Mortgage news

US Government Bails Out Citigroup, once the largest U.S. bank

2008-11-24T19:02:00.000-08:00

Nov 24 2008 Best-Mortgage-Companies.com
Officials agreed to a $326 billion rescue of the company that was once the largest U.S. bank. The government intends to invest $20 billion in Citigroup and to guarantee as much as $306 billion of its troubled assets. The deal will make the government the largest Citigroup shareholder with 7.8% of its shares.

The deal marks the latest of several government moves to buy direct investment in banks in order to bolster their balance sheets and restore confidence in the entire U.S. banking system.

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Giant bank to axe thousands of jobs

2008-11-17T09:07:00.000-08:00

Nov 17 2008 Best-Mortgage-Companies.com

J.P. Morgan is planning to cut thousands of jobs across its worldwide operations. So is Citigroup, which is having a meeting this morning to pare about 10% of its workforce.

Lay-offs in the financial industry are not only happening in the United States but also across Europe.

Definitely, the US recession is spreading to the world.

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Citigroup Offers Relief To Mortgage Borrowers

2008-11-10T18:04:00.000-08:00

Nov 10 2008 Best-Mortgage-Companies.com
Citigroup Inc. plans to modify loan terms for mortgage borrowers who are current on their loan payments but at risk of being delinquent. This aggressive move targets mortgages worth as much as $20 billion. The plan will not only help ailing homeowners, but it will also help the company reduce loan losses.

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Citigroup loses $1.4 Billion in Credit Cards

2008-11-03T10:41:00.000-08:00

Nov 3 2008 Best-Mortgage-Companies.com

Citigroup declared it lost $1.4 billion in the third quarter from credit card backed securities. The company said it expects losses to rise next year.

Citi also said it added $3.9 billion to overall credit reserves, including $2.3 billion for its North American consumer business and $855 million non-US business.

Citi said the additional reserve to the North American section was mostly due to the weakening of the credit markets, including higher delinquencies on first mortgages, unsecured personal loans, credit cards and auto loans.

The credit card industry is in turmoil. American Express, a credit card giant, announced last week plans to slash 7,000 jobs.

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Feds To Bail Out 2 Dozen Banks

2008-10-27T23:38:00.000-07:00

OCt 27, 2008 Best-Mortgage-Companies.com
Sources said Monday October 27, 2008 that FED’s regulators have decided to help a dozen banks with capital from the government. But the companies' names were not released in order to avoid creating winners and losers in the financial market , for the latter could have faced negative sentiments from customers, counterparties and investors.

The bailout was evidenced by PNC receiving $7.7 billion in federal funds, which allowed the company to buy ailing National City Bank. Alabama-based Regions Financial said earlier this week that the government had accepted its application to be part of the program.

An initial $125 billion was allocated to nine of the largest US banks, including Citigroup, JP Morgan Chase and Bank of America.

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PNC to acquire struggling bank

2008-10-27T10:09:00.000-07:00

Oct 27, 2008 Best-Mortgage-Companies.com
In a deal worth about $5.6 billion, Pittsburgh-based PNC will acquire ailing bank National City. The sale, which values National City at $2.23 per share, would create the nation's fifth-largest US bank with $180 billion in deposits. PNC is exchanging $5.2 billion in stock and paying an additional $384 million in cash for National City.

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New technologies to make your home smarter

2008-10-23T03:49:00.000-07:00

Oct 22 2008 Best-Mortgage-Companies.com
Wired-home technology is getting more affordable for the average homeowner. Some of the first home automation systems were priced at $35,000 to $45,000. Today, similar systems cost as low as $2,500.

More and more technology can be woven into our homes. To get most of these home innovations, all your computers and electronics will be networked.

With a digitally networked home, you can manage your music and movie files on a media server so they can be heard or watched in any connected room. You can control your lights, your thermostat and even your window blinds with a touch of a button. Movies can be downloaded from the Internet and watched immediately on your big-screen televisions.

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Rates ease but credit still freezes

2008-10-19T19:59:00.000-07:00

Oct 19 2008 Best-Mortgage-Companies.com
Bank-to-bank lending rates went lower last Friday and demand for Treasury bills let up slightly, but there are signs companies that need credit most might not be able to obtain it.

Corporate bonds are being issued at the slowest pace in a decade, and it's been three weeks since a high-yield corporate bond has been issued.

This drought is partially due to companies sitting on the sidelines, waiting for conditions to improve. But it's also because there are not enough buyers. This is a problem, because when companies can't get funding from the markets, they have to draw down their credit facilities with their banks -- which often forces banks to jack up their rates.

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WIll Your Bank Weather The Storm?

2008-10-12T19:40:00.000-07:00

Oct 12, 2008 Best-Mortgage-Companies.com
Use these THREE measures to find out:

Risk-based capital ratio

The FDIC mandates that a bank's risk-based capital be no less than 6% of its total assets. You'd like a little more cushion than that--perhaps 8%. To find this ratio in the call report, turn to the Regulatory Capital section, called Schedule RC-R, and look for the line item "Total risk-based capital ratio."

Loan-to-deposit ratio

The larger that percentage, the greater the risk the bank has taken on. If customers begin to pull deposits, the bank might be suddenly strapped for cash.
It should be between 95% to 105%. To find this measure, divide "loans and leases, net of unearned income and allowance" (item 4.d. in Schedule RC-Balance Sheet) by "deposits" (item 13 in the same Schedule).

Amount of non-current loans (those 30 days or more past due) vs. total amount lent.

To calculate your bank's percentage, divide the total dollar amount of loans that are 30 days or more past due (found in Schedule RC-N) by total loans and leases (again, item 4.d. in Schedule RC-Balance Sheet).

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Two more banks collapse

2008-10-11T04:49:00.000-07:00

Oct 10, 2008 Best-Mortgage-Companies.com
Main Street Bank of Northville, Michigan and Meridian Bank of Eldred, Illinois became the latest victims of the ongoing financial crisis as their deposits were transferred respectively by the Federal Deposit Insurance Corp to Monroe Bank & Trust and National Bank yesterday October 10, 2008.

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Bank of America, Citigroup and JP Morgan Chase to Raise Fees

2008-10-09T00:56:00.000-07:00

Oct 09, 2008 Best-Mortgage-Companies.com

The sale of Wachovia's banking operations and other assets to Citigroup on Monday leaves the nation with three only megabanks to set the rules: Bank of America, Citigroup and JP Morgan Chase

For customers of those institutions , the consolidation may result in higher fees on everything from checking accounts to bounced checks and overdrafts, and lower interest-rate yields on deposit accounts, banking experts said.

Loan availability also remains in question , as liquidity won’t return to mortgage-backed securities in the near term after the bailout plan passed through Congress.

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Citigroup acquires Wachovia's banking operations

2008-10-08T01:49:00.000-07:00

October 7, 2008 Best-Mortgage-Companies.com
Federal Deposit Insurance Corporation confirmed on September 29 2008 that Citigroup Inc. will acquire the banking operations of Wachovia Corporation; Charlotte, North Carolina.

The transaction was facilitated by the Federal Deposit Insurance Corporation and concurred with by the Board of Governors of the Federal Reserve and the Secretary of the Treasury in consultation with the President. All depositors are fully protected .There will be no interruption in services and bank customers should expect business as usual, said FDIC Chairman Sheila C. Bair.

Citigroup Inc. will acquire the bulk of Wachovia's assets and liabilities, including five depository institutions and assume senior and subordinated debt of Wachovia Corp. Wachovia Corporation will continue to own Wachovia Securities, AG Edwards and Evergreen. The FDIC has entered into a loss sharing arrangement on a pre-identified pool of loans. Under the agreement, Citigroup Inc. will absorb up to $42 billion of losses on a $312 billion pool of loans. The FDIC will absorb losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing this risk.

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Fed injects more billion into banks

2008-10-06T13:18:00.000-07:00

The Federal Reserve announced on October 6, 2008 that it will increase by hundreds of billions of dollars the money it makes available to the nation's banks.

As the crisis in financial markets has become very acute, the Government is trying to provide all the liquidity that is needed so that banks don't become insolvent .

The Fed will allow banks to bid in an auction for the rate they're willing to pay to borrow the funds, and it will accept a much wider range of collateral for the loans than in other forms of lending by the central bank.

The Fed also announced it would pay banks interest on their reserve holdings. This would allow the central bank to have control over the fed funds rate, its key overnight lending rate target.

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$19 billion in mortgage loan losses for WaMu

2008-09-23T16:43:00.000-07:00

Tuesday Sept 23, 2008 Best-Mortgage-Companies.com
Investors turned nervous again on Monday, Sept. 22, when they pushed WaMu shares down 20%, to $3. The bank’s stocks got hit on fears that President George W. Bush's $700 billion bailout of troubled mortgage assets might not be a good thing for banks if they are forced to recognize even larger losses on their mortgage holdings.

The bank is anticipating $19 billion in mortgage losses during this crisis. Analysts say the losses could go as high as $28 billion. The uncertain company’s future continues to put a strain on the bank's customers, who are moving their deposits to other banks just to be safe. Its deposits from retail customers were down nearly $6 billion from last year by the end of June, even as the bank offered attractive rates to lure deposits.

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Lehman Brothers' Failure Pushes Central Banks To Inject Money Into The Credit Markets

2008-09-18T05:14:00.001-07:00

Thu Sept 18, 2008 Best-Mortgage-Companies.com
Lehman Brothers, which used to be an innovator in global finance and served the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide, has failed. Its headquarters are in New York, with regional offices in London and Tokyo. Founded in 1850, Lehman Brothers had maintained leadership in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity.

Inter-bank lending ground to a virtual halt as banks grew increasingly wary of lending to each other after the investment bank failed.

The news pushed central banks to boost liquidity. The world's biggest central banks moved Thursday to inject massive amounts of liquidity into the financial system in a bid to alleviate extreme distress caused by the collapse in short-term. The Fed provided additional $180 billion for short-term dollar auctions.

Lehman's bankruptcy is the largest failure of an investment bank since Drexel Burnham Lambert collapsed amid fraud allegations 18 years ago.

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Troubled Mortgage Company Up For Auction

2008-09-18T05:14:00.000-07:00

Thu Sept 18, 2008 Best-Mortgage-Companies.com
Washington Mutual, the nation's largest thrift, has put itself up for sale, the New York Times reported on Wednesday Sept 17, 2008. Goldman Sachs, which was been hired to advise the troubled mortgage company, started the auction several days ago. Potential buyers include Citigroup, HSBC, JP Morgan Chase and wells Fargo, said the New York Times. Washington Mutual’ s shares fell 13% to $2.01. The stock rallied 11% to $2.23 during after-hours action.

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Reviewing Mortgage Backed Securities’ policies

2008-09-14T00:14:00.000-07:00

Sept 13,2008 Best-Mortgage-Companies.com
Freddie Mac and Fannie Mae bailout by the Government accomplished one part of the hoped-for effect: longer term mortgage rates plunged to levels not seen for months.

At the same time four U.S. Senators proposed a freeze of foreclosures on mortgages held by the companies for 90 days and immediate action to assist homeowners by modifying delinquent loans.

Even though Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have encouraged lenders and loan servicers to facilitate such modifications neither Freddie nor Fannie have gone as far as many private lenders in doing so.

A foreclosed mortgage usually pays the lender $0.30 on the dollar but a mortgage that is modified so as to be affordable for the borrower pays nearly $0.90.

The Senators asked that the GSEs review their policies governing loans involving Mortgage Backed Securities in order to keep families in their homes and maximize the value of these assets. The proposed changes would also reduce risks to taxpayers and alleviate the downward pressure on house prices.

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Beyond the subprime mortgage crisis: Alt-A loans

2008-09-03T07:24:00.000-07:00

Sept 03 08 Best-Mortgage-Companies.com
Alt-A mortgages were designed for people with good credit who could not document their income — people like the self-employed. Not as risky as subprime loans but not quite prime either, Alt-As are part of what’s causing trouble for Fannie Mae and Freddie Mac. About half of their combined $3.1 billion loss in the second quarter came from bad Alt-A loans.Part of the problem is that many of these loans, like the riskier subprime mortgages, went to people who never should have gotten them. Not self-employed, maybe not employed at all.

Now there are worries that Alt-A loans may cause another wave of defaults beyond the subprime mortgage crisis. Entrepreneurs who took out Alt-A mortgages may be hit when their rates reset -- jeopardizing their homes while the ailing economy is killing their businesses. Also, small business owners with good credit may not be able to get Alt-A loans because many people abused them by lying about their income and banks get nervous about lending to people who have trouble documenting their income.

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Mortgage forbearance vs. forgiveness

2008-08-23T13:41:00.000-07:00

August 23 2008 Best-Mortgage-Companies.com
Mortgage rates are skyrocketing. Some homeowners with adjustable rate mortgages who are three months to a year behind on their mortgage have chosen to leave their homes altogether.

But leaving a property to the mortgage-holder or other interested parties carries a serious credit risk and significant legal responsibility. It is a good idea to call the lender even if it’s the person you may least want to talk to. You may also contact either an FHA-sponsored or independent loan counselor to help you negotiate with your lender. Acting this way can help you reach a forbearance agreement with your lender. This agreement reduces or suspends the mortgage payment for a limited time, giving homeowners a temporary reprieve.

Ultimately the mortgage payments have to be reinstated, and anywhere from three to six months of missed payments have to be accounted for. Of course! Because a forbearance is not the same as loan forgiveness. Most lenders offer specialized payment plans in which the borrower agrees to add a portion of the missed payments to the mortgage until the account is current. You could also be eligible for a partial claim, a one-time interest-free loan that will allow you to bring your account current.

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Wachovia reaches settlement about bad securities it sold

2008-08-18T11:11:00.000-07:00

August 18 2008 Best-Mortgage-Companies.com
Investors who bought auction rate securities through Wachovia Securities LLC and Wachovia Capital Markets LLC. will return the securities to Wachovia for roughly $9 billion under a preliminary settlement.
Government regulators have been investigating alleged misrepresentations made by Wachovia to thousands of its customers about the liquidity risk associated with auction-rate securities. The settlement will bring real relief to tens of thousands of unsuspecting investors who were not given the forthright information they needed in the process of purchasing auction-rate securities. These investors will now get their money back.
But there speculations that some investors may be left out of auction rate settlement.

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Citigroup under fraud probe

2008-08-03T15:47:00.000-07:00

August 03 2008 Best-Mortgage-Companies.com
New York state Attorney General Friday August 01, 2008 that his office intends to file charges against Citigroup for alleged fraudulent marketing and sale of troubled auction-rate securities to unsuspecting investors.
The nation's largest bank may have repeatedly and persistently committed fraud by material misrepresentations and omissions in the underwriting, distribution and sale of auction rate securities, touting them as safe investments.
The Attorney General also claimed that Citigroup destroyed recordings of telephone conversations related to the marketing and sale of auction-rate securities.
Auction-rate securities are long-term bonds that hospitals, cities and corporations sell at weekly or monthly auctions, which many investors, until now, had treated like cash investments. The market for these investments is worth about $330 billion.

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Senate passes crucial bill to help mortgage borrowers

2008-07-26T20:32:00.000-07:00

July 26, 2008 Best-Mortgage-Companies.com
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

2008-07-26T20:12:00.000-07:00

July 26 2008 Best-Mortgage-Companies.com
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.

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IndyMac, largest lender of alt-A loans, collapses

2008-07-13T21:46:00.000-07:00

July 13 2008 Best-Mortgage-Companies.com
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?

2008-07-13T21:39:00.000-07:00

July 10 2008 Money.CNN.com
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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Countrywide preferential mortgage scandal investigated

2008-06-19T12:16:00.000-07:00

June 19 2008 Best-Mortgage-Companies.com
Republicans are not letting Countrywide’s elite VIP program scandal quietly die. The program allowed some members of Congress to receive preferential treatment on multiple mortgage loans. Conservatives already opposed the housing bill now on the Senate floor as a bailout for irresponsible lenders and borrowers. Now they oppose it because it would possibly send billions of dollars to Countrywide. Nine GOP senators want to offer an amendment that would send the bill back to committee with instructions to investigate just how much Countrywide would gain from the legislation. Republicans sent a letter to House Speaker Nancy Pelosi demanding an investigation with open hearings into allegations that certain Members of Congress received preferential treatment in acquiring and renegotiating the terms of existing home mortgage loans with the nation’s largest mortgage lender. Congress is currently considering a $300 billion bill that would bailout many large mortgage lenders from some of their own bad financial decisions.

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Rescue for struggling mortgage borrowers

2008-05-25T23:03:00.000-07:00

May 25 2008 Best-Mortgage-Companies.com
A key Senate panel approved Tuesday last week a $300 billion homeowner rescue plan to provide cheaper, government-backed mortgages to as many as 500,000 struggling borrowers. The legislation also includes tougher federal oversight of Fannie Mae and Freddie Mac. The rescue plan would be financed with a share of the two companies' profits. The two government-sponsored enterprises would finance a new affordable housing fund -- intended to aid low-income people -- that temporarily would be used to pay for the homeowner rescue. After posting a first-quarter loss of $2.2 billion amid rising mortgage defaults, Fannie Mae's CEO told its shareholders Tuesday that home prices could fall as much as 25 percent before the worst is over.

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Wachovia Bank under fraud and money laundering probe

2008-04-29T05:21:00.000-07:00

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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The biggest problem in the subprime mortgage fix

2008-04-13T01:40:00.000-07:00

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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Fingerprints on the mortgage mess: Greenspan?

2008-04-08T07:28:00.000-07:00

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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Lawmakers reach mortgage fix deal

2008-04-02T10:22:00.000-07:00

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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JP Morgan Chase may increase Bear offer

2008-03-24T06:09:00.000-07:00

March 23 2008 BusinessWeek.com
JP Morgan Chase & Co. is discussing a deal that would increase its offer for Bear Stearns Cos. from $2 to $10 a share, The New York Times reported today. The talks Sunday were an attempt to satisfy Bear Stearns stockholders upset over JP Morgan Chase’s offer of $2 a share for the struggling investment bank, the newspaper said on its Web site, citing people involved in the negotiations. In an attempt to speed majority shareholder approval, Bears board was trying to authorize the sale of 39.5 percent of the firm to JP Morgan Chase, the Times said. State law in Delaware, where the companies are incorporated, allows a company to sell up to 40 percent without shareholder approval.

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Lying brokers and more subprime nightmares

2008-03-23T20:01:00.000-07:00

Many homeowners who were subject to predatory lending practices - including brokers who misrepresented payments - are trying to rework their loans. Few are having any luck. The problem is that servicers don't have the power to renegotiate a loan. Because they don't actually own the loan and therefore they can't make changes to the payment plan. Most mortgages aren't owned by a single bank. Instead, they are packaged and sold to investors on the secondary market, which means that loan servicers are actually beholden to investors, not borrowers. And it's much harder for troubled borrowers to get a deal that permanently lowers their mortgage payments. The Hope Now Alliance of mortgage lenders and servicers, including Citigroup, Bank of America and JP Morgan Chase, says it has kept over one million borrowers out of foreclosure since July. But only about one quarter of them - 278,000 - have actually had the terms of their mortgages modified. With an apparent stalemate between lenders and borrowers, will people be forced to go into foreclosure or even to just walk away!

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Despite Fed rate cuts, mortgages are still elusive for some

2008-03-21T06:31:00.000-07:00

March 21 2008 Best-Mortgage-Companies.com
Given the complexity of problems in the mortgage and credit markets, Fed's rate cuts may not have a clear effect on long term fixed rate mortgages. Thus far, Fed's interest rate cuts have only lowered short term adjustable rate mortgages. However, people are hesitant to take these risky mortgage loans, prefering the safety of fixed rate mortgages. But lenders, in order to cushion against the risks of foreclosures, are keeping fixed rate mortgages high. Getting a mortgage is still a challenge for some home buyers.

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JP Morgan Chase acquires Bear for $2 a share

2008-03-18T06:05:00.000-07:00

March 18 2008 BusinessWeek.com
JP Morgan Chase, the big bank that helped bail out Bear last Friday, is paying just $2 a share to take over the investment firm, which a little over a year ago was trading for as high as $170 a share. The deal to buy Bear will avert a looming bankruptcy filing by the investment firm and potentially stave off a new crisis in the financial markets. The purchase price is an indication of just how far things have fallen at Bear, which a year ago helped spark the subprime meltdown with the collapse of its two big hedge funds. The deal values Bear at $236 million.

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FED pledges tough rules for mortgage brokers

2008-03-13T08:31:00.000-07:00

March 13 2008 Reuters.Com
Treasury Secretary Henry Paulson on Thursday issued a call for U.S. financial institutions to raise capital quickly so they can keep lending, and pledged tougher rules for the mortgage industry. "We are encouraging financial institutions to continue to strengthen balance sheets by raising capital and revisiting dividend policies; we need those institutions to continue to lend and facilitate economic growth," he said in a speech at the National Press Club. Among recommendations from a top-level Presidential Working Group that he heads, Paulson said he wanted "strong nationwide licensing standards" for mortgage brokers as part of a bid to ward off future housing crises and reassure investors.

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Fed to inject up to $200 billion into financial markets

2008-03-12T08:12:00.000-07:00

March 11 2008 Market Watch.com
The Fed announced a new temporary lending program on Tuesday that will allow participants in the bond markets to swap the mortgage-backed securities that they can't currently sell for highly liquid Treasurys that they can. The hope is that the extra money in the financial system will restore trust and keep prices of illiquid securities from plunging. Counting the latest action, the Fed will have provided more than $400 billion in Treasurys in an effort -- so far futile -- to grease the wheels of commerce that have seized up. The Fed hopes the action will give bond dealers comfort that they'll be able to find financing, Fed senior officials told reporters. The move was not an effort to prop up any particular firm, they said.

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Lawmakers near deal over alternatives to subprime mortgages

2008-03-12T07:40:00.000-07:00

March 11 2008 Money.CNN.com
By early April, both chambers of Congress are likely to tie the bow on a bill that would expand the reach of the Federal Housing Administration, which aims to provide safe loan alternatives to subprime mortgages and make homeownership more accessible. 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 a private lender just as they would any other mortgage. But they pay a small premium to the FHA every month. The FHA, in turn, uses those premiums to cover the lender in the event of foreclosure and requires lenders to pursue viable ways to help borrowers avoid foreclosure if they become delinquent. That gives borrowers a better chance of keeping their homes should they fall on hard times. If a lender does have to foreclose, the FHA will pay the lender the unpaid principal on the loan, forgone interest and a portion of the foreclosure costs.

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Subprime mortgage defaults, debts are the biggest threat to the US economy

2008-03-03T10:30:00.000-08:00

March 03 2008 CNBC.com
National Association for Business Economists members are increasingly concerned over the short-term risks associated with subprime mortgages and other forms of indebtedness, while inflation is a distant third risk. The combined punch of subprime mortgage defaults and heavy debt remains the biggest risk to the health of the U.S. economy, the panel said on Monday. The conclusion was based on a survey of 259 members conducted between Feb. 1-15 and updates a poll conducted in August. Fewer respondents support monetary and fiscal policies being implemented to address the credit situation, with more than one-third saying current monetary policy is too stimulative. The most frequently cited concerns about lower interest rates, which followed the Federal Reserve’s aggressive cut of the benchmark federal funds interest rate, are the threat of inflation and the sense that lower rates might bail out investors who should have known better.

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US in Recession, Will Worsen; Dollar Sinks

2008-02-26T05:53:00.000-08:00

February 25 2008 CNBC.com
The United States economy is already in recession and is set for a further slowdown with the dollar expected to remain under pressure, investment guru Jim Rogers said on Monday.

The housing and automobile sectors are in a situation worse than recession with soaring energy and food prices hitting consumer spending. Rogers said the central bank was making the same mistakes Japan did in the early 1990s before its credit-inflated bubble economy burst.

As long as the U.S. central bank and the federal government keep making the mistakes, you will have a longer period of slowdown and it will be perhaps one of the worst recessions we have had in a long time in America.

As the dollar goes down a great deal, countries such as Iran and Venezuela are already using alternative currencies to the dollar.

Last week the U.S. central bank sharply lowered its forecast for U.S. economic growth in 2008 and said it was worried the economy could face further setbacks even after a series of aggressive interest rate cuts.

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Lenders oppose lawmakers plan to reduce mortgage balances for home owners

2008-02-22T10:03:00.000-08:00

February 22 2008 Money.CNN.com
Lenders are trying to derail legislation that would allow bankruptcy judges to reduce mortgage balances for home owners. Two bills before Congress would give bankruptcy court judges the authority to reduce mortgage debt, which could save thousands of borrowers from foreclosure. Lenders are furious at the prospect of having judges seize control of their mortgage portfolios. Community and consumer advocates argue that such a move makes sense amid the current mortgage crisis. Both the Emergency Home Ownership and Mortgage Equity Protection Act of 2007 and the Foreclosure Prevention Act of 2008 aim to provide relief for some home owners in bankruptcy. Only borrowers who live in their homes and hold subprime or non-traditional mortgages, like interest-only loans, would be eligible.

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Mortgage interest rates increase sharply

2008-02-20T10:29:00.000-08:00

As most interest rates moved higher, mortgage application volume tumbled 22.6% during the week ending Feb. 15, according to the Mortgage Bankers Association's weekly application survey. Refinance volume dropped 27.9% during the week, while purchase volume fell 11.55%. Refinance applications accounted for 61.7% of total applications. The average interest rate for traditional, 30-year fixed-rate mortgages increased to 6.09% from 5.72%. The average interest rate for 15-year fixed-rate mortgages, a popular option for refinancing a home, increased to 5.55% from 5.18%.

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Countrywide says foreclosures and delinquencies continue rising

2008-02-17T07:34:00.000-08:00

February 17 2008 Money.CNN.com
Struggling lender Countrywide Financial Corp. reported Friday that both foreclosures and delinquencies rose in January.
The combination of a slowing economy and nagging unemployment in some regions of the country have made it more difficult for borrowers to meet payments, especially those holding adjustable rate mortgages. That has led to a greater number of people either forestalling payments or walking away from their loans altogether. The up-tick of delinquencies and foreclosures was a visible sign of larger problems borrowers are facing nationwide. Industry research firm RealtyTrac said Jan. 30 that foreclosure filings were up 75% in 2007.

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Major mortgage lenders halt foreclosures

2008-02-13T10:43:00.000-08:00

February 13 2008 Money.CNN.com
Six of the nation's largest mortgage lenders, in a joint effort to cool the raging foreclosure crisis, have agreed to temporarily stop foreclosure proceedings on homeowners who have fallen seriously behind in their mortgage payments. Under a program unveiled Tuesday, legal efforts to oust seriously delinquent borrowers from their homes will be postponed for 30 days while lenders and borrowers try to work out payment options. The banks so far participating in the program are Citigroup, Countrywide, Bank of America, JP Morgan Chase, Washington Mutual and Wells Fargo.

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Countrywide expands scope of mortgage help

2008-02-11T05:41:00.000-08:00

February 11 2008 Money.CNN.com
Plan would offer loan modifications for both fixed and adjustable loans and to borrowers who've already fallen behind. Countrywide Financial says it will expand programs to help borrowers manage their mortgage payments regardless of the type of subprime loan they have or whether they have already fallen behind on payments. Countrywide, the nation's largest mortgage lender and home loan servicer, has sought to address the growing number of defaults on its books by modifying loan terms, working out long-term repayment plans and other actions. The company said last month it helped more than 81,000 borrowers keep their mortgage payments manageable in 2007.

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Government-Sponsored Enterprises' debt may pose risk to economy

2008-02-07T12:29:00.000-08:00

February 07 2008 Money.CNN.com
The housing slump has compelled Freddie Mac and Fannie Mae to buy up mortgages on the secondary market that banks are backing away from. But that could end badly, charges one regulator. The increased share of housing debt taken on by Freddie Mac and Fannie Mae during the housing slump has put the two government sponsored enterprises at risk. The two Government-Sponsored Enterprises are "reducing risks in the market, but concentrating mortgages risks on themselves. These risks are beginning to take their toll," said James Lockhart, director of the Office of Federal Housing Enterprise Oversight (OFHEO), which regulates Fannie and Freddie. He was speaking Thursday at a Senate Banking committee on regulatory reform.

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Mortgage rates fall again

2008-02-07T12:21:00.000-08:00

February 07 2008 BusinessWeek.com
Rates on 30-year mortgages dipped slightly this week, the fifth decline in the past six weeks. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.67 percent this week, down from 5.68 percent last week. The 30-year mortgage
, which ended last year at 6.17 percent, has been below 6 percent for five weeks, a stretch that has not been seen since 2005. Analysts attributed the declines in mortgage rates to growing fears that the country could be slipping into a recession.

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Senator Chris Dodd Puts New $20B subprime mortgage bailout on the table

2008-02-01T10:48:00.000-08:00

February 1 2008 Money.CNN.com
Senator Chris Dodd proposes setting up a fund that would buy defaulting subprime mortgages and restructure loans for borrowers. The proposal to bail out subprime mortgage borrowers who are at risk of foreclosure was floated at a Senate Banking Committee hearing Thursday. Senator Chris Dodd, the committee chair, said he is working to create a Home Ownership Preservation Corporation, which would purchase mortgage securities that are backed by at-risk, subprime loans from lenders and investors. This corporation would give these lenders and investors a better price for the securities than they would get if the properties backing them were put through foreclosure

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How Congress helped create the subprime mess!

2008-01-31T08:14:00.000-08:00

January 31 2008 CNN.Money.com
Executives in Houston high-rises can rest easy. The mortgage industry has officially replaced Big Oil as Washington's favorite political punching bag.

But before our elected officials in Congress get too preachy about the lousy lending practices that led to today's mortgage mess, first they ought to consider Congress's own role in laying the groundwork.

The fact is, neither the expansion of the subprime market nor the proliferation of exotic interest-only or option-ARM mortgages would have been possible without federal laws passed in the 1980s.

Lawmakers may say they are outraged, but it was actually two key pieces of legislation that primed the pump for the housing implosion: the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) and the Alternative Mortgage Transactions Parity Act of 1982 (AMTPA).

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Fed Expected to Cut Rates Another Half Point, to 3%

2008-01-30T08:24:00.000-08:00

January 30 2008 CNBC.com

The Federal Reserve is expected to lower U.S. interest rates another half-point Wednesday as part of an ongoing aggressive effort to spare the economy from the worst effects of a deep housing slump and credit crunch. Financial markets saw an 80 percent chance the Fed would lower benchmark overnight rates by a steep half-percentage point after a weak reading on fourth-quarter economic growth was released Wednesday, as the central bank seeks to counter the risk of a U.S. recession. Weaker consumer confidence and spending data, along with rising housing inventories and plunging home prices, may have kept Fed officials concerned about downside risks to growth, economists explain.

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GSEs's regulator opposes stimulus plan's mortgage fix

2008-01-26T22:56:00.000-08:00

January 26 2007 Money.CNN.com
Government agency takes stand against letting Freddie Mac and Fannie Mae buy higher-cost loans. The government agency, the Office of Federal Housing Enterprise Oversight (OFHEO), which has regulatory power over Freddie Mac and Fannie Mae opposes lifting the loan caps for the two agencies, part of the economic stimulus package announced Thursday. The stimulus package includes a proposal that temporarily raises loan limits for the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. That could kick start sluggish residential real estate markets in high cost areas that have suffered through the liquidity squeeze that started last summer. "We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform." said James Lockhart, director of OFHEO, in a statement last Thursday.

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Commercial Mortgage Rates Surging Despite Fed's Efforts To Prevent Deteriorating Real Estate Market

2008-01-26T06:09:00.000-08:00

January 26 2008 Bloomberg.com
The cost of borrowing for apartment buildings, offices, retail properties and hotels climbed as much as 1.25 percentage points, while the yield on 10-year Treasury notes fell 1.43 percentage points in the past three months to the lowest since 2003 following four interest rate cuts. Bernanke's easing hasn't stopped the $3.2 trillion commercial market from starting a slide that mirrors the housing decline, where prices have dropped for the first time since the Great Depression. Delinquencies of securitized commercial mortgages may quadruple in the next 18 months to almost 4 percent, said Kenneth Rosen, an economist at University of California, Berkeley. A buyer could borrow $1 billion a year ago and expect to pay annual debt service of $58 million. Today that same mortgage would have an annual cost of $76 million. The average down payment lenders required rose to 23 percent of the purchase price in the fourth quarter, the highest in three years, from 19 percent in the second quarter, according to New York-based Merrill Lynch & Co.

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Surprise Rate Cut May Speed Recovery Of Ailing US Economy

2008-01-23T07:28:00.000-08:00

January 23 2007 CNBC.com

There is no quick cure for what ails the U.S. and global economies, but if the Federal Reserve's emergency interest rate cut Tuesday can instill some confidence among consumers, consumers and investors, it may speed a recovery. Interest rate reductions take time to work, and they cannot undo the damage inflicted by the tumbling U.S. housing market and subsequent credit contraction that has curbed the flow of cash to households and businesses, pushing the economy to the brink of a recession. The Fed's efforts, coupled with a $150 billion fiscal stimulus plan of the Bush Administration, can coax cautious consumers and companies back to normalcy and shorten any U.S. downturn.

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Lenders continue to be knocked by turmoil in credit and mortgage markets

2008-01-22T06:39:00.000-08:00

January 22 2008 MarketWatch.com
A quartet of regional banks reported steep declines in profit on Tuesday as lenders continued to be knocked by turmoil in credit and mortgage markets. National City Corp. said it swung to a fourth-quarter loss of $333 million, or 53 cents a share, from a profit of $842 million, or $1.36 cents a share, a year earlier. The Cleveland-based bank said the loss resulted from a large credit-loss provision, losses on mortgage loans held for sale, indemnification charges from Visa Inc. and severance charges resulting from job cuts. The company also recorded a goodwill impairment charge of $181 million, or 26 cents a share, associated with the mortgage business. Analysts polled by Thomson Financial, on average, projected a per-share loss of 26 cents, excluding some items.

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The Fed Cuts Rates by 75 basis points

2008-01-22T06:24:00.000-08:00

January 22 2008 BusinessWeek.com
The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday. The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent. The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the U.S., the world's largest economy, could be headed into a recession.

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WaMu accused of fraud: lender told appraiser to produce higher property prices

2008-01-19T23:08:00.000-08:00

January 19 2008 Money.CNN.com
Lawsuit claims the lender told an appraiser to offer a rosier housing outlook so risky mortgages could get approved. A former real estate appraiser for Washington Mutual is suing the bank, claiming she was blacklisted last year for providing a housing market forecast that was too gloomy. The appraiser, who is seeking unspecified damages, says WaMu stopped accepting her appraisals in mid-2007 a month after she reported that her local housing market in California was declining. She was told to change her appraisal process to produce higher prices for the properties she was evaluating. A pessimistic outlook makes it harder to extend outsized, risky mortgages to borrowers whose homes can't support them.

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Mortgage lending forecast to fall 16% this year

2008-01-15T09:40:00.001-08:00

January 15 2008 Money.CNN.com
Previously owned home sales are also expected to fall as banks rack up billions in losses, according to the Mortgage Bankers Association. U.S. mortgage lending will fall by more than 16 percent this year, dragged down by a worsening economy and a slumping mortgage market, an industry group predicted Monday. The Mortgage Bankers Association forecast that U.S. mortgage lending will fall 16.2 percent this year to $1.96 trillion, down from a projected $2.34 trillion last year. The group also said sales of previously owned U.S. homes will drop by about 13 percent, while median prices fall about 2 percent. New mortgage lending would continue its downward descent in 2009, the group predicted, but home sales and prices would steady a bit.

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Subprime lender to file for bankruptcy protection

2008-01-15T09:31:00.000-08:00

January 15 2008 Money.CNN.com
First NLC Financial Services cites few buyers for its subprime loans. Friedman Billings Ramsey Group's mortgage lending arm, First NLC Financial Services, will file for bankruptcy protection and plans to liquidate because demand among investors for home loans has vanished, the investment bank said Monday. First NLC Financial Services, which FBR bought in February 2005 for $100.8 million, plans to file for Chapter 11 bankruptcy protection. FBR's plan to sell the business to Sun Capital Partners has fallen through, and the company said it does not expect to recoup its remaining $12 million investment in the unit's recapitalization for that sale.

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Citigroup write-offs could reach $24 billion in subprime related losses

2008-01-14T10:23:00.000-08:00

January 14 2008 MarketWatch.com
Citigroup may write off up to $24 billion over subprime- and credit-related losses, putting as many as 20,000 jobs at risk, according to a published report on Monday. Citi also may cut its dividend payment without attribution, the report said. The company may raise as much as $15 billion from selling stakes to foreign and domestic investors. The report pointed to some of those shares being sold to Saudi Arabia Prince Alwaleed bin Talal, already Citi's largest shareholder. China Development Bank may invest about $2 billion. Meanwhile, the Financial Times reported that the Kuwait Investment Authority may invest as much as $3 billion in Citigroup.

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Cleveland sues lenders over subprime mortgage loans

2008-01-12T14:39:00.000-08:00

January 12 2008 Money.CNN.com
City says 21 banks and mortgage companies signed off on deals they knew they shouldn't have made. Likening their actions to those of organized crime syndicates, Cleveland's Mayor is suing 21 major banks and mortgage companies for the roles they played in the subprime mortgage crisis that devastated many neighborhoods in the city. The suit, filed in Cuyahoga County Common Pleas Court, alleges that in pushing subprime mortgagesin Cleveland, the companies created a public nuisance in violation of state law. City officials hope to recover hundreds of millions of dollars in damages for lost property tax revenue, the cost of demolishing homes left abandoned and the cost of policing neighborhoods devastated by thousands of foreclosures.

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Bank Of America buys Countrywide: What's next for the largest mortgage lender?

2008-01-11T09:32:00.000-08:00

January 11 2008 Best-Mortgage-Companies.com
Bank of America is in advanced talks to buy Countrywide, the largest mortgage lender in the country, at a severely distressed price in order to avoid the company‘s bankruptcy. Countrywide has been aggressive in helping troubled subprime borrowers get out of loans they can’t afford. Bank of America will have to restructure the loans that have to be reworked. There are hopes that the bailout will provide more opportunity for loans in the future. So what does this mean for Countrywide CEO and co-founder Angelo Mozilo? Bank of America' s CEO Ken Lewis says he will keep many top executives. "Angelo has told me he will do anything we want him to do in terms of how long he stays", he says.

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Federal Reserve Chairman Ben Bernanke's speech on financial markets

2008-01-11T08:36:00.000-08:00

January 11 2008 Best-Mortgage-Companies.com
Full transcript of Federal Reserve Chairman Ben Bernanke's speech on "Financial Markets, the Economic Outlook, and Monetary Policy" in Washington, D.C. on Jan. 10, 2008

Following a period of aggressive risk-taking, the subprime crisis has led investors to reassess credit risks more broadly and, perhaps, to become less willing to take on risks of any type. Also, investors have been concerned that, by further weakening the housing sector, the problems in the subprime mortgage market may lead overall economic growth to slow. The subprime crisis has contributed to a considerable increase in investor uncertainty about the appropriate valuations of a broader range of financial assets, not just subprime mortgages.

Full
Speech

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Capital One shows credit woes firmly hitting consumer

2008-01-10T11:25:00.000-08:00

January 10 2007 MarketWatch.com
Credit-card shares were among the top decliners in the financial sector Thursday after Capital One Financial Corp. lowered its earnings outlook and raised its loan loss reserves, with increasing clarity that the credit crisis sparked by careless home lending has spread to the consumer sector. As delinquencies on subprime mortgages surged this year, there were initially few signs that similar problems were leaking into the credit-card industry. However, that changed in recent weeks as evidence, like Thursday's news from Capital One, shows that consumers loaded up on credit-card debt to make up for a loss in the purchasing power they once wielded by refinancing mortgages during the real-estate boom.

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Freddie Mac may be downgraded by Moody's

2008-01-10T11:04:00.000-08:00

January 10 2008 BusinessWeek.com
Freddie Mac's financial strength rating may be cut by Moody's over concerns that the government-sponsored mortgage finance company will experience higher-than-expected credit losses. Freddie shares fell more than 4 percent Thursday morning but later recovered. Fallout from the ongoing housing slump and credit crunch has forced Freddie and its larger government-sponsored rival Fannie Mae to set aside billions of extra dollars to account for bad home loans.

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Mortgage Lenders: The Pain Deepens

2008-01-10T10:59:00.000-08:00

January 10 2007 Best-Mortgage-Companies.com
On Wednesday, Countrywide Financial Corp., the nation's largest mortgage lender, said the percentage of borrowers who missed payments on home loans rose in December, signaling worsening trouble for the entire mortgage sector and causing stock prices across the industry to fall. Earlier in the week, Countrywide denied rumors that it would soon file for bankruptcy. Citigroup Inc. and Merrill Lynch & Co., the No. 1 U.S. bank and largest brokerage house, are facing potentially $25 billion worth of losses when they report earnings results next week. Both companies -- led by new CEOs eager to make their mark -- are expected to turn overseas for another injection of capital. Merill Lynch previously secured a $4.4 billion investment from Singapore's state-run Temasek Holdings.

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Treasury Secretary defends mortgage rate freeze plan for some subprime borrowers

2008-01-08T06:02:00.000-08:00

January 8 2008 Money.CNN.com
Treasury Secretary Henry Paulson used a speech Monday to defend a plan brokered by the Bush administration to "freeze" mortgage rates for some subprime borrowers and also to call on Congress to pass legislation to head off a housing crisis. "Over the next two years, we ... face an unprecedented wave of 1.8 million subprime mortgage resets, raising the potential of a market failure," Paulson said. By coordinating the alliance of lenders, servicers and investors known as HopeNow, which is implementing the rate-freeze plan, the Administration is helping to prevent avoidable foreclosures and safeguard neighborhoods and communities without using taxpayer money, Paulson said.

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Fed to Offer Banks $60 Billion in January Auctions

2008-01-06T15:44:00.000-08:00

January 6 2008 CNBC.com

The Federal Reserve announced Friday that it is increasing the amount of money available to banks through a new auction process, one of the main ways it is combatting a severe credit squeeze. The Fed again pledged to continue with the auctions "for as long as necessary." The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion, a 50 percent jump. The next two auctions will take place on Jan. 14 and Jan. 28. The Fed announcement indicated that the auction process it began last month has been successful in providing a source of loans for cash-strapped banks. The Fed announced in December that it was creating an auction facility to give cash-strapped banks a new way to get short-term loans from the central bank to help them over the credit hump. A global credit crisis has made banks reluctant to lend to each other, which can crimp lending to individuals and businesses.

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Bush on housing: Congress should do more

2008-01-06T15:40:00.000-08:00

January 6 2008 Money.CNN.com
The president calls on lawmakers to act quickly on his proposals to ease the mortgage crisis, but not all of them have an equal chance of passage. Criticized for not doing enough to stave off foreclosures, the White House seems prepped to put on a full-court press in dealing with the housing crisis. President Bush last weekend said he will push Congress this year "to act quickly" on proposals he supports. Some of them are designed to have an immediate impact, such as efforts to make the refinancing of subprime loans easier and more affordable, and to make it easier for all homebuyers to get financing. Another proposal focuses on putting a stop to abusive lending. Efforts implemented so far include a Treasury-coordinated rate-freeze plan for some subprime borrowers, and tax relief on breaks that homeowners get from lenders in foreclosure.

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Mortgage application volume declines

2008-01-03T06:39:00.000-08:00

January 3 2008 BusinessWeek.com
Mortgage application volume declined 11.6 percent during the week ending Dec. 28, according to the trade group Mortgage Bankers Association's weekly application survey. The MBA's index fell to 533.9 during the holiday-shortened week from 603.8 the previous week. Refinance volume tumbled 15.4 percent, while purchase volume dropped 8.5 percent. Refinance applications accounted for 50.9 percent of total mortgage applications. The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week.

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US Mortgage Applications Sink to Year Low

2007-12-27T08:09:00.000-08:00

December 27 2007 CNBC.com

U.S. mortgage applications sank last week to the lowest level since the end of last year despite falling borrowing costs, an industry trade group said Thursday. The Mortgage Bankers Association's seasonally adjusted mortgage application index fell 7.6 percent in the week ending Dec. 21 to 603.8, its lowest reading since falling to 575.6 in the Dec. 29, 2006 week. The MBA's weekly indexes have been exaggerated on the high side much of the year. Borrowers facing stricter loan standards often apply numerous times in search of getting one request approved. The applications slump this week and last, however, appears to more closely reflect the status of ailing housing sales.

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Ameriquest mortgage to pay $18M to N.Y subprime victims

2007-12-25T15:59:00.000-08:00

December 25 2007 NYorkDailyNews.com
Nearly 14,000 New Yorkers stung by a predatory mortgage company will share in an $18 million restitution fund this holiday season, state authorities said Monday. Ameriquest Mortgage Co. and its subsidiaries will pay the money as part of a nationwide $325million settlement for illegal lending practices. The money is being distributed to 13,686 homeowners - who will get an average of $1,315 apiece - in New York who did business with Ameriquest and "suffered harm as a result," state officials said.

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2008 housing outlook: deeper home price slump

2007-12-23T13:01:00.000-08:00

December 21 Money.CNN.com
The United States is deep in its worst housing slump since the Great Depression, and according to a new report, it's not going to get better any time soon. The forecast is for a longer, deeper home-price slump than previously expected, with double-digit declines in many markets. In a new survey, Moody's Economy.com says many metro areas will record losses of 20 percent or more during the downturn, with the national median price for single-family homes dropping 13 percent through early 2009. Factoring in discount offers from sellers, the actual price decline would be well over 15 percent. Eighty of the 381 metro areas covered by the report will record double-digit losses, according to the report. Most of the worst-hit markets are in once high-flying areas, such as California and Florida.

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Merrill Lynch may get $5 billion Temasek injection

2007-12-23T12:53:00.000-08:00

December 21 MarketWatch.com

Merrill Lynch & Co is in advanced talks to receive a $5 billion cash infusion from Singapore's state investment company Temasek Holdings Ltd., becoming the latest among a number of blue-chip Wall Street and European financial institutions to receive funding from Asian or Middle Eastern government funds in the wake of the ongoing turmoil in structured credit markets, according to a media report Friday.

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Fed to crack down on shady lenders

2007-12-15T11:09:00.001-08:00

December 15 2007 Money.CNN.com
Central bank will propose rules on Tuesday to protect mortgage borrowers from banks and brokers. People taking out home mortgages may gain new protections soon against shady lending practices as the Federal Reserve seeks to back even the riskiest borrowers, already hit hardest by the housing and credit crunches. Rules expected to be proposed Tuesday would apply to loans made by all types of lenders, including banks and brokers. The plan from the Fed, which has regulatory powers over the nation's financial system, could be finalized next year. The effective date would be know then.

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Moody downgrades Citigroup's Rating

2007-12-14T23:30:00.000-08:00

December 14 2007 CNBC.com
Moody's lowered Citigroup's rating to "Aa3," saying it doubted that the U.S. bank could rebuild its capital ratios any time soon, and said Citi's failure to restore its capital ratios in the medium term could lead to a further downgrade. Citigroup said it will provide emergency support to seven structured investment vehicles if they can't find buyers for their short-term notes. The move is being seen as a body blow for a rescue fund that several large banks have been working to develop at the urging of the Treasury Department.

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US central banks take steps to help credit markets

2007-12-12T12:51:00.000-08:00

December 12 2007 MarketWatch.com
The Federal Reserve announced plans Wednesday to ease elevated pressures in mortgage markets. The Fed will inject cash into the markets through auction of short-term funds. The Fed also announced foreign exchange swap lines with the European Central Bank and the Swiss National Bank. The Bank of Canada is also a partner in the liquidity plan. The first auction will be held on Monday Dec. 17.

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Fed Trims Rates 1/4 Point, Disappointing Investors

2007-12-11T14:06:00.000-08:00

December 11 2007 CNBC.com
The Federal Reserve cut benchmark U.S. interest rates by a modest quarter-percentage point on Tuesday to help the U.S. economy withstand tightened credit and a prolonged housing slump, disappointing Wall Street, which had hoped for more-aggressive action. The central bank's decision takes the bellwether federal funds rate, which governs overnight lending between banks, down to 4.25percent. While the action was widely expected, some economists had thought the Fed might offer a bolder half-point reduction in the rate.

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Bank of America halts fund's redemptions

2007-12-10T11:41:00.000-08:00

December 10 2007 Money.CNN.com
Problems in the credit market seem to have infected an institutional money market fund run by Bank of America’s (BAC) Columbia Management. Money market observer Crane Data reports that Columbia Funds Strategic Cash has halted redemptions after the fund’s assets fell to $33 billion from $40 billion after a run of redemptions. Crane says the fund in question is an enhanced cash pool available to only the largest qualified institutional investors. Bank of America previously pumped $300 million into the fund.

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American Mortgage seeks options after losses

2007-12-08T16:51:00.000-08:00

December 8 2007 Reuters.com
American Mortgage Acceptance Co said it was exploring strategic options after the real estate investment trust liquidated certain investments to meet margin calls, sending its stock down more than 40 percent in after-hours trading. American Mortgage said it sold its Fannie Mae and Ginnie Mae debt securities and may need to sell additional assets to maintain liquidity. The company, which originates and buys mortgage loans and other debt instruments usually secured by U.S. multifamily and commercial properties, said its board also decided not to declare its regular fourth-quarter dividend to common shareholders.

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Mortgage lenders stocks rebound as refinancings increased

2007-12-07T04:20:00.000-08:00

December 7 2007 Reuters.com
Shares in U.S. mortgage lenders rebounded for a second day as the pace of residential refinancings increased and on optimism that some struggling lenders may find buyers. Shares of Fremont General Corp. rose $1.75, or 25.8 percent, to $8.53 amid hopes the subprime lender, one of the nation's largest, is close to selling its Fremont Investment & Loan subprime unit. New Century Financial Corp. closed up 14 cents at $5.16 but is still 64.8 percent below its Friday close. Shares of NovaStar Financial Inc. another subprime lender, rose 56 cents to $5.09, but are 29.7 percent below Friday's close. Countrywide Financial Corp., the largest mortgage lender, up 15 cents to $37.00; Impac Mortgage Holdings Inc.up 88 cents to $5.75, and IndyMac Bancorp Inc., up $1.52 to $31.18.

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Home equity dips; falling home prices a factor

2007-12-06T21:44:00.000-08:00

December 6 2007 Money.CNN.com
Federal Reserve reports that owners' home equity drops to barely above 50 percent, falling home prices are a factor. The amount of equity homeowners hold in their homes slipped in the third quarter to just above 50 percent, according to a report from the Federal Reserve Thursday. Home equity has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing. This decline could curb retail spending as homeowners stop tapping home equity and, instead, save money.

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Treasurys fall as hopes of mortgage fix lift stocks

2007-12-06T21:40:00.000-08:00

December 6 2007 MarketWatch.com
Treasurys fell Thursday, sending yields higher as the Bush administration's plan to help homeowners with subprime mortgages helped lift stocks and removed safe-haven flows in government bonds. President Bush and Treasury Secretary Henry Paulson announced a plan to help struggling homeowners avoid losing their properties, including a temporary freeze on low, introductory mortgage
-interest rates that would otherwise jump higher in the next few years. Hopes that the plan will help cushion the ailing U.S. economy and ease a credit crisis linked to bad home loans helped lift the Dow Jones Industrial Average.

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Bush subprime plan offers help to 1.2M

2007-12-06T21:36:00.000-08:00

December 6 2007 Money.CNN.com
Mortgage interest rates will be frozen only for ARM borrowers who are not yet in foreclosure. The Bush administration unveiled a foreclosure relief plan Thursday that the White House said could help 1.2 million distressed homeowners. But the freeze is limited. It excludes anyone more than 30 days late at the time the mortgage would be modified or anyone who has been more than 60 days late at any time within the previous 12 months. It also only covers borrowers with adjustable rate mortgages (ARMs) resetting beginning in 2008 and leaves out any who are judged capable of continuing to make mortgage payments at the higher reset rates.

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Stocks Rally on Data, Mortgage News

2007-12-06T21:32:00.000-08:00

December 5 2007 BusinessWeek.com
Encouraging reports on labor and productivity, and word of a plan to aid distressed U.S. homeowners, lifted equities Wednesday. Major U.S. stock indexes closed broadly higher Wednesday, supported by favorable economic data, continuing hopes for lower interest rates, and a report that the Bush administration has worked out a program to help out certain subprime mortgage holders. According to a report on the Wall Street Journal website, the Bush administration is expected to announce Thursday an agreement with the mortgage industry to freeze interest rates for certain subprime mortgages for five years.

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More Housing Price Drops, even Google falling

2007-12-06T21:28:00.000-08:00

December 5 MarketWatch.com

PIMCO's Bill Gross is still one of the top bond fund managers in the U.S., if not the world. Homeowners by the hundreds of thousands, to be sure, but also those that created, packaged, insured, distributed, and ultimately bought what should have been labeled "junk mortgages," but which by a masterstroke of marketing genius were given a more respectable imprimatur. Defaults are rising, the dollar’s sinking, and good Lord—even Google’s stock price is going down. Something must really be wrong here.

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Wall Street slips amid economic concerns about mortgage market meltdown

2007-12-06T21:25:00.000-08:00

December 4 2007 CNBC.com
Wall Street wilted Tuesday as investors awaiting next week's Federal Reserve meeting remained uneasy that fallout from the slumping housing market could bring more bank losses and pull the economy into recession. Meanwhile, JPMorgan downgraded major securities firms, warning that while further write-offs of bad mortgage debt might help the firms' stocks, longer-term concerns about their risk management might hurt their overall valuation. JPMorgan lowered its earnings estimates for some of Wall Street's biggest players: Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley. Those investment banks and other financial companies fell, including Washington Mutual Inc., Citigroup Inc., Bank of America Corp., the government-sponsored Freddie Mac and Fannie Mae, and JPMorgan Chase & Co.

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Paulson Crafts Subprime Deal to Prevent Second Bush Recession

2007-12-02T22:59:00.000-08:00

December 3 2007 Bloomberg.com
U.S. Treasury Secretary Henry Paulson, struggling to prevent a second recession in the presidency of George W. Bush, will today discuss plans to keep troubled subprime borrowersfrom losing their homes. The Treasury is negotiating with lenders to fix interest rates on some mortgages to prevent a surge in defaults as borrowing costs on 2006 loans rise from initially low rates. Paulson speaks at a conference in Washington at 10:30 a.m. Paulson and Federal Reserve Chairman Ben S. Bernanke are concerned that falling home values will throttle consumer spending, which has driven much of the six-year expansion. By heading off further deterioration in the $11.5 trillion mortgage market, officials are also aiming to stem losses on securities backed by subprime loans.

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Foreclosure rehabbers hope handiwork sells

2007-12-02T22:55:00.000-08:00

December 2 2007 USATODAY.com

After the unpaid mortgage bills, the creditor warnings and finally the sheriff's sale, it's sometimes left to a handy man to clean up the mess left by the nation's home foreclosure crisis. Most foreclosed homes are bought at auction by the lenders, get fixed by contractors who specialize in the work and return to the real estate market. Rehabbers gamble that the renovations they do — new carpeting, fresh paint, refinished floors, for instance — will enable them to quickly resell or rent a property. A rehabber's stake depends on the market and neighborhood, and that can be as little as $20,000 or $30,000 for a fixer-upper in blue-collar Cleveland, where a rehabbed home might fetch $50,000 or $60,000.

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Rate freeze plan for ARMs gains traction

2007-12-02T22:51:00.000-08:00

November 30 2007 Money.CNN.com
Plans to suspend interest rate increases for resetting adjustable rate mortgages are moving forward. One solution to the foreclosure problem gaining traction would freeze rates at lower levels. Lenders quietly began offering such freezes during the summer. Last week California officials announced a rate-freeze deal with four major lenders. And now the Hope Now Alliance, coalition of lenders, servicers, investors and community groups, put together by the Treasury Department, is working on its own version of a freeze. Details of the Hope Now plan have not been finalized, according to Kurt Pfotenhauer, a senior vice president for government affairs with the Mortgage Bankers Association, which is part of the Alliance.

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Fed Likely to Cut Rates, But How Much Is Unclear

2007-12-02T22:49:00.000-08:00

November 30 2007 CNBC.com

Fed Chairman Ben Bernanke’s latest analysis of the weakening economy makes another interest rate reduction at the Dec. 11 policy meeting a near certainty, say economists, but the size of that cut is very much up in the air. That will be depend on the nature of key economic data for the month of November due out the week ahead of the FOMC meeting. The ISM index of manufacturing activity, as well as nonfarm payroll and unemployment data, are critical.

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Citi cuts assets of sponsored SIVs by $17 billion

2007-12-02T22:45:00.000-08:00

November 30 2007 MarketWatch.com
Citigroup Inc. said late Friday that it has reduced the assets of structured investment vehicles it advises by $17 billion in the past two months, as the banking giant tries to maneuver through this year's subprime thicket. Structured investment vehicles borrow short-term money by selling commercial paper and buying longer-term, fixed-income investments. The longer-term assets usually pay higher interest rates than the short-term debt, so they make money on the difference. Some of those higher-yielding assets were mortgage-backed securities and so-called collateralized debt obligations partly backed by subprime home loans. As the subprime crisis spread, SIVs struggled to refinance themselves because spooked money-market funds and other investors refused to buy more commercial paper from them.

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Banking: This Disaster Was Guaranteed

2007-12-02T22:39:00.000-08:00

November 29 2007 BusinessWeek.com
Money-back assurances on subprime-linked securities are costing some leading banks billions. Although refund policies have long been standard practice for retailers, they've rarely been given for financial investments--and for good reason. A closer look at the mortgage meltdown reveals Citigroup and other big banks offered a type of money-back guarantee to buyers of nearly $100 billion of subprime mortgage-linked securities. Incredibly risky in retrospect, the refund policies were critical in the banks' push to keep a steady stream of money coming in during the peak years of the housing market from 2004 to 2006. But the myopic decision has been a central cause of the billions in losses that some banks are now reporting. Citi, which declined to comment, announced on Nov. 5 that it was on the hook for $25 billion worth of such deals.

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Here comes the recession

2007-11-26T13:20:00.000-08:00

November 26 2007 Money.CNN.com
Even with a boost from holiday spending, the U.S. economy looks shaky, thanks to slumping housing prices, Wall Street woes and debt-laden consumers. A persistent rise in energy prices will mean bigger heating bills this winter and heftier tabs at the gas pump. Job growth is slowing and wage gains have been anemic. House prices are sliding, diminishing the value of the asset that's the biggest factor in Americans' personal wealth. Even the stock market has begun pulling back amid signs of deep distress in the financial sector. With consumer spending accounting for about three-quarters of U.S. economic activity, some economists say it is inevitable that the economy will stop growing at some point in the coming year.

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Citigroup says planning process focused on reducing costs

2007-11-26T13:17:00.000-08:00

November 26 2007 MarketWatch.com
Financial-services giant could lay off up to 45,000 employees. Citigroup Inc. said Monday that it's in a planning process to become more efficient and cost effective as the financial-services giant grapples with billions of dollars in losses from the subprime mortgage-fueled credit crisis. Citi may cut up to 45,000 jobs. The bank is planning a larger number of layoffs as part of a response to recent huge write-offs for bad mortgage investments. Division heads at Citi have been told to start planning for layoffs, which will not be restricted to fixed-income and mortgage divisions. Citi could take up to $15 billion in write-downs from collateralized debt obligations over the next two quarters, Goldman Sachs analysts estimated last week.

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Housing Prices Haven't Bottomed Yet, says Greenspan

2007-11-25T19:05:00.000-08:00

November 23 2007 CNBC.com
Former Federal Reserve Chairman Alan Greenspan said on Friday that U.S. house prices have not bottomed out after a crisis in the subprime mortgage market. "The markets are becoming aware that the decline in U.S. housing prices is not stopping. It is at an unprecedented pace compared to the last 50 years," Greenspan told a financial audience in the Norwegian capital. He said the housing bubble had burst and the market was "a good deal away" from its selling climax -- a point at which sellers ultimately lower their prices to match lower bids. He added that house prices underpin the mortgage market and also have a "wealth effect" on home owners

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Even average homeowners feel rising mortgage floodwaters

2007-11-22T23:18:00.000-08:00

November 22 2007 MarketWatch.com
While the headlines have been full of stories on the credit crunch, subprime mortgage mess and the real estate bubble, a lot of ordinary homeowners have figured they were immune from the problems. Ensconced in a home with a prime mortgage, they have watched the news and figured they're safe. And all the while, the water has been rising. A growing number of homeowners -- particularly those who bought their house in the last five years -- are looking at the prospect of being "underwater" on the mortgage. That's when the value of the home is less than the amount remaining on the loan used to buy it. More than 15% of homeowners nationwide who bought their home in the last year are now underwater.

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Treasury rally will lower mortgages, hurt some portfolios

2007-11-22T23:12:00.000-08:00

November 22 2007 USATODAY.com
A plunge in a closely watched Treasury yield Wednesday spells relief for some borrowers who want to buy homes and big-ticket items like cars, but is a threat to retirement portfolios and the broader economy. A vigorous Treasury rally sent the benchmark yield on the 10-year Treasury note below 4% early Wednesday for the first time since September 2005. Heavy losses on global stock exchanges, alongside escalating credit fears and a surge in oil prices above the $99 a barrel level, caused nervous investors to clamor for Treasurys, which carry a government guarantee. Mortgages and consumer loans for items like autos and appliances often are tied to the yield on the 2-year note, which Wednesday dropped below 3% for the first time in almost three years.

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Mortgage applications down

2007-11-21T12:12:00.000-08:00

November 21 2007 CNBC.com

The volume of applications filed for mortgages fell 3.6% last week, the Mortgage Bankers Association reported Wednesday. Also on a seasonally adjusted basis, applications to refinance existing mortgages decreased 5.0% on a week-to-week basis in the week ended Nov. 16 , while new home purchase applications dropped 2.0%, according to MBA's weekly survey. On an unadjusted basis, overall applications were up 9.8% compared with the same week in 2006. The four-week moving average for all applications showed improvement, up a seasonally adjusted 0.9%. Refinancing filings accounted for 50.3% of all applications last week, up slightly from 50.2% the previous week. Adjustable-rate mortgages made up 15.8% of all filings, up from 15.5%.

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U.S. mortgage rates fall

2007-11-21T12:09:00.000-08:00

November 21 2007 MarketWatch.com
Mortgage rates dropped this week, allowing the 15-year fixed-rate mortgage to fall to a level last seen in February 2006, according to Freddie Mac's weekly survey, released on Wednesday. "Both the producer price index and the consumer price index remained contained in October while industrial production fell," Frank Nothaft, Freddie Mac chief economist, said in a news release. "This allowed interest rates for the 30-year fixed-rate mortgage to decline to the lowest levels since early May 2007 and the 15-year fixed-rate mortgage to fall to a level not experienced since early last year."

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Behind Freddie and Fannie's Free Fall: Rating agencies and Subprime crisis

2007-11-21T12:04:00.000-08:00

November 20 2007 BusinessWeek.com
Ratings agencies chimed in: Fitch Ratings and Standard & Poor's Ratings Services both warned that they may cut Freddie's AA- credit rating on its preferred stock. Analysts slashed ratings and investors trounced share prices as the home financiers posted huge third-quarter losses. Like other companies involved in the mortgage business, Freddie Mac and Fannie Mae have seen their share prices suffer amid the subprime crisis. But that was nothing compared to what happened Nov. 20. Investors punished the shares of the home finance giants after Freddie posted a surprising—and disturbing—third-quarter loss of $2 billion and warned that it was having trouble meeting its regulatory capital requirements and may need to cut its dividend in half to raise capital reserves.

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