Central Ohio Real Estate Blog

UP TO $5,000 IN DOWN PAYMENT ASSISTANCE AVAILABLE

noreply@blogger.com (Brent A Diebert) — Tue, 11 May 2010 19:22:00 +0000

Up to $5,000 Grant Money to buyers purchasing a home to live in

Grant money is available at closing to help with down payment and closing costs!!!

Columbus Income Limits for 1-2 persons $54,880 3+ people $63,112

Can combine with other grant programs such as OHFA

Brent Diebert

BrentDiebert@ArlingtonBank.com

Office 614-486-3843

Mobile 614-571-3554 Apply Now

Team Fax 614-430-8116

Member of Arlington Bank’s “Lean on Me Team” located at 4621 Reed Rd Columbus OH 43220.

Financing investment properties

noreply@blogger.com (Brent A Diebert) — Thu, 06 May 2010 20:04:00 +0000

When purchasing investment property there are different lending criteria based on your history as a landlord, number of mortgage properties, and amount of savings and reserves. At the Arlington Bank We offer conventional financing to investors with between 4 and 10 financed properties. If this fits your needs lets go over the guidelines and see where your property acquisition plans fit.

Brent Diebert

BrentDiebert@ArlingtonBank.com

Office 614-486-3843

Mobile 614-571-3554

Team Fax 614-430-8116

HUD BUYER AND BROKER INCENTIVES DISCONTINUED

noreply@blogger.com (Brent A Diebert) — Tue, 16 Feb 2010 21:01:00 +0000

Effective February 12,2010, any properties listed and/or sold with FHA financing as of this date are no longer eligible for the $100 down payment incentive. Only contracts executed by 02/12/2010 are eligible. The Sales Allowance of $2500 for owner occupant purchasers will also be discontinued as of February 12, 2010 for all new contracts accepted on or after this date. The $500 broker bonus for owner occupant purchasers who took advantage of the $2500 sales allowance is also discontinued as of February 12, 2010.

Brent Diebert

BrentDiebert@ArlingtonBank.com

Office 614-486-3843

Mobile 614-571-3554 Apply Now

Team Fax 614-430-8116

Central Ohio's Jumbo Summary Report

noreply@blogger.com (Brent A Diebert) — Fri, 12 Feb 2010 17:59:00 +0000

Listings between $500,000 - $1,400,000 in Franklin Delaware, and Fairfield Counties.

In Calendar year 2009 there were 1,185 jumbo properties listed in the statistical area.

There were 407 sold jumbo properties listed in the statistical area.

This is a 2.912 ratio of listings to sales or approximately 3 listed properties for every sold property.

In 4th Quarter of 2009 there were 184 jumbo properties listed in the statistical area.

There were 97 sold jumbo properties listed in the statistical area.

This is a 1.897 ratio of listings to sales or approximately 2 listed properties for every sold property.

In January of 2010 there were 90 jumbo properties listed in the statistical area.

There were 23 sold jumbo properties listed in the statistical area.

This is a 3.913 ratio of listings to sales or approximately 4 listed properties for every sold property.

As of 2-11-2010 there are 527 jumbo listing.

Brent Diebert Brian Hitchcock

BrentDiebert@ArlingtonBank.com BrianHitchcock@ArlingtonBank.com

Office 614-486-3843 Office 614-486-9174

Mobile 614-571-3554 Apply Now Mobile 614-260-5537

Team Fax 614-430-8116

The Arlington Bank’s “Lean on Me Team” located at 4621 Reed Rd Columbus OH 43220.

Defaults on FHA Loans Surpass 9%

noreply@blogger.com (Brent A Diebert) — Wed, 10 Feb 2010 17:43:00 +0000

Defaults on FHA Loans Surpass 9%

Even with improvements beginning to peek through the debris of the housing crisis, mortgage defaults continue to rise at an incredible rate, and the story is no different for the federal government’s mortgage insurance agency.

The latest numbers from the Federal Housing Administration (FHA) show that the percentage of loans it backs that are at least 90 days past due hit 9.12 percent at the end of 2009. That figure is up from 6.82 percent one year earlier – a 34 percent increase.

FHA officials have repeatedly cited a rise in loan defaults as inevitable given the agency’s exponential growth in market share. The FHA currently backs about 30 percent of all new loans for home purchases and 20 percent of refinanced loans. Those figures represent an increase of nearly 1,000 percent since 2006, when private lenders began to pull back and the credit crunch set in.

According to the agency, the bulk of its problem loans stem from originations made in 2007 and 2008. Officials say tighter underwriting standards make more recent and new loans less likely to default. In fact, HUD said in its fiscal year 2011 budget that it expects new business from FHA to generate a $6 billion overall profit, although that number will be eclipsed by projected losses of $19 billion from insuring soured loans.

In the fourth quarter of 2009, lenders originated $86.1 billion in FHA single-family loans, up 21 percent compared to the same period in 2008. Sixty percent, or $51.8 billion, of the fourth-quarter financing was used to fund home purchases.

For the full 2009 year, FHA insured 5.8 million loans, with an aggregate balance of $752.6 billion – a 24 percent increase compared to 2008’s business.

Foreclosures on loans guaranteed through FHA soared 41 percent in the fourth quarter from year-ago levels, to 20,650. The agency also reported that 2,925 short sale transactions were completed during the three-month period – that’s a 140 percent increase compared to one year earlier.

FHA announced extensive policy changes last month to get a better handle on default risk and minimize problem loans. The agency has raised homebuyers’ up-front costs for mortgage insurance, tripled downpayment requirements for borrowers with low credit scores, and cut seller concessions in half. Officials say they will also be keeping a close eye on FHA lenders to ensure the agency’s standards are being followed and plan to institute new rules that force mortgagees to assume liability

Brent Diebert Apply Now

Mortgage Lending Professional

The Arlington Bank

Portfolio loan of the Week:

noreply@blogger.com (Brent A Diebert) — Tue, 09 Feb 2010 17:10:00 +0000

Our client was looking to add a 2 story addition nearly doubling the sq ft of his home. The current outstanding balance was $240K and the improvements were another $200K and the estimated value after completion would be $530K. Our portfolio loan offered a construction loan of $400,000 and required an investment in the project of 20% of the improvements. We were able to offer a rate of 4.125% (APR of 4.222) in a 3/1 Arm

The Arlington Banks portfolio lending offers flexible mortgage financing solutions.

Brent Diebert Apply Now

Mortgage Lending Professional

The Arlington Bank

4621 Reed Rd

Columbus, OH 43220

Office: 614-486-3843

Mobile: 614-571-3554

Fax: 614-430-8116

Deadline for OHFA down payment assistance second mortgage set now set to expire 12/31/2009

noreply@blogger.com (Brent A Diebert) — Wed, 25 Nov 2009 18:05:00 +0000

The down payment assistance second mortgage program in Ohio has been extended through December 31^st 2009. The original deadline was set to expire the end of November. The basic idea of this program is to allow homebuyers to get an advance on the tax credit for the purpose of down payment on a first home. If this idea sounds appealing you are not alone. The program has been very successful over the past several months.

This also means that at the current time although the first time homebuyers tax credit is available for home purchase closing for another 7 months this program is only available through the end of the year. If you have any interest in using this program I suggest you act quickly and give me a call.

Brent Diebert

Mortgage Lending Professional

The Arlington Bank

4621 Reed Rd

Columbus, OH 43220

Office: 614-486-3843

Did your last lender offer you a $2000 yearly tax credit?

noreply@blogger.com (Brent A Diebert) — Thu, 19 Nov 2009 20:55:00 +0000

Most 1^st time homebuyers (Realtors for that matter) have no idea that there is a yearly tax credit of up to $2,000 every year you have your mortgage available in the state of Ohio. For a first time homebuyer you can receive a tax credit in the amount of 20% of the mortgage interest paid on your loan for every year you have it with a cap of $2000. For anyone buying a bank owned home to live in you can receive a 30% of the mortgage interest paid on your loan for every year you have it with a cap of $2000. This program is called the Mortgage Credit Certificate program MCC and may be available in may other states as well. To apply for the credit you must use a approved lender for your mortgage loan. The loan must be a fixed rate but can be a conventional or FHA loan. Funds are limited but available at the current time.

Please contact me for more information

Brent Diebert The Arlington Bank 614-486-3843 BrentDiebert@Arlingtonbank.com

Congress Passes Homebuyer Tax Credit Extention

noreply@blogger.com (Brent A Diebert) — Thu, 05 Nov 2009 21:45:00 +0000

The first-time home buyer tax credit extension and expansion has won Congressional approval and is on its way to President Barack Obama.

He's expected to sign the measure as early as tomorrow.

The U.S. House of Representatives, this morning, voted 403 to 12 to pass the measure, following Senate approval yesterday.

The extension and expansion of the popular first-time home buyers tax credit gives both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010.

The new tax credit extends the existing credit for first-time homebuyers, worth up to $8,000, and offers a new credit of up to $6,500 for some existing homeowners.

The reduced credit for existing homeowners is available to those who have been in their current residence for a consecutive five-year period.

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.

A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010.

Brent Diebert

The Arlington Bank

BrentDiebert@ArlingtonBank.com

614-571-3554

Hud fumbles the deal for 1st Time Homebuyers

noreply@blogger.com (Brent A Diebert) — Fri, 29 May 2009 16:15:00 +0000

Homebuyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.This means that 1st time homebuyers still need 3.5% for down payment. If you’re in Central Ohio I can help. I have programs available to monotize the Stimulus from the State of Ohio.

Contact me Now!!

Office 614-486-3843

Updates from HUD on the Monetization of the stimulus for homebuyers

noreply@blogger.com (Brent A Diebert) — Fri, 15 May 2009 18:37:00 +0000

HUD Secretary Donovan’s statement was a “preview” ahead of the formal announcement, which is expected next week along with information about how to apply for the $8,000 bridge loan.

I will keep you up to date as the news rolls in

FHA to help with down payment

noreply@blogger.com (Brent A Diebert) — Wed, 13 May 2009 14:45:00 +0000

Yesterday (May 12^th 2009) Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is going to permit its lenders to allow homeowners to use the $8,000 tax credit as a down payment. According to Donovan, the FHA's approved lenders will be permitted to "monetize" the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Clipped from www.hud.gov

We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly.

Tax credit saves tens of thousands for Central Ohio 1st time buyers

noreply@blogger.com (Brent A Diebert) — Fri, 24 Apr 2009 20:44:00 +0000

As if it wasn’t great enough having the feds giving 1st time buyers $8,000, now I have a program available that give buyers a yearly tax credit of up to $2,000 every year they have a home loan. The tax credit is 20%-30% of your yearly mortgage interest.
Rates today are currently 4.875 – 5.00% with No points for conventional and FHA financing.
A recent example:
· $150,000 loan amount
· 5% rate for 30 yr fixed rate FHA purchase
· Total credit over the life of the loan was $27,983

This was over and above the $8,000 federal stimulus check they received.

There are income and property limitations but every 1st time buyer should apply (at no cost of course).

Brent Diebert
The Arlington Bank
Office 614-486-3843
Mobile 614-571-3554

Ohio beats Florida down payment assistance

noreply@blogger.com (Brent A Diebert) — Mon, 20 Apr 2009 16:55:00 +0000

As the state of Florida works to get residents and advance the $8,000 stimulus funds the Federal Government is offering** see (http://www2.tbo.com/content/2009/apr/18/na-state-eyes-plan-to-aid-homebuyers/news-politics/) I have it available for the residents of Ohio.

Get an advance on your federal stimulus to use as down payment for your first home.

Don’t need assistance with down payment, I can also offer 1^st time homebuyers an additional tax credit of up to $2,000 every year you live in the home. Email me for all the information. BrentDiebert@Arlingtonbank.com

Brent Diebert

Mortgage Lending Professional

The Arlington Bank

Office: 614-486-3843

Mobile: 614-571-3554

1st Time Homebuyers Advance on $8,000 Stimulus

noreply@blogger.com (Brent A Diebert) — Wed, 15 Apr 2009 17:46:00 +0000

This IS what you have been waiting for!

I now have the avaibility to advance 1st time homebuyers 3% down payment money to purchase a home today. With FHA financing this means that I can offer a first mortgage of 96.5% of the purchase price, a second for an additional 3% of the purchase price and the seller can pay all the closing costs and pre-paids. Buyer's down payment of 1/2% can still be a gift from a family member. So for $1,000 investment buyer can purchase a $200,000 home.

Income and property limits apply so contact me for the details.

Brent Diebert
BrentDiebert@Arlingtonbank.com
Mortgage Lending Professional
The Arlington Bank
Office: 614-486-3843
Mobile: 614-571-3554

It's no April fools Joke. FHA discontinues Cashout soon so APPLY NOW

noreply@blogger.com (Brent A Diebert) — Tue, 17 Mar 2009 14:45:00 +0000

FHA to stop cash-out loans as of April 1^st 2009. Cash-out can mean any money that was not part of the original purchase of the home. Effective for case number assignments on or after April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser’s estimate of value.

Given the continued deterioration in the housing market, and FHA’s need to limit its exposure to undue risk, this reduction to the maximum LTV for cash-out refinances is being instituted on a temporary basis while FHA further analyzes the housing and mortgage industry as well as its own portfolio to determine whether permanent measures should be taken.

Brent Diebert

Mortgage Lending Professional

BrentDiebert@arlingtonbank.com

The Arlington Bank

4621 Reed Rd

Columbus, OH 43220

Office: 614-486-3843

Cell: 614-571-3554

1st time homebuyers won't have to wait for tax credit

noreply@blogger.com (Brent A Diebert) — Fri, 27 Feb 2009 18:17:00 +0000

First-time homebuyers who qualify for up to $8,000 in new tax credits don’t have to wait until 2010 to get their money.

The Internal Revenue Service says that buyers can claim the credit when filing their taxes this year, by April 15.

Already filed your taxes? You can still get the credit this year, too, by filing an amended return.

The other option is waiting to claim the credit when filing 2009 tax returns, by April 15, 2010.

The tax credit, which is part of the federal stimulus package, provides up to 10 percent of a home’s purchase price (with a maximum of $8,000). Purchases must be between Jan. 1 and Dec. 1. Buyers who haven’t owned a home in the past three years would qualify, too.

The tax credit is capped at $4,000 for married people filing separately, and the amounts are less for people whose adjusted gross income is over $75,000, or $150,000 for joint filers.

People who already filed federal income tax returns this year can still get the homebuyer tax credit early, if they purchased a home since Jan. 1. They would need to file a 1040X to amend their tax returns, reflecting the new tax credit.

Some people may have bought a home after Jan. 1, but before the new tax credit was adopted last week. If they’ve already filed their taxes, they may have claimed the old credit. They, too, could file an amended 1040X, to get the new credit this year.

An IRS spokesman says it’s best to hold off on filing amended returns until after you receive your expected tax refund.

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit, on www.IRS.gov. The instructions to the revised Form 5405 provide additional information on who can (or can’t) claim the credit, income limitations and repayment of the credit.

“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit,” said IRS Commissioner Doug Shulman in a statement. “This important change gives qualifying homebuyers cash they do not have to pay back.”

First-time homebuyers who purchased between April 8, 2008, and Dec. 31, 2008, would qualify for the previous tax credit of $7,500, which has to be repaid over 15 years.

The new tax credit does not have to be repaid if the recipient stays in the home for 36 months after purchase

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

noreply@blogger.com (Brent A Diebert) — Thu, 19 Feb 2009 20:03:00 +0000

Here’s the Skinny……..

Tax Credit for Homebuyers

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, insulation. The Incentives also assist with a person favorite of mine wind turbines

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Please feel free to share this information.

Best regards,

Brent Diebert

Mortgage Lending Professional

FDIC to Tighten Interest Rate Restrictions on Institutions That are Less Than Well-Capitalized

noreply@blogger.com (Brent A Diebert) — Wed, 28 Jan 2009 15:01:00 +0000

Below is a partial notice released by the FDIC. Were less that stable banks offering higher than average rates of returns? If memory serves me correctly both Indymac and Washington Mutual were offering accounts at a return of approximately 5% before their demise. The bigger question in my mind is: If there are only 154 problem banks out of the 8,300 nationwide why is the government concealing their identity? With the lack of faith in the entire banking community wouldn't the country be better served with FULL DISCLOSURE?

Prompt Corrective Action requires the FDIC to prevent banks that are less than Well Capitalized from soliciting deposits at interest rates that significantly exceed prevailing rates. The proposed regulation would define nationally prevailing deposit rates as a direct calculation of those national averages, as computed and published by the FDIC based on data available to it. Reliance on the Treasury yields in the regulation would be discontinued. The expectation is that this additional concreteness would result in lower deposit rates being paid by a number of banks that are less than Well Capitalized and closer adherence to the statute."

The proposed rule applies only to the small minority of banks that are less than well capitalized. As of third quarter 2008, there were 154 banks that reported being less than Well Capitalized, out of more than 8,300 banks nationwide.

Fair Isaacs is making major changes to its credit scoring models by mid 2009

noreply@blogger.com (Brent A Diebert) — Thu, 08 Jan 2009 15:42:00 +0000

By next spring, two of three credit reporting bureaus will use a new model. Fair Isaac, the developer of FICO scores, has made the biggest change to its mathematical credit score model since it was introduced in 1989. Scores will still be on a 300- to 850-point scale. But the company estimates that 40% to 50% of borrowers’ scores could go up or down by more than 20 points because of how the new model fine-tunes the variables it uses to evaluate consumers’ credit use behavior.

For creditors, the new FICO score promises to reduce the risk of defaults, improving the predictability of defaults by 5% to 15%. Delinquencies are at their highest rate since 1992, when the economy was also in a recession. The revised scoring method “has a few more gray areas fleshed out so it gives us confidence in credit scoring models,” says Ginny Ferguson, a member of the board of the National Association of Mortgage Brokers.

Equifax and TransUnion will be the first credit reporting bureaus to roll out the changes over the next year. As credit tightens because of the financial crisis, FICO scores are becoming increasingly important for borrowers looking to qualify for favorable terms. That puts high scorers in “even a better position for pricing on loans” as the economy recovers, says Ferguson.

Fair Isaac has increased the number of groups that customers fall into from 10 to 12, taking into more account the number and magnitude of credit problems. Infrequent problem borrowers will no longer be lumped in with habitual delinquents. With the new model, “there is more forgiveness around people in the middle,” says Foster. “If you have one isolated missed payment you won’t score as low as before.” The new FICO model also focuses less on how many accounts a borrower has and more on the amount of balances carried.

Piggybacking — upping a score on someone else’s back — won’t be ruled out in the new FICO score. But it will make using that route to establishing credit harder and lengthier. The authorized user provision allows young adults to create a credit history by using and paying off accounts held by their parents. But it has also been subject to abuse, with high credit scorers selling their names to borrowers looking to improve scores. Fair Isaac estimates that 30% of U.S. credit card holders, or 60-75 million people, are authorized users. Credit.com says that many of those authorized users are women. Many of them rely on their husbands’ FICO scores, and it will now take longer for those women to build up their own credit scores.

Super Conforming Loans Ineligible for Private Mortgage Insurance

noreply@blogger.com (Brent A Diebert) — Wed, 07 Jan 2009 18:15:00 +0000

Recent announcements by the Private Mortgage Insurance companies no longer allow mortgage insurance coverage on loan amounts over $417,000 in the states of: Arizona, California, Florida, or Nevada.

USDA Rural Development 100% loan program to run out of money by January 9, 2009, if not sooner

noreply@blogger.com (Brent A Diebert) — Tue, 06 Jan 2009 20:30:00 +0000

In a message received from the USDA Rural Development National Office in Washington DC announced that demand for the this program is at a historic high, and we anticipate this funding will be exhausted by January 9, 2009, if not sooner. USDA Rural Development will continue to accept and process applications, and will issue Conditional Commitments “subject to receipt of Congressionally appropriated funds.”. There will be no interruption of service by USDA Rural Development during any period in which funding is not available. So rest assured any loans I currently have in the process for your clients will continue to move forward in a timely manner.

Brent Diebert

Mortgage Lending Professional

The Arlington Bank

4621 Reed Rd

Columbus, OH 43220

Office: 614-486-3843

Cell: 614-571-3554

Yesterdays Roller Coaster ride for interest rates

noreply@blogger.com (Brent A Diebert) — Thu, 18 Dec 2008 15:43:00 +0000

In the hunt to locate the best interest rate for a mortgage loan many people may spend an afternoon calling or emailing local lenders or use an online service like zillow to get free quotes from many different lenders. This was the procedure recommended for years by financial professionals. But as the lending landscape has changes in the past 24 months this procedure has proven ineffective. Wednesday December 17th 2008 was the case in point.

My first notice of 30 yr fixed interest rates started at 4.625% that lasted for about 10 minutes. I was notified in minutes that locks were no longer being accepted and rate changes were coming momentarily.

As the morning progressed I took calls from customers following the time tested procedures I listed above unwilling to heed my advice and noting they would be back in touch.

Next notice was 4.75%, then 4.875 and by 1:00 pm rates were back at 5%, which was the prior days level.

By the end of the day rates were 5.125-5.25% to close the day.

When customer called back in the afternoon they were disappointed to hear the news.

In today’s banking environment locking an interest rates just like buying stock. A rate lock is a buy call and your committed good or bad. There no bell when you hit bottom so the advice of a trusted professional is worth its weight in gold. One customer’s indecisiveness cost them a savings of over $64,000 yesterday on the term of their loan.

My recommendation:

Get an application completed now.
Get me a signed document outlining your terms, desired rate, and other information.
Having a plan in place for getting your best rate can ensure it happens without suprises.

Brent Diebert
BrentDiebert@ArlingtonBank.com
Mobile 614-571-3554

Are Some Owners Purposefully Falling Behind?

noreply@blogger.com (Brent A Diebert) — Fri, 12 Dec 2008 18:52:00 +0000

There is a growing increasingly alarmed that programs to bail out troubled home owners might have the unintended consequence of encouraging people to miss mortgage payments in order to qualify for easier loan terms.

Such initiatives typically require that borrowers be 60 to 90 days late on payments to get a mortgage reworked.

Customers who are contacting their lenders before they fall behind are being told to call back when they are 2-3 payments late. “They essentially told me to stop paying my loan” is a comment I have heard from several homeowners looking for assistance.

Half of newly modified loans become delinquent

noreply@blogger.com (Brent A Diebert) — Tue, 09 Dec 2008 17:57:00 +0000

Comptroller of the Currency John Dugan said more than half of loans modified in the first quarter have become delinquent within six months of being modified with more favorable terms.

"After three months, nearly 36 percent of borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months 58 percent," he said.

Why is the re-default rate so high? Were the loans so badly underwritten that the customers were never qualifiable at any payments. Here are some headlines from lender solicitations I received in years past:

Credit score of 620? No job no proof of income no problem
1 day out of a chapter 7 bankruptcy 100% financing available
$417,000 loan amount with a $322 payment No proof of income required!
100% stated income stated asset investment property purchases available

The loan modification process is a road paved with good intentions but they might as well be building it on a sandy beach unless they start re-underwriting the loans prior to any changes.