Refinance Free Credit

Yesterday, President Bush signed the massive housing bailout bill.  Supposedly this will stabilize financial markets and help people who obviously have no clue how to manage their finances get back on track.  The government giving our tax money to banks will stabilize the market?!  Since when is increasing debta stabilizing force?  The President had once threatened to veto the bill, but now proves himself to yet again be a RINO, a neo-con, a sell-out.  Treasury Secretary Henry Paulson was there for the signing.  I'm sure no one could see it, but I'm positive that Paulson was pulling the string attached to the signing hand of the puppet - I mean President- of the United States.  The President wasn't alone on this though.  Many of his fellow Republicans in Congress joined him since they are facing tough re-election contests.  I'm guessing they don't care about the rest of our votes.

So once again, I find my responsible self being punished for the stupidity of others.  I mean, what the hell do people think the term 'adjustable' means?  And did they really gamble and think that it would adjust in their favor although 9 times out of 10 it will not?  Did these people really believe that they could buy a house with no money down?  And don't even get me started on the banking institutions who took the risks on these loans.  How many more banks does the government think they can bail out before we are so saddled with debt that it will take three or more generations to crawl out from under it?  Of course, that is assuming that America is still even here then.  Just like showing the world we are paper tigers gets us hit with 9/11, so having a paper economy will prove to stabilize nothing and protect us from nothing.  Wait until China and Russia decide that it is time to hit.  They won't need bombs.

And here is something else to chew on:  The government is going to be backing these newly re-financed home loans.  So then, who owns these homes when these people inevitably default once again?  There are these new senior home loans that have become pretty popular called 'reverse mortgages' and they are also government backed.  At the end of the term, who owns those homes?  Do you see where I am going with this?  Private home ownership will be a thing of the past and in its place...government housing.

A financial sector that has been battered recently by credit and liquidity concerns saw its fortunes brighten, at least temporarily, on Wednesday morning. Moves by both the Securities and Exchange Commission and the Federal Reserve on Wednesday served to at least temporarily prop up a market that’s been searching for — and, so far, not [...]

Maybe the good news on Merrill Lynch & Co. (MER: 26.75 +1.90%) yesterday wasn’t really all that good, after all. That’s the consensus that seems to be creeping into the Street’s collective psyche Wednesday morning, as analysts scrutinize the details of the deal to sell $30.6 billion in gross notational amount of ABS CDOs to an [...]

Co-signing for a loan is nothing new. Many of us at some point in our lives have needed a co-signer. Whether it was for an auto loan, or a supplemental school loan, co-signers have been there when needed them for various expenses we just couldn’t qualify for on our own. However, with the recent tightening of lending standards a new phenomenon is coming to light. People are starting to use co-signers on home loans. This trend, though it may be helping more families purchase their own homes, carries substantial risk to the co-signer, beyond any related risk for smaller loans.

What Are the Risks?

For any loan that you co-sign, you are taking full responsibility for any payment, should the primary borrower default or is unable to pay. This means that in addition to your own expenses, which are likely substantial, you must be both willing and able to take over responsibility of payment for the person you’ve co-signed for. If we consider smaller loans, such as auto loans or school loans, this may not have a huge impact but can still be a burden. However, when we are considering a home loan which can easily surpass the hundred thousand dollar mark, the effect on a co-signer’s finances can be devastating if the primary borrower is unable to make the payment, defaults, or completely bails on the loan with no forwarding address. Any defaults or missed payments will also affect the co-signer’s credit report, making it harder to get credit and loans in the future. Also, if you are not listed as a co-owner on the property, you could end up making payments for a house that is not yours. Once you co-sign for a loan, there is no turning back. The only way to get your name off of the loan is to pay the remainder of it, or for the lender to let you off of the loan.

Should I Co-sign?

This is a decision that is entirely up to you in light of your circumstances. Now that you are aware of the risks, make sure that you are completely familiar with the primary borrower. While you may know this person well, you may not know them well financially. The way someone conducts themselves financially can be completely different and foreign compared to how you think of them on a daily basis. Become familiar with their financial history and their credit. Do not be afraid to ask them questions; after all, this is a favor you will doing for them, at a potentially substantial cost to yourself. The borrower should be more than willing to provide you with all the information you request. Be wary if they do not seem honest and upfront with you. Make sure that you will actually be able to afford the home loan payments on your own, should the primary borrower face financial hurdles.

Additional Resources

• Thinking of Co-Signing On A Mortgage: Things To Think About First
• Co-signing a loan

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Borrowers flocked in record numbers to fixed-rate mortgage products during the second half of 2007, as the nation’s credit crisis cranked into high gear and concerns over more exotic loan programs grew — a trend that seems likely to have continued even more strongly into 2008, based on a review of mortgage application data so [...]

The program will begin October 1, 2008 and will run through September 2011.

Eligible borrowers must have spent over 31% of their monthly income on their mortgage, starting March 2008. You must verify your income and the home must be your primary residence. In the end it is up to the lenders to choose which loans to refinance. 

This is just the basic for more information check out the website http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf

It’s almost taken as common knowledge at this point that out-of-control subprime mortgage lending — the funding of home loans to borrowers with less-than-perfect credit — was the chief culprit behind the unsustainable boom in U.S. home prices that eventually derailed the real estate and mortgage markets. But new research, published Wednesday by UC Irvine’s Paul [...]

The Federal Reserve announced changes to its emergency lending window for financial institutions today.  The changes extend the repayment period for the loans and the duration of the program among others.  The lending window allows banks to borrow from the Fed for short periods of time while putting up securities (such as mortgage backed securities, etc.) as collateral for the loan.  Banks have used this lending window to alleviate the strain on capital exacerbated by the credit crunch.

From Market Watch:

The Federal Reserve, continuing to combat the enormous stresses that have engulfed financial markets, announced Wednesday several steps designed to enhance its emergency lending program for banks and primary dealers.

For banks, the Fed said it would lengthen some of the credit it extends to 84 days. At the moment, the loans have been for 28 days.

For broker dealers that serve as primary dealers of Treasury debt, the Fed said it would introduce auctions of options on $50 billion of loans. The options could be exercised if needed in periods of elevated stress in months to come, such as the end of financial quarters.

The Fed also said it’s officially extending its primary-dealer loan program to the end of January from mid-September. This step had been previously telegraphed by Fed Chairman Ben Bernanke.

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… when, in truth, maybe we shouldn’t have been. HW readers might recall our earlier coverage of MGIC’s earnings call for Q2 in which the company all but admitted that 2008 vintage mortgage loans are performing like those from 2007. Which is to say, in a word: crap. A deconstruction of an Orange County Register story this [...]

It’s a time-tested relationship — higher mortgage rates equal lower demand for mortgages, and fewer applications from potential borrowers. And vice versa. Like many things throughout the housing mess, however, more than a few tried-and-true axioms about how things are supposed to work are finding themselves thrown out the window. Like the idea that national home [...]