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Age is a Protected Class for Borrowing

I often wondered about elderly people taking out home loans when I knew they wouldn’t be able to live to fulfill the term of the contract. However, everyone needs a roof over their heads and if they can make the monthly payment, it is illegal to discriminate against them. You can not deny someone a home loan based on their race, color, national origin, religion, sex, familial status or handicap. George Souto, a mortgage lender from Middletown, Connecticut further explains,

In the case of older Borrowers, there is not only no age limits, but there isn’t any restrictions on the term (length) of the mortgage either. For example, if a Borrower who is 80 years of age chooses to purchase or refinance a home with a 30 year mortgage, they can as long as they meet the same income, credit, and ratio guidelines as anyone else.

Get caught discriminating against an older person if you’re buying or selling a home, and you could face federal consequences!

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Mortgage Rates Should Remain Low

by Kathy T. Leave a Comment

At a committee meeting of the Federal Reserve last week, there was discussion about the cost of housing remaining affordable for the next year. The Federal Reserve Open Market Committee has many responsibilities, including price stability and sustainable economic growth. When these folks talk, everyone listens.

How this impacts mortgage rates is simple,

Based on the comments from the last FOMC meeting, the economy is slowing. The Fed expects to leave the Federal Funds Rate at an exceptionally low level through at least late 2014 and has a couple of tools it can use (such as Operation Twist) to keep interest rates low while keeping inflation at bay.

All of which will loosely translate into mortgage rates remaining low for the foreseeable future.

Again the price of homes being extremely low, mortgage rates being extremely low… if you’re thinking about buying start saving your money NOW for a down payment and closing costs!

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FHA Program Opens More Options

by Kathy T. Leave a Comment

For home owners terribly delinquent on their mortgage payments and who have their loans guaranteed by the FHA, there may be another option other than foreclosure thanks to a new government program. According to Lender 411,

The FHA will sell 5,000 mortgages each quarter starting September 2012 to outside investors that may offer options outside government program allowances. Each loan will sell for a market-determined price, and the servicer of the loan will agree to refrain from foreclosure on the home for six months while the borrower has a chance to work out staying in the home.

For a borrower to be eligible for this initiative, they must be a minimum of 6 months delinquent, have attempted all current FHA loss-mitigation programs available and be in foreclosure but not have filed for bankruptcy.

I certainly hope this is a program that really will benefit people who are fighting to keep their homes. Sometimes proposals look good on paper, but do not come to fruition for people who can actually use the help.

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Tax Forgiveness to Expire at End of Year

by Kathy T. Leave a Comment

When a home is foreclosed on, sold via short-sale, or a home owner receives a modification loan, the amount of money forgiven is taxable because it can be considered income (albeit unrealized). That credit on your tax report can hurt to the tune of about $1500 to $3500 per $10,000. Therefore if you lose your home to foreclosure and it as worth $150,000, you could conceivably owe $22,500 to $52,500 in taxes.

However through the Mortgage Debt Relief Act of 2007, this tax debt was forgiven for millions of people. Unfortunately this is due to expire at the end of 2012 so could be big trouble for people already in financial trouble. According to DS News.com, it may be extended.

“Obama did include it in his budget, to extend it to 2014,” said Mark Luscombe, a principal analyst for tax research firm CCH, in a statement. “Congress….. might decide it’s not as crucial as extending the tax breaks that already expired at the end of last year.”

That doesn’t mean Congress won’t eventually act to extend the relief, Luscombe said.

If Congress acts, the tax relief could be extended to January 1, 2015.

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Third of Loan Applicants Turned Down

by Kathy T. Leave a Comment

One of every three applicants for a mortgage are turned down by lenders, according to msn.realestate.com. There is plenty of money available to loan and homes that are perfectly priced for affordability, but lenders are still saying “No thank you” to would-be buyers.

Banks and the federal government have tightened lending requirements. Each blames the other for the difficulties consumers have getting financing. It’s all a reaction to the big mortgage circus a few years back, when government regulators were lax, banks were handing out easy money and borrowers racked up debts they couldn’t pay.

The riskiest loans, made from 2004 to 2007, still haunt banks: The federal government now owns many of them and is forcing banks to buy some back.

Evidently when the government buys so many loans, their restrictions are greater so in order to sell lenders must meet those requirements.

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Some Help from Settlement for Regular Folks

by Kathy T. Leave a Comment

While the majority of people who are upside-down on their homes, behind on their mortgage payments, or who’ve lost their homes will not benefit from the massive settlement, some will be helped.

Today 49 states and federal officials settled with some of the nation’s biggest banks to the tune of $25 billion. However we are still in the dark about whether you, me, and our neighbors will be helped. According to MSNBC,

The settlement largely affects borrowers whose loans are serviced by five big banks: Bank of America, Citi, JPMorgan Chase, Wells Fargo, and Ally/GMAC. Loans owned by government-owned mortgage giants Fannie Mae and Freddie Mac are not affected. Borrowers from Oklahoma also will not be eligible because officials from that state did not join the settlement.

There are a lot of people in this nation tonight crossing their fingers that relief is coming. Unfortunately it will take many nights of crossed fingers before they get their answer.

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Stifling a Home Purchase

by Kathy T. Leave a Comment

New mortgage lending policies are now being developed to classify mortgages and set the standards on who qualifies. While the intent is to develop rules “in the spirit” of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, what essentially happens is it becomes even more difficult for regular people to qualify for a home loan. From Real Trends,

However, the lower default rates, moving from QM to QRM come at a cost—the number of potential borrowers who would be excluded from the market. This is where real estate professionals and their customers really get whacked.

Items of concern include the elimination of 8.55 million qualified loans of the 19 million analyzed. Also excluded are minorities and low income buyers, “Even at a 3% down payment, 25% of low-income buyers would be excluded, and at 10% down payment, 50% would be excluded.”

Scary stuff coming around the bend. Looks like a lot of houses will sit empty.

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Banks Still Have to Fix Mortgage Mess

by Kathy T. Leave a Comment

I have a confession to make here. My husband’s job was outsourced to India two years ago and he has yet to find another job. Fortunately my own work life has improved so we have managed to stay in our home. We have, however, because of the displaced worker issue requested to modify our mortgage. We have been trying to do this for a year and a half. We fax our papers every two months (or more if they ask) showing paycheck receipts. We call Wells Fargo every week. And still… nothing.

This is why as I read the article about the new task force investigating mortgage fraud, I feel a little sense of relief.

After a year of talks aimed at a settlement with five big banks — Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial (formerly GMAC) — attorneys general in all 50 states this week have been are poring over the 100-page draft of a the $25 billion deal requiring bankers to commit to modify problem loans that they have been slow to do until now. Under the proposed terms, the banks would also agree to follow strict foreclosure guidelines and procedures and contribute as much as $5 billion to foreclosure relief programs.

I don’t believe for a minute that it will help my husband and me – Mr. & Mrs. Joe Average – but it does give me a sense of satisfaction that perhaps SOMEONE will be helped.

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Time for Fannie & Freddie to Pay the Piper

by Kathy T. Leave a Comment

With the “Occupy Wall Street” movement in full swing, people are protesting the power that major banks and multinational corporations have over the democratic process. Protesters maintain that Wall Street played a huge role in creating an economic collapse that has caused the greatest recession in generations.

It appears that perhaps their theories are not too far off, as evidenced by the charges brought against former executives of Fannie Mae and Freddie Mac by the Securities & Exchange Commission. From CNN Money,

The suit claims that the executives knowingly approved of misleading statements, downplayed the size of their holdings of subprime loans and falsely claimed that their risky investments were minimal and manageable.

“Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was,” SEC enforcement chief Robert Khuzami said in a statement. “These material misstatements occurred during a time of acute investor interest in financial institutions’ exposure to subprime loans, and misled the market about the amount of risk on the company’s books.”

While I would never wish trouble on anyone, when someone commits fraud they should face consequences. Not only should regular people be watching the outcome, but I anticipate the world will watch as well.

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Looking at Stats for Mortgage Interest Deduction

by Kathy T. Leave a Comment

Depending on your place in life, depending on how you look at the stats, you may be getting a good amount for your mortgage interest deduction. Or maybe not. From RealTrends,

For example, if the cutoff for where middle class ends and upper class begins is $100,000, then the group of people making over $100,000 represent 41 percent of people who claim a mortgage interest deduction, and they get 82 percent of the total benefit. Maybe it’s not surprising to anyone, but they also pay about 82 percent of all taxes. So, you would think, OK, the most benefit goes to people who make the most money (and probably have the more expensive homes and mortgages), and pay the most taxes. Fair, I guess.

Click through to the article for the other side of the story.

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