In all the coverage of foreclosure prevention measures, it has been difficult to call out instances of other mortgage lender news. However, starting tomorrow, mortgage brokers are required to be in compliance with what is known as the “Identity Theft Red Flags and Discrepancies Final Rule”. This is a rule that requires mortgage brokers to take more care to ensure that they are dealing with legitimate borrowers. Some of the requirements of the Red Flag rule include:

* Implement an Identity Theft Prevention Program

* ID theft training for employees (loan officers, processors, etc.)

The idea is to train mortgage brokers and their employees to look for red flags (especially address discrepancies and changes) that indicate that identity theft may be occurring. Unfortunately, since there are so many unscrupulous folks out there, it likely means that a little more effort will be required on the part of borrowers as well. However, if it means your identity is being protected, it’s probably worth a little extra effort and annoyance.

One of the bits of information that Wall Street and others has been waiting for has been the release of the results of bank stress tests. These stress tests were performed by the Treasury and then analyzed. Now the results of stress tests on 19 banks are about to be released. Preliminary results suggest that six of these banks need more capital.

Two of the bank names have already been released: Bank of America and Citi. The reason we’re hearing about these banks is due to the fact that they are appealing the results of the stress tests to the Federal Reserve.

But where will this capitalization money come from? Bloomberg reports on how banks are expected to raise the capital they need:

While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said.

Contrary to the belief of some, releasing stress test results thus far hasn’t negatively impacted the stock market. In fact, U.S. stocks are rallying today.

While I think that you are probably safe from swine flu (for the most part), it is still causing a great deal of worry. And that worry is not only shaking up financial markets, but it is also creating a climate in which your mortgage interest rate could be lower. Risk aversion means that mortgage interest rates are dropping as safer investments (like bonds) become more popular. The Mortgage Reports Blog has this on swine flu and your mortgage interest rate:

Whatever you call it, though, mortgage rate shoppers are squealing with delight right now. In a week in which mortgage rates were supposed to face upward pressure from new economic data and a Federal Reserve meeting, fears of a pandemic virus are hogging the headlines and leading mortgage rates lower.

Traders are nervous that Swine Flu will slow the recovering economy’s growth and that is drawing money into mortgage-backed bonds.  Conforming mortgage rates have improved by 0.125 percent since Friday’s market close as a result.

Mortgage rates are already at lows, and now they are a little lower. If you can lock in a good interest rate soon, you are likely to be in good shape.

When the global financial crisis went down, some investing banks and firms were forced to re-structure to become more traditional banks in order to receive TARP funds and be subject to more regulation. One would think that such a fall would result in a little more caution going forward. Not so. Goldman Sachs is boosting its risk taking at a rather rapid pace — faster than anyone else on Wall Street.

Some of the money Goldman has managed to earn from all of this is meant to repay TARP. Indeed, many former investment banks are eager to repay their obligations to the U.S. government so that they can move on, enjoying less regulation. Any company that wants to do this, however, will have to wait until the release of the results of the Treasury department’s stress tests.

Great investment ideas like: fire, things you can eat and weapons.

Happy Friday!

http://www.comedycentral.com/videos/index.jhtml?videoId=187614

There has been no shortage of scandal surrounding numerous aspects of the bailout efforts made last year. From junkets for those receiving taxpayer money to closed door meetings, it seems as though definite favoritism might have been employed in deciding who failed and who survived. (Rumors abound that former Goldman exec, then-Treasury Secretary Henry Paulson, allowed Goldman rival Lehman Brothers to fail on purpose, while bailing out others.)

The latest scandal is that Bank of America CEO Ken Lewis is alleging that he was forced into silence about Merrill Lynch back when BofA was in the process of acquiring Merrill Lynch in order to keep the company from going the way of Lehman. Stock Market Funding reports on this latest wrinkle:

Bank of America Chief Executive Kenneth Lewis told the New York attorney general he believed former Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke wanted him to keep quiet about the worsening terms of the bank’s acquisition of Merrill Lynch, according to testimony reviewed by The Wall Street Journal.

All of this scandal begs the question: What other shenanegans have been going on behind closed doors since all this bailout stuff started in 2008?

Today is Earth Day, and I thought it would be worth a reminder that the economic stimulus bill passed earlier this year is offering an increased tax credit for green home improvements. The Christian Science Monitor offers this insight into what’s new for green home improvement tax credits:

New incentives increase the size of tax credits for homeowners who buy qualifying products. For instance, those who invest in highly-rated insulation, replacement windows, duct seals, or high-efficiency heating and cooling systems can now receive a tax credit worth 30 percent of the upgrade cost (maximum credit value: $1,500).

Previously, homeowners could get a tax credit worth just 10 percent of an upgrade cost, up to a maximum of $500. Now, taxpayers who spend $800 on an efficient water heater, $1,000 on insulation, and $2,000 on windows could lop $1,140 off their federal tax bill.

Awards for switching to renewable energy sources have become especially generous. Congress this month did away with caps on 30 percent tax credits for homeowners who install solar panels, geothermal heat pumps, or windmills. Now a $24,000 investment to make a home solar-powered would generate a federal tax credit worth $7,200. (Before the stimulus, credits were capped at $2,000 for geothermal and solar; $4,000 for wind).

This represents a major shift in the effort to encourage more environmentally friendly homes. It is also worth noting that if you get a home equity loan to cover some of the costs, the interest is tax deductible in many cases. Of course, in order to reap the savings, it is important to realize that you will need to be in your home long term. Even with the tax credits, it can be a while before you actually manage to offset the costs that come with upgrading your home to something greener. But if you can afford to do it, now is a great time — even if it is only one or two simple changes.

This week is not expected to hold any news that is likely to make a big splash in the markets. As a result, mortgage rates are expected to remain relatively stable in the near term. Lenderama points this out about mortgage rates:

The bottom line for this week is that mortgage rates will likely remain fairly steady as MBS pricing tries to set up a solid pattern, though seeing mortgage rates edge slightly higher may be seen as well.  As I have said before, I do not expect mortgage rates to be heading any lower, at least for the foreseeable future and without something major happening.

It appears as though mortgage rates may have reached a temporary bottom, and that they are unlikely to go much lower. Additionally, as the economy improves, mortgage rates are expected to go up overall. So the window is closing on the best rates.

There are a number of ways to avoid foreclosure. With the President’s mortgage modification program, many people may find that they can stay in their homes. But what happens if you need to sell your home? The situation changes, and you may have difficulty in this market. And what happens if you can’t get an offer on your home that covers what you owe on your mortgage? This is a problem for many whose homes have dropped dramatically in value.

Short sale

One option is engagin in a short sale. A short sale is an arrangement in which your mortgage lender agrees to take less for your home than you owe. The amount of the difference is forgiven, and the mortgage lender is just glad you tried to sell rather than simply walk away and leave the home to the bank as a foreclosure.

However, many mortgage lenders won’t consider a short sale unless you have the home on the market for at least 90 days. Others won’t think about it unless you are in mortgage payment trouble. You should also realize that a short sale can damage your credit rating. In this economy, though, many lenders understand that you might have had no choice and will take that into consideration when you go to buy a new home — provided your credit history and debt to income ratio are generally excellent.

A short sale can be a way of selling your home quickly in this difficult real estate market. However, if you don’t have to move and you can make your mortgage payments, you might be better off to wait until home values start growing again.

One last fond look at tax season 2009. This is one of the great TurboTax commercials featuring our money come to life.

Happy Friday!