Mortgage news

News, trends and analysis of the mortgage and credit market

Tuesday, April 29, 2008

Wachovia Bank under fraud and money laundering probe





Wachovia Corporation, the Charlotte-based bank is having some serious trouble this April. On April 14 the bank announced it had lost $350 million or $0.20 per share during the first quarter of 2008. The losses were due essentially to problems in the mortgage markets. At the same time the Office of the Comptroller of the Currency is investigating claims that the bank, over an approximate period of June 2003 to December 2006, had ties with telemarketing and payment processing companies that marketed identity-theft certificates, discount travel vouchers, and other products or services, targeting seniors and/or low-income clients. The telemarketers obtained bank account information from respondents and used it to draw up a "remotely created check" which doesn't require a signature. These remotely created checks would then be deposited into the telemarketing companies' Wachovia accounts and the bank would withdraw the funds from the consumers' bank accounts without their knowledge. The news about the telemarketing probe came after The Wall Street Journal published a report that the company was allegedly under scrutiny for its involvement in a drug money laundering scheme.
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Sunday, April 13, 2008

The biggest problem in the subprime mortgage fix




April 13 2008 Best-Mortgage-Companies.com
The Federal Housing Administration is at the center of all of Government’s efforts to rescue the battered housing markets. But it's not clear whether the agency is up to the task or whether it will need a taxpayer-funded rescue. The agency currently backs $385 billion in mortgage loans, but that figure could double in the coming year if some of leading proposals in the White House and Congress go through. Prior to this year, the Federal Housing Administration had seen its market share shrink to almost nothing. The agency faces the enormous challenge of filling the gap left by not only subprime lenders, but of being the first choice for many borrowers. It will be very difficult for the Federal Housing Administration to handle the increased role.

The FHA program is intended for mortgage borrowers with weak credit or little or no cash, who may not be able to otherwise get an affordable mortgage. Borrowers get FHA loans from private lenders, just as they would any other mortgage. FHA offers insurance to cover lenders if those borrowers, who pay a small insurance premium to the FHA every month, default on the loan. The FHA uses those premiums to cover the lender in the event of foreclosure.

No one knows if FHA premiums will be able to cover the increased risk of FHA's expanded mission.
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Tuesday, April 8, 2008

Fingerprints on the mortgage mess: Greenspan?




April 08 2008 Best-Mortgage-Companies.com
Some critics, like Stanford University economist John Taylor, who believe rates were too low for too long, blame the housing bubble on Greenspan's low-rate policy. Greenspan says “no”. He explains that if the Fed’s policies were to blame, the housing bubble would have been mostly limited to the U..S. Yet, he argues, many other countries had housing bubbles, too. The culprit, he suggested, was the glut of savings globally. Savers were competing to make loans, keeping long-term interest rates low in many countries, and stimulating housing demand. And home buyers thought adjustable-rate mortgages were the cheapest way to finance home purchases. And these adjustable rate mortgages were given to people who the lenders knew couldn’t afford them. And foreclosures followed . And these foreclosures created the housing bubble. Then there were enormous losses in subprime mortgage-backed investments. And these bad US mortgages contaminated global markets. The conclusion: the culprit isn’t Greenspan; blame the housing slump on predatory lending practices…What do you think?
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Wednesday, April 2, 2008

Lawmakers reach mortgage fix deal




April 02 2008 Best-Mortgage-Companies.com
Senate leaders reached a deal on Tuesday that could expedite help for the troubled housing market. But hurdles remain and time is running out. Congress needs to act fast. Nationwide, 1.5 million subprime adjustable-rate mortgages will reset to higher interest rates this year. Many of those borrowers are vulnerable to foreclosure either because their monthly payments will become unaffordable when the rate changes, or they already are having trouble making their payments.
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