Your Mortgage Has been Sold: Who Do You Pay Now

When lenders make a mortgage loan they sometimes keep it " in house". But much of the time if they are doing a lot of this type of business they have to assign the loan to another to get back the cash so that they can do this again. This is known as the secondary mortgage market. Other banks, insurance companies, hedge funds, mutual funds and Fannie Mae and Freddie Mac all participate in buying mortgages from the original lender. This way the bank that made the original loan gets cash back to do it again. It works as long as there is faith in the ability of the borrower to pay it back.

What Happens to You When Your Lender has Sold Your Mortgage: Some Rules You Need to know

According to RESPA, the real estate settlement procedures act, the lender must disclose their policy on assigning loans. There should be no surprises

1. If an assignment takes place, your lender has to disclose the date of the transfer, and who they assigned the loan to. When you receive a letter indicating that your payments must now be made to a new company, you know your check is going to the new owner of your mortgage.

2. Your newly assigned loan cannot be changed. The terms of the mortgage cannot be changed

3. Because it can be confusing during the transfer, the law allows a 60 day grace period. if you fail to pay the correct lender and are therefore technically late, you have two payments or 60 days without late penalties to get it right.

4. If you are not sure make your payments to, pay the first lender and send both parties a letter indicating that. Not bad to send this certified so that you can be sure it ws received by both parties.

5. Your lender has 20 days to act on this notice to correct and make clear to you who now should be in receipt of your monthly payments. The have 60 days to resolve the confusion. If not you can sue for any damages incurred up to $1000 and court costs.

Watch Out for Scams

Dont pay a new lender before confirming with the original lender that they in fact have assigned the loan to them. Any one can send you a letter asking for your mortgage payment. Pay the original lender until its confirmed that the new owner of your mortgage is in fact the rightful owner to avoid paying your monthly payments to scam artists.

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property Path News Brief
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Freddie Mac: Long Term Rates Little Changed

ARMs Up in Anticipation of Fed Actions

The Fed has met and interest rates remain unchanged. In spite of the continuing housing crises, the Fed now seems to be focusing on the cost of oil and some serious inflation coming our way. Monsanto and Dow Chemical have just raised their prices to farmers by 25%. Looks like stagflation, a difficult balance to strike.

30-year fixed-rate mortgage: Averaged 6.67 percent. The last time the 30-year FRM was higher was the week ending August 23, 2007, when it averaged 6.52 percent.

15-year fixed-rate mortgage: Averaged 6.04 percent with an average 0.6 point. A year ago at this time, the 15-year FRM averaged 6.34 percent. The last time the 15-year FRM was higher was the week ending October 18, 2007, when it averaged 6.08 percent..

Five-year Treasury indexed ARMs: Averaged 5.70 percent this week, with an average 0.7 point. A year ago, the 5-year ARM averaged 6.37 percent.

One-year Treasury-indexed ARMs: Averaged 5.27 percent this week with an average 0.6 point. At this time last year, the 1-year ARM averaged 5.65 percent. The last time the one-year ARM was higher was the week ending May 8, 2008, when it averaged 5.29 percent.

Thanks for Reading

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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Cross Border Lender Targets the Second Home Owners

Lehman Brothers Resort Home Lending is now offering mortgage packages Mexico, Costa Rica, the Bahamas, the Dominican Republic, Panama, Canada and the United Kingdom.

One, three, five and 10-year adjustable-rate mortgages amortized over 30 years will be available to U.S. borrowers in Mexico, Costa Rica and the Bahamas beginning June 21 2008.

Mortgages offered by Lehman Bros will only accelerate the trend of Americans moving to warmer and cheaper climates to stretch the dollar.The focus of the Lehman Bros loans for retirees and vacation homes will begin in Puerta Vallarta and Los Cabos.

This should protect buyers from less the scrupulous builders and agents. Transacting in another country can be difficult and its easy to be taken advantage off. Having Lehman Bros. agents on the property should be very reassuring.

Mortgage competition, somewhat limited in many of these countries should cause rates to begin to drop as the competition for new buyers increases due to a greater ease of buying and the vetting of these properties. This should also help to keep rates competitive and prices down.

Thanks for Reading

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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Harvard 2008: State of the Nation's Housing

According to the recently released Harvard Study we have more dislocation to come before we see home markets reach an equilibrium that begins to bring buyers back. In the overheated markets of 2003–2005, house prices surged ahead of incomes and new construction outstripped sustainable long-term demand. But when the Federal Reserve started to raise interest rates in 2004, prices were climbing so rapidly that buyers
still clamored to get in on the market. By late 2005, however, the combination of higher interest rates and higher home prices finally dragged down demand. Within the span of two years, sales and starts plummeted, prices fell, and home equity shrank.

Estimates from the Mortgage Bankers Association suggest that the number of loans in foreclosure proceedings nearly doubled to almost one million by the end of 2007, while the number entering foreclosure topped 400,000 in the fourth quarter alone.

The Rocky Road Ahead

With credit markets in such disarray, the for-sale housing inventory at record levels, and only small declines in interest rates, emerging from today’s housing slump could take some time.

This one will take longer to unwind. When bubbles burst, the longer and ,more unrealistic the rise the harder the return to reality. It will take longer this time to rebound given the unusually high levels of foreclosures and constrained credit markets.

Thanks for Reading
Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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Renting a Recently Foreclosed Property: What Are Your rights

With foreclosure rates in some towns running at 40% of all listed properties, its not just the owner that is forced to move. What about all those renters who have rented in good faith and have paid rent on time.

Should You Continue to Pay Rent

Absolutely! Do not stop paying your rent. You do not want to continue paying rent to the owner if he is no longer your landlord. Either pay rent to the bank, lender or court appointed receiver or if you are not sure who owns the property speak with an attorney and set up an escrow account and pay your rent into that account.

Does my Lease Protect Me

Not really. In some states, you lose any rights you have in the property is foreclosed.

1. In most states the rule of first in time, first in right applies. That is, if the mortgage was dated before the lease was signed then you lose all your rights to stay.

2. Banks can foreclose in most instances, but do check with the laws in your state.

3. Unless you are section 8, your lease will survive until its termination date.

Do I Have to Move
Possibly. The banks may want to keep you on as a tenant, partly for the cash flow and partly because occupied property wont get vandalized. But those who remain join the ranks of month-to–month renters, all of whom can be terminated with proper notice, usually 30 days. You can expect the banks to be absentee landlords and much less inclined to make repairs or provide decent service. They are swamped and if they want you out they can make your life a hell

Cash For Keys

Because eviction is so expensive for the banks they are willing to cash you out. If you just leave they are often willing to pay moving costs and a small sum for a quick exit. Do your best to bargain!

Do I Have any Recourse

Yes. You can sue the owner who has just defaulted. Basically, when you sign a lease that has been terminated by foreclosure, the landlord who has defaulted has not lived up to the full term of the lease. And so you can sue. True, the owner is likely broke, but the judgment will last for many years and when the owner recovers, you may be able to collect.

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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Freddie Mac : Mortgage Market Survey

Rate Reductions May Be Over

It seems that the Fed has now tilted towards inflation as a greater problem and will likely not reduce rates at their next meeting. In fact the dollar has been rising in the expectation that rates will rise. Bad weather in Burma (rice) and Australia (wheat) and the Midwest (corn, grain and soy) will boost prices and today oil is $140.00. You may have noticed how fast food has increased....serious stuff, especially for the poor.

30-year fixed-rate mortgage: Averaged 6.32 percent with an average 0.7 point for the week ending June 12, 2008. Last year at this time, the 30-year FRM averaged 6.74 percent. The last time the 30-year FRM was higher was the week ending October 25, 2007, when it averaged 6.33 percent.

15-year fixed-rate mortgage: Averaged 5.93 percent with an average 0.6 point. A year ago at this time, the 15-year FRM averaged 6.43 percent. The last time the 15-year FRM was higher was the week ending October 25, 2007, when it averaged 5.99 percent. Five-year Treasury indexed ARMs: Averaged 5.70 percent this week, with an average 0.7 point. A year ago, the 5-year ARM averaged 6.37 percent.

One-year Treasury-indexed ARMs: Averaged 5.09 percent this week with an average 0.6 point At this time last year, the 1-year ARM averaged 5.75 percent. Meanwhile, news reports on the housing market were mixed.

Serious delinquencies (loans over due 90-days or more or in foreclosure) for both prime and subprime conventional mortgages nearly doubled between first quarter of 2007 and 2008, according to the Mortgage Bankers Association.

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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More Credit Crunch Coming

Federal Reserve officials expect some U.S. banks to write down more assets while operating with insufficient reserves to cover bad loans, Vice Chairman Donald Kohn said. Credit will get tighter as lenders repair their balance sheets and loan only to the top tier.

According to Bloomberg, the collapse of the sub prime mortgage market has led banks and brokerages to report more than $386 billion in losses and write downs. Financial-services firms have raised $283 billion to cover the losses.

A stock market crash which can wipe out individual wealth is still paper wealth and doesnt necessarily transfer to the real economy. But a financial service industry crises affects the basis of economic activity and is far more devastating.

And the Beat Goes On....

MBIA and Ambac have just been downgraded from AAA to AA. So what, you ask. This is serious for our community development. When a city, county or state needs to buy more buses or upgrade sewer services or build schools upon voter approval the issue Municipal bonds (think of it as an IOU).

Many municipalities and states do not have a strong enough tax base to borrow at the best rates. The cost of higher interest can make or break a project. The work around has always been the bond insurers such as MBIA and Ambac. They will insure bonds that have less than AAA ratings. Effectively, for a small fee they could take a BBB rating community and wrap its AAA rating around that bond issue by insuring it for a small fee.

Viola, a BBB rated bond now can borrow at the lower AAA rates, thanks to the insurer and get the best interest rates available. Makes a project happen.

Thanks to the lower credit rating for the big bond insurers, the cost of borrowing for these communities has just gone up.

Warren Buffet, a brilliant investor and one of the richest men in the world notes: "We see a Baa credit enhanced to a Aaa credit by someone guaranteeing it for a 10-15 basis point charge. Yet, the spread in the market yield might be 100 basis points. Well, that doesn’t strike us as smart. … I would say that at some point, you can get into a lot of trouble at 140-to-1 insuring credits"

Its funny how what looked smart can turn on its head in a moment.

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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FHA Looks to Ban Seller-Assisted Payments

The Federal Housing Administration has reopened a public-comment period on seller assisted gifts to be used for down payments, which the agency says leads to higher-than-normal foreclosure rates.

How it Works: A third party,typically a charity, provides the down payment for the buyer and is then reimbursed by the home seller, ( read home builder). This helps home sellers close deals with buyers who can't come up with down payments on their own. They get to sell property that might otherwise just sit there and they contend that in these times of tighter credit, they are helping the lower income buyer with less borrowing ability, to buy into a home.

The government-backed loans made to borrowers who receive down-payment assistance go into foreclosure at three times the rate of loans in which borrowers pay for their own down payment. Loans with seller-assisted down payments make up about 35% of the FHA's loan portfolio.

There is a large business tied to helping families into homes by providing seller assisted "gifts" to families that need help with a down payment to qualify. Although the FHA would like to limit these work arounds, they have lost this fight before. After all, gifts from family members are allowed when Federally backed loans are involved. HUD contends that these seller assisted gifts (a third party makes the gift to the buyer) are not true gifts because the seller (builder) is reimbursing the giftor for the "gift".

The FHA has a right to make good economic decisions to protect its asset base. Certainly isolating areas to mitigate loss is just good business. The problem is that its become crucial for home builders to off load inventory during this home crises. Lennar, a major national home builder has gone from $45 per share in 2007 to $15 today. Its also earned a BBB rating and this will only make it harder for the national home builders to weather this storm. Some things have no good answers, but the FHA is asking people to weigh in on whether they should limit or eliminate seller assisted down payments.

The Federal Housing Administration has reopened a public-comment period before it tries again to limit or eliminate these loans that are now almost 30% of the entire loan portfolio of the FHA.

Thanks for Reading

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.

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Freddie Mac: Long-Term Rates Nearly Unchanged

Although the GDP grew at a faster rate in the first quarter than originally reported, consumer spending rose only 1 percent, representing the smallest increase since the 2001 recession.

The Fed has signaled that this may be the end of interest rate reductions for now. Bernanke is becoming more concerned with inflation with oil and food fueling a serious situation. The rate reductions have brought rates down by a little more than 1/2 point, but that hasnt been nearly enough to ease the pain of the housing crisis.
Since the Fed is virtually out of ammo, it will mean that the Government will have to assume much of this debt and become the lender of last resort. In other words the tax payer will certainly take the hit.

30-year fixed-rate mortgage: Averaged 6.09 percent with an average 0.6 point for the week ending June 5, 2008. Last year at this time, the 30-year FRM averaged 6.53 percent.

15-year fixed-rate mortgage: Averaged 5.65 percent with an average 0.6 point A year ago at this time, the 15-year FRM averaged 6.22 percent.

5-year Treasury-indexed hybrid ARM: Averaged 5.51 percent this week. A year ago, the 5-year ARM averaged 6.24 percent.

One-year Treasury-indexed ARM: Averaged 5.06 percent this week with an average 0.7 point, down from last week when it was 5.22 percent. At this time last year, the 1-year ARM: Averaged 5.65 percent.

Thanks for Reading

Howard Bell
www.yourpropertypath.com
A web site of over 450 articles related to real estate focused primarily on property management.

Your Property PathSF
http://yourpropertypath.blogspot.com/
Trade talk for the San Francisco real estate industry. Your source for property management tips, policies and market trends.s.

You can add this page to your favorite Social Bookmark site:

Freddie Mac: Long rates Unchanged

Long-Term Rates Nearly Unchanged

Freddie Mac today released the results of its Primary Mortgage Market Survey.

30-year fixed-rate mortgage: Averaged 6.09 percent with an average 0.6 point for the week ending June 5, 2008. Last year at this time, the 30-year FRM averaged 6.53 percent.

15-year fixed-rate mortgage: Averaged 5.65 percent with an average 0.6 point A year ago at this time, the 15-year FRM averaged 6.22 percent.

5-year Treasury-indexed hybrid ARM: Averaged 5.51 percent this week. A year ago, the 5-year ARM averaged 6.24 percent.

One-year Treasury-indexed ARM: Averaged 5.06 percent this week with an average 0.7 point, down from last week when it was 5.22 percent. At this time last year, the 1-year ARM: Averaged 5.65 percent.

Although the GDP grew at a faster rate in the first quarter than originally reported, consumer spending rose only 1 percent, representing the smallest increase since the 2001 recession. The Fed has signaled that this may be the end of interest rate reductions for now. Bernanke is becoming more concerned with inflation with oil and food fueling a serious situation. The rate reductions have brought rates down by a little more than 1/2 point, but that hasnt been nearly enough to ease the pain of the housing crisis. Since the Fed is virtually out of ammo, it will mean that the Government will have to assume much of this debt and become the lender of last resort. In other words the tax payer will certainly take the hit.

Thanks for Reading'

Howard Bell

www.yourpropertypath.com
A 450 article driven web site focused primarily on property management

Your Property Path
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