Have you shared your toys lately? Have you been giving your sandwiches away? You may be a communist.

Happy Friday!

Technorati Tags: Barack Obama, communist, Friday, Friday Fun Video, happy Friday, mortgage blog

Have you shared your toys lately? Have you been giving your sandwiches away? You may be a communist.

Happy Friday!

Technorati Tags: Barack Obama, communist, Friday, Friday Fun Video, happy Friday, mortgage blog

Mortgage rates jumped higher this week, rising to 6.46%. It would be nice if yesterday’s Fed rate cut had helped fixed rate mortgages, but those mortgages are more influenced by bond rates.

HELOCs

The Fed rate cut could be good news for HELOCs, though. Shorter-term, consumer loans are more affected by the Fed funds rate than longer-term fixed rate mortgages. So this could be a good chance for you to pay down some of your consumer debt (including credit cards).

Mortgage interest rates continue to rise. And today’s expected Fed rate cut is unlikely to help any of that. Mainly because the Fed rate cut will be dealing with rates that are for loans more short-term than a mortgage loan. (HELOCs, though, should see some decrease.)

Right now, it’s just a fact that between liquidity problems and the failure of the government’s backing to make mortgage backed debt more palatable, mortgage interest rates are on the rise. Here is what Mr. Mortgage at the Mortgage Lender Implode-O-Meter points out about mortgage backed debt, interest rates and the housing market:

Whatever the case, Agency debt and mortgage backed debt is being
shunned.  And if this does not turn around, the housing market will
become even less affordable forcing values down that much more setting
off even more loan defaults due to the dreaded negative equity effect.
Housing remains unaffordable enough without 8.5% rates coming into the
picture.

I do think this is somewhat interesting, however. Back when my husband’s parents bought their first (and to this day only) home, mortgage interest rates were 12% — with a large down payment and reasonably good credit. They would have loved to get 8.5% on their mortgage loan.

My, how times have changed. We expect debt to be cheap and easy.

With foreclosures continuing to rise, it is no surprise that I have gotten a couple of questions from readers along the lines of:

What do I do if I can’t pay my mortgage?

Most of these folks are, of course, interested in staying in their homes. (Although the number of people just walking away — or even trashing the home before walking away — is increasing.) Here are some things you can do to increase the chances that you can avoid foreclosure and stay in your home:

1. Re-do your budget. Take a look at your expenses. Are there are unnecessary expenditures? Would it help if you didn’t *need* that big TV package, cell phone plan, to go out to eat twice a week or impulse buy? If you can cut some expenditures to save money to make your mortgage payment, do so.

2. Talk to your mortgage lender. It is a good idea to let your mortgage lender know what is happening. If you are worried about making payments after your rate resets, find out if you are eligible for a mortgage rate freeze. If you can refinance or get a loan modification, that would be helpful as well. But you may still need to do #1.

3. Consider selling. If you can’t afford your mortgage payment even with a workout, it might be worth it to consider selling. It stinks, but you may need to do it. If you can sell, you won’t have a foreclosure on your record. If the situation is dire, the mortgage lender might let you do a short sale.

The current economic conditions are making things difficult for a lot of people. One of the keys is to prepare and do what you can to plan in advance so that you do not become one of the foreclosures.

In the third quarter, foreclosure rates moved higher. So it is nice that Behind the Mortgage is offering some rather helpful information with regard to when you are eligible for a mortgage again after foreclosure. With more and more people deciding that foreclosure is the smart financial decision (my cousin among them), this is good information to have.

• Foreclosure: 5 years from completion date, minimum
  680 FICO and 10% down for 7 years, investment property, second homes,
  cash out refinances not allowed for 7 years.

• Deed-in-Lieu of Foreclosure: 4 years, at least 10% down required for 7 years.

• Short Sale: 2 years.  4 years for Freddie Mac

For what it’s worth, under FHA rules you have to wait two years before you are born-again.

Behind the Mortgage also points out that if you want a mortgage again after you become eligible, it is important to follow good financial and credit habits so that you can show that you are financially responsible. Also, it is worth noting that saving up for a bigger down payment is a good idea.

Today’s video is also educational! It is a rather simplified look at things, and leaves out the parts deregulation and derivatives played, but it’s a fairly decent assessment of the situation. Why is it fun? Why, the smiley faces, of course!

Happy Friday!

Despite various efforts by state and federal governments to stem the tide of foreclosure, foreclosures are on the rise around the country. Calls for moratorium on foreclosures have gone unheeded, and the cycle of foreclosures continues to bog down the U.S. economy. CNN Money reports on the current foreclosure cycle:

"We have never seen a foreclosure cycle like this one
before," said Rick Sharga, Realty Trac senior vice president. Other
periods of elevated foreclosure rates have been preceded by signs of
economic weakness. However, "in this cycle, we have foreclosure
problems that have caused an economic downturn."

Why the foreclosures keep on coming

One of the major reasons that the foreclosures keep mounting, I think, has to do with the fact that right now programs are voluntary. Mortgage lenders don’t have to renegotiate terms if they don’t want to, and there are no government programs in place to force the issue. (John McCain wants the government to buy up the mortgages in trouble.)

Another problem is that, in some cases, the homebuyers are wholly unable to afford the homes they are in even with modified terms. Part of the reason some of them got interest-only and teaser-rate loans is because they couldn’t afford a traditional fixed rate mortgage in the first place. Others have since lost their jobs or had other problems due to the economy. These are causing a new wave of foreclosures that can’t really be helped because the ability to pay just isn’t there.

And some people just do not want to deal with their mortgages anymore. There are increasing instances of people simply walking away, refusing to pay anymore and just letting the home go.

With all of these factors at play, it’s no wonder that foreclosures are still creating problems.

Despite various efforts by state and federal governments to stem the tide of foreclosure, foreclosures are on the rise around the country. Calls for moratorium on foreclosures have gone unheeded, and the cycle of foreclosures continues to bog down the U.S. economy. CNN Money reports on the current foreclosure cycle:

"We have never seen a foreclosure cycle like this one
before," said Rick Sharga, Realty Trac senior vice president. Other
periods of elevated foreclosure rates have been preceded by signs of
economic weakness. However, "in this cycle, we have foreclosure
problems that have caused an economic downturn."

Why the foreclosures keep on coming

One of the major reasons that the foreclosures keep mounting, I think, has to do with the fact that right now programs are voluntary. Mortgage lenders don’t have to renegotiate terms if they don’t want to, and there are no government programs in place to force the issue. (John McCain wants the government to buy up the mortgages in trouble.)

Another problem is that, in some cases, the homebuyers are wholly unable to afford the homes they are in even with modified terms. Part of the reason some of them got interest-only and teaser-rate loans is because they couldn’t afford a traditional fixed rate mortgage in the first place. Others have since lost their jobs or had other problems due to the economy. These are causing a new wave of foreclosures that can’t really be helped because the ability to pay just isn’t there.

And some people just do not want to deal with their mortgages anymore. There are increasing instances of people simply walking away, refusing to pay anymore and just letting the home go.

With all of these factors at play, it’s no wonder that foreclosures are still creating problems.

One of the economic trends coming to light as the global financial crisis becomes more pronounced is the advent of mass layoffs. Mass layoffs are increasing at a rather rapid rate, according to CNN Money:

"At large firms, basically what I see is an across-the-board, shotgun
approach," said Paul Sarvadi, CEO of human resources outsourcing firm
Administaff in Houston. "If they anticipate revenues going down, then
they see how much need to cut to reach operating targets, and equate
that cost to a number of people."

What you can do to prepare for job loss

At this time, it is important to be prepared for any eventuality. This means that you may have to take steps to prepare your personal finances — especially if you have a home. Now is a good time to review your budget and make sure that you are cutting unnecessary expenses. Now is the time to find breathing room and pad your budget. You want to make sure that you can make your mortgage payment — or you might lose your home.

Also, if you can, this is the time to build up your emergency fund and your savings. You should also pay down some of your consumer debt.