A friend recently told me about a mortgage his clients recently signed … a 40 year plan at a 9 1/2 percent APR.  I nearly fell over.  They must have had some risk in their credit score and employment history to get that seemingly bad deal in this generous mortgage rate era.

Another mortgage is also now being marketed – a plan in which home owners make a payment every two weeks rather than monthly.  It can be good in that the loan will be paid off earlier, but there are some concerns.  According to Miranda Marquit of The Military Wallet,

A biweekly payment means that the lender loses out on some of the money it would have received if you fulfilled the original mortgage terms. To make up for this, some lenders charge a monthly plan fee, or charge an upfront enrollment fee. Another thing to be wary of is a prepayment penalty. Double check your mortgage; it a prepayment penalty is involved, enrolling in a biweekly plan could be counterproductive.

Before jumping in, weigh all the pros and cons.  And if you’re considering a 40-year mortgage at 9 1/2 percent, look elsewhere!

Photo by SurferGirl30 via flickr creative commons.

Toxie seems to be a popular character on NPR and throughout the blogosphere that focuses on asset and financial management.  Toxie is the name given the toxic mortgages throughout the U.S.  When Toxie was good, she doubled, tripled, quadrupled the value of housing in different parts of the country.

But then she had to pay her dues and Toxie became toxic.  Toxie gave wealth.  Toxie took it away.

Toxic assets — bundles of mortgages that Wall Street sliced up and sold to investors — were at the center of the financial crisis.  When the housing market tanked, no one wanted to own them.  That’s when we bought one.  When we bought Toxie , in January of this year, she seemed like a great deal.   We paid $1,000. That was 99 percent less than she cost dring the housing boom.

In the end, people could not figure out how much Toxie’s assets were really worth.  And there are millions more still out there waiting to see how their story ends.

Photo from Palimpsest.

I have a love:hate relationship with voice mail.  I love the ability to screen calls from telemarketers, but I hate when I’m the caller and get long voice mail messages.  For example, “Thank you for calling [insert name]. I am currently away from my desk or meeting with a client.  If you’re calling about employment, we will be hiring in August.  If you’re calling to verify employment, please leave a message with the social security number, blah blah blah.  If you would like to leave a message, please leave your name, number, and a detailed reason why you called.”  Two minutes later, I finally get to leave a message.

DavisW also doesn’t like voice mail, but perhaps worse are the twists and turns needed in order to speak to a real person,

None of the six choices seemed quite right for what I wanted to do, so I tried pressing zero. Sometimes this gets you directly to a live customer service representative.

“We’re sorry but your menu selection is not available,” the fake woman said patiently. “For more information, you can visit our website at [insert name].”

Yeah, well I already tried that and it didn’t work. Why do you think I’m calling you?

For the record, mortgage companies are no better than health care companies!  Wise up, folks. Hire some real people!  Improve the economy!

Photo by christyxcore via flickr creative commons.

The subprime mortgage mess started it, but now we’re full blown into another problem with a catchy new name: Mortgagegate.   And it’s a lot bigger than people think.  The paperwork on the mortgages was bad in the beginning, but it’s not just the mortgages.  It’s also the tax consequences and title problems.

According to Les Jones,

Many of those mortgages were bundled together and sold as mortgage-backed securities, most of which did very poorly after 2008. If the properties were never properly titled and assigned then the original sale of the securities could be invalid, which could lead to trillions of dollars of securities being forced back on the original seller, what Janet Takavoli calls “the biggest fraud in the history of the capital markets.”

Photo by The Market Oracle.

Here’s the latest rates, as disseminated by Freddie Mac,

Thirty-year fixed mortgages slipped to 4.27 percent this past week, the lowest on records dating back to 1971, from 4.32 percent the previous week. A drop in interest on 15-year loans to 3.72 percent from 3.75 percent, meanwhile, was the lowest on records dating back to 1991. Freddie Mac also reported that the five-year adjustable-rate mortgage fell to 3.47 percent from 3.52 percent the prior week, and the one-year ARM dropped to 3.40 percent last week from 3.48 percent.

How much longer can these rates remain low?  Probably as long as buyers are scarce!

Choosing a good financial adviser can be hard work.  You’ll want to get references from your families and friends.  Ask lots of questions, ask about their training and education.

And once you’ve found a good consultant to help you with your finances, you can watch out for warning signs that they’re looking out to pad their own pockets rather than helping you.  From The Sun’s Financial Diary, we have a list of signs that you need to run away from your adviser, including:

If you have your choice, you’d prefer to work with a financial advisor that charges you based on the time spent with you or as a percentage of the assets that they are managing for you versus the commission they can earn on what they sell you.  An advisor who gets paid based on the size of your portfolio has an incentive to grow it which is good for both you and them.  A sales-based advisor can be more concerned with just selling you a high commission product that may or may not be suitable for you.

Read the whole article… good advice!

H/T Brip Blap.

Loans may be tougher to get, but when you can get a loan you may also be able to find a lovely piece of real estate for the same price of a new car – or less!

From my own MLS, here’s a condo (like new!) just outside of Nashville for under $60,000.

Details about the home, 1152 square feet, two bedrooms, two and a half baths, and refrigerator stays!  Contact listing agents Hope Wilson or Amber Bringier of Exit Realty at 615-896-5656 for more information. Photos by listing agents.

The Federal Housing Agency announced earlier in the year that the upfront and annual mortgage insurance premium rates would increase.  Today is the day.

• Upfront MIP will be 1.00% for all mortgage terms
• Annual MIP will be 0.90% for LTVs greater than 95% with mortgage terms greater than 15 years
• Annual MIP will be 0.85% for LTVs less than or equal to 95% with mortgage terms greater than 15 years
• The Annual MIP for mortgage terms less than or equal to 15 years will not change

The MIP will be based on the date the case number is assigned.

Mortgages that will not be impacted by the new rule include:

- Title I
- HOPE for Homeowners (H4H)
- Section 247 (Hawaiian Homelands)
- Section 248 (Indian Reservations)
- Section 223(e) (declining neighborhoods)
- Section 238(c) (Military Impact areas in Georgia and New York)

The eviction notice that came in the mail to the home-owners (current on their payments) was one of the early indicators that something went wrong after they bought their house just a few months ago.

In a stunning example of how the left hand does not know what the right hand is doing when it comes to people in foreclosure situations, the house was sold TWICE – once to a buyer through regular real estate channels and once at auction.  From MSNBC.com,

In court papers, the bank, formerly Indymac and now OneWest, says the escrow company, Point Break Escrow Inc., closed the sale by mistake.

The bank says it did not receive the final HUD1 form, the standard real estate closing sheet involving federally insured mortgages, as it was supposed to at least 48 hours before the scheduled closing date. So, the lawyer for the bank says, OneWest proceeded with the scheduled foreclosure auction.

Interestingly, the investors say they lost everything – the house and their cash.  It sounds to me like the bank owes them some money because if the escrow was closed, they had no cause to auction.