Archive for Finance
Desperate to boost your credit?
June 4th, 2007 • Business, Finance, Loan Programs, Real Estate
One of my Digg.com friends Chris just passed along an interesting story on yahoo about some enterprising credit repair providers. They use a technique that many mortgage brokers/Loan Officers have known about for years called piggybacking.
Instead of spending several years repairing his credit rating, which he said was marred by two forgotten cell phone bills and identity theft, the 37-year-old real estate agent paid $1,800 to an Internet-based company to bump up his score almost overnight.
Instantcreditbuilders.com, or ICB, helped Estruch boost his score by arranging for him to be added as an authorized user on several credit cards of people with stellar credit who were paid to allow this coattailing. Parents also use this practice when they add their children to their credit cards to help them build solid credit.
The pitch to those who are essentially renting their credit history for pay is seductive: You don’t need to worry about users of this service receiving duplicate copies of your credit cards, account numbers or any of your personal information. It’s essentially free money, they are told.
In the past if a borrower needed a few points extra to qualify for a loan program loan officers would ask them if any of their family members had an account they could get authorized on. Once the borrower is authorized as a user on the account, they do a rapid rescore and 75% of the time the prior history would be attached to the newly authorized user. This company however is taking it to a new level.
The Reality of Foreclosure Investing
September 15th, 2006 • Business, Finance, Real Estate
The reality of foreclosure investing is very different from what people have been led to believe through late night infomercials and the hundreds of books written on the subject. Always remember these two key facts when dealing in foreclosures.
• Every active foreclosure investor works a lot more than people working 9-5 jobs.
• Serious foreclosure investors either have large sums of money of their own or have another investor backing them up.
Real Estate News Today
August 31st, 2006 • Finance, Real Estate
Real Estate Round Up
August 29th, 2006 • Finance, Real Estate
- Mortgage lenders see stock prices sink
- Homeowners under insured due to surge in home prices
- If you’re ready to list your home with an agent, you’ll have plenty of candidates. There are a record 2.6 million licensed real-estate agents in the U.S. — “way too many,” says Stefan Swanepoel, chief executive officer of Realty U, a real-estate education and training company in Aliso Viejo, Calif.
- The new, revised Yahoo Real Estate went live with new features including interactive maps, aerial views of homes, and a valuation comparison tool. The site is loaded with about 3 million real estate listings, provided by Prudential Real Estate.
- Growing mortgage company will add 245 jobs
Today’s Good News in the Housing Market
August 28th, 2006 • Finance, Real Estate
I know some people who read this blog must laugh at my unrequited optimism for the housing market, however here is today’s support for my opinion that there will be another short term housing or at least a refinancing boom.
From Reuters and Richard Leong
A further decline in benchmark Treasury yields may spur massive buying of government bonds by mortgage investors, adding zest to a market already spurred on by the Federal Reserve’s pause in interest-rate increases.
A tumble in Treasury yields on hopes the Fed may lower its key rate in 2007 has hurt returns on mortgage investments. As falling yields have lowered mortgage rates, homeowners have been enticed to refinance their loans.
As a result, some fund managers and loan-service companies have been forced into so-called convexity hedging, buying Treasuries or using interest-rate swaps to receive fixed-rate payments on their investments to make up for expected lost income from mortgage holdings.
“The mortgage market has been awoken here,” said Terry Belton, head of fixed income and derivatives strategy at J.P. Morgan Securities in Chicago. “The rally (in Treasuries) has triggered some significant buying by mortgage hedgers.”
Homeownership – The Road to Serfdom?
August 28th, 2006 • Finance, Real Estate
I came across an interesting article today by !PDF Warning!Michael Hudson – Distinguished Professor of Economics at the University of Missouri–Kansas City. After reading it I thought I had never read anything that was so completely off the mark.
From the Article:
The reality is that, although home ownership may be a wise choice for many people, this particular real estate bubble has been carefully engineered to lure home buyers into circumstances detrimental to their own best interests. The bait is easy money. The trap is a modern equivalent to peonage, a lifetime spent working to pay off debt on an asset of rapidly dwindling value.
This paragraph makes two faulty assumptions. First and most egregious is the idea that there was a master plan set forth by the Fed to enslave Americans to mortgage repayments. I’m not a big fan of Owner-Occupied housing, as i see it as a liability and not an asset, however the flip side of paying rent and claiming no interest deduction and no possibility of equity gains is even more patently absurd. The second is that these new homeowners will never be able to pay off their loans. We are in a period of extremely low interest rates. Even now when the average loan is running 6.5% for 30 year fixed paper (and falling I might add). How long ago was it when we thought a 7.5% fixed interest rate was reasonable? This means of course that as a percentage of payments a buyer is paying less on interest expense than at any time in recent history. That one percent drop in interest rate just negated a 10% rise in home values. Lets not forget either that a god number of the homes sold during the recent boom were locked in at 5.5% or lower. A full 20% increase in buying power when compared to pre-boom financing.
I also find it hard to take the author seriously when he compares homeowners to the sharecroppers of the south at the turn of the century:
Debtors were medieval peons or Indians bonded to Spanish plantations or the sharecropping children of slaves in the postbellum South. Few Americans today would volunteer for such an arrangement, and therefore would-be lords and barons have been forced to develop more sophisticated enticements.
Yes! That enticement is called lower interest rates!
Housing Boom 2.0 – How It Could Happen
August 27th, 2006 • Business, Finance, Real Estate
There are several signs that affordability could increase rapidly in the coming months.
- Falling Interest rates – According to the National Association of Realtors a 1% drop in interest rates increases buying power by 10%. In the last 3 months interest rates have dropped .32% – theoretically a 3.2% increase in buying power.
- Inflation appears to be contained. Treasury bulls are betting big on it. Consumer prices appear to be in decline globally as well.
- Some markets are still appreciating rapidly.
- Even in the face of rising interest rates home have been holding their values
- Some analysts are predicting an additional 28 bps drop in the 10 Year’s yield which would increase the downward pressure on interest rates significantly.
- The US central bank has pursued a policy of “asset targeting” since 1999, adjusting short term interest rates in response to movements of stock market indexes and housing prices. This is further evidence that the Fed could start lowering rates soon as more news of a slowdown in the stock market and housing continue.
Mortgage Rates Drop for 5th Straight Week
August 25th, 2006 • Finance
It’s official. Interest rates are on their way down. Freddie Mac’s report is a lagging indicator as most customers don’t know that they can expect a lower rate than they are being offered by their lender or broker because they have been hearing about rising rates for the last year and a half. Most people in the industry are looking at interest rates with cautious optimism as there are mixed messages from the Fed. However Bernanke seems to have hit his stride as he didn’t rattle markets after his speech in jackson Hole today.
From Briefing.com
Treasury Traders Day Off: The market wandered higher today, shifting up as some traders heaved a collective sigh of relief after (still new) Fed chief Bernanke refrained from letting any major market moving tape-bombs fly in his Jackson Hole speech.
As a result the Yield on the 10 year bond shed 2 basis points. Keep your fingers crossed.