Category — Loans & Mortgages

OVER 1400 REAL ESTATE & MORTGAGE professionals were arrested today.  Bear Sterns hedge fund managers were taken away in handcuffs.  FBI special agents are the guys that carry guns.  They actually arrest people for mortgage and real estate fraud.

I used to remind mortgage agents that when their client (my clients too) sign a deed of  trust there is bold ten point print that points out that not occupying the property on a owner occupant loan, is a felony.  I’ve even had people (not my clients) actually ask me “do we really have to move in?”  Ya.  Otherwise the guys with the guns show up.  And now you know.  They do arrest borrowers.

There are a variety of mortgage scams, but the most common one is the investor who applies for and gets an owner occupied loan, and never intends to move in.  Bye Bye Puddin’ Pie.

McMurdie’s Real Estate Rule No. 26: Don’t be a Puddin’ Pie.  Tell the truth.

WHO’D A THUNK IT?  As you have already read it on Realestateblocks.com, mortgage interest rates are about to rise due to inflation cause by the shrinking value of the dollar.  Fed Chairman Bernacke announced today that the Feds low interest rate cuts were at an end, and inflation caused by the drop in the international value of the dollar my lead to higher interest rates.

Here I am, Cassandra, again.

I just got out of a meeting with Chase Mortgage regarding mortgage loans.  Online Chase’s mortgage interest rates are not available.  Wells Fargo was also nervous about mortgages rates.  Thirty year rates move before short term rates and it is likely borrowers will not see 5.85% fixed rate again for many years.  Any rate under 8.0% fixed is a good rate.  Traditionally mortgage rates run at least 3% over the rate of inflation.  Right now, it looks like fixed rates should be close to 10%.  ARMs and interest only are last year’s idea.

The primary cost of a home is the amount of the monthly payment.  Smart buyers and sellers will make their move now, and complete purchases and sales before November.

Borrowers will not be able to get low fixed rates again for love nor money in a few short months.

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THE SENATE FORECLOSURE RELIEF BILL will come to a vote in the Senate, but without giving bankruptcy judges the power to adjust downward the principal balance of mortgages.

I have not reviewed the wording of the bill the House has passed, but it sounds like bankruptcy judges will be able to dramatically reduce delinquent interest, but have limited authority to adjust downward the principal balances due on loans.

I agree with the Senate’s approach.  If bankruptcy judges were given authority to reduce the principal amount owed, especially on line of credit seconds, thousands of homeowners would file bankruptcy who could afford to make debt payments, with accompanying massive loss by lenders the financial system might not be able to sustain.

The Senate bill also contains legislation allowing states to issue $10 billion in tax free mortgage bonds to replace delinquent/defaulted loans.

GRACE KENG reports on the Santa Clara County Assessors speech.  Larry Smith, the county assessor is correct, Santa Clara County, excepting the far eastern and southern end of the County, do not have a foreclosure problems.  The problem for the market is mortgage underwriting criteria making it difficult for buyers to qualify for purchase money loans.

PETER THIEL brings us an optimistic thought experiment on globalization that includes an analysis of the subprime mortgage market bust on global markets.  This is an important article for anyone interested in global markets, booms, busts, and the future.

My favorite line by Thiel: “approaching retirement in an actuarially bankrupt country.” Sigh.  Unfortunately true.