Refinancing Your Home : Has the time arrived?, by Chris Wagner, American Capital Mortgage Inc.


Chris Wagner, CMPS
American Capital Mortgage Corporation
555 SE 99th Ave., Suite 101
Portland, OR 97216
503-674-5000 Office
503-888-3372 Cell


The mortgage industry has gone through more transitions in the past few years than Lady Gaga has had costume changes!  Since mid-2007, qualifying has gone from just being able to fog a mirror to having to document your high school transcripts before your loan gets funded!

All joking aside, we are seeing some outstanding refinancing opportunities that simply did not exist a short while ago.  Despite the current economic adversity, chances are good that you can significantly improve your current mortgage, simply due to the fact that we are seeing rates that haven’t been around since the 1940’s!

Here are just a few highlights

For those with an existing FHA loan: a streamline refinance will allow you to lower your rate without an appraisal or income qualifications!   VA loans offer a similar program called IRRL (interest rate reduction loan)

For those whose conventional loans are owned by Fannie Mae or Freddie Mac: A “refi-plus” or the Home Affordable Refinance Plan (HARP) allows you to refinance, often without an appraisal, and if an appraisal is required, they provide for lowered values without paying for mortgage insurance while often allowing for limited income documentation as well.

Getting qualified is simple! Within a short 5 to 10 minute phone call, your mortgage professional should be able to learn everything they need to update your file and determine which program is the best fit.  Realistically, most of the information are top of mind items and should be enough to get the ball rolling without the completion of a formal application. This will allowyou to get a good idea if refinancing now is a good idea for you.

Let’s get down to business……

Once you get a feel for what can be done based on your current circumstances and loan type, you will have the information necessary to make a good decision to get the best results you can, but there is more to it than just APR.  Call it cultural training, but we have all been conditioned to pursue an interest rate like a raccoon runs after whatever is shiny.  In both cases, what you end up with is not always good.

There are essentially four categories that when surveyed, the vast majority of clients will describe their satisfaction or dissatisfaction based on how the following transactional components were executed.  You may consider keeping this list in the back of your mind as a scorecard while you are considering the individuals and institutions you will or are working with.

  1. 1. Communication: This is the number one source of concern that clients describe as a source of anxiety and ill ease.  Our imaginations tend to work against us when we are left to our own and there are few things that are crueler than being ignored.  Your broker/banker’s job is to effectively quarterback all of the people involved with your transaction and to report the progress and timelines to you in a pre-described manner.  This is the only way that expectations can be set properly.  Much like a safari guide, every trip is a little different, but there are enough similarities that your professional should know what to look out for, what to do if it is encountered and how it will affect your outcome.  If you have trouble getting your calls or emails returned promptly when you are initially inquiring about a loan, you can only count on it getting worse down the road.

  1. 2. Honesty and Integrity: This should be obvious, but it is not.  We are not talking about premeditated deception here.  The level of disclosure required by all parties is geared towards virtually eliminating that.  What we are talking about is a mortgage provider who quotes rates and terms prior to gathering the details of your transaction, thus paving the way toward disappointment.  What would you think of a doctor who gave you a prescription without asking questions or examining you first?  This kind of malpractice is due to an urgency to get a commitment from you and may indicate a lack of experience on the part of the interviewer.  Internet advertisers often employ phone-room type data input clerks that often work from a script.  Ask your provider for a written closing cost guarantee prior to spending any money besides the charge for a credit report.  This will go a long way to indicate to you if the numbers are real.

  1. 3. Smooth and Complete Process: Perhaps you have already been, or know of someone who was the victim of the “Oh, just one more thing” series of phone calls requesting additional information that never seem to end once started.  Granted, there are circumstances that in fact do generate requests that could not be anticipated initially, however you should receive a list of items required that you need to begin gathering immediately once your application has been taken.  In addition, you should be given a timeline of the various milestones that will occur during your transaction.  Examples would be, when appraisal is ordered, received, underwriting timelines, and ultimately when you will be signing.  You might get a super low rate, but if it feels like you had to crawl over broken glass to get it and you have been working on it for 4 months, much of the shine will have worn off that apple by the time you actually close.
  1. 4. Rates, terms and fees: This also seems fairly straightforward, as it has to make economic sense to proceed.  In reality, you may initially consider this to be the most significant detail when considering a lender.  The fact is, the lenders and individuals who are still in business after the past few years had to be competitive, or they simply would not be around.  It is wise to determine what your real savings is after all costs are considered.  If it costs you $5000 to lower your rate and that saves you $100 per month, you want to be aware that it will take you 50 months before you reach the break even point of expenses versus savings.  That could be an excellent strategy based on other criteria, but each situation needs to be considered individually in order to be genuinely accurate.  In this case, one size does NOT fit all.

Action step: Don’t Wait!

Find out what can be done in your present situation.  Don’t make assumptions regarding employment, home values or credit.  You owe it to yourself to know for sure.  Don’t wait until rates start creeping up, because they most certainly will.  You are under no obligation to act once you do get qualified, and if you do nothing else, you can get an updated credit report from all three major credit bureaus.  You have a historic opportunity to impact you and your family’s financial future, don’t wait!

Fixed rate home loans are history, by Sarbajeet K Sen


The fight may be intense among the top housing finance lenders to woo customers with special offers and teaser rates even as festive season is round the corner. But, if you are someone looking for a home loan that bears a fixed rate of interest for its entire tenure, you may not be as welcome.

While the State Bank of India and LIC Housing Finance do not offer products with interest rate remaining fixed for its entire tenure, HDFC and ICICI Bank are pricing their offering at a level that would discourage consumers to opt for it, prompting housing finance experts to say the offers are virtually not on the shelf.

While HDFC’s fixed rate loan comes at 14 per cent rate of interest, against its teaser rate home loan offering that starts at 8.5 per cent up to March 31, 2011, ICICI Bank has priced its offering a shade higher at 14.5 per cent, while its teaser rate begins at 8.25 per cent for the first year.

“The rate that the lenders are offering on their fixed rate product for the entire tenure essentially means that there is no such product available. The pricing appears to be aimed at discouraging borrowers to opt for the offer,” RV Verma, executive director of National Housing Bank, said.

Out of the total home loan providers including all banks and housing finance companies, the four largest players — HDFC, SBI, ICICI Bank and LIC Housing Finance, between them accounted for nearly 53 per cent of the market at the end of 2009, according to Icra report on the mortgage loan market in the country.

According to data available on the NHB website for interest rates on housing finance as on September 1, Axis Bank and DFHL Vysya Housing Finance have similar high rates of 14 per cent and 13.75 per cent, respectively on their fixed rate products, while the likes of Punjab National Bank and IDBI Bank have comparatively lower rates. IDBI Bank’s offer comes at 11 per cent, PNB has the lowest rate of 10.50 per cent among the 15 primary lenders.

The remaining eight lenders in the list do not have such fixed rate offers.

A senior official of SBI felt that the fact that providers are actively discouraging fixed rate products is a sign of the market coming of age. “It is a sign of the market maturing. When most housing loan providers were offering fixed rates for the entire tenure some years ago, many of them were new to the whole concept of retail banking and did not know of its intricacies. The competition for drawing in fresh borrowers was making them offer such products,” the official said.

So, what is it that is forcing the major lenders to discourage borrowers from taking a fixed offer or deciding to not offer such a product at all? Lenders say that the sole reason is their inability to raise long-term funds to match such lending.

“Cost of funds keeps varying over the longer term. Hence, it is rather risky to take a long-term call on the lending rate and deciding to keep it fixed for the entire tenure,” the SBI official said.

Srinivas Acharya, managing director of Sundaram BNP Paribas Home Finance, said inability to raise long-term funds makes designing of long-term fixed rate products difficult. “We don’t offer a fixed interest rate product over the entire tenure because it is risky proposition. It is difficult to pattern fixed rate products over a 20-year period, since there is no matching funding available in the market,” he said.

Verma says besides the difficulty of raising long-term funds, such funds often come at a higher cost, if available. “It is difficult for lenders to take a call because of uncertainties. Long-term fund raising has become difficult or comes at a price that is not attractive,” Verma said.

ICICI Bank and HDFC did not want to comment on the issue. “Yes we do offer fixed interest for the entire tenure of the home loan,” was all that an ICICI Bank spokesperson said, without willing to discuss the subject when probed further.

sarbajeetsen

@mydigitalfc.com

Treasury Designs New Federal Program to Help Stimulate Economy, by Mandelman, Mandelman Matters


This week, the federal government is said to be announcing a new federal program designed to keep our economy vacillating between deflationary collapse and contrived recovery.  The program, referred to as the Special TARP Underwriting Program to Impede Development, will first tackle the challenge of bringing the government’s most inane economic stability plans together under one larger, yet infinitely more purposeless program banner.

Initial funding for the Special TARP Underwriting Program to Impede Development will come primarily from contributions made on a voluntary basis by the nation’s largest and most insolvent financial institutions, through the sporadic unannounced printing of twenty and fifty dollar bills, and from change found in the couches left behind in foreclosed homes.

Names floated in the press for program director included initial frontrunner, Carrot Top, followed by Dan Quail and Paris Hilton, although confirmed reports say that Treasury Secretary Tim Geithner and White House economic advisor, Larry Summers, have thrown their considerable combined clout behind Elizabeth Warren.

“I can’t think of anymore more qualified for this job than Liz,” the Treasury Secretary said while attending a Telethon for the Boatless in Miami Beach, sponsored by the magazine, Unbridled Avarice, and through a grant made by Goldman Sachs.  (In the spirit of full disclosure, Goldman did file papers with the SEC stating that the firm does plan to short that grant in an effort to remain vigilant about it’s risk profile.)

The Special TARP Underwriting Program to Impede Development is known by the acronym, STUPID.  The program is projected to provide assistance to responsible American homeowners who have high credit scores, equity of $200,000 in a second home, and surnames that begin with “Gh” or “Pf,” assuming they did not file a tax return in 1992, and reside primarily in a state that ends in the letter “E”. Qualified homeowners can apply for assistance under the program by calling a toll-free number at HUD; area code 212-GET-STUPID.

Secretary Geithner explained the program to reporters while waiting for his dessert soufflé to rise.  Those in attendance said that he told the group that the program would help homeowners and get the economy back on track by removing the key obstacle to the future profitability of financial institutions.  He also mentioned that the soufflé was dry.

“So, now that you understand what STUPID is, let’s talk about what STUPID does,” Geithner told the group.  “I think you can see why Larry and I feel so strongly that Liz Warren be asked to run the new program.  I think that she, more than anyone else I can think of, is representative of what the program is all about.  I’m hoping that within a very short period of time, the entire country will associate the name Elizabeth Warren with STUPID.  I know Larry and I both do already.”

The good news is that almost all of the HAMP participating servicers have already signed on to participate in the new program, so most homeowners are very likely to find that they have a STUPID Servicer handling their loan.

http://mandelman.ml-implode.com/

Is Debt Really The Problem… or is it something else?, By Bill Westrom, Truthinequity.com


Mainstream media, the Government and consumers themselves vilify debt as the root of the consumer’s financial plight and the root of a weakening country. Debt is not the problem; it’s the management of debt and the way debt is structured that is creating the problem not the debt itself. Unless you win the lottery, invent a cure for cancer or get adopted by Bill Gates or Warren Buffett, debt will be something you will have to face somewhere along the course of your adult life; it’s a natural component of our society.

In today’s economic environment hard working American’s are experiencing a level of fear and financial uncertainty they have never been faced with. This is keeping them up at night wondering how they are going to sustain a life they have worked so hard to build. Americans are also wondering why those we have trusted for all these years; the banks, money managers and politicians, are thriving financially, but don’t seem to be contributing anything of real value to the public? Today, the predominant questions being asked by the American public as it relates to their financial future are; what am I going to do, what can I do, how am I going to do it? We all work way too hard to be faced with these questions. The answers to these frightening questions are right in front of us. The answers lie in the use of the financial resources we use every day. You just need to know how to use them to your advantage.

The crux of the problem for consumers and the country alike lie with misaligned, improper or a shear lack of education on the use of the banking tools we use every day. The three banking tools that we use every day; checking accounts, credit cards and loans are simply being used improperly. The solution lies in educating consumers and institutions to use these tools in the proper sequence and function to manage debt properly, regain control of income and possess the authority to control the repayment of debt. It’s as simple as that. By exposing the failed business model of conventional banking and borrowing practices, realigning them into a model that actually helps consumers get more out of what they own and what they earn, we can once again grow individually, as a society and a nation.

The Truth Is In The Proof.
TruthInEquity.com

How Ruthless Banks Gutted the Black Middle Class and Got Away With It, by Devona Walker, Truth-out.org


The real estate and foreclosure crisis has stripped African-American families of more wealth than any single event in history.

The American middle class has been hammered over the last several decades. The black middle class has suffered to an even greater degree. But the single most crippling blow has been the real estate and foreclosure crisis. It has stripped black families of more wealth than any single event in U.S. history. Due entirely to subprime loans, black borrowers are expected to lose between $71 billion and $92 billion.

To fully understand why the foreclosure crisis has so disproportionately affected working- and middle-class blacks, it is important to provide a little background. Many of these American families watched on the sidelines as everyone and their dog seemed to jump into the real estate game. The communities they lived in were changing, gentrifying, and many blacks unable to purchase homes were forced out as new homeowners moved in. They were fed daily on the benefits of home ownership. Their communities, churches and social networks were inundated by smooth-talking but shady fly-by-night brokers. With a home, they believed, came stability, wealth and good schools for their children. Home ownership, which accounts for upwards of 80 percent of the average American family’s wealth, was the basis of permanent membership into the American middle class. They were primed to fall for the American Dream con job.

Black and Latino minorities have been disproportionately targeted and affected by subprime loans. In California, one-eighth of all residences, or 702,000 homes, are in foreclosure. Black and Latino families make up more than half that number. Latino and African-American borrowers in California, according to figures from the Center for Responsible Lending, have foreclosure rates 2.3 and 1.9 times that of non-Hispanic white families.

There is little indication that things will get much better any time soon.

The Ripple Effect

If anything, the foreclosure crisis is likely to produce a ripple effect that will continue to decimate communities of color. Think about the long-term impact of vacant homes on the value of neighborhoods, and about the corresponding increase in crime, vandalism and shrinking tax bases for municipal budgets.

“The American dream for individuals has now become the nightmare for cities,” said James Mitchell, a councilman in Charlotte, NC who heads the National Black Caucus of Local Elected Officials. In the nearby community of Peachtree Hills, he says roughly 115 out of 123 homes are in foreclosure. In that environment, it’s impossible for the remaining homeowners to sell, as their property values have been severely depressed. Their quality of life, due to increases in vandalism and crime, diminished. The cities then feel the strap of a receding tax base at the same time there is a huge surge in the demand for public services.

Charlotte, N.C. Baltimore, Detroit, Washington D.C. Memphis, Atlanta, New Orleans, Chicago and Philadelphia have historically been bastions for the black middle class. In 2008, roughly 10 percent of the nation’s 40 million blacks made upwards of $75,000 per year. But now, just two years later, many experts say the foreclosure crisis has virtually erased decades of those slow, hard-fought, economic gains.

Memphis, where the majority of residents are black, remains a symbol of black prosperity in the new South. There, the median income for black homeowners rose steadily for two decades. In the last five years, income levels for black households have receded to below what they were in 1990, according to analysis by Queens College.

As of December 2009, median white wealth had dipped 34 percent while median black wealth had dropped 77 percent, according to the Economic Policy Institute’s “State of Working America” report.

“Emerging” Markets Scam v. Black Credit Crunch

While the subprime loans were flowing, communities of color had access to a seemingly endless amount of funding. In 1990, one million refinance loans were issued. It was the same for home improvement and refinance loans. By 2003, 15 million refinance loans were issued. That directly contributed to billions in loss equity, especially among minority and elderly homeowners. Also at the same time, banks developed “emerging markets” divisions that specifically targeted under-served communities of color. In 2003, subprime loans were more prevalent among blacks in 98.5 percent of metropolitan areas, according to the National Community Reinvestment Coalition.

One former Wells Fargo loan officer testifying in a lawsuit filed by the city of Baltimore against the bank says fellow employers routinely referred to subprime loans as “ghetto loans” and black people as “mud people.” He says he was reprimanded for not pushing higher priced loans to black borrowers who qualified for prime or cheaper loans. Another loan officer, Beth Jacobson, says the black community was seen “as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania.”

“We just went right after them,” Jacobson said, according to the New York Times, adding that the black church was frequently targeted as the bank believed church leaders could convince their congregations to take out loans. There are numerous reports throughout the nation of black church leaders being paid incentives for drumming up business.

Due in part to these aggressive marketing techniques and ballooning emerging market divisions, subprime mortgage activity grew an average of 25 percent per year from 1994 to 2003, drastically outpacing the growth for prime mortgages. In 2003, subprime loans made up 9 percent of all U.S. mortgages, about a $330 billion business; up from $35 billion a decade earlier.

Now that the subprime market has imploded, banks have all but abandoned those communities. Prime lending in communities of color has decreased 60 percent while prime lending in white areas has fallen 28.4 percent.

The banks are also denying credit to small-business owners, who account for a huge swath of ethnic minorities. In California ethnic minorities account for 16 percent of all small-business loans. In the mid-2000s roughly 90 percent of businesses reported they received the loans they needed. Only half of small businesses that tried to borrow received all or most of what they needed last year, according to a survey by the National Federation of Independent Business.

In addition, minority business owners often have less capital, smaller payrolls and shorter histories with traditional lending institutions.

Further complicating matters is the fact that minority small-business owners often serve minority communities and base their business decisions on things that traditional lenders don’t fully understand. Think about the black barber shop or boutique owner, who knows there is no other “black” barber shop or boutique specializing in urban fashions within a 30-minute drive. While that lender may understand there is such a niche market as “urban fashions,” they likely won’t understand the significance of being “black-owned” in the market as opposed to corporate-owned. Or think of the Hispanic grocer with significant import ties to Mexico who knows he can bring in produce, spices and inventory specific to that community’s needs, things people cannot get at chain grocery stores. That lender might only understand there is a plethora of Wal-Marts in the community where he wants to grow his business.

Minority business owners are often more dependent upon minority communities for survival, which of course are disproportionately depressed due to subprime lending. Consequently, minority business owners have a lower chance of success. Banks, understanding that, are even less likely to lend. It’s like a self-fulfilling prophecy, and it’s beginning to resemble the traditional “redlining” of the 1980s and 1990s.

“After inflicting harm on neighborhoods of color through years of problematic subprime and option ARM loans, banks are now pulling back at a time when communities are most in need of responsible loans and investment,” said Geoff Smith, senior vice president of the Woodstock Institute.

Believe it or not, no one in a position of power to stop all this from unfolding was blindsided. Ben Bernanke was warned years ago about the long-term implications of the real estate bubble and subprime lending. Still, he set idly by. He told the advocates who warned him that the market would work it all out. Perhaps they thought the fallout would be limited to minority communities, or perhaps they just didn’t care.

Devona Walker has worked for the Associated Press and the New York Times company. Currently she is the senior political and finance reporter for theloop21.com. 

 

New Program for Buyers, With No Money Down, John Leland, Nytimes.com


MILWAUKEE — When the housing bubble burst, one of the culprits, economists agreed, was exotic mortgages, including those that required little or no money down.

But on a recent evening, Matthew and Hannah Middlebrooke stood in their new $115,000 three-bedroom ranch house here, which Mr. Middlebrooke bought in June with just $1,000 down.

Because he also received a grant to cover closing costs and insurance, the check he wrote at the closing was for 67 cents.

“I thought I’d be stuck renting for years,” said Mr. Middlebrooke, 26, who earns $32,000 a year as a producer for a Christian television ministry.

Although home foreclosures are again expected to top two million this year, Fannie Mae, the lending giant that required a government takeover, is creeping back into the market for mortgages with no down payment.

Mr. Middlebrooke’s mortgage came from a new program called Affordable Advantage, available to first-time home buyers in four states and created in conjunction with the states’ housing finance agencies. The program is expected to stay small, said Janis Smith, a spokeswoman for Fannie Mae.

Some experts are concerned about the revival of such mortgages.

“Loans that have zero down payment perform worse than loans with down payments,” said Mathew Scire, a director of the Government Accountability Office’s financial markets and community investment team. “And loans with down payment assistance” — like Mr. Middlebrooke’s — “perform worse than those that do not.”

But the surprise is the support these loans have received, even from critics of exotic mortgages, who say low down payments themselves were not the problem, except when combined with other risk factors like adjustable rates or lax underwriting.

Moreover, they say, the housing market needs such nontraditional lending, as long as it is done prudently.

“This is subprime lending done right,” said John Taylor, president of the National Community Reinvestment Coalition, an umbrella group for 600 community organizations, and a staunch critic of the lending industry. “If they had done subprime this way in the first place, we wouldn’t have these problems.”

At Harvard’s Joint Center for Housing Studies, Eric Belsky, the director, said the loans might be the type of step necessary to restart the housing market, because down payment requirements are keeping first-time home buyers out.

“If you look at where the market may get strength from, it may very well be from first-time buyers,” he said. “And a very significant constraint to first-time buyers is the wealth constraint.”

The loans are the idea of state housing finance agencies, or H.F.A.’s, quasi-government entities created to help moderate-income people buy their first homes.

Throughout the foreclosure crisis, the state agencies continued to make loans with low down payments, often to borrowers with tarnished credit, with much lower default rates than comparable mortgages from commercial lenders or the Federal Housing Administration. The reason: the agencies did not offer adjustable rates, and they continued to document buyers’ income and assets, which many commercial lenders did not do. In 2009, the agencies’ sources of revenue dried up, and they had to curtail most lending.

Then they created Affordable Advantage. The loans are 30-year fixed mortgages, with mandatory homeownership counseling, available to people with credit scores of 680 and above (720 in Massachusetts). The buyers have to put in $1,000 and must live in the homes.

All of these requirements ease the risk, said William Fitzpatrick, vice president and senior credit officer of Moody’s Investors Service. “These aren’t the loans that led us into the mortgage crisis,” he said.

So far Idaho, Massachusetts, Minnesota and Wisconsin are offering the loans. The Wisconsin Housing and Economic Development Authority has issued 500 loans since March, making it the first state to act. After six months, there are no delinquencies so far, said Kate Venne, a spokeswoman for the agency.

The agencies buy the loans from lenders, then sell them as securities to Fannie Mae. Because the government now owns 80 percent of Fannie Mae, taxpayers are on the hook if the loans go bad.

The state agencies oversee the servicing of the loans and work with buyers if they fall behind — a mitigating factor, said Mr. Fitzpatrick of Moody’s.

“They have a mission to put people in homes and keep them in homes,” not to foreclose unless other options are exhausted, he said. The loans have interest rates about one-half of a percentage point above comparable loans that require down payments.

Ms. Smith, the spokeswoman for Fannie Mae, distinguished the program from loans of the boom years that “layered risk on top of risk.”

With the new loans, she said, “income is fully documented, monthly payments are fixed, credit score requirements are generally higher, and borrowers must be thoroughly counseled on the home-buying process and managing their mortgage debt.”

For Porfiria Gonzalez and her son, Eric, the loan allowed them to move out of a rental house in a neighborhood with a high crime rate to a quiet street where her neighbors are retirees and police officers.

Ms. Gonzalez, 30, processes claims in the foreclosure unit at Wells Fargo Home Mortgage; she has seen the many ways a mortgage holder can fail.

On a recent afternoon in her three-bedroom ranch house here, Ms. Gonzalez said she did not see herself as repeating the risks of the homeowners whose claims she processed.

“I learned to stay away from ARM loans,” or adjustable rate mortgages, she said. “That’s the No. 1 thing. And always have some emergency money.”

When she first started shopping, she looked at houses priced around $140,000. But the homeownership counselor said she should keep the purchase price closer to $100,000.

“They explained to me that I don’t need a $1,200-a-month payment,” she said.

The counselor worked with her real estate agent and attended her closing. On May 28, Ms. Gonzalez bought her home for $90,500, with monthly payments of $834. After moving expenses, she has kept her savings close to $5,000 to shield her from emergencies.

“If I had to make a down payment, it would have wiped out my savings,” she said. “I would have started with nothing.”

Now, she said, she is in a home she can afford in a neighborhood where her son can play in the yard. A neighbor brought her a metal pink flamingo with a welcome sign to place by her side door.

“My favorite part is the big backyard,” said Eric, 10. “And that’s pretty much it.”

“You don’t like it that it’s a quiet, safe neighborhood?” his mother asked.

“Yeah, I do.”

“He didn’t go out much with kids in the old neighborhood,” she said.

“Because they were bad kids,” he said.

Ms. Gonzalez said that owning a house was much more work than renting, and that when the basement flooded during a heavy rain, her heart sank.

“But I look at it as an investment,” she said, adding that a similar house in the neighborhood was on the market for $120,000.

Prentiss Cox, a professor at the University of Minnesota Law School who has been deeply critical of the mortgage industry, said the program met an important need and highlighted the track record of state housing agencies, which never engaged in exotic loans.

“It’s not a story people want to hear, because it won’t bring back the big profits,” Mr. Cox said. “The H.F.A.’s have shown how the problems of the last 10 years were about having sound and prudent regulation of lending, not just whether the loans were prime or subprime.”

He added, “One of the great and unsung tragedies of the whole crisis was the end of the subprime market.”

When to refinance a mortgage? , Thetruthaboutmortgage.com


Mortgage Q&A: “When to refinance a mortgage?”

With mortgage rates at record lows, you may be wondering if now is a good time to refinance.

The popular 30-year fixed-rate mortgage slipped to 4.32 percent this week, well below the 5.08 percent seen a year ago, and much better than the six-percent range seen years earlier.

So should you refinance now?

Well, that answers depends on a number of factors.

First, what is the current interest rate on your mortgage(s)? And what will the closing costs be on the new mortgage?  They’ve been rising lately…

Let’s look at a quick example:

Loan amount: $200,000
Current mortgage rate: 5.5% 30-year fixed
Refinance rate: 4.25% 30-year fixed
Closing costs: $2,500

The monthly mortgage payment on your current mortgage (including just principal and interest) would be roughly $1,136, while the refinanced rate of 4.25 percent would carry a monthly payment of about $984.

That equates to savings of $152 a month.

Now assuming your closing costs were $2,500 to complete the refinance, you’d be looking at about 17 months of payments before you broke even and started saving yourself some money.

So if you refinanced again or sold your home during that time, refinancing wouldn’t make a lot of sense.

But if you plan to stay in the home (and with the mortgage) for many years to come, the savings could be substantial.

Other Considerations

If you’re currently in an adjustable-rate mortgage, or worse, an option arm, the decision to refinance into a fixed-rate loan could make even more sense.

Or if you have two loans, consolidating the balance into a single loan (and ridding yourself of that pesky second mortgage) could result in some serious savings.

Additionally, you might be able to snag a no cost refinance, which would allow you to refinance without any out-of-pocket costs (the rate would be higher to compensate).

cash-out refinance could also contribute to your decision to refinance if you were in need of money and had the necessary equity.

Finally, if you’re already in a 30-year fixed and want to build equity, you might consider taking a look at the 15-year fixed, which is pricing at a record low 3.83 percent, assuming you could handle a higher monthly payment.