Mortgage news

News, trends and analysis of the mortgage and credit market

Saturday, July 26, 2008

Senate passes crucial bill to help mortgage borrowers

July 26, 2008
On Saturday July 26, 2008 the Senate overwhelmingly passed a landmark housing bill that will offer up to $300 billion in loans for troubled homeowners and establish a government rescue plan for mortgage giants Fannie Mae and Freddie Mac.

The bill has two principal objectives: to offer affordable government-backed mortgages to homeowners at risk of foreclosure, and to bolster Fannie and Freddie with a temporary rescue plan and a new, more stringent regulator.
  • Establish a stronger regulator for the GSEs

  • Permanently increase "conforming loan" limits to a maximum of $625,500 from $417,000.

  • Create home-buyer credit: a tax refund for first-time home buyers worth up to 10% of a home's purchase price but no more than $7,500.

  • Bar down-payment assistance for FHA loans

  • Create an affordable housing trust fund: a permanent fund to promote affordable housing.

  • Give grants to states to buy foreclosed properties: grant up to $4 billion to states to buy and rehabilitate foreclosed properties.

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    Two more american banks close

    July 26 2008
    1st National Bank of Nevada and First Heritage Bank N.A. were closed Friday July 25, 2008 by federal regulators. Customers were assured that every penny of their money was protected, preventing lines of angry accountholders from forming Saturday. Mutual of Omaha Bank bought all of the two banks' deposits, even those over the amount protected by FDIC insurance limits.

    Insurance limits are typically $100,000, but some accounts, such as joint accounts, can have more money protected.

    The Office of the Comptroller of the Currency said that 1st National was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices. First Heritage was critically undercapitalized and was likely to incur losses that would deplete all or nearly all of its capital.

    List of Banks That Have Closed

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    Sunday, July 13, 2008

    IndyMac, largest lender of alt-A loans, collapses

    July 13 2008
    On Friday July 11, the Office of Thrift Supervision transferred control of IndyMac to the Federal Deposit Insurance Corp. because it did not think the lender could meet its depositors' demands.
    IndyMac is the largest regulated thrift to fail and the second largest financial institution to close in U.S. history, regulators said after taking control of the bank.
    As of March 31, IndyMac had $19.06 billion in total deposits.
    During the housing boom earlier in the decade, IndyMac was one of the largest lenders of alt-A loans — mortgages given to customers with minor credit trouble or that did not have the proper documentation to receive a traditional, prime loan.

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    Fed To Bail Out 2 Mortgage Giants?

    July 10 2008
    The anxiety over Fannie Mae and Freddie Mac, crucial to a recovery of the battered housing market and the economy as a whole, took stocks on a wild ride Friday.
    An early sell off was fanned by speculation of looming bailout. The stocks recovered on assurances by a leading senator that no rescue is needed.
    Immediately after the markets opened, shares of Fannie and Freddie fell more than 47% from their already battered closing price the day before. They soon rebounded later in the morning but Fannie shares were still down about 24% and Freddie shares were off 22% in early afternoon trading. The shares of both companies recovered most of their losses shortly after 2 p.m. when Sen. Christopher Dodd, D-Conn., the chairman of the Senate Banking Committee, defended the strength of both firms.
    Dodd said that his discussions with Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the regulators who oversee the firms and the two companies' CEOs convinced him they have more than adequate capital and that there was no need to even discuss failure or a bailout.

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