Are you ready to take out your first mortgage loan?, By Melissa Gates


Whether you’re looking to buy a home in New Jersey, New York, Carolina, Texas or anywhere in the United States of America, you have to inevitably take out a mortgage loan to finance the property. Apart from the ultra-rich people, no one is able to finance their own property with their funds as this requires a huge amount of money. For all the laymen who come from mediocre families, taking out a mortgage loan is the only option left. If you’re a first-time homebuyer, you must not be aware of the basics of taking out a home mortgage loan. If you don’t choose a loan within your affordability, it is most likely that you have to take out a  loan in the near future after paying all the closing costs and other fees. Its better you take the required steps before. Read on to know some basic facts that are taken into consideration by your lender while lending you a loan.

 

1. Your credit score: The most vital fact that is taken into consideration by the mortgage lenders is your credit score. You’re entitled to take out a free copy of your credit report from any of the three credit reporting agencies and by doing this you can easily take the steps to boost your score before applying for a home mortgage loan. With an exceptionally good credit score, you can grab the best mortgage loan in the market and thereby save your hard-earned dollars.

 

2. The amount of loan you can afford: This point is to be taken into consideration by you so that you don’t overstretch yourself while getting yourself a mortgage loan. Take out a loan within your affordability so that you don’t have to burn a hole in your pocket while repaying the loan. Consider all the other factors needed to determine the amount of loan that you can afford.

 

3. The total income earned by you in a month: The gross monthly income that you earn in a month is another important document that is checked by the lender so that he can determine whether or not you can repay the loan on time after managing all your other debt obligations that you owe. If you want to secure a lower interest rate on the home mortgage loan, you should boost your income in a month and then apply for the loan.

 

Apart from the above mentioned factors, the mortgage lenders take the debt to income ratio into account as they also need to see whether or not the borrower can make timely payments on the home mortgage loan. Manage your personal finances so that you don’t have to opt for refinance in the future.

 

Tying Health Problems to Rise in Home Foreclosures , by S. MITRA KALITA , Wall street Journal


The threat of losing your home is stressful enough to make you ill, it stands to reason. Now two economists have measured just how unhealthy the foreclosure crisis has been in some of the hardest-hit areas of the U.S.

New research by Janet Currie of Princeton University and Erdal Tekin of Georgia State University shows a direct correlation between foreclosure rates and the health of residents in Arizona, California, Florida and New Jersey. The economists concluded in a paper published this month by the National Bureau of Economic Research that an increase of 100 foreclosures corresponded to a 7.2% rise in emergency room visits and hospitalizations for hypertension, and an 8.1% increase for diabetes, among people aged 20 to 49.

Each rise of 100 foreclosures was also associated with 12% more visits related to anxiety in the same age category. And the same rise in foreclosures was associated with 39% more visits for suicide attempts among the same group, though this still represents a small number of patients, the researchers say.

Teasing out cause and effect can be delicate, and correlation doesn’t necessarily mean foreclosures directly cause health problems. Financial duress, among other issues, could lead to health problems—and cause foreclosures, too.

The economists didn’t find similar patterns with diseases such as cancer or elective surgeries such as hip replacement, leading them to conclude that areas with high foreclosures are seeing mostly an increase of stress-related ailments.

 

Tuesday brought news of further weakness in the housing market as the closely watched S&P/Case-Shiller home-price index came in 5.9% lower for the second quarter from a year earlier. Continued job losses and economic uncertainty could weigh on home prices and make for another wave of foreclosures, economists say.

It may not just be foreclosure victims arriving at hospitals—but neighbors also grappling with depleting equity in their biggest investment.

“You see foreclosures having a general effect on the neighborhood,” Ms. Currie says. “Everybody’s stressed out. There is a connection between people’s economic well being and their physical well being.”

The situation got so bad for Patricia Graci, a 51-year-old Staten Island, N.Y., resident, that she canceled a recent court appearance related to the foreclosure on her house because she couldn’t get out of bed. After her husband lost his job as a painter in 2008, the Gracis relied on savings to pay their mortgage for two years.

“Everything was going downhill. My savings were going down to nothing,” says Ms. Graci. “When I realized the money wasn’t there anymore, I started getting very anxious and depressed.”

She says her lender advised her to default on her mortgage to qualify for a loan modification. Ms. Graci, who was an assistant bank manager and already had rheumatoid arthritis, says she began seeing a therapist and landed in the hospital with difficulty breathing in December 2009. A few weeks later came the foreclosure notice from the bank.

“They told me it was more anxiety and stress that made me wind up in the hospital than the arthritis,” Ms. Graci says. After repeatedly missing work due to illness, Ms. Graci went on long-term disability.

The areas that have the highest foreclosure rates also tend to have a large portion of their population unemployed, underemployed or uninsured. Ms. Currie says the research accounted for this by instituting controls for persistent differences among areas, such as poverty rates, as well as for county-level trends. Much of the 2005-2009 period examined came before unemployment peaked, too, she says. The researchers examined hospital-visit numbers and foreclosure rates in all ZIP Codes that had those data available.

The areas that have the highest foreclosure rates also tend to have a large portion of their population unemployed, underemployed or uninsured. Ms. Currie says the research accounted for this by instituting controls for persistent differences among areas, such as poverty rates, as well as for county-level trends. The time period examined, 2005 to 2007, was before unemployment peaked, she says. The researchers examined hospital-visit numbers and foreclosure rates in all ZIP Codes that had those data available.

They found that areas in the top fifth of foreclosure activity have more than double the number of visits for preventable conditions that generally don’t require hospitalization than the bottom fifth.

At the local hospital in Homestead, Fla., a city of mostly single-family, middle-class homes about 30 miles from Miami, the emergency room has been bustling. Emergency visits to the hospital in 2010 more than doubled from 10 years earlier to about 67,000, and emergency department medical director Otto Vega says they will surpass 70,000 this year. Homestead has the highest rate of mortgage delinquencies in the U.S.—in June, 41% of mortgage holders in the hardest-hit ZIP Code of Homestead were 90 days or more past due on payments, according to real-estate data firm CoreLogic Inc.

While the most common ailments are respiratory problems and pneumonia, Dr. Vega notes an increase in psychosomatic disorders, such as patients with chest pain and shortness of breath, and others who feel suicidal. “A lot of young people, less than 50 years old, have chest pain. You know it’s anxiety,” he says.

Nationwide, overall emergency-room visits have also been rising, growing 5% from 2007 to 127.3 million in 2009, according to the American Hospital Association. But inpatient stays have largely kept pace with population growth over the last decade, says Beth Feldpush, a vice president for policy and advocacy at the National Association of Public Hospitals.

The number of people covered by employer-sponsored insurance has been falling, she says. “When people don’t have insurance, they put off seeking care for too long and end up in the emergency room.”

And some of those seeking treatment had medical conditions before foreclosure—but the stress of losing their homes has exacerbated their ailments.

In 2008, Norman Adelman of Freehold, N.J., called his lender to ask for a forbearance of three or four months, saying he was about to undergo knee-replacement surgery. The lender complied and Mr. Adelman, who runs a home-energy business, says he began scaling back his work. He underwent needed tests and doctor visits.

After two months of not paying his mortgage, he successfully applied for a loan modification, taking his monthly payment from $2,700 to $1,900. But then the loan was sold—and a new servicer didn’t recognize the terms of the arrangement, he says.

Mr. Adelman is fighting the new lender but says he has been in and out of the hospital for the last two years. He never had his knees replaced and is now on antidepressants and antianxiety medication.

“He’s deteriorated. He’s had sleepless nights,” says his wife, Shulamis. “You always have this fear of being thrown out. He’s just gotten worse and worse from not sleeping.”

Earlier this month, after working with the nonprofit Staten Island Legal Services, Ms. Graci received a trial loan modification. “I’m happy but I am still scared,” she says. “I want a permanent solution. I don’t know if I am in the clear.”

Write to S. Mitra Kalita at mitra.kalita@wsj.com

Corrections & Amplifications
The researchers examined the years 2005 through 2009. An earlier version of this article incorrectly implied the research only covered 2005 through 2007

 

 

RealtyTrac: Foreclosure Activity at Lowest Level in Three Years, by Carrie Bay, DSNEWS.com


RealtyTrac says processing delays have reduced foreclosure activity to its lowest level since the first quarter of 2008.

New data released by the tracking firm shows that foreclosure filings were reported on 681,153 properties during the first three months of this year. That represents a 15 percent decline from the previous quarter and a 27 percent drop from a year ago.

Commenting on the latest numbers, James J. Saccacio, RealtyTrac’s CEO, said despite the recent plunge in foreclosure activity, the nation’s housing market continued to languish in the first quarter.

“Weak demand, declining home prices and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork,” Saccacio said.

A total of 197,112 U.S. properties received default notices for the first time in the January to March period, a 17 percent decrease from the previous quarter and a 35 percent decrease from the first quarter of 2010.

Foreclosure auctions were scheduled for the first time on 268,995 homes. That’s down 19 percent from the previous quarter and 27 percent from the first quarter of last year.

Lenders completed foreclosure actions on 215,046 homes last quarter, a 6 percent drop from the fourth quarter of 2010 and a 17 percent decrease from the first quarter of last year. However, in states where the non-judicial foreclosure process is primarily used, RealtyTrac says bank repossessions (REOs) increased 9 percent from the previous quarter.

Illustrating the extent to which processing delays pressed foreclosure activity to artificially low levels, RealtyTrac says states where a judicial foreclosure process is used accounted for some of the biggest quarterly and annual decreases in the first quarter.

Florida foreclosure activity decreased 47 percent from the previous quarter and was down 62 percent from the first quarter of 2010, although the state still posted the nation’s eighth highest foreclosure rate with one in every 152 housing units receiving a filing in Q1.

First quarter foreclosure activity in Massachusetts fell 46 percent from the previous quarter and was down 62 percent from a year ago. The state’s foreclosure rate – one in every 549 housing units with a foreclosure filing – ranked No. 38 among the states.

New Jersey’s first quarter foreclosure rate of one in every 401 housing units with a filing ranked No. 34 among the states, thanks in part to a 43 percent decrease in foreclosure activity from the previous quarter and a 44 percent decline from the first quarter of 2010.

Connecticut’s first quarter foreclosure activity dropped 39 percent from the fourth quarter of 2010 and was down 65 percent from a year earlier. Pennsylvania posted a 35 percent decline from the previous quarter and a 29 percent drop from the same period last year.

Looking at the nationwide data for March, RealtyTrac’s report indicates that activity is already beginning to pick up some. Foreclosure filings were reported on 239,795 U.S. properties last month, up 7 percent from February. Both default notices and REOs increased in March compared to the previous month; scheduled auctions was the only stat to post a monthly decline.

 

LPS’ Data Show Declines in Delinquencies and Foreclosure Inventories, by Carrie Bay, Dsnews.com


Image representing Lender Processing Services ...

Image via CrunchBase

Lender Processing Services, Inc. (LPS) gave the media an advance look Monday at the company’s February mortgage performance report to be released later this week. In what can be viewed as an anomaly of the current housing crisis, LPS’ data show that both the national mortgage delinquency rate and the share of homes that are in the process of foreclosure drifted lower last month.

The Florida-based analytics firm reports that the total loan delinquency rate for the U.S. mortgage market dropped to 8.80 percent. LPS calculates this stat based on loans that are 30 or more days past due, but not yet moved into foreclosure.

The February delinquency rate is 1.2 percent below the rate recorded by LPS in January and 18.4 percent lower than it was in February 2010.

The industry’s foreclosure inventory rate, which LPS defines as loans that have been referred to a foreclosure attorney but have not yet reached the final stage of foreclosure sale, slipped 0.2 percent last month to 4.15 percent. Foreclosure activity was bottlenecked last fall when the news of improper affidavit filings surfaced and several large servicers temporarily froze proceedings to review internal processes, causing foreclosure inventory numbers to swell as loans languished in the pipeline.

Although LPS’ month-to-month reading indicates foreclosure cases have begun to progress again, the company notes that the U.S. foreclosure pre-sale inventory rate remains 7.4 percent above that in February 2010.

Altogether, LPS says there are 6,856,000 properties in the United States with mortgages that are currently 30 or more days delinquent or in foreclosure.

Of these unpaid loans, 2,196,000 are part of the foreclosure inventory, meaning the lender has initiated foreclosure proceedings on the property but it has not yet advanced to the foreclosure sale stage.

The other 4,659,000 are 30-plus days overdue but not in foreclosure. Within this bucket, 2,165,000 have been delinquent for at least 90 days – and in most cases, longer – but have not been referred to an attorney to start the foreclosure process.

LPS reports the states with the highest ratio of non-current loans – meaning the combined percentage of both foreclosures and delinquencies – are Florida, Nevada, Mississippi, New Jersey, and Georgia.

States with the lowest percentage of non-current loans included Montana, Wyoming, Arkansas, South Dakota, and North Dakota.

LPS will provide a more in-depth review of this data in its monthly Mortgage Monitor report, scheduled for publication March 25. The company’s statistics are derived from its loan-level database of nearly 40 million mortgage loans.

U.S. Homeowners in Foreclosure Process Were 507 Days Late Paying, by John Gittelsohn, Bloomberg.com


U.S. homeowners in the foreclosure process were an average of 507 days late on payments at the end of last year as lenders handled a record rate of mortgage delinquencies, Lender Processing Services Inc. said today.

The average grew 25 percent from 406 days at the end of 2009, according to the Jacksonville, Florida-based mortgage processing and default management company.

“The sheer volume of loans going through the system is going to extend those timelines,” said Herb Blecher, senior vice president for analytics at Lender Processing. Foreclosure processing also was slowed by “an abundance of caution” in the last three months of 2010 after lenders were accused of using faulty documentation and procedures to seize homes, he said.

A national jobless rate of 9 percent is increasing loan defaults and weighing down prices as foreclosed properties sell at a discount. Homeowners with 6.87 million loans — 13 percent of all mortgages — were at least 30 days behind on their payments as of Dec. 31, Lender Processing said.

Florida led the nation with a 23 percent delinquency rate, followed by Nevada at 21 percent, Mississippi at 19 percent, and Georgia and New Jersey at 15 percent, the loan processor said.

California homeowners who didn’t make their mortgage payments had the longest average wait before receiving a notice of default at 379 days, followed by Florida at 349 days, Maryland at 345 days, New York at 344 days, and Rhode Island and Washington, D.C., at 341 days.

Delinquent homeowners held onto their properties for the longest in Vermont, where it took an average 754 days to lose their homes, followed by 697 days in New York, 695 days in Maine, 688 days in Florida and 682 days in New Jersey.

The number of U.S. homes receiving a foreclosure filings may climb 20 percent this year, reaching a peak of the housing crisis, as banks step up the pace of seizures, RealtyTrac Inc. said Jan. 13. A record 2.87 million properties received notices of default, auction or repossession last year, according to the Irvine, California-based data provider.

To contact the reporter on this story: John Gittelsohn in New York at johngitt@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.

Mortgage Applications in U.S. Increase From 12-Month Low on Refinancing, by Bob Willis, Bloomberg.com


Mortgage applications in the U.S. rose last week from a 12-month low as refinancing increased for the first time since early November.

The Mortgage Bankers Association’s index of loan applications increased 2.3 percent after dropping 3.9 percent in the prior week to the lowest level since December 2009. The group’s refinancing gauge rose from the lowest level since Jan. 1, while the purchase index declined.

Home-purchase applications fell 31 percent at the end of the year from a 2010 high in April, while an increase in mortgage rates hampers refinancing. Declining home prices, mounting foreclosures and unemployment hovering near 10 percent mean any recovery in housing, the industry that triggered the recession, will probably take years.

“It doesn’t look good,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “With rates moving up, it’s going to be a tough hurdle.” On purchases, “we’re still in this sideways, choppy situation.”

The group’s refinancing gauge rose 3.9 percent after dropping 7.2 percent. The purchase index fell 0.8 percent last week after rising 3.1 percent.

The average rate on a 30-year fixed loan dropped to 4.82 percent last week from 4.93 percent the prior week, which was the highest since May, the group said. The rate reached 4.21 percent in October, the lowest since the group’s records began in 1990.

Borrowing Costs

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $525.87, or about $22 less than the same week the prior year.

The share of applicants seeking to refinance a loan rose to 71 percent last week from 70.3 percent the prior week.

Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, on Dec. 22 reported a fourth-quarter loss bigger than analysts expected as revenue fell 19 percent.

“The year can generally be described as one where we and the industry were bouncing along the bottom,” Chief Executive Officer Ara Hovnanian said on a conference call.

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net