Refinance Free Credit

1. This is a rule of thumb with regards to obtaining a mortgage for everyone--NEVER go to your local bank! The big 5, CIBC, RBC, TDCT, BNS or BMO. If you are someone worried about high interest rates then you should know that they will NEVER be able to beat the rate of that of financial institutions. (i.e. FirstLine, ING, MCAP, MacQuarie...the list goes on!) they currently all have a lower 5yr fixed than any of the big five banks! You can ask anybody in the real estate industry--ask your Realtor, ask your mortgage broker, anybody in the industry, we all know that when we get a mortgage for ourselves, we will NEVER go to our local banks! As they can NEVER provide the rates that other financial institutions can. And even if they do match a rate of that of a financial institution you must look a little deeper as to why. For example ING has their 5yr variable at Prime - .75% and TDCT for example also provides Prime - .75% (with special approval from head office, if you are a client of TDCT then you can get this rate, you just have to dig a little) but TDCT calculates their interest compounding monthly while ING calculates their interest compounding semi-annually not in advance. This isn't visible to the average client but the difference between a semi-annually mortgage vs. a mortgage on a monthly compounded format is huge! Were talking in the thousands just over the short term of 5yrs. Just think of semi-annual being a normal mortgage and monthly-compounded mortgage being calculated like a credit card! Interest is being calculated on the higher amount after you pay down per month! as opposed to once a year! Another thing that everyone should be aware of when going into your local bank is to be prepared for the spiel! The spiel is as follows: "Hi Mr. Client, I seen that you have been banking with us for X amount of years so I'm going to give you a discount on our 5yr fixed mortgage rate. I'm going to give you a discount of .5% below our posted rate, how does that sound?" What Mr. Client doesn't know is that banks NEVER give out the posted rate. Right now the current posted rate for the majority of the big 5 banks is 6.99%, which NOBODY applying for a mortgage will get, providing your credit score is up to par. The banks have a posted rate/ceiling rate and a floor rate. The floor rate is the absolutely lowest rate they can give you, so each banker will try to get away with the highest rate they can get away with. I myself did some shopping around for myself just to see. I applied at one RBC they quoted me 5.74% on there 5yr fixed then I went down the street to the other RBC and they quoted me 5.69% and then I called the customer service line on the back of my bank card and they quoted me 5.59%. Now how is this consistent? They also mentioned my tenure with the company but I just started banking with them this year! Banks do not only want to have your mortgage business they want to do your investments, they want you to open new savings accounts etc. They want to get all your business and all your money, so yes, they do have a hidden agenda!

From my past experiences, even with my closest friends, they tell me, "Sterling, I'm going to my bank because I've been banking with them my whole life and they said they will give me a discount on my mortgage rate!" What I told him was, don't be another victim of the classic spiel that they tell all your clients, fact is you aren't special, you are client number 870,850. In the United States over 70% of people use mortgage brokers in Canada its 26% This needs to change! The reasons are clear, even The Donald uses a mortgage broker and he's a billionaire with enough real estate knowledge! I've also heard, "Sterling if you get me a mortgage send me to one of the big 5 because I don't want to go to a "no-name" mortgage company in case they go bankrupt!" What I have to say to these types of mind sets is, if they go bankrupt, who cares? Whats the worst that can happen, they go bankrupt then you don't have to pay back the mortgage. The only thing you need to worry about is that they release funds to the lawyer on closing date! Realistically even if the mortgage company does go bankrupt you will still need to pay the mortgage, but I'm just theoretically speaking. Most of the financial institutions are owned by the big 5 banks in some way so don't worry, there still getting paid!

Acutaly, I can't say don't totally neglect the big 5. Only go to the big 5 unless you have to. When I mean have to I mean if they are the only ones offering a solution to your unique situation. Your mortgage broker will know best and place you accordingly.

I just can't emphasis enough the lack of education in mortgages within Canadians! The big 5 have our trust, and us being Canadians are either mis educated or are just too conservative so we just automatically assume that our banks are looking in our best interests. Do yourself a favour and use a Mortgage Broker!

2. Our services are FREE! All our services are free unless you have a unique situation or if your credit is shot and we need to bend over backwards to finding a lender who will lend out money to you. This requires more time and energy so us mortgage brokers will add a fee anywhere between .5% - 5% depending on your situation.

3. Most of the major financial institutions who provide these low rates ONLY deal with mortgage brokers. I had a friend ask another friend of mine, "how does Sterling get these low rates? How does he have more connections than a bank manager?" Well the answer is some has to do with having the right contacts but the largest reason on how we can get better rates is because us mortgage brokers can go outside of the big 5 banks to provide you the lowest rates! Almost all mortgage brokers can provide the rates that I do, so if you don't choose to go with me...Find a mortgage broker near you and find a good one and they will guaranteed find you a better rate than your bank. Having connections or not!

4. 2 in 1 - We play two roles here. 1. We do the shopping for you finding you the best rate. Really, who has time to go to all the big 5 banks and do research on the other 35 lenders out there. We do, this is our lives, this is what we know best. The market and rates change everyday, unless your willing to drive out to the big 5 banks and call 35 lenders everyday there is NO way you will be able to know who is offering the best rate and when. The second role we play credit counseling so you can make the right financial decisions moving forward with regards to your overall financial situation. And if you don't qualify for a mortgage we will tell you the step-by-steps you need to take in order to get yourself into a mortgage. Most of us mortgage brokers have a background in credit counseling and we are very familiar with credit scores and how they operate. We know how to get you to the 700 beacon score...just ask!

5. We work 24/7 - Unlike the banks we work on evenings and on the weekends, we will come to your house and provide you with the best service possible!

6. I know this is a top 5 list but I can't emphasis this enough...RULE #1 NEVER GO TO YOUR LOCAL BANK FOR A MORTGAGE! Us Canadians need to be informed on this and if you are a mortgage broker reading this you need to educate all your clients as well! The big 5 has roughly 70% of the market share out there. This number is decreasing as Canadians are being more educated, but this is far from where it needs to be! I'm not saying to be like the United States, but they are usually ahead of our time, so if 70% of them are using mortgage brokers then why are we? I know I personally got my mortgage through a financial institution...Where did you get yours?

If you have any questions please contact me directly at 877.979.4979 or sterling@xpx.ca this will probably be my last entry for awhile as I do not like how Wordpress is posting related links underneath my posts without my permission. So for now, I'm taking a break!

Also please visit my other two business that I run. Thanks for your support!

Xpress Property Xchange (XPX.ca) and ShiftRealty.ca

Best Regards,

*Sterling

"Call Free Home Refi in Costa Mesa, CA at (503) 766-3009.

We are a truly free home refinancing service that provides homeowners with no closing costs, no lender fees, and the lowest refinance rates. Consult our experts right now."

Despite an absolute dearth of ARM resets, the number of severely delinquent Alt-A borrower continues to grow, according to a report released late last week by Clayton Holdings, Inc. (CLAY: 5.89, 0.00%). The number of troubled Alt-A borrowers in the 2007 vintage rose an eye-popping 26.5 percent from March to April alone, nearly reaching 17 percent of loan volume.

The 2007 vintage isn’t the only Alt-A vintage facing problems, of course: 19.3 percent of borrowers with loans originated in 2006 were more than 60 days delinquent at the end of April, a jump of nearly 10 percent from March. Cumulative losses percentages for 2006 vintage Alt-A first liens continued what Clayton analysts called a “concerning upward trend,” with losses for 2006 issues running at more than three times the pace set by the 2004 and 2005 issues.

The troubles in Alt-A are appearing despite the fact that very few borrowers in any vintage are yet to face a strong wave of rate-reset activity. The graph below shows that, if anything, lenders and policymakers should be concerned about a wave of pending Alt-A resets that are looming in the back half of 2009.

click for larger view (source: Clayton)

That looming wave of resets may be particularly troubling, given the current U.S. interest rate and LIBOR outlook held by most economists and bank officials; most see interest rates flat to increasing over that time frame, both within the U.S. and abroad, a pattern that could bode poorly for borrowers facing rate adjustments.

The good news is that one-month roll rates — which measure the transition of loans from one stage to the next (i.e., performing to delinquent, delinquent to severely delinquent, etc.) — for nearly every Alt-A vintage decreased for the month, with only the 2003 vintage showing an increase. That sort of respite may end up being short lived, however, given the sharp increase in deliqnuencies and continued downward trending of cure rates for troubled borrowers.

Subprime woes, renewed?
Subprime mortgages aren’t sexy to most financial media any more, and numerous reports lately have suggested that the problem in subprime mortgages has largely been mitigated by lower interest rates that have limited payment shock for the most vulnerable borrowers.

click for larger view (source: Clayton)

All of which is true; but that shouldn’t hide the fact that 60 day delinquencies in the 2006 subprime vintage rose 5.4 percent in April and now stand at 34.6 percent of remaining collateral; in the 2007 vintage, 23.1 percent of collateral is more than 60 days in arrears, as well.

While resets aren’t an immediate problem, there are yet a good number of resets that need to work their way out of the financial system (see graph above).

Perhaps more telling, toll rates increased in April on both subprime first and second liens after sharp declines in recent months, marking perhaps a renewed cycle for troubled subprime borrowers. Many media pundits have pointed to declining roll rates as evidence that the worst of the subprime crisis is behind us; the jump in rolls might suggest otherwise.

For more information, visit http://www.clayton.com.

Despite an absolute dearth of ARM resets, the number of severely delinquent Alt-A borrower continues to grow, according to a report released late last week by Clayton Holdings, Inc. (CLAY: 5.89, 0.00%). The number of troubled Alt-A borrowers in the 2007 vintage rose an eye-popping 26.5 percent from March to April alone, nearly reaching 17 percent of loan volume.

The 2007 vintage isn’t the only Alt-A vintage facing problems, of course: 19.3 percent of borrowers with loans originated in 2006 were more than 60 days delinquent at the end of April, a jump of nearly 10 percent from March. Cumulative losses percentages for 2006 vintage Alt-A first liens continued what Clayton analysts called a “concerning upward trend,” with losses for 2006 issues running at more than three times the pace set by the 2004 and 2005 issues.

The troubles in Alt-A are appearing despite the fact that very few borrowers in any vintage are yet to face a strong wave of rate-reset activity. The graph below shows that, if anything, lenders and policymakers should be concerned about a wave of pending Alt-A resets that are looming in the back half of 2009.

click for larger view (source: Clayton)

That looming wave of resets may be particularly troubling, given the current U.S. interest rate and LIBOR outlook held by most economists and bank officials; most see interest rates flat to increasing over that time frame, both within the U.S. and abroad, a pattern that could bode poorly for borrowers facing rate adjustments.

The good news is that one-month roll rates — which measure the transition of loans from one stage to the next (i.e., performing to delinquent, delinquent to severely delinquent, etc.) — for nearly every Alt-A vintage decreased for the month, with only the 2003 vintage showing an increase. That sort of respite may end up being short lived, however, given the sharp increase in deliqnuencies and continued downward trending of cure rates for troubled borrowers.

Subprime woes, renewed?
Subprime mortgages aren’t sexy to most financial media any more, and numerous reports lately have suggested that the problem in subprime mortgages has largely been mitigated by lower interest rates that have limited payment shock for the most vulnerable borrowers.

click for larger view (source: Clayton)

All of which is true; but that shouldn’t hide the fact that 60 day delinquencies in the 2006 subprime vintage rose 5.4 percent in April and now stand at 34.6 percent of remaining collateral; in the 2007 vintage, 23.1 percent of collateral is more than 60 days in arrears, as well.

While resets aren’t an immediate problem, there are yet a good number of resets that need to work their way out of the financial system (see graph above).

Perhaps more telling, toll rates increased in April on both subprime first and second liens after sharp declines in recent months, marking perhaps a renewed cycle for troubled subprime borrowers. Many media pundits have pointed to declining roll rates as evidence that the worst of the subprime crisis is behind us; the jump in rolls might suggest otherwise.

For more information, visit http://www.clayton.com.

Lately we have been deemed to be in a mortgage crisis. This means that there were a lot of people who made bad really bad decision on mortgages. They did not pay attention to what they were doing. Also, there were some bad lenders who encouraged this and did not stop people from entering bad situations. Well, how will this affect you? You definitely do not want to get caught up in it. Should this situation actually turn you into a renter instead of a buyer? This is something that many people have thought about given the current situation. We have lined out some positives and negatives of renting. Hopefully this will help you.

Positives of Renting

One of the good things about renting is that you are not locked into a long term commitment. You do not have to worry about the mortgage, you are just paying month to month to live there. If you are renting then you might see that the landlord will pay to fix all the problems that happen within the home. This also leaves you without some financial responsibility. If you fear the long term commitment then you might find that renting is the best thing for you. Plus, when your time is up you can just move on to another home if you do not want to stay in the home you currently are in. Hopefully you will find that you have a good experience if you choose to go the renting route for your living.

Negatives of Renting

When you are renting you do not actually own this valuable asset. A home can help you when it grows in value because you will also be building equity. As a renter you are not entitled to the equity in the home and you will not see any benefit when the home rises in value. You are also just giving away your money to the landlord. You will not see any return on this money other then the ability to live in your home. Some people just think that it is a waste of time and money to rent. They would rather see some return on an investment. You do not ever want to put yourself in a negative renting situation. Watch out for it.

Always Act in a Positive Way for Yourself

In the end you need to do what is best for you. If you choose to rent then you need to make sure you are renting smart and you are setting yourself up with a good situation for you and your family. If you decide that you do not want to rent and that you go buy then you need to pay attention. Do not get in over your head and make sure the lender is solid. You can escape this mortgage crisis if you pay attention and do what is right for you. This may come through renting, and it may come through buying. Either way you need to always act in a positive way with your finances.

Additional Resources:

• Subprime Mortgage Problems. Where is Personal Responsibility
• New Program Aims to Stall Foreclosure

Ambac, one of the top bond insurers in the country continued to hemorrhage cash on bad mortgage-related bets. Ambac reported a loss of $228 million in CDOs and its investment portfolio in April. Many of the CDOs include subprime mortgage debt.

From the Associated Press on Ambac’s subprime mortgage backed CDO losses for April:

Bond insurer Ambac Financial Group Inc. said Wednesday it continued to take millions of dollars in charges in April tied to its credit derivative and investment portfolios.

Net write-downs on its credit derivatives holdings totaled $176 million in April, with the bond insurer taking a write-down of $228 million on the value of collateralized debt obligations. Those write-downs were partially offset by $52 million in gains among other credit derivative holdings.

Share This

AIG, who has taken a beating on mortgage-related insurance bets may need to raise an additional $10 billion in cash on top of the recently-raised $20 billion in order to keep its rating.

From Bloomberg on AIG’s cash needs:

AIG may seek $5 billion to $10 billion rather than let its credit ratings be cut again and risk higher borrowing costs and lower sales, Shanker said yesterday in a research note. Standard & Poor’s, Fitch Ratings and Moody’s Investors Service downgraded New York-based AIG this month after the company posted a $7.81 billion first-quarter loss.

“The ramifications of another downgrade would be devastating,” Shanker, who rates AIG “hold,” said in a note published after the close of regular U.S. markets. “A downgrade would be so detrimental to AIG that it will not allow this to happen.”

Share This

Standard & Poor’s Ratings Services, Moody’s Investors Service, and Fitch Ratings will need to make some strong adjustments covering how their structured finance ratings businesses operate, according to new standards published by regulators today.

The new rules include provisions that will prohibit analysts from “making proposals or recommendations regarding the design of structured finance products” that the agency rates, according to a new code of conduct for credit rating agencies published Wednesday by the International Organization of Securities Commissions, an international conglomerate representing more than 100 securities regulators.

Among other rules in the code of conduct, rating agencies must also differentiate their ratings of structured financial products — such as residential mortgage-backed securities and CDOs — from other rated debt, a proposal that has been hotly-debated in the States and largely supported by internal proposals from both Moody’s and Fitch.

“IOSCO’s Code of Conduct aims to improve investor protection, improve the fairness,
efficiency and transparency of securities markets and to reduce systemic risk,” said Michel Prada, Chairman of IOSCO’s technical committee. “We have engaged in a frank and constructive dialogue with the CRA industry, issuers and investors and have taken a broad range of views into account in finalizing the changes to our code.”

IOSCO first proposed a code of conduct for rating agencies in December 2004, and although not binding on U.S. operations of each major rating agency, the organization has seen support for coordinating global financial regulations grow amidst the current financial crisis.

The guidance from international authorities comes ahead of expected support for the IOSCO code of conduct by U.S. Securities and Exchange Commission chairman Christopher Cox, who has said the SEC will likely roll out its own changes to rating agency regulations on June 11. HW’s key sources suggested Wednesday morning that much of the new regulation will be tied to IOSCO’s proposal, and that Cox will push for stronger international oversight of the debt ratings business as a result.

He’ll certainly have company, with IOSCO’s Prada — a key financial regulator in France — vocalizing his support for the idea to the Financial Times’ Gillian Tett on Wednesday.

Other key changes in the IOSCO proposal include provisions that would force rating agencies to better disclose their financial ties to issuers; one such provision would have agencies “disclose in their ratings announcements whether the issuer of a structured finance product has informed it that it is publicly disclosing all relevant information about the product being rates,” while another would force agencies to disclose if the issuer (or any other connected client) make up more than 10 percent of revenue.

Slowing refinancing applications activity from borrowers — troubled or otherwise — helped push the Mortgage Bankers Association’s weekly applications survey down for the week ended May 23, as mortgage rates headed upward last week. The MBA said Wednesday morning that its composite index of purchase and refinance activity fell 4.6 percent on seasonally-adjusted basis to 593.3; last week’s total was 7.5 percent below year ago application activity.

Last week’s total was the slowest week since the end of April, when the index fell to 567.0, and was among the lowest application totals recorded this year. The application index is calibrated to March 16, 1990; a reading of 593.3 means that application activity was roughly 5.9 times greater than when the index was first established.

Driving the drop was a fall-off in refinancing applications, which fell 8.9 percent from the previous week amid rising rates, the MBA said. Average rates on a traditional 30-year fixed-rate mortgage rose six basis points, while rates on one-year ARMs shot up an average of 21 basis points, according to the MBA’s calcuations.

Despite the fall-off in refinancing, purchase applications actually increased 0.8 percent while the a measure of government purchase application activity — largely FHA — decreased 2.2 percent. FHA volume had been strong to start 2008, as borrowers piled into the revitalized government lending program, but has since tapered off.

Not surprisingly, the refinance share of mortgage activity decreased to 46.1 percent of total applications from 48.2 percent the previous week, the MBA reported. ARM share decreased to 9.3 from 10.0 percent of total applications from the previous week.

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

Fitch Ratings said Tuesday afternoon that it had cut its residential mortgage servicer ratings on troubled lender Residential Capital LLC, as the ratings agency said questions over the company’s “weakening financial condition” continue to run unanswered. Fitch cut all servicer ratings by at least four notches, a significant drop in ratings for one of the nation’s largest servicing shops.

Cut the deepest, at five notches, were the company’s special and master servicer ratings; both plunged from RSS2+/RMS2+ to RSS3-/RMS3-, respectively. A summary of all ratings actions is provided in the graphic below.

ResCap consolidated the disparate servicing operations of GMAC Mortgage, GMAC-RFC, and Homecomings Financial under its corporate umbrella earlier this year.

Housing Wire reported yesterday that ResCap subsidiary Residential Funding Corp.had agreed to transfer servicing of a number of subprime deals to Lehman Brothers (LEH: 36.92, -0.75%) outfit Aurora Loan Services, LLC; at the time, it wasn’t clear what had forced the transfer. While no party is commenting, sources suggested to HW that the pending downgrade of ResCap’s servicer ratings likely forced the transfer.

Most servicing contracts require servicers to maintain a minimum rating in order to continue to service securitized collateral; the downgrades by Fitch move many of ResCap’s servicer ratings below the common thresholds used, our sources confirmed.

Fitch cut eight key servicer ratings at ResCap, all by mulitple notches. (Click for larger view.)

“The servicer rating actions reflect the continued pressure on ResCap’s liquidity position and financial flexibility and the potential impact on the company’s servicing operations,” Fitch said in a press statement. “A company’s financial condition is an important component of Fitch’s servicer rating analysis.”

As of March 31, 2008, ResCap serviced 3.28 million loans for $458 billion, excluding real estate owned (REO) properties. The servicing portfolio was comprised of 55 percent prime, 26 percent second liens, 11 percent subprime, and 8 percent Alt-A products, Fitch said.

For more information, visit http://www.fitchratings.com.