Does a desire for two-person showers, travertine floors and granite countertops push home prices up? Housing economist Tom Lawler, a Vienna, Va., consultant, argues that it does — and says these cravings are partly responsible for [tag]ballooning home prices[/tag] throughout much of this decade. In a subscription-only report, he notes that household spending for improvements for single-family homes increased to $1,900 last year from $1,100 in 1997, and that such spending will likely continue to rise, despite the slowdown in home sales and prices reported earlier this week by the [tag]National Association of Realtors[/tag].

Although the impact of these spruce ups is hard to gauge statistically — improvements often aren’t noted in public records — he estimates that overall, [tag]remodeling[/tag] is responsible for 1% to 1.5% of home-price appreciation each year. So, while prices overall may continue to decline due to overbuilding, speculation and risky mortgages, remodeling will continue to add real value to many homes. (more…)

Federal and state authorities are investigating allegations of an elaborate [tag]mortgage fraud[/tag] involving about 100 people living in or near this small factory town who say they unwittingly took out loans to buy houses at inflated prices in Indiana. The borrowers, who include truck drivers, factory workers, a pastor and a hair stylist, say they were duped by acquaintances into signing stacks of documents and didn’t know they were [tag]applying for loans[/tag]. Instead, they thought they were joining a risk-free “investment group.”

Mortgage fraud, involving loans obtained by providing false information, has mushroomed in recent years as lenders have pushed for speedier loan approvals in an effort to remain competitive and milk maximum profits from the now-fading housing boom. The Federal Bureau of Investigation reported that mortgage fraud led to losses of $1 billion in 2005, up from $429 million a year earlier. Some of the fraud that slipped through during the boom is only now starting to surface. Attracted by the ability to obtain large sums quickly, some criminal gangs involved in drug dealing and other street crimes have branched out into mortgage fraud, says Chip Burrus, assistant director of the [tag]FBI[/tag]’s criminal investigative division. “It’s more profitable and less risky,” he says. (more…)

They represent the future of [tag]real estate[/tag] in this time of uncertainty — 17 bright-eyed and eager students, median age 40, sitting for three hours in a classroom while I click slowly through a 50-slide Power Point presentation with embedded video and audio. These are small investors, a mixed group of young and old, Realtors and nonRealtors, and all ethnicities — a true mix of the modern-day urban market.

They want to know what I can tell them about renovating one-to-four unit properties cost-effectively, whether or not to hire an [tag]architect[/tag], what to look for in a [tag]contractor,[/tag] what will put their rentals a cut above the others without breaking their budgets. These are not [tag]flippers[/tag]. These folks are in for the long haul, agreeing with some expert who told me this week that this isn’t the time to experiment with real estate but to get serious about it. One of the experts whose video was embedded in the Power Point was Carl Dranoff, a developer who was one of the pioneers of the warehouse to loft conversion boom on the late ’70s to mid-’80s in many of our older cities. (more…)

With a minimum of 500 to 600 full-time employees, [tag]Laurelmor[/tag], a [tag]Ginn Clubs & Resorts[/tag] [tag]mountain-top[/tag] project under way in [tag]Wilkes[/tag] and [tag]Watauga[/tag] counties, is expected to add more than $2 billion in [tag]property value[/tag]s if it is built out according to a 10-year plan. One selling point is that the property is close to the [tag]Blue Ridge Parkway[/tag].

Laurelmor will be built in phases, with a master plan calling for about 1,500 homes, 1,000 condominium units or hotel rooms, two 1[tag]8-hole golf course[/tag]s, 50 miles of roads, a [tag]spa[/tag], [tag]water park[/tag], [tag]equestrian center[/tag], [tag]observatory[/tag] and other amenities. Ginn plans to hold a sale of lots in October and to open in 2009. Ginn expects to have a sales day in October for a first phase. A spokesperson said that the company hasn’t made completed lot prices for Laurelmor, but that the most inexpensive lot would likely be around $500,000. Developers have told local officials that the [tag]minimum home size[/tag] would be about 3,000 square feet, and some could be twice that big. (more…)

When I first picked up “[tag]Confessions of a Real Estate Entrepreneur[/tag]” by James A. Randel, I wasn’t enthused by its bland, noncreative cover, which makes the book look dull and boring. Wrong. Instead, it is one of the best [tag]real estate book[/tag]s of 2006 so far because it tells how a super-successful investor evaluates real estate opportunities. What makes this new book so unusual is the self-deprecating author emphasizes his real estate mistakes as much as the highlights of his successes. The book’s title could have been “Real Estate Mistakes I Made But How I Succeeded Anyway.”

James A. Randel started with an excellent educational background from Columbia University where he obtained his law degree. Then he wisely became a real estate broker so he could participate in [tag]real estate commission[/tag]s as well as practice law. When briefly mentioning his New York City residency during college years, Randel admits he didn’t spot the opportunities to buy run-down buildings near Columbia for upgrade profits by adding value. The book’s theme is “add value” whether you invest in raw land, houses, a fixer-upper factory building with potential for rezoning profits, or a run-down office building. What makes this book so special are the personal stories the author shares, emphasizing how he profited when he (and his investor partners) added value and how they lost money when their planning was faulty. (more…)

[tag]Mortgage applications[/tag] in the U.S. increased last week to the highest level since April as borrowing costs close to a five-month low spurred refinancing. The Mortgage Bankers Association’s index of applications to buy a home or [tag]refinance an existing loan[/tag] rose 2 percent during the week to 595.8. The group’s gauge of refinancing jumped 9.5 percent to 1748.7, the highest since February. Purchases declined for the first time in three weeks.

A half-percentage-point decline in [tag]30-year fixed mortgage rate[/tag]s since the end of June may be helping keep the slowdown in housing from becoming a rout. Federal Reserve policy makers today are forecast to keep interest rates unchanged for a second month as they wait to see how the rest of the economy is affected by the weaker real estate market. “It’s an orderly and gradual slowdown” in housing, said Zoltan Pozsar, an economist at Moody’s Economy.com in West Chester, Pennsylvania. “Housing is hurting the economy just enough to keep price pressures at bay. The Fed should stop here. If it went further in raising rates, it’d hurt the economy.” (more…)

You’ve upgraded your kitchen fridge and installed new copper pipes, all while saving your landscaping from the adult Japanese beetle. With all the [tag]credit-card reward points[/tag] you’ve racked up as a result, the itch to splurge is unbearable. Should you select that $350 Spa Finder gift certificate (35,000 points, Citibank ThankYou Network), or opt for the round-trip ticket to Europe (60,000 points, MBNA WorldPoints)?

Using your rewards as an escape from reality may make you feel fabulous temporarily, but at the end of the month, it’s done nothing to free you from the pile of bills that go hand in hand with owning a home. [tag]Mortgage[/tag], [tag]homeowners’ insurance[/tag], utilities — with that drain on your bank account, no wonder you needed that spa trip in the first place. But with the right card, you can put your reward points to good use, reducing your mortgage, slashing your homeowners’ premiums and financing that pricey remodel. Cards that specialize in home rewards are few and far between, but our experts liked all of ‘em, assuming you pay off your balance each month. We’ve collected three cards to consider, plus four tips to help you maximize your savings. (more…)

The [tag]Treasury-bond market[/tag] has had its best week in 18 months, the [tag]10-year T-note[/tag] today 4.61 percent, and that dragged low-fee [tag]mortgage rates[/tag] below 6.5 percent. The improvement in [tag]mortgage[/tag]s was not as big as the Treasury move, but catch-up trading should soon take us to 6.25 percent.

The unsettling backdrop to this decline: nobody has a good explanation for why. A drop in long-term rates at the end of a Fed tightening cycle is always associated with a slowdown in the economy, usually an abrupt one. Consistent with that thought, the bond market broke to six-month lows Thursday instantly after the Philadelphia Federal Reserve reported a surprise contraction in business activity. The Philly Fed’s index is a minor affair, covering manufacturing in Mid-Atlantic states; it is brand-new news of September conditions, and it could reflect a brand-new downtrend in the national economy. (more…)

When it comes to eventually moving into that [tag]dream home[/tag] you’ve always wanted, keep in mind that many of the choices we make on a house are really driven by lifestyle desires, rather than lifestyle needs. More [tag]bedrooms[/tag] means more time to clean, more expensive to repaint and carpet/floor in the future. The bigger the house and the larger the lot, the more you’re going to pay for it both in time and financial resources. The main three decision factors are larger lot, more space and more stuff. Each of these come with a price tag.

Depending on the acreage, the lot is going to cost the owner in regards to acquisition, monthly payment, and upkeep. First is the acquisition. Larger lot means larger price, thus larger [tag]down payment[/tag] and monthly payment. In metropolitan areas, the closer in to the epicenter of town, the more the extra space is going to cost you. If you decide to get it cheaper by moving out of town, then you’ll be paying more for gas and be losing the ever elusive minutes of your life. (more…)

TO hear some people in the [tag]real estate industry[/tag] tell it, one of the biggest problems with the housing market is what is being said about it in the news media. Agents and industry executives say reporters, editors and news anchors are making a cooling market sound worse than it is. While the number of sales may have dropped from 2005 (which was a record-setting year, the end of a five-year run) and more homes stay on the market longer, [tag]real estate[/tag] professionals note that sale prices in much of the country are still higher than they were a year ago.

Many journalists who cover the real estate market said they expected, and were not worried by, criticism from the industry. They said they were more concerned about whether the news media were skeptical enough about the boom while it was continuing. “We were late to the [tag]savings and loan crisis[/tag] and we were definitely late to the [tag]dot-com crash[/tag],” said Bradley J. Inman, publisher of Inman News, a real estate news service, who said he believed that the news media have done a better job covering the housing boom. Some critics say the news media did not include enough contrary viewpoints during the run-up in home prices. (more…)

Many headlines and cable news programs are touting a pending real estate bubble. Sure this helps increase their ratings, but there are too many factors in favor of real estate to worry about the naysayers. All you have to do is look back to the early `90s. In the early part of the decade, prospects for [tag]real estate investments[/tag] were looking about as good as they are today. After [tag]Japanese investors[/tag] paid extravagant prices for Hawaiian hotels and Los Angeles office properties sent the real estate market climbing, the `80s real estate boom was topped off when a Japanese consortium purchased the iconic Pebble Beach golf course for $500 million.

The examples above are just a few of the national [tag]real estate[/tag] players. On the local level, I know there are thousands of individual investors and real estate speculators that have been piling up cash while waiting for housing prices to begin to fall. Once they start falling, these investors are going to have to outbid each other to get their hands on these depressed properties. One final point is that houses have utility value. That’s economic parlance for a tangible use. After all, you can live in a house. Other examples of items with utility value are a hammer (because it can hammer nails) and a washing machine (because it washes clothes). These items have value as tools to make your life easier. (more…)

U.S. [tag]mortgage applications[/tag] rose for a second consecutive week as demand for home purchase loans hit its highest in two months, an industry trade group said on Wednesday. The [tag]Mortgage Bankers Association[/tag] said its seasonally adjusted index of mortgage application activity , which includes both refinancing and purchasing loans, for the week ended Sept. 8 increased 3.2 percent to 584.2 from the previous week’s 566.3, its highest since mid-May.

Dean Maki, chief U.S. economist at Barclays Capital in New York, said the indexes tend to volatile but if the trend continues it will be good news for the [tag]U.S. housing market[/tag]. “One never wants to make too much out of one week’s data,” he said. “If this index were to consistently move above 400 it could be an early sign of stabilization in home sales, but it is too early to draw any conclusions from one week.” Borrowing costs on [tag]30-year fixed-rate mortgages[/tag], excluding fees, averaged 6.32 percent, edging up 0.01 percentage point from the previous week. Interest rates were above year-ago levels of 5.72 percent, but below a four-year high of 6.86 percent touched in June. (more…)

While a growing number of consumers are looking to cash in on the changing [tag]real estate market[/tag], another group is trying to figure out how to keep from cashing out. The 115,292 homes nationwide entering some stage of foreclosure in August remains historically low, but the rate of increase in the number is becoming alarming. August foreclosures represented a 24 percent increase from July — the second highest this year — f[tag]oreclosures[/tag] are up 38 percent for the year so far and 53 percent compared to where they were this time last year.

Blame it on those nasty mortgage IEDs ([tag]Improvised Equity Devices[/tag]) — high leverage, high risk loans that are easy to come by, but financially explosive as time goes by. Mortgage IEDs are typically [tag]ARM[/tag]s, in a host of varieties, that typically start off with low rates, but, in this market, continually adjust upward. Along with the higher interest rate, so goes your [tag]monthly mortgage payment[/tag]. When the loans come with [tag]interest-only payment[/tag] terms, if you only pay the interest and your home value shrinks, your mortgage could become larger than your home’s value giving you no room to bail out without coming up with the cash to cover the difference. (more…)

Applications to refinance accounted for close to 40 percent of all [tag]mortgage applications[/tag] in August, according to the [tag]Mortgage Bankers Association[/tag]. And many of those refinancing are homeowners who are watching their once-attractive [tag]adjustable-rate mortgages[/tag] head skyward. Here are answers to a couple of refinancing questions that might strike a chord with many facing similar situations.

The decision to refinance out of your 5/1 adjustable-rate mortgage into a fixed-rate product depends on how long you plan on being in the house, your attitude toward risk and your outlook on interest rates. If this is a starter home or you plan to downsize in the next three to five years, then staying in a 4.5 percent loan during the next three years makes sense. If you plan on staying put, then you need to consider refinancing while 30-year fixed rates are still below 7 percent. If your mortgage has an annual cap of 2 percent and a lifetime cap of 9.99 percent, it would be at least 2010 before your mortgage rate could hit 8.5 percent. Although that’s about 2 percent higher than current 30-year fixed-rate mortgages, you’re not paying any refinancing costs or expenses to stay in your current loan.
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[tag]Mortgage Bankers Association[/tag] reports that activity index increased for the second straight week, hitting its highest level since mid-May.

U.S. [tag]mortgage applications[/tag] rose for a second consecutive week as demand for home purchase loans hit its highest level in two months, an industry trade group said Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both [tag]refinancing[/tag] and purchasing loans, for the week ended Sept. 8 increased 3.2 percent to 584.2 from the previous week’s 566.3, its highest since mid-May. Borrowing costs on [tag]30-year fixed-rate mortgage[/tag]s, excluding fees, averaged 6.32 percent, edging up 0.01 percentage point from the previous week. Interest rates were above year-ago levels of 5.72 percent, but below a four-year high of 6.86 percent touched in June. (more…)

The number of homes entering into some stage of [tag]foreclosure[/tag] is surging, according to a survey released Wednesday. In August, 115,292 properties entered into foreclosure, according to RealtyTrac, an online marketplace for [tag]foreclosure sales[/tag]. That was 24 percent above the level in July and 53 percent higher than a year earlier.

California foreclosures are increasing at an even faster annual rate, up 160 percent since last year to 12,506. And the formerly red-hot Nevada market recorded a spike of 24 percent compared with July and a whopping 255 percent increase from August 2005. Rick Sharga, RealtyTrac’s vice president of marketing, says the rising foreclosure numbers are in part the result of rising monthly payments on adjustable-rate mortgages, which have a low introductory interest rate that heads higher after an initial period. “Usually, foreclosures are a lagging [market] indicator,” he says. “But we’ve never had a situation like this with adjustable-rate mortgages amounting to $400 billion to $500 billion coming up for adjustment over the rest of the year.” For a homeowner with a 5/1 ARM that’s now resetting, the adjustment could add at least two percentage points to the interest rate. That could send the payment on a $200,000 loan up from about $950 a month closer to $1,200 – $250 more each month. (more…)

Black and [tag]Hispanic borrower[/tag]s were more likely than whites to receive refinanced mortgages with higher interest rates, according to a study released by the Consumer Federation of America. Nearly half of [tag]black borrower[/tag]s were more likely to receive a high-cost, subprime loan, while Hispanics received higher rates about one-third of the time. White borrowers were offered loans with [tag]higher interest rates[/tag] in fewer than 25% of the cases.

The CFA looked at more than 5 million mortgages originated by 30 lenders nationwide. The CFA collected data on loans originated between April and August 2005. Similar data was sent to the Federal Reserve Board under the Home Mortgage Disclosure Act. The Fed is expected to release its report later this year. (more…)

Pull the “triggers!” That s the demand from the [tag]National Association of Mortgage Brokers[/tag], a 27,000-member trade group that is the largest in the home lending field. The triggers it wants to pull have nothing to do with weapons. Instead, the group is targeting a little-known marketing product developed by the three [tag]national credit bureaus[/tag].

The concept works like this: When you inquire about or apply for a home mortgage, the loan officer typically does a quick check on your credit — tapping into the online files of Equifax, Experian and TransUnion, the three national credit bureaus.

What the loan officer usually doesn t know, however, is that the credit inquiry — along with the applicant s key financial data — is immediately passed on to competing lenders around the country who ll pay the credit bureaus for fresh leads about who s interested in getting a new mortgage.

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One of the most important aspects of the investment game is creating a [tag]positive cash flow[/tag] from your [tag]rental properties[/tag]. The basic principles apply: buy low/sell high; cover your monthly expenses with your monthly rental payments; go to the bank a happier, richer person. Setting up just how much you want to walk away with each month, however, isn’t as simple as adding up all your expenses, tacking on an additional 25 percent and sitting back waiting for the tenants to move in.

There are two basic systems for determining the rent to charge. The first is “return on investment,” directed by how much money you want to make on your investment plus the amount of annual expenses for the investment. For example: if you put $20,000 down on a property and you want to receive a 10 percent return on that down payment (total of $2,000 per year); First add up all your expenses (say, $12,000 per year for mortgage and $2,000 for maintenance and upkeep). Then add in the desired annual return, thus you would need to bring in $14,000 per year in rental income to meet your goal — ergo, the rent charged would be $1,200 per month. (more…)

Fueled largely by demand from investors in Europe and Asia, bonds backed by [tag]subprime loans[/tag] are riding high, even as the stocks of companies that make these loans are getting crushed amid reports that more borrowers are falling behind on their payments. This is in sharp contrast to late last year, when [tag]hedge funds[/tag] seized on negative reports from lenders and home builders as an opportunity to place big bets on a deterioration in the credit performance of subprime mortgage bonds, pushing spreads dramatically wider. But dealers say that just about everyone inclined to be short, or bet against, the market has already done so.

The data on [tag]subprime mortgages[/tag] taken out in the first half of this year are still incomplete, but DiMartino said that the initial indications are that delinquencies are rising. He recently published research showing that late payments on interest-only loans that reset after two years are 1.75 times higher than those taken out in 2005, according to data from LoanPerformance. ate payments are also rising on subprime loans that require borrowers to start paying off principal right away. Those taken out in the first half of the year are experiencing delinquencies at 1.5 times the rate of those taken out in 2005. (more…)

During the last few years, [tag]reverse mortgages[/tag] have become common as a way for senior citizens to tap into some of the equity in their home. When any new financial opportunity arises misconceptions are commonplace, but the short answer to the headline question above is that for some people a reverse mortgage is appropriate, while for others the answer is no.

Certain aspects of reverse mortgages are non-debatable. All proceeds from a reverse mortgage can be used for any reason and are tax free. No matter how much is borrowed, you never have to worry about owing more than the home is worth. When the house is eventually sold the borrower or heir receives anything left over after the mortgage is paid off. Reverse mortgages normally have higher associated fees than other loans, sometimes much more so. Unless the home in question appreciates more than the size of the loan, the estate will be reduced by a reverse mortgage. During a reverse mortgage, the borrower is still responsible for all taxes, insurance and upkeep. (more…)

After rising all year, [tag]interest rates[/tag] recently fell for six consecutive weeks to their lowest point since July. Less than a year ago, experts everywhere, from the [tag]Federal Bureau of Investigations[/tag] to the [tag]Federal Reserve[/tag], questioned appraised values of homes. Now, as the boom wanes, lenders are more certain [tag]mortgages[/tag] are backed by accurately valued [tag]collateral[/tag]. That doesn’t mean lenders aren’t still going gangbusters on riskier, [tag]high-leverage loans[/tag] for those who qualify even if income, employment and asset documentation aren’t checked.

Here are some timely [tag]mortgage tips[/tag] to sooth your worries and to help you sleep more soundly. Pull your credit report. Before you shop for any credit, pull your credit report from the only federally sanctioned free service, AnnualCreditReport.com. You don’t have time for surprises. Know what the lender will know before the lender knows. You may need to make changes to your credit report, housing budget or timing, depending upon what you find. Mortgage money shop. Shop several or more lenders and loan programs, as well as title and escrow fees, online and off to get the best deal. To make the best comparison, compare all loan costs whenever possible including rates, points, [tag]brokers fees[/tag], [tag]originating fees[/tag], yield spread premiums, recording feeds, [tag]title and escrow costs[/tag], everything that will wind up on the HUD-1 Settlement Statement. (more…)

Americans are getting one more cash advance from their homes. They’re doing it with cash-out refi’s — [tag]home mortgage[/tag]s big enough not just to cover debt, but deliver some immediate cash to the borrower. [tag]Cash-out refi[/tag]’s this spring hit their highest market-share percentage in 16 years — 88 percent of all mortgages refinanced through [tag]Freddie Mac[/tag], the U.S. mortgage market’s second-largest financier. Homeowners drained $81 billion in home equity this way in this year’s second quarter, the McLean, Va.-based firm reported this month.

Why refinance when interest rates are higher? “Either they’re serious about getting cash out for a home improvement or business,” said Amy Crews Cutts, Freddie Mac’s deputy chief economist, “or they’re seeing that reset down the pike and want to change into something that will be cheaper.” Re-sets are a looming issue for anyone with an adjustable-rate loan. Adjustable-rate mortgages offer low introductory monthly payments, then “reset” higher after the teaser-rate term expires. Such mortgages have been wildly popular in recent years because they allow people to buy earlier — or more — than they otherwise could afford.
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In a slow [tag]real estate market[/tag], sellers, potential buyers and real estate agents begin to think about [tag]creative financing[/tag]. Last week, we explored [tag]installment sales[/tag]. Another approach is known as a “wrap-around” (wrap) mortgage. Here is how it works. You want to sell your house for $500,000 and have an existing mortgage loan in the amount of $200,000, with an interest rate of 5 percent. You have found a buyer, who has sufficient income but may have difficulty obtaining a [tag]mortgage loan[/tag].

The Seller must have an assumable mortgage on the property. While these are not common in today’s economy, there are still many Veteran’s Administration or FHA assumable loans on the books. And some adjustable rate mortgages are also assumable. Otherwise, if and when the seller’s lender learns that the property has been sold to a third party, that lender may decide to foreclose on the property, using the so-called “due on sales” clause. There are, of course, people who will take a chance that the lender will either not learn of the sale, or will allow the assumption to go forward. But sellers must fully disclose the risks to their prospective purchasers. (more…)

About a year later, J Felipe discovered that his consultant — who turned out to have been convicted twice for identity fraud since 1998 — had used his name and Social Security number to buy a $260,000 duplex in Lawrence. Since then, Felipe has struggled to repair his credit rating and get authorities to charge Reyes.

Some brokerage firms, which promise borrowers “[tag]100 percent financing[/tag]” and “[tag]guaranteed home ownership[/tag],” operate without required state licenses. And because the state licenses mortgage companies and their owners, and not the [tag]loan officer[/tag]s who work for them, it is difficult for consumers to check the record of an individual officer. In contrast, the state has a website where consumers can easily review the licenses and disciplinary records of dozens of other professionals, including accountants, veterinarians, and manicurists.
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Freddie Mac today released the results of its [tag]Primary Mortgage Market Survey[/tag]SM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.44 percent with an average 0.4 point for the week ending August 31, 2006, down from last week’s average of 6.48 percent. Last year at this time, the 30-year FRM averaged 5.71 percent. This is the lowest the [tag]30-year FRM[/tag] has been since the week ending April 6, 2006, when it averaged 6.43 percent.

The average for the 15-year FRM this week is 6.14 percent, with an average 0.4 point, down from last week when it averaged 6.18 percent. A year ago, the 15-year FRM averaged 5.32 percent. This is the lowest the 15-year FRM has been since the week ending April 6, when it was 6.10 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) fell to 6.11 percent this week, with an average 0.5 point, down from last week’s rate of 6.14 percent. A year ago, the five-year ARM averaged 5.30 percent. This is the lowest the five-year ARM has been since March 30, 2006, when it was 6.02 percent. (more…)

Americans are getting one more [tag]cash advance[/tag] from their homes. They’re doing it with cash-out refi’s — home mortgages big enough not just to cover debt, but deliver some immediate cash to the borrower. [tag]Cash-out refi’s[/tag] this spring hit their highest market-share percentage in 16 years — 88 percent of all mortgages refinanced through [tag]Freddie Mac[/tag], the U.S. mortgage market’s second-largest financier.

Re-sets are a looming issue for anyone with an [tag]adjustable-rate loan[/tag]. [tag]Adjustable-rate mortgages[/tag] offer low introductory monthly payments, then “reset” higher after the teaser-rate term expires. Such mortgages have been wildly popular in recent years because they allow people to buy earlier — or more — than they otherwise could afford. “About $500 billion in [tag]ARM[/tag]s are scheduled to reset this year,” Cutts said. “It’s clear when they reset that payments will be higher. Borrowers are pretty savvy. If their credit’s in good condition, they’ve got a job, they might say, ‘Let’s refinance today.”‘ To what extent that’s happening, and will continue, no one knows, the economist said. “The hard thing, of course, is telling the difference between the smart, savvy people out there, the people who are not, and the people who are but have bad luck — they lose their job, one of their kids gets a horrible illness, there’s a death in the family, or something else that rocks the boat,” Cutts said. (more…)