Apr
06
2009
The Clock Begins Ticking Again…
The Washington Independent posted an alarming article this past week that states that Fannie Mae and Freddie Mac have quietly lifted the moratorium that was in place on foreclosures. The agencies put this moratorium in place in late 2008 as a way to slow the potential tidal wave of foreclosure filings, and to allow the new Administration time to implement their economic recovery plan. Here’s the complete article from the Washington Independent –> Fannie, Freddie Quietly Lift Moratorium on Foreclosures.
What does this mean for the Peninsula?
If this is indeed true, the clock begins ticking again for those homeowners in the pre-foreclosure phase. In time, if these mortgages aren’t reworked to keep the owners in their homes, another wave of foreclosed and REO properties may hit parts of the Peninsula that was just recovering from the last wave. Considering how tough the job market currently is, I think in this round you may see some foreclosures in areas you’d least expect.
For investors, this means there may be more bargains coming on the market later in the year when this wave flushes through.
Action is better than inaction…
If you are unfortunate enough to be a homeowner in a very tough situation, the worst thing to do is to do nothing… The sooner you get conversation started with your lender, the better the chance you’ll have of hammering out a deal to stay in your home. With all of the pressure being applied on lending institutions to work out deals with borrowers who are in trouble, one would hope this would translate into some flexibility for troubled homeowners.
—————————————–
Feb
27
2009
Proving once again that the government isn’t in business to give things away for free, President Barack Obama’s proposed budget has its sights set on one of the most ferociously protected tax shelters to recoup funds: The mortgage interest tax deduction. His proposal is aimed at reducing this deduction for America’s wealthiest familes, and will surely face vigorous opposition from homeowners and the real estate industry.
Here’s an excellent article that summarizes what’s at stake:
There’s a significant percentage of households on the Peninsula who will be impacted by this change. It’s definitely a discussion you should be having with your CPA or tax attorney….
Nov
05
2008
Much has been made lately in the press about the impending peril homeowners may be facing when their 5/1 or 7/1 Adjustable Rate Mortgages (ARMs) complete their fixed-period and covert to an ARM. After all, when the first wave of mortgages indexed sharply upwards last year, it marked the beginning of the sub-prime meltdown that we’re still sorting through today.
But just because you have an ARM that’s due to index soon, does it mean you should be losing sleep at night waiting for your adjustment letter to arrive in the mail? Not necessarily. It all depends on which index your ARM is based on. If you recall, the fully indexed interest rate is calculated by a simple equation:
Fully Indexed Rate = Margin + Current Index
Since the margin is a fixed figure that is set by the lender, the “variability” of an ARM will follow the behavior of the index. While there are numerous indices that are used in ARM’s the two most common that are used are the London Inter Bank Lending Rate (LIBOR) or the Constant Maturity Treasury (CMT.) Here’s a great site that keeps track of all of the most common index rates:
Mortgage Index Rates
These two indices have behaved VERY differently over the past 12 months. LIBOR rates have risen significantly due to the tight money market, while CMT rates as yields have dropped. Consequently, by understanding which index your ARM is based on, you can better anticipate what your loan is going to do when judgment day comes.
How do you know which index your loan is based on? It is specified on your original loan documentation, or you can call your lender and find out. Either way, knowing what your rate is going to do may buy you some much needed peace of mind.
