Refinance Free Credit

A home inspection is something that is very important. This will really help you when buying or selling a home, because you get a true sense of what might be wrong. Because of this, you need to be involved in the inspection process. Sure, you can let them do their job, but you need to ask them questions. These questions will help you understand what exactly they are doing during the inspection.

What Happens During the Inspection?

This help to eliminate any bad surprises right off the bat. If possible, ask if you can follow them around as they inspect. Acknowledge that you want to let them do their job, but it is your house and you want to get a sense of what is going on. But know what they will be looking for during the inspection process.

How Long Have You Been in Business?

You want an experienced inspector, because they will know what to look for. They will also be more assured of what they see; more likely ensuring you that you get a fair shake. Know what certifications they have. It might be helpful to talk with two or three inspectors so you know you are getting someone with the most experience.

What is Included in the Overall Report?

Too much information is never a problem. The more information you get, the more you know they looked at. You also need to know how it is formatted, that way you know how to go about reading the report. The easier it is to read, and the more that is laid out for you, the better it will be.

How Soon Will I Get My Report?

You have probably set out deadlines for yourself regarding your home. So let them know that it is important for you to get your report as quickly as possible.

Is it Possible to Repair and Get a Re-Inspection?

If they recommend some changes, then make those changes. You may only have a small window of time to get a re-inspection, however.

This Inspection is Important

If you are buying the home, then make sure the inspection is very thorough. You do not want any surprises. If you are selling the home, then make sure they are fair and honest. You want the best deal you can for the home, but you also do not want any troubles after you sell it. So find out what is wrong with the home right now. Remember, you do not want any bad surprises.

Additional Resources:

• Home Inspection
• For Your Protection Get a Home Inspection

Confirming what sources had suggested for the past week, The Securities Industry and Financial Markets Association (SIFMA) said Friday that it will keep newly-conforming jumbo mortgages out of the to-be-announced market. The decision means newly-eligible conforming borrowers aren’t likely to get all of the GSE rate benefits that had been touted by many primary market participants.

“Jumbo borrowers [will] only get the benefit of guarantee in market, while the prepayment hickey and higher GSE guarantee fees are tacked onto their rate,” said one source via email earlier this week.

The economic stimulus package signed into law by President Bush this past Wednesday boosts the GSE conforming limit to as much as $729,750 through the end of this year, and also raises FHA lending limits to the same level for high-cost areas.

Many primary mortgage market industry groups, including the National Association of Realtors and the National Association of Home Builders, had lobbied for the loan limit increase on the grounds that it would expand access to lower-rate mortgages for borrowers in areas where prices had gone well above the traditional $417,000 conforming limit.

“SIFMA views this methodology as the most expeditious and least disruptive option currently available to facilitate securitization and secondary market activity for the higher balance loans, bringing added liquidity and rate relief to higher balance loan borrowers while not imposing additional costs or impairing the liquidity for loans falling within the pre-existing loan limits,” said Sean Davy, managing director of SIFMA’s MBS and securitized products division.

The TBA market facilitates the forward trading of MBS issued by GSEs and Ginnie Mae by creating parameters under which mortgage pools can be considered fungible and thus do not need to be explicitly known at the time a trade is initiated – hence the name “To Be Announced.” The TBA market is the most liquid, and consequently the most important secondary market for mortgage loans.

SIFMA said its decision was made to ensure “the continued liquidity and smooth functioning of the current conforming loan market.” Many industry insiders had said that including the newly-conforming jumbo loans in TBA trades would essentially raise conforming rates for all borrowers, while potentially gumming up the one part of the mortgage secondary market that is still working.

For more information, visit http://www.sifma.org.

Radian Group Inc. said Friday that it lost $618 million, or $7.74/share, during the fourth quarter as paid claims mounted, and the mortgage insurer set more aside to cover future expected losses. The quarterly loss compares to $158.3 million in earnings one year earlier.

The loss outstripped analysts’ estimates, with Reuters reporting that median analyst expectations were for a loss of $2.53 per share.

“We have come through a difficult year and the environment continues to be very challenging,” said S.A. Ibrahim, Radian’s CEO. “These challenges will remain with us for the near-term and may intensify, so we are looking at various scenarios and responses.” He did not elaborate on what responses were under consideration.

Driving the loss was a huge jump in the company’s provision for losses, which amounted to a $687.8 million charge for the quarter compared to just $84.3 million in the year-ago period. Radian ended the year with $1.3 billion in mortgage insurance loss reserves, it said.

Increased claims and rising loss severity led to $410 million in mortgage-insurance incurred losses, Radian said, while it also absored a $298 million write-down in the value of derivatives it held (including CDOs). Other losses included a $50 million pre-tax charge associated with a write-off of the company’s investment into C-BASS.

Default activity continued rising, as well. Total defaults reached 6.8 percent of the primary insurance portfolio at the end of the fourth quarter, compared to 5.43 percent at the end of 2006. But the jump in deliquencies was most noticable among the company’s insured Alt-A loans, with defaults at a reported 9.74 percent during Q4, versus 5.9 percent one year earlier.

32 percent of new insurance underwritten in the fourth quarter represented loans with an LTV above 95 percent; that was up from 24 percent in the fourth quarter of 2006.

Higher LTV loans have been singled out by other insurers as more likely to default and result in paid claims; mortgage insurer the PMI Group, Inc. said earlier this week that it would no longer write insurance for loans above 97 percent LTV.

For more information, visit http://www.radian.biz.

Countrywide reported increased foreclosures and delinquencies.  Raise your hand if you heard this one before.  Of course, no one is surprised as RealtyTrac reports that overall foreclosures were up 75% in 2007.  I’m sure the NAR and others are saying somewhere that this blog and others “attitudes” are driving the rising foreclosures.

From Market Watch on Countrywide’s increasing foreclosure and delinquency problem:

Then nation’s largest mortgage lender said foreclosures for the month rose to 1.48% from 1.44% a month earlier. Delinquencies, too, continued to climb, up to 7.47% from 7.27% in December 2007.

The up-tick of delinquencies and foreclosures was a visible sign of larger problems borrowers are facing nationwide. Industry research firm RealtyTrac said Jan. 30 that foreclosure filings were up 75% in 2007.

Analysts were not surprised to see the increases, pointing to past lending practices popularized by the lending industry during the height of the housing boom as an underlying problem that will continue to play out in 2008.

“It is certainly not a big surprise that we are seeing more [delinquencies], as many of these loans came about because of poor underwriting practices,” Gary Gordon, an analyst for Portales Partners who has been following Countrywide for almost two decades.

Yawn.

FGIC Corp. — the first monoline to lose its AAA status at all three major rating agencies — has asked to be split into two in order to protect the municipal bonds it insures, according to a Bloomberg report:

FGIC, owned by Blackstone Group LP and PMI Group Inc., applied for a new license so it can separate its municipal insurance unit from its guarantees on subprime-mortgages, David Neustadt, a department spokesman, said in a telephone interview.

New York Insurance Superintendent Eric Dinallo had suggested as much yesterday in testimony before the House Financial Services subcommittee on capital markets, saying he wanted to break up the monolines.

“We cannot allow the millions of individual Americans who invested in what was a low-risk investment [municipal bonds] lose money because of subprime excesses,” he said in his testimony. “Nor should subprime problems cause taxpayers to unnecessarily pay more to borrow for essential capital projects.”

The Wall Street Journal catches up with what HW readers and industry insiders have known for some time — that we’re not looking at a subprime credit crisis any longer:

As prices fall, more homeowners are finding they owe more on their mortgages than their homes are worth. Economists call this “negative equity.” The problem with negative equity is that it gives people an incentive to walk away from their homes and their mortgages, making the debt the problem of the banks.

Some homeowners did that in Texas in the 1980s. It is hard to prove it’s happening now to any large degree. But many bankers see it as a problem.

Wachovia and Bank of America executives have pointed to the trend, as does Fitch Ratings. In Las Vegas, half the homes listed for sale are vacant, according to Ivy Zelman, an independent housing analyst. Many of these homes were originally bought by investors. They thought they were getting an appreciating asset and have little attachment to the homes now.

It is easy to imagine how walkaways could lead to an insidious process, putting more downward pressure on prices, and in turn giving more homeowners an incentive to pack their bags and leave their keys in the mailbox for the bank.

None of this, of course, is really news — or at least it shouldn’t be.

Yesterday, HW provided some additional analytic insight into the NAR’s quarterly MSA price survey that found that the population differential between the best-performing and worst-performing MSAs was skewed towards price declines by a factor of nearly ten. Price declines are now a wide-spread trend, even outside of so-called ‘bubble areas,’ meaning that the number of borrowers seeing their equity cushions disappear is increasing.

The Calculated Risk blog has covered this issue for some time, with the blog’s eponymous author suggesting that if prices decline an additional 10 percent in 2008 — a number in line with most economists’ projections — the number of homeowners with no equity will rise to 10.7 million.

No wonder outfits like Fitch are worried.

The Securities and Exchange Commission, recently given regulatory authority over the rating agencies, said Thursday that it is leading a series of wide-ranging reviews into the role rating agencies have played in the current mortgage industry meltdown. SEC chairman Christopher Cox said yesterday that the President’s Working Group on Financial Markets is examining the “the role of credit rating agencies in lending practices … and how securitization has changed the mortgage industry.”

Speaking in testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Cox said that the SEC may also be rethinking overall policy on the role rating agencies play in the secondary mortgage market.

“We are also re-examining the wisdom of the legislative and regulatory provisions that have granted a central role to the rating agencies in our markets,” said Cox. “More than just providing the markets one view of the likelihood of default, the past several months have demonstrated the power of credit ratings to move markets, and their potential to create cascading effects in those markets.”

Saying that there are clear “limitations” to using “credit ratings as a proxy for objective standards” of monitoring risk, Cox indicated that SEC staff are now exploring alternatives to current regulatory reliance on credit ratings.

The admission of soul-searching anew at the SEC comes on top of an ongoing regulatory examination into the rating agencies’ role in the subprime mortgage crisis; that examination began last July, when the SEC gained formal authority to regulate the credit rating agencies. Cox said he expects a final report on the current investigative work to be complete by early summer.

“Our examinations are focused on whether the rating agencies diverged from their stated methodologies and procedures for determining credit ratings in order to publish higher ratings,” Cox said.

“They are also focusing on whether the rating agencies followed their stated procedures for managing conflicts of interest inherent in the business of determining credit ratings for residential mortgage-backed securities.”

The SEC wants to improve disclosures and push greater transparency in market evaluation of any rating — such as those assigned to mortgage-backed securities — by requiring rating agencies to provide information regarding past performance and the accuracy of previously-assigned ratings.

The SEC’s Division of Enforcement has more than three dozen subprime-related investigations currently underway, including inquiries into underwriting for various RMBS deals, as well as valuation strategies, Cox said.

Ohio Attorney General Marc Dann — yes, the same one that sued Freddie Mac in late January for participating “in one of the largest housing investment deceptions in modern U.S. economic times” — apparently decided that for his next trick, he’d try taking a stunt that’s worked reasonably well as of late in federal courts down to the state level.

The results clearly weren’t what he’d bargained for, reported Cincinnati’s local Enquirer:

Ohio Attorney General Marc Dann suffered his first setback Monday in a novel effort to slow foreclosure filings in the state – and in doing so had his ethics questioned by a Hamilton County magistrate.

Dann argues that lenders can’t foreclose unless they can prove they own the mortgage they say is in default …

Monday, however, Common Pleas Court Magistrate Michael Bachman rejected Dann’s argument.

He further said Dann was acting against the interests of his clients – the taxpayers of Ohio – by moving to dismiss foreclosure cases in which the state has liens against the properties.

Turns out that Bachman did much more than reject Dann’s motion; he obliterated it. It also turns out that Dann himself thought to argue the motion personally in front of the magistrate, just for effect. Kevin Funnell at Bank Lawyer’s Blog has some questions:

Now, what, you might rightly ask, is the Attorney General doing intervening in a private civil action on behalf of borrowers to, at best, delay the day of reckoning? You’d be right to ask the question, as you would to ask a similar question: What’s this got to do with his job as Attorney General of the State of Ohio? The answer to the last question is “nothing” and the answer to the first is “to get himself some more press, so he can advance his political career.”

Unfortunately for Dann, Deutsche Bank, the trustee handling the foreclosure, didn’t back down, and fought Dann. Worse, Dann ran into a state court magistrate who not only kicked his fat tukus off the bandwagon, but also took his name.

The rest of Funnell’s commentary on this is worth reading, as well. But I want to get to the actual decision by the magistrate — the full court doc is available by clicking here — because it isn’t every day that any state’s AG gets drilled like this:

…the court has significant concerns regarding the ethical implications of the Attorney General moving to dismiss an action wherein he claims an interest in collecting a debt owed to the State of Ohio by the defendant.

…

In foreclosure actions such as the instant case, the State is named as a defendant because the State has, or may have, obtained a judgment against one of the defendants in the action. The State seeks to collect upon the judgment through the proceeds of the judicial sale. Thus, on its face, the Attorney General’s motion seeking to dismiss the foreclosure action conflicts with his duty to the taxpayers and citizens of the State of Ohio to collect on judgments rendered in the State’s favor.

When asked about this obvious conflict in interest, the Attorney General informed the court that no conflict exists because, as a matter of public policy, the Attorney General concluded that the State is more likely to collect the money owed to the State if the homeowners keep their homes. The court finds the Attorney General’s argument utterly baseless and demonstrably meritless. First, the State merely seeks to have the instant complaint dismissed without prejudice, meaning that the plaintiff need only wait to record the mortgage assignment and re-file a new foreclosure action under a new case number. Rather than allowing the homeowner to keep the real property, the State’s prayer serves only to delay the eventual awarding of judgment against the homeowner. Because the interest due the plaintiff would continue to accrue during the Attorney General-ordained period of delay, less potential excess funds would be available after the judicial sale to satisfy the State’s judgment lien.

…this court must conclude that the Attorney General was using this court to advance a political agenda rather than seek a legal remedy in a court of law.

That’s gotta sting. Dann’s office, for the record, has said it will appeal.

While we’re at it, can we also please lay to rest the ridiculous notion that says any motion denied on the ground of recording mortgage assignments — a la Boyko — is somehow a big issue for the industry?

A hotly-contested bankruptcy reform provision that would allow judges to modify principal amounts of mortgages on primary residences was included in a new housing reform package unveiled Thursday by Senate Democrats.

The new measure, introduced by senator Harry Reid (D-NV), seeks to go further on housing issues than the recently-passed economic stimulus package signed into law by President Bush on Wednesday. Called the Foreclosure Prevention Act of 2008, it adds in a number of projects that Democrats had wanted to add to the original stimulus package.

“In the face of an uncertain economy and with so many Americans struggling, we know that more needs to be done to address the housing crisis,” Reid said. “The provisions we are announcing today is [sic] another step in the right direction.”

American Banker reported that Senate Democrats will allow the bill to bypass the usual committee review process and fast-track the legislation for consideration after Congress returns from recess:

“If you’re a financial services company that wants to derail this bill, you need to be very nervous,” said Jaret Seiberg, an analyst with Stanford Group Co. “This has a lot of provisions that play very well to voters, and you have a lot of members up for re-election, and in such a situation, bills that should be dead on arrival find themselves enacted into law.”

MBA chairman Kieran Quinn offered a cautious outlook on the bill, praising some provisions but warning that the bankruptcy reform provision would be a strong sticking point.

“By including language to reform bankruptcy and allow judges to modify mortgage contracts, the bill threatens to hurt those it is designed to help,” Quinn said. “As long as this consumer-unfriendly provision is included, we cannot support the package as a whole.”

In addition to the bankruptcy reform provision, the bill would also provide $10 billion to allow housing finance agencies to issue bonds for refinancing subprime mortgages, a measure senators John Kerry (D-MA) and Gordon Smith (R-OR) had tried to include in the original stimulus package.

The bill would earmark $200 million in additional funds for third-party credit counseling, while also providing $4 billion in Community Block Development Grant funding for managing vacant properties; Senator Chris Dodd (D-Conn.) has been pushing for expansion of HUD’s CBDG program in recent weeks, in addition to calling for a federally-funded distressed mortgage agency.

“I’m pleased that some of these ideas, including increased funding for local governments to buy abandoned and foreclosed-upon properties, are part of this package,” Dodd said in a statement Thursday. “But more needs to be done by the Administration, as well, to help people keep their homes.”

The idea that current administration efforts to deal with a surge in foreclosures isn’t enough also coursed through a Senate hearing earlier in the day, where Treasury secretary Henry Paulson was grilled by members of the Committee on Banking, Housing, and Urban Affairs, including Dodd.

“The Administration has been working at cross-purposes with us,” Dodd said during the hearing. “They have in essence sanctioned backsliding from the kind of aggressive, broad-based effort that is more urgently required by the day. The latest Administration effort – dubbed ‘Lifeline’ – is a lifeline more to lenders than to borrowers.”

As for the latest housing bill, it’s unclear if it will have bipartisan support; sources that spoke with HW suggested the bankruptcy provision will likely be a large sticking point for Republicans.

With news of Federal Reserve cutting rates, I often think...what does that mean for me? Should I refinance?

Not surprisingly, the answer often is...'it depends.' According to this article in the Mercury News, the answer depends on a variety of factors: borrowers' current loan terms, how long they plan to stay in their homes, how much equity they have, their credit scores and more.

Whether a homeowner is a good candidate for refinancing depends greatly upon the amount of his or her mortgage. That's because it's the rates for loans of less than $417,000 that have fallen in the past few weeks, resulting in rates for 30-year, fixed-rate mortgages of about 5.5%last week.

But rates for larger loans more than $417K - the "jumbos" so prevalent in the high-priced Bay Area (and Los Angeles) - haven't budged much. "If your loan amount is more than $417,000, for a lot of people it's going to be hard to find a benefit (from refinancing) right now because jumbo rates are still hovering near 7%," said Greg McBride of Bankrate.com.

Those of us with jumbo loans may be in luck soon, if Congress passes economic stimulus legislation that includes a provision that would temporarily allow government-sponsored mortgage finance companies Fannie Mae and Freddie Mac to provide guarantees for loans worth up to $729,750. Right now, the ceiling for "conforming loans" backed by Fannie and Freddie is $417,000. The limit for loans backed by the Federal Housing Administration would also increase to the same new level, potentially allowing more buyers to obtain these government-backed loans.

The change could benefit homeowners with jumbo loans because conforming loans - and FHA loans - typically feature lower interest rates than jumbo mortgages. The national average rate for a 30-year jumbo mortgage last week was 6.85 percent, according to Bankrate.com.

Going back to the subject of having equity in your home, it's major factor that makes some homeowners good candidates for refinancing. Homeowners without any equity in their homes will have a very tough time refinancing in today's market, as lenders have nearly stopped offering loans equal to 100 percent of a home's value.

Those who have at least 20% equity in their home - that is, their loan balances are equal to 80% or less of their home's market value - will have the easiest time refinancing. Same goes for those with with credit scores of 700 or higher, said Sue Baker-Dirickson of Princeton Capital in Cupertino.

Needless to say, it's complicated out there. It's probably smart to at least start a conversation with a mortgage broker or lender's loan officer you trust, have interviewed, and who has been referred to you, to see what programs are out there that could be appropriate for your personal situation.