Refinance Free Credit

It apparently hasn’t taken long for new CEO Robert Willumstad to have an impact at wounded insurance giant American International Group, Inc. (AIG: 32.63, -4.06%), after the departure of his predecessor Martin Sullivan. Wilmington Finance, Inc., AIG’s U.S.-based mortgage lending arm, said Tuesday that it will cease wholesale mortgage banking originations effective immediately. The company will [...]

Last June, James M. Weichert went boldly on record calling the bottom in housing. This June, the namesake of Weichert, Realtors is at it again. Tuesday, the now-is-a-great-time-to-buy! poster child went on record — again — calling right now the bottom of the real estate market. From the boldly-worded, yet apparently also amnesia-ridden, press release: In a message [...]

Add another bank to the list of those looking to strengthen its balance sheet by raising fresh capital — in this case, that bank is Barclays PLC (BCS: 26.6195, +2.50%), the U.K-based bank that has absorbed more than its fair-share of write-downs tied to the U.S. mortgage mess. In a press statement, Barclays confirmed Tuesday [...]

The Goldman Sachs Group (GS: 180.59, -0.82%), which has largely avoided the mortgage and credit messes that have hit other Wall Street competitors with a vengeance, said Tuesday morning that earnings fell amid tough market conditions — but still managed to beat analyst expectations. The Wall Street firm said it earned $2.05 billion, or $4.58 [...]

Using Home Equity for Business Loans

It goes against the grain but sometimes using your home equity for your business makes sense. If you are a small business owner and you need financing to help your business grow, start a new business, your SBA loan is up for refinancing or maybe you need to buy out a partner? Most small business owners look to get a loan from the SBA or another commercial bank for this purpose but very few think to use their home equity for such a purpose. The reasoning by most is that they want to keep their home separate from their business or their spouse does not want to “risk” their home for the business.

Point of fact is that the majority of small business loans have a personal guarantee associated with them and therefore the house is still at risk. A strategy we suggest with many of our clients is to use the home equity (via a cash out refinance transaction) to satisfy the needs for the business. The main reason for doing it this way is that you can usually borrow the money out of your house for two and sometimes up to four percentage points cheaper than a traditional business loan. In a recent case study a client was buying out their business partner and needed to remove the partner from the current $400,000 business loan.

Traditional banks were offering a commercial loan around 8.75% and we were able to provide the client with a 30-year fixed rate mortgage for only 5.75%. We then instructed their CPA to draft a private note from the clients as individuals to their business in order to claim this deductable expense that the commercial loan would have provided. Now there is some leeway on how you can structure this private note but their CPA left the rate the same so it was a wash.

End result: The client was able to buy out their partner much quicker than going the traditional route and at a much lower cost than their CPA originally thought. The client was able to save $812/month or nearly $10,000 per year in cash flow resulting in close to $300,000 in savings if they carry the loan to term. While this is not always an option, you should investigate if this strategy may be right for you? Ask your mortgage planner to run a scenario and if it looks like it makes sense then call your CPA to discuss. Take Control of your Finances and Make Life Happen!

Dave Muti Author of Mortgages: What You Need to Know

Banks suing other banks are likely to become much more common as the litigation machine warms up its engines in the wake of the mortgage-led financial market crunch. The latest case in point: Deutsche Bank AG (DB: 97.04, +1.27%) and money manager HBK Investments LP are named defendants in a lawsuit filed Monday by Buffalo, [...]

Signs of stagflation are abounding in our economy, as many predicted would be the likely outcome tied to the Fed’s frantic attempt to save the financial markets by slashing interest rates.  With a continually weakening economy and inflation taking hold in commodities across the board it looks like our friend stagflation is here for the time being.

From Bloomberg on the phenomenon:

Builders broke ground on 975,000 homes at an annual pace in May, the least in 17 years, and construction permits fell, the Commerce Department reported in Washington. Meanwhile, the Labor Department said producer prices jumped 1.4 percent, more than economists forecast. A further report from the Federal Reserve showed industrial production unexpectedly dropped 0.2 percent.

“The latest round of commodity-price pressure is adding to both inflation and weak growth,” said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. “It’s a pretty negative cocktail for the economy and financial markets.”

“Industrial production is down, that’s the stag part, and prices are up, that’s the inflation part,” said Neal Soss, chief economist at Credit Suisse Holdings Inc. in New York. Compared with the 1970s, though, “it’s not likely that inflation will get as out of control when wages do not respond.”

The producer-price index jump exceeded the 1 percent forecast among economists surveyed by Bloomberg News. It was the biggest increase since November. The Labor Department’s figures also showed that prices rose 0.2 percent excluding food and energy, a measure that matched economists’ predictions. Production was expected to increase 0.1 percent.

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Signs of stagflation are abounding in our economy, as many predicted would be the likely outcome tied to the Fed’s frantic attempt to save the financial markets by slashing interest rates.  With a continually weakening economy and inflation taking hold in commodities across the board it looks like our friend stagflation is here for the time being.

From Bloomberg on the phenomenon:

Builders broke ground on 975,000 homes at an annual pace in May, the least in 17 years, and construction permits fell, the Commerce Department reported in Washington. Meanwhile, the Labor Department said producer prices jumped 1.4 percent, more than economists forecast. A further report from the Federal Reserve showed industrial production unexpectedly dropped 0.2 percent.

“The latest round of commodity-price pressure is adding to both inflation and weak growth,” said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. “It’s a pretty negative cocktail for the economy and financial markets.”

“Industrial production is down, that’s the stag part, and prices are up, that’s the inflation part,” said Neal Soss, chief economist at Credit Suisse Holdings Inc. in New York. Compared with the 1970s, though, “it’s not likely that inflation will get as out of control when wages do not respond.”

The producer-price index jump exceeded the 1 percent forecast among economists surveyed by Bloomberg News. It was the biggest increase since November. The Labor Department’s figures also showed that prices rose 0.2 percent excluding food and energy, a measure that matched economists’ predictions. Production was expected to increase 0.1 percent.

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The Orange County Register’s Mathew Padilla notes that foreclosures in Orange County — which includes such glamorous spots as Newport Beach and Laguna Beach — are soaring. In fact, it only took the first five months of 2008 to surpass the total number of foreclosures filed during all of 2007. A look at a scary graph [...]

In what now appears to be a desperate attempt to reduce available supply by home builders, the Commerce Department reported Tuesday morning that new starts on residential construction fell to their lowest levels in 17 years during May. Privately-owned housing starts registered a seasonally-adjusted annual rate of just 975,000, the lowest level since March 1991 [...]