If the Federal Reserve does as expected and leaves short-term interest rates unchanged next week, investors looking for a conservative income mutual fund might consider those that invest in Ginnie Maes. Some fund managers believe these government-backed mortgages can perform well in a stable interest rate environment. Denis Jamison has been managing the same Ginnie Mae fund for nearly 25 years _ almost as long as many people take to pay off their home mortgages. Having shepherded the ING GNMA Income fund through a variety of market conditions, he sees the present environment as ideal for investors looking for a steady income stream to invest in mortgage funds.

Ginnie Maes tend to pay less interest than other types of mortgage-backed securities because their principal and interest payments are guaranteed by the government. The Government National Mortgage Association works by packaging mortgages from agencies such as the Department of Housing and Urban Development or the Department of Veterans Affairs.Mortgage funds are worth examining, Jamison said, because the underlying mortgages prices are generally at or below par, or face value, giving a fund’s principal room to appreciate. Also, the coupon, or interest rate, on these mortgage securities is about 100 basis points higher than the yield on a benchmark 10-year treasury note before inflation. Ginnie Maes tend to be less sensitive to interest rates than are the 10-year Treasuries, he notes. (more…)

search for : Federal Reserve, government-backed mortgages, Ginnie Mae, home mortgage, 10-year treasury note

Everyone, no matter how rich or poor, enjoys saving money. For example, a few weeks ago a multimillionaire real estate investor friend took me to a lavish lunch, which must have cost him at least $100. As we were leaving the restaurant, he saw the city “meter maid” coming down the street. All of a sudden he sprinted to beat her to his Lexus with an expired parking meter so he wouldn’t get a $20 parking ticket.

A few years ago my insurance agent made a wise and profitable suggestion. He said I should cut my liability coverage on each of my properties to $300,000 and take out a $2 million “umbrella policy” to give me better coverage at lower cost. Don’t tell the insurer, but my $700 annual premium for $2 million excess liability coverage is a genuine bargain. If you have net worth over $1 million, you can probably save money by following the same strategy. Check with your current insurance agent, plus one or two others, to see if a similar tactic can save you insurance premium dollars and obtain better protection. Incidentally, my umbrella liability insurance policy not only provides excess coverage for insured property liability, but it also provides automobile liability coverage if I should be at fault in an auto accident. (more…)

search for : insurance agent, liability coverage, umbrella liability insurance policy

Mortgage lenders are making it easier to get loans even as the housing market cools — and as the number of borrowers struggling to make their payments continues to rise, new studies show. In the latest sign that a cooling housing market and weaker credit standards are beginning to take their toll on borrowers and lenders, the number of past-due mortgages continued to rise in the three months ended Sept. 30, according to data from Equifax Inc. and Moody’s Economy.com Inc.

Agencies that counsel homeowners with mortgage problems say that many borrowers are running into problems because of the terms of their loans, not their personal circumstances. “It’s mostly people with adjustables” who are having trouble paying their loans, says Pam Canada, executive director of the NeighborWorks HomeOwnership Center in Sacramento, Calif. David M. Crosby, a Las Vegas bankruptcy attorney, says he has seen a “surge” in borrowers with mortgage problems. “Most of it is [tied to] the end of the housing boom, but I do see a good percentage of clients who got caught by a change in their mortgage rates.” In addition, some clients “bought a number of speculative homes,” he says. “The market turned on them, and now they are in a real financial mess.” Some homeowners are calling it quits. “A surprising number of people are walking away from their homes rather than trying to save them,” says Mr. Crosby, either because the rate on their loan has jumped or because they owe more than the home is worth. (more…)

search for : Mortgage lenders, borrowers

Imagine back-road tours of scenic countryside, well-tended vineyards bursting with ripe grapes, delicious wine, charming tasting rooms, authentic regional cuisine and historic accommodations. That sounds like the travel brochure for a tour of French or Italian wine country, but all these things are available a short drive from Charlotte. The N.C. wine industry has grown in the last couple of years. If you haven’t discovered the pleasures of a winery visit, treat yourself on one of these beautiful fall afternoons.

Wine is not new to the Carolinas. Scuppernongs are North Carolina’s official state fruit. In fact, before Prohibition, North Carolina was the largest wine-producing state in the country. But it wasn’t until the 1970s that Westbend Vineyards in Lewisville planted the first vitis vinifera, grapes of European descent like chardonnay, sauvignon blanc, riesling, cabernet sauvignon and merlot. These European varieties do well in the central and western portions of the state, and produce a dry style of wine. While grapes will never replace the more traditional tobacco and soybean crops, many hope wine-making and its kissing cousin, tourism, will help replace lost textile and manufacturing jobs. (more…)

search for : vineyards, wine, N.C. wine industry

Though mortgage rates are still extremely low, the mortgage market has somewhat dried up. Home sales plummeted 14 percent from a year ago. However, homeowners remain optimistic about home value appreciation but the bottom line is home values are remaining steady or declining. So why am I thinking we may be headed for another boom? Between 2002 and 2004, many people took advantage of low fixed-rate loans. Rates were as low as 4.5 percent on a 30-year fixed traditional mortgage. However, many borrowers applied for adjustable rate mortgages or ARM loans that are now coming into their adjustment period and these adjustments could mean payments drastically going up or even doubling.

Applications for refinance transactions fell sharply once news of raising interest rates hit the media but are now up 10 percent from a year ago, according to the Mortgage Bankers Association. This is the highest share of refinance business seen since February 2005. This rise is most likely the result of payment shock felt by homeowners who got their notices of rate increases once the fixed period of their ARM loans was over. These rate increases mean payment increases to an already debt-sensitive market. (more…)

search for : mortgage, home value appreciation, 30-year fixed traditional mortgage, Mortgage Bankers Association, refinance, ARM loan

A lack of enforcement at the state level is a major reason appraisals remain at the root of mortgage fraud, said panelists at a symposium sponsored by the Appraisal Foundation earlier this month. A third of the states “are doing a great job” at responding to cases alleging fake, false or erroneous appraisals, Mark Simpson of Fannie Mae told the conference. And another third are “so slow that we don’t know what to think. They sit on referrals for three years.”

Appraisers who commit fraud need more than just slaps on the wrist, they “need to be punished” by having all their assignments taken away, the industry spokesman said. Valuations may be subjective, he explained, but fraud is not. “Fraud is an intentional and material misrepresentation. A faulty or even fake appraisal is at the basis of most fraudulent mortgage transactions.” Richard Powers, president of the Appraisal Institute, agreed that state regulators lack the money and the manpower to effectively oversee the business. In some states, he noted, a single agency polices “each and every license” granted within their borders, from hair dressers to contractors. They have so much responsibility, he added, that they can’t possibly be effective. (more…)

search for : mortgage fraud, erroneous appraisals, Appraisers who commit fraud, fake appraisal, mortgage

In your columns on repaying mortgage loans, you skip over a detail that I have often wondered about … I don’t think that saving 6 percent interest on a mortgage is quite the same as earning 6 percent on other investments because mortgage interest is deductible … I get further confused by the possibility that the income taxes due on other investments may be deferred if they are in a 401K or other tax-deferred retirement account….

In numerous articles, I have argued that mortgage repayment should be viewed as an investment with a yield equal to the mortgage rate — and that this yield should be compared to those available on other low-risk investments. The “low-risk” qualifier is important, because mortgage repayment has zero risk to the borrower. You are right that in making such comparisons, account should be taken of possible different tax treatment. Mortgage interest is always deductible on first mortgages up to $1 million, but other investments can be subject to different tax rules. Four different situations are worth distinguishing. (more…)

search for : tax-deferred retirement account, mortgage repayment, mortgage rate

U.S. mortgage applications fell last week, retreating from a nine-month high as home loan interest rates crept up, an industry trade group’s data showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity , which includes both refinancing and purchasing loans, for the week ended Oct. 6 fell 5.5 percent to 599.1. This was a slide from the previous week’s 11.9 percent surge to 633.9, which was its highest level since January.

“Housing is something to pay close attention to, but I think you have to be careful you’re not losing sight of the entire economy,” he said. “The biggest effects from housing are secondary effects and not the primary effects of actual construction of homes and to date, we have yet to see the secondary effects play out in any incredibly negative way.” Matus expects U.S. economic growth to slow due to the direct effects of softer housing investment. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.27 percent. This was up 0.03 percent from the previous week but below a four-year high of 6.86 percent touched in June. (more…)

search for : mortgage applications, refinancing and purchasing loans, 30-year fixed-rate mortgages