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…)