financial Corp. in July 2008, just before the financial crisis.Countrywide was a giant in mortgage lending, but was also known for approving risky loans.

Fannie Mae and Freddie Mac, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses.

Bank of America’s purchase of Countrywide originally was lauded by lawmakers because the bank was viewed as stepping in to eliminate a bad actor from the mortgage market. But instead of padding Bank of America’s mortgage business, the purchase has drawn a drumbeat of regulatory fines, lawsuits and losses.

Bank of America said that the loans involved in the settlement have an aggregate original principal balance of about $1.4 trillion. The outstanding principal balance is about $300 billion.

“Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests,” Bradley Lerman, Fannie Mae executive vice president and general counsel, said in a statement.

Bank of America Corp., which is based in Charlotte, N.C., also said that it is also selling mortgage servicing rights on about 2 million residential mortgage loans. The loans have an aggregate unpaid principal balance of approximately $306 billion.

The transferring of the servicing rights is expected to take place throughout the year.

In addition, the bank will pay $1.3 billion to Fannie Mae to settle loan servicing compensatory fee obligations.

Bank of America said its fourth-quarter will include various items related to the settlement and other matters, but that it expects “modestly positive” earnings for the period.


Associated Press

US Home Sales Rise 2.1 Percent in October.

Housing Market Bounces Back


Housing Market Bounces Back

U.S. sales of previously occupied homes rose solidly in October, helped by improvement in the job market and record-low mortgage rates.

The increase along with a jump in homebuilder confidence this month suggests the housing market continues to recover.

The National Association of Realtors said Monday that sales rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million. That’s up from 4.69 million in September, which was revised lower.

The sales pace is roughly 11 percent higher than a year ago. But it remains below the more than 5.5 million that economists consider consistent with a healthy market.

As the economy slowly recovers, more people have started looking to buy homes or rent apartments. Prices are steadily climbing, while mortgage rates have been low all year. At the same time, rents are rising, making the purchase of a single-family home or condominium more attractive.

“Altogether, the report is encouraging,” said Michael Gapen, an economist at Barclays Capital. “Our view is that housing is in a recovery phase,” he added, though it will be restrained by limited credit and modest job gains.

A separate report Monday showed confidence among homebuilders rose this month to its highest level in six and a half years. The increase was driven by strong demand for newly built homes and growing optimism about conditions next year.

The National Association of Home Builders/Wells Fargo builder sentiment index increased to 46, up from 41 in October. Readings below 50 suggest negative sentiment about the housing market. The index last reached that level in April 2006. Still, the index has been trending higher since October 2011, when it stood at 17.

Housing Market Bounces Back
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The Realtors’ group said Superstorm Sandy delayed some sales of previously occupied homes in the Northeast. Sales fell 1.7 percent there, the only region to show a decline. Those sales will likely be completed in future months, the group said.

The median price for previously occupied homes increased 11.1 percent from a year ago to $178,600, the Realtors’ said.

A decline in the number of homes available for sale is helping push prices higher. There were only 2.14 million homes available for sale at the end of the month, the lowest supply in 10 years. It would take only 5.4 months to exhaust that supply at the current sales pace. That’s the lowest sales-to-inventory ratio since February 2006.

Prices are also benefiting from the mix of homes being sold. Sales of homes priced at $500,000 and above have jumped more than 40 percent in the past year. Sales of homes and condominiums that cost less than $100,000 fell 0.6 percent.

There have been other positive signals from the housing market. Applications for mortgage loans to buy homes jumped 11 percent in the week ended Nov. 9, compared with a week earlier, the Mortgage Bankers’ Association said last week. Purchase applications are up 22 percent in the past year.

Foreclosures are slowing. The number of properties that began the foreclosure process in the first 10 months of the year fell 8 percent compared with the same period last year, RealtyTrac said last week.

And builders broke ground on new homes and apartments at the fastest pace in more than four years in September. The jump could help boost the economy and hiring.

Still, the market has a long way back to full health. Many potential home buyers cannot meet stricter lending standards or produce larger down payments required by banks.

That can be a particular problem for first-time homebuyers. They accounted for 31 percent of sales in October, down slightly from September and below the 40 percent that is common in a healthy market.

Federal Reserve Chairman Ben Bernanke said Thursday that banks’ overly tight lending standards may be preventing sales and holding back the U.S. economy.


Veiga reported from Los Angeles.



How to Buy a House.

Editor’s note: This article appeared originally at Debt-Proof Living on August 31st 2012. 

When the housing bubble burst in the U.S., home prices across the country dropped significantly. As painful as this has been for many, this situation has made it possible for many people, who before would not have been qualified, to enter the housing market.

But is it really better to buy a home than to rent? Conventional wisdom has always pointed out that when you rent, you are just throwing money away every month. But that’s a one-sided argument. On the other side is the fact that the equity you may build from buying is mostly offset by the money you will “throw away” on property taxes, homeowners insurance, maintenance and mortgage interest.

In decades past, homeowners could pretty much count on their equity (the difference between the outstanding mortgage amount and market value of the property) to grow substantially each year. This usually made buying so much more attractive than renting, from a financial standpoint. However, since 2008, that benefit continues to be questionable.

There does remain one significant benefit for buying over renting: You get to freeze your monthly payment for 15 to 30 years and then stop paying it altogether. This offers the promise of a rent-free retirement. If there is one thing you will not want to have once you stop working is a monthly mortgage payment, or rent.

Buying for the first time can be overwhelming. In an effort to calm fears and build confidence, here are the basics for buying a house.

How much do houses cost? The national median existing single-family home price in the U.S. was $181,500, as of July 31, 2012. That means half are more and half less than that median figure.

How much can you afford? Generally, multiply your gross annual household income by three and you’ll know your comfortable price range. For example, if your total household income is $75,000 annually, you should be looking at houses in the $225,000 range. A loan broker might tell you something quite different, but remember this: The biggest mistake you can possibly make when buying a home is to get in over your head.

Mortgage. A loan on real estate is “secured” and called a mortgage. By “secured” this means that if you fail to pay as promised, the lender can take the property as payment, through a process known as “foreclosure.”

Most home mortgages are for 30 years, meaning that if you make all 360 principal and interest payments, the loan will be paid down to $0, and you will own the property “free and clear.” The monthly payments on a 15-year mortgage are going to be more, but you will own the house in 15 years, and avoid having to pay a lot of interest.

How much will my payments be? Of course there are variables here depending on interest rates, but generally your  payment will be 0.75 to 1.15 percent of the purchase price. On a $150,000 home that’s $1,687 to $2,587 per month, which includes taxes and insurance.

The bigger your down payment, the lower the monthly payments. The lower the interest rate, the lower the monthly payments. The longer the loan term, the lower your monthly payments. Keep in mind that it’s better to get a shorter loan so you pay it off quicker and save on interest, if you can afford the higher payments.

Money you need up front. You will need money for the down payment, closing costs and miscellaneous costs.

Down payment. You will need 3 to 20 percent of the purchase price in cash for a down payment. The actual amount will depend on your credit score and the terms and conditions required by the lender.

Closing costs. Expect closing costs to be from 1 to 8 percent of the purchase price. This covers the loan fee, also called “points,” charged by the lender plus other loan origination costs.

Miscellaneous costs. This is money you will pay up front to cover things like the application fee for the loan, the appraisal of the property, transfer fees, a professional home inspection and so forth. Your miscellaneous fees will be in the range of $250 to $800.

All together, on a $225,000 purchase price, you should plan on $40,000 to $65,000 up front, depending on the down payment, the terms and conditions of your loan and other related costs.

Qualifying for a mortgage. Generally, you need four things to qualify for a mortgage these days:

  • Money for a down payment.
  • Household annual income that is 2 to 3 times your monthly mortgage payment.
  • Two years of solid employment with the same job or in the same field.
  • A good credit score (or credit score average of the joint buyers).

Steps to buy a house

1. Get your credit reports. Go to to get free copies of your credit reports from each of the big three credit bureaus. You will need a good score of at least 740, depending on the lender (if joint buyers, average your two scores). If you need to clean up your report to raise your score by disputing items or changing your personal information, now is the time to do that.

2. Go to your bank or credit union and speak to a loan officer. Say that you want to buy a house and want to fill out an application for a mortgage. This will  result in a “pre-qual” letter that says the amount you can qualify to borrow.

3. Find a real estate agent. Get referrals from friends. The seller pays the real estate commission upon the final sale, so you won’t have to come up with money to pay your agent.

4. Discuss with your agent. Bring out your pre-qual letter. Talk about the area you would like to live and your list of “must haves.” Your agent will give you a list of properties that may fit your criteria.

5. Disclosure. Once you find a home that seems interesting and meets your needs, ask for the seller’s Disclosure Form. This lists everything about the property that the seller is aware.

6. Make an offer. If all is well with the Disclosure and you want to make an offer, ask your agent to suggest how much to offer, without going so low you lose out altogether.

7. Submit the offer. The agent will complete the property paperwork to put your offer into writing. The offer includes the price you are willing to pay together with the time frame, and what items if any that you want to be included in the sales price of the home.

8. Inspection. Once your offer is accepted (it may require a few counteroffers back and forth), arrange to have the house inspected by a professional. This may cost you $350 or more, but it will be worth every penny provided you get an experienced inspector.

9. Appraisal. Arrange with your agent to have the house appraised. Your lender will be insistent that the home have a market value consistent with the amount of your loan.

10. Get insurance. Your lender will require that you have proper homeowners insurance for fire and other disasters in place upon closing.

11. Closing. Depending on the state laws where the property is located, you will go to an escrow office, a title insurance office or an attorney’s office to sign all of the documents and take care of any other paperwork. You’ll owe some money, such as the down payment, and closing costs unless you got those rolled into the mortgage. You’ve either already arranged with your bank to wire the funds to the closing company, or you will bring a bank check with you to closing. You’ll receive access to the property according to the details and terms of your contract with the seller.

Congratulations, you are now a homeowner!

By Mary Hunt

Debt-Proof Living” was founded in 1992 by Mary Hunt.  What began as a newsletter to encourage and empower people to break free from the bondage of consumer debt has grown into a huge community of ordinary people who have achieved remarkable success in their quest to effectively manage their money and stay out of debt.  Today, “The Cheapskate Monthly” is read by close to 100,000 Cheapskates.  Click here to subscribe.

Publication date: September 5, 2012

5 Simple Ways to Save Thousands.


In light of recent difficult economic times and in remembering those times when I scraped pennies to put gas in my car to get to work, I want to share some simple, but valuable ideas on how to save money in your household.

  1. Invest in a thermos and make your own premium coffee at home. It is estimated that coffee shops’ average cup of coffee with all the fixings is $4.00 and the average American buys 3 per week. This is almost $50 per month spent on luxury coffee. That’s $600 per year!
  2. Unplug all appliances in your home when not in use. That’s right. Unplug that television, lamp, blender, and can opener. Even when appliances are not in use, they still use energy when staying plugged in. I learned this little tip a few years ago and immediately saw a difference in my electricity bill. (I would estimate about $50 per month, at least!)
  3. Call your credit card company and ask for a lower rate. It seems simply, right? The truth is, many Americans secured a credit card many years ago and have paid satisfactory for many years. The rate may have been at 19% several years ago, but credit card companies will very often lower your rate in order to save your business. (Obviously, I recommend having $0 credit card debt, but in the event you already have the debt, get the lowest rate possible).
  4. Shop cable, internet, and phone companies. Most of us sign up for these services when moving into our new place and rarely every do anything different. Because the economic market is suppressed, competition among companies is very high. Call your companies and ask for their very best deals. Then, simply shop with competitors. (I have even been paid $100 cash to stay with my phone company in the past!)
  5. Refinance your home, if you are a homeowner. Rates are as low as 3.25% right now, which is unprecedented. If you are paying more than this on your home mortgage now (and you can recoup closing costs on the new loan within 30 months), go for it! There can be drastic savings on your monthly mortgage note and your long-term interest.

These suggestions can save you thousands every years and only take a few minutes each to implement into your daily life. We all can afford to save a few dollars to put back for children’s college funds, our retirement, and more, so get started today.

By Jennifer Maggio

Author/Speaker, Jennifer Maggio, leaves audiences across the globe riveted with her story from homeless teen mom to 11-time Circle of Excellence Winner in Corporate America. She is the critically-acclaimed author of two books, Overwhelmed: The Life of a Single Mom and The Church and the Single Mom. She has been featured on more than 100 radio and television shows and has a passion to encourage single mothers and women everywhere. For more info, visit

Report: Fewer US homes foreclosed upon in April.

Related Content

  • FILE - In this Friday, March 16, 2012 file photo, a "No Trespassing" sign is shown in front a neighborhood of 262 homes called Strawberry Lakes, in Lake Worth, Fla. National foreclosure trends took a positive turn in April, as the number of homes seized by banks declined and fewer properties entered into the foreclosure process RealtyTrac Inc. said Thursday May 17, 2012. But state-level data point to potentially more home repossessions ahead in Florida and many of the 25 other states where courts are required to sign off on foreclosures. (AP Photo/Wilfredo Lee)FILE – In this Friday, March 16, …

LOS ANGELES (AP)National foreclosure trends took a positive turn in April, as the number of homes seized by banks declined and fewer properties entered into the foreclosure process.

But state-level data point to potentially more home repossessions ahead in Florida and many of the 25 other states where courts are required to sign off on foreclosures.

All told, the number of U.S. homes taken back by lenders in April declined 7 percent from March, the third consecutive monthly decline, foreclosure listing firm RealtyTrac Inc. said Thursday. Home repossessions fell 26 percent versus April last year.

The number of homes that lenders placed on the foreclosure path last month also declined, falling 4 percent from March and 2 percent from April 2011, the firm said.

While the figures suggest foreclosure trends are improving nationally, state data tell a different story.

“You absolutely have a tale of two different types of foreclosure trends happening across the country,” said Daren Blomquist, a vice president at RealtyTrac.

The divide comes down roughly between the 26 states where courts play a role in the foreclosure process and places like California and the other 23 states where the process generally moves quicker because judges are not required to sign off on foreclosures.

Last year, foreclosure activity, as measured by the number of homes receiving foreclosure-related notices, slowed sharply as lenders grappled with allegations that they had been processing foreclosures without verifying documents.

A $25 billion settlement reached in February between the nation’s biggest mortgage lenders and state officials has since cleared the way for banks to take action on unpaid mortgages.

In California, Arizona, Nevada and many other so-called non-judicial foreclosure states, foreclosure activity has been declining because they didn’t build a huge backlog of pending foreclosure cases last year.

In contrast, the slower foreclosure process in states like Florida, New Jersey and Pennsylvania helped build a logjam of pending foreclosure cases that now has lenders playing catch-up.

As a result, foreclosure activity in all the judicial foreclosure states combined jumped 15 percent versus April last year. Taken together, non-judicial states saw foreclosure activity fall 29 percent, RealtyTrac said.

While 27 states recorded increases in the number of homes entering the foreclosure process last month, it appears the properties represent largely homes where borrowers missed payments for two or three years, and lenders are now getting around to taking action against them.

“The good news there, is we don’t see a lot of evidence that there are a lot of new people who are just not making their payments who are entering foreclosure,” Blomquist said.

The Mortgage Bankers Association reported on Wednesday that the percentage of mortgages that were one payment past due as of March 31 declined to the lowest level since mid-2007. While the share of home loans that were at least three months past due at the end of the first quarter fell to the lowest level since the end of 2008.

Home loans taken out at the peak of the housing boom continue to comprise the majority of problem loans. In the first quarter, some 60 percent of all mortgages past due 90 days or more, or in foreclosure, were originated between 2005 and 2007, the MBA said.

Meanwhile, banks are increasingly agreeing to short sales rather than foreclosing on homes. In a short sale, the bank agrees to accept less than what the seller owes on their mortgage.

In the first three months of this year, short sales grew while foreclosures declined. Short sales are now on pace to outnumber sales of bank-owned homes in California, Arizona and 10 other states, RealtyTrac said.

That could help slow the pace of home repossessions, which are on pace to be just over 700,000 this year. Last year, about 1 million homes ended up foreclosed-upon.

All told, foreclosure-related notices were reported on 188,780 U.S. properties last month, the lowest monthly total since July 2007, RealtyTrac said. That’s a decline of 5 percent from March and down 14 percent from April last year.

Lenders took back 51,415 homes and began the foreclosure process on 97,665 homes last month.


Associated PressBy ALEX VEIGA | Associated Press 

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