US long-term mortgage rates little changed; 30-year at 2.93%

WASHINGTON (AP) — U.S. average rates on long-term mortgages changed little this week, remaining at historically low levels that has sparked demand for homes.

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year home loan ticked up to 2.93% from 2.91% last week. By contrast, the rate averaged 3.49% a year ago.

The average rate on the 15-year fixed-rate mortgage declined, however, to 2.42% from 2.46% last week.

Housing demand continues as one of few bright spots in the pandemic-hobbled economy. Sales of new homes soared in July, rising nearly 14% as the market continued to gain traction following the spring downturn caused by pandemic-forced lockdowns.

In the wider economy, the government reported Thursday that the number of laid-off Americans applying for unemployment benefits fell to a still-elevated 881,000 last week — evidence that the pandemic keeps forcing many businesses to slash jobs.

Associated Press

S&P CoreLogic Case-Shiller: US home prices rose 3.7% in May

WASHINGTON (AP) — U.S. home prices grew more slowly in May, but continued to show resilience in the face of the coronavirus outbreak.

The S&P CoreLogic Case-Shiller 20-city home price index rose 3.7% in from a year earlier. That’s a drop from the 3.9% increase in April and it was a smaller gain than economists had expected. Still, home prices have risen steadily despite the pandemic and lockdowns that have badly damaged the American economy.

Phoenix led the way with a 9% annual gain in home prices, followed by Seattle (up 6.8%) and Tampa (up 6%). Chicago registered the smallest increase: 1.3%.

The May slowdown, however, broke a streak in rising sales that stretched back to September. Craig Lazzara of S&P Dow Jones Indices said it was too soon to know if April was a high water mark, or if May was “a slight deviation from an otherwise intact trend.″

The National Association of Realtors reported last week that sales of existing U.S. homes shot up 20.7% last month, snapping a three-month streak of falling sales. Mortgage rates are near historic lows.

“In a remarkable show of resilience, the housing market has stared the pandemic right in the eye and hasn’t blinked,” said Matthew Speakman, economist at the real estate firm Zillow. “Record-low mortgage rates and a shortage of available homes have fueled competition amongst buyers in the spring and early summer, leading to homes flying off the market at their fastest pace in years and home prices to continue to rise.″

The 20-city index released Tuesday excluded prices from the Detroit metropolitan area index because of delays at the recording office in Wayne County, which includes Detroit.

The Case-Shiller index is composed of a three-month average of home prices, so this month’s data includes figures from March, April and May.

-Associated Press

Boy Scouts mortgage vast New Mexico ranch as collateral

The Boy Scouts of America has mortgaged one of the most spectacular properties it owns, the vast Philmont Scout Ranch in New Mexico, to help secure a line of credit as the financially strapped organization faces a growing wave of new sex-abuse lawsuits.

The BSA said Friday that it has no plans to sell the property, and that the land is being used as collateral to help meet financial needs that include rising insurance costs related to sex-abuse litigation.


However, the move dismayed a member of Philmont’s oversight committee, who says it violates agreements made when the land was donated in 1938. The BSA disputed his assertion.

Top BSA officials signed the document in March, but members of the Philmont Ranch Committee only recently learned of the development, according to committee member Mark Stinnett.

In a memo sent to his fellow members, Stinnett — a Colorado-based lawyer — decried the financial maneuver and the lack of consultation with the committee.

“I cannot begin to tell you how sorry I am to be the one to break this news to you,” Stinnett wrote. “The first point of the Scout Law is ‘A Scout is trustworthy.’ I am distressed beyond words at learning that our leaders apparently have not been.”

“But I am even more distressed to learn that Waite Phillips’ magnificent gift has now been put at risk,” Stinnett added.

Phillips was a successful oilman who used some of his fortune to develop a huge ranch in northeastern New Mexico. In 1938, and again in 1941, he donated two large tracts of the ranch to the Boy Scouts.

Since the first Boy Scout camp opened there in 1939, more than 1 million Scouts and other adventurers have camped and hiked on the property, which now covers more than 140,000 acres (56,650 hectares). One of its many trails leads to the 12,441-foot (3,793-meter) summit of Baldy Mountain.

In a statement provided to The Associated Press, the Boy Scouts said programming and operations at Philmont “continue uninterrupted, and we are committed to ensuring that the property will continue to serve and benefit the Scouting community for years to come. “

“In the face of rising insurance costs, it was necessary for the BSA to take some actions earlier this year to address our current financial situation,” the BSA said. “This included identifying certain properties, including Philmont Scout Ranch, that could be used as collateral …. in order to keep in place an existing line of credit for insurance.”


Disclosure of the mortgage comes at a challenging time for the BSA, which for years has been entangled in costly litigation with plaintiffs who said they were abused by scout leaders in their youth. Hundreds of new lawsuits loom after New York, New Jersey, Arizona and California enacted laws making it easier for victims of long-ago abuse to seek damages.

The BSA, headquartered in Irving, Texas, says it’s exploring “all available options” to maintain its programs and has not ruled out the possibility of filing for bankruptcy.

Seeking to ease some of the financial pressure, the BSA announced in October that the annual membership fee for its 2.2. million youth members will rise from $33 to $60, while the fee for adult volunteers will rise from $33 to $36. The news dismayed numerous local scout leaders, who had already started registering youths for the coming year.

According to Stinnett, the BSA used the ranch as collateral to secure $446 million of debt with J.P. Morgan Chase.

Stinnett wrote that ranch committee member Julie Puckett — a granddaughter of Waite Phillips — had urged BSA officials in recent weeks to recognize Philmont as a restricted asset based on the understandings of all parties when Phillips donated the land.

“BSA management has instead stated its position that Philmont and its endowment are free and clear of restrictions and are thus theirs to take or encumber as they wish,” Stinnett wrote, depicting that stance as a “betrayal” of agreements made with the Phillips family.

The Boy Scouts disputed Stinnett’s assertion, saying nothing in the agreements with the Phillips family prevented the ranch from being used as collateral.

Philmont has been one of scouting’s most popular destinations for decades. At many times of the year, Philmont can’t accommodate all those who want to trek there; it offers an online lottery, held about 18 months in advance, to give everyone an equal shot.

Most activities take place during the summer, but Philmont also has autumn and winter programs. In addition to backpacking treks, it offers horseback riding, burrow packing, gold panning, chuckwagon dinners, rock climbing, mountain biking and sport shooting.

It’s also home to the National Scouting Museum.


Last year, a wildfire ripped through the heart of the ranch. Campsites and several miles of trails were wiped out, leaving behind a scar that will take years and millions of dollars to restore.

source: newsinfo.inquirer.net

5 Ways to Get out of Debt: Which Method Is Right for You?

Getting out of debt can improve an individual’s quality of life and open new doors. There are many unexpected events that can negatively affect a person’s personal finances and cause serious financial stress. Debt management is possible, however, and is available in many different forms. Some of the most common methods to get out of debt include credit counseling, debt consolidation, cash-out refinance, debt settlement, and bankruptcy.


Credit Counseling

Credit counseling is one of the best ways to help a person better understand the depth of their financial situation, and the options they have to improve it. A professional counselor acts as a liaison between the individual and their creditors to try to negotiate lower interest rates. They can also create a plan for the individual to organize and better manage their debt related expenses. This debt management plan allows the individual to make lower payments though their counselor, who then pays the creditors.

While credit counselors can be very beneficial, they do not have the ability to directly reduce the amount of debt an individual owes. Lowering interest rates is of course helpful, but the principal amount cannot be negotiated or changed. Speaking with a credit counselor can also give you a negative reputation among lenders. They may see you as a credit risk if you are having a counselor negotiate your account details. Also, credit counselors are not free, so the individual should be careful to know how much they are paying their credit counselor to avoid accumulating even more debt from this expense. Monthly payment amounts are often increased in debt management plans, which could leave the individual right back where they started.

Debt Consolidation

Debt consolidation is a very popular method that combines all outstanding debt across multiple creditors into one, single debt amount. A person can apply for a personal or debt consolidation loan so that they are only making payments to one creditor instead of multiple, often at a lower interest rate. All monthly payments are combined into one monthly payment of a determined amount.

Something to consider when using debt consolidation is that loans can at times require collateral. Collateral secures the loan through an asset owned by the applicant, such as their car or house. If the individual fails to pay the loan, these assets could be repossessed by the lender. Those who do not have collateral could expect to see higher interest rates when applying for a personal loan. Also, being approved for a loan will not reduce the principal amount of debt owed.

Being approved for a personal or debt consolidation loan requires good credit, which can be difficult for those who are already under financial stress. Fortunately, taking out one of these loans does not impact the credit of the applicant unless they are unable to pay the loan back. Terms of the loan are often customized to a certain degree to help the individual choose the best plan for their situation.

Cash-Out Refinance

Cash-out refinance lets homeowners work with a mortgage lender to help pay off their debt. Those who own a home can refinance their mortgage, add up the amount of debt they owe, then apply that amount to their current mortgage balance. They can then take that excess amount out in cash and use it to pay off the creditors, thus only having to repay the remaining balance to their mortgage company. This lowers the interest rate and creates one payment that is made each month.

Cash-out refinancing is only appropriate for homeowners with good standing credit, a steady income, and equity in their home. This is crucial to consider because many will need to choose this option before their debt gets unmanageable and hurts their credit, decreasing the chances of being able to use a cash-out refinance in the future. There are also other costs to consider when refinancing a home, including closing costs and the impact of increased mortgage debt.

Debt Settlement

Debt settlement, also known as debt resolution, is when a company that offers debt settlement tries to convince creditors to allow the debtor to pay a lower total amount than what is owed. The individual would then pay the settlement company that lower amount. Much like a credit counselor negotiates to lower interest rates, debt settlement negotiates to reduce the principal amount owed. If done correctly, this can be extremely beneficial to the individual. They can save a significant amount of money if approved.

Debt settlement, unfortunately, can put a damper on a person’s credit. However, credit can be rebuilt by consistently paying the new smaller monthly payments. This may be a good option for those who have already become financially overwhelmed and are facing repercussions for not being able to make their current monthly payments.

Bankruptcy

Bankruptcy is typically seen as a last resort for those who are entirely unable to pay back their debt. This is a legal process that is often extremely damaging to an individual’s credit and financial status. There are two different kinds of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is the most commonly used method that removes all debt from the individual, allowing them to start over. This can have devastating affects on the person’s credit, and they may even lose assets to cover the debt owed. Chapter 13 does not always completely clear a person of debt, but can lower the principal amount, so the individual owes much less. The individual then owes payments to the court who passes the money to the creditors. This can also severely hurt a person’s credit.

Can I Pay My Debt Myself?

There are ways a person can take control of their personal finances on their own. By organizing finances and using free tools online, those who are struggling to manage their debt can create a plan to help get back on track.

source: usa.inquirer.net

Great News for Homebuyers in 2019: Loan Limits Increase

Thinking about buying a home in the next year? You’re in luck.

The Federal Housing Finance Agency (FHFA) announced yesterday that for the third straight year they will increase the limits for mortgages backed by agencies that cover the vast majority of the home loans issued in the U.S. In 2019 they will increase the limit 6.9 percent, taking the limit from $453,100 to $484,350.

What does this mean for you as a homebuyer? It may allow you up to $30,000 more on an affordable loan option, particularly if you are looking to buy in a market with rising home prices.

This increase in loan limits is designed to help homebuyers keep pace with a more expensive market. Even as home prices rise, you can afford to buy a more expensive home with an agency conforming loan.

“These higher loan limits create more borrowing opportunities – whether you’re a potential homebuyer or a homeowner seeking to refinance,” says A. Wade Douroux, President and CEO of Resource Financial Services. “This gives homebuyers access to higher amounts through conventional lending – which is also good news for sellers this year.”

The knowledgeable mortgage bankers at Resource Financial Services can help you figure out if the new conforming loan limits apply to you. They can answer all your questions and have a wide range of programs that may benefit you.

“Get in touch with us soon to discuss how these loan limits can help you with a home purchase or refinance,” says Douroux.

Resource Financial Services exists to make people’s dreams of home ownership a reality. The mortgage lender offers experienced mortgage specialists who work hard to educate homebuyers about the wide variety of loan programs that can be tailored to meet individual financial needs. Homebuyers can expect quicker closings, same-day pre-approval, 5-Day Processing and guaranteed lower rates.

Call toll-free at 877.797.4545to speak with a mortgage banker or visit Resource Financial Services online at rfsmortgage.com to learn more.

source: resourcefinancialservices.com

More Millennials Are Buying Homes

In the second quarter of 2018, Millennials began buying homes in a big way. Despite the commonly-cited hurdles that include student debt, irregular and gig income and the high cost of living, today’s Millennials are finding their way to home ownership.

A report from the US Census Bureau shows that home ownership rates among people aged 35 and under jumped 3.4% between April and June of this year. The Ellie Mae Millennial Tracker shows the average age of millennial borrowers is 29.

What’s driving Millennials into the market? A larger percentage of them are reaching the point in their lives where it’s appropriate to buy a home. They are settling down, getting married and having families.

“Most Millennials are buying a house because there are major changes happening in their lives such as starting a family, getting a new job, or because they’ve decided that they want to build equity and stop renting,” said Ellie Mae Executive Vice President of Corporate Strategy Joe Tyrrell.

Resource Financial Services is here to help Millennials on the road to home ownership. We understand that buying your first home can be a little intimidating. And no matter how many times you ask for advice from parents, family members and friends who are experienced homebuyers, there will still be questions.

That’s why we believe meeting with one of our reputable and experienced mortgage bankers should be your first step. With our guidance and knowledge, you can find a home you can truly afford with a mortgage that works for your budget.

Five Simple Steps to Home Ownership:

One: Make the call. Pick up the phone and call a mortgage banker at Resource Financial Services for step-by-step guidance on the home-buying process. There is no charge for a phone call that can make all the difference in helping you understand your options and what you may be able to afford.

Two: Get pre-approved. Before looking at the first house, your mortgage banker can pre-approve you for a loan and explain the customary closing costs and financing fees. This will give you an accurate picture of how much home you can truly afford and help you narrow down homes based on that amount.

Three: Begin the house hunt. Your pre-approval will help you sort by price, identify neighborhoods and find your dream home faster. It will also give you an edge when you make an offer in a competitive seller’s market.

Four: Make the offer. Your real estate agent (and we highly recommend working with one) has extensive knowledge and experience on comparable home transactions and can offer the best strategy for the home you’re interested in. Your purchase agreement will note how much you’re willing to put down as a down payment. By the way it’s a myth that you need 20% as a down payment; the average down payment is only 10% and for first time homebuyers it’s even lower at 6%. Arrange to have the deposit held in escrow (not with the seller) so your money can be returned to you if the offer falls through.

Five: Close. Once an offer is accepted by both parties and signed, it becomes a binding contract. Your Resource Financial Services mortgage banker will help you understand the process and go over any documents you need to provide as well as any closing costs you owe so there are no surprises at closing.

Working closely with a reputable lender that offers competitive rates, a variety of products and the education is the best way to eliminate surprises and help you create a clear path to homeownership.

Resource Financial Services is here to make people’s dreams of home ownership a reality. That’s why our experienced mortgage specialists work hard to educate homebuyers about the wide variety of loan programs that can be tailored to meet individual financial needs. We offer quicker closings, same-day pre-approval and guaranteed lower rates.

source: resourcefinancialservices.com

Get the most out of your savings from a home refinance

Although lowering their interest costs is a primary objective of homeowners who refinance their mortgages, a number of other critical factors should also be considered in order to realize the greatest savings through a refinance.


The median household that does not refinance could lose out on an average of $11,500, according to the National Bureau of Economic Research. Besides the obvious lure of reducing the cost of your monthly payments, some other factors to keep in mind when refinancing are:


    1) The total cost of refinancing
    2) When you will begin to save money each month
    3) The length of the new mortgage term
    4) The new mortgage payment
    5) What to do with the monthly savings


To find out how many months it will take to pay off your refinanced loan, take the total cost of your refinance and divide it by the monthly savings after you refinance. Using a refinance calculator like the one at HSH.com can help you determine the length of time it will take before you can start to see a tangible savings.


Are you going to take a shorter or a longer term on your refinance?  Figure out how many years you can cut from your mortgage term by making your “old” payment on your newly refinanced mortgage. If your “old” mortgage has 25 years remaining, and refinancing at current rates lowers your monthly payment by $400 each month, then apply your old cost to your new monthly payment (i.e., prepay your mortgage an extra $400 per month) to see how soon your mortgage is paid off.  By paying an extra $400 each month, you could likely pay off your mortgage in fewer than 25 years. This could end up saving you thousands of dollars, at least.

source: smarterlifestyles.com

Obama Passes HARP and Helps Homeowners Save Huge

Obama is urging homeowners to refinance. Did you know that the President passed historic legislation that makes it easier for homeowners to refinance and saves them an average of $3,000/year?

The legislation is called the Home Affordable Refinance Program (HARP) and it does three really important things for homeowners.

1) Waives Refi Requirements

Obama’s mortgage program waives certain refi requirements for homeowners, making it much easier to qualify and take advantage of today’s still historically low rates. Some examples of requirements that have been waived are the need for an appraisal and credit score requirements. With requirements like these gone, millions of homeowners now qualify to refinance. The problem is people don’t know the program exists and they don’t know how much they could save by refinancing .

A free service that can help you see how much you could save by refinancing is LowerMyBills.com. You might be shocked at how much their network of lenders can save you.

2) Reduces The Amount Homeowners Owe

In his State of the Union, Obama told homeowners that if they refinance at today’s rates they could save up to $3,000/year. It’s amazing how many homeowners have sat on the sidelines, getting ripped off by banks as they keep paying mortgage rates in excess of 5%. If the rate you’re paying on your mortgage is above today’s historically low rates, you should  consider refinancing.

Think about how much money $3,000/year is over the life of your loan. If you have 25 years left, that’s $75,000. If you’re a homeowner, and you haven’t looked into refinancing recently, you should use this easy tool. It takes about 3 minutes to complete and helps you take advantages of today’s rates.

3) Pay Off Your Home In Half The Time

The President’s refi plan encourages homeowners to shorten their loans. Homeowners who switch from say a 30 year to a 15 year fixed rate mortgage not only pay their homes dramatically faster but they also get significantly lower rates. The savings for homeowners who opt to go this route end up saving huge. Savings can be as much as $805/mo.

Not only that, these homeowners are done with their mortgages altogether up to 15years faster. If you want to learn more about all the loan options available in the market, LowerMyBills can help you find out what would be best for you.

source: smarterlifestyles.com

Refinancing? Here are 3 Things to Consider

With interest rates near record lows, many homeowners want to refinance their mortgages. This can make sense, since it can mean that you save money over the life of your loan, or that you can improve your monthly cash flow (or do both).

As you refinance your mortgage, it’s important to think about your financial goals, and how your new mortgage can help you accomplish them. Here are 3 things to consider:

Cash Flow vs. Long-Term Savings

One of the first things to consider is the purpose of your mortgage, beyond getting a lower interest rate. Is cash flow important to you? Or are you more interested in long-term savings?

Look at your monthly income. Do you wish you had a little more wiggle room? If you are looking for money in your budget each month, refinancing can help, if you extend your term. A 30-year mortgage provides you with a lower monthly payment, allowing you the opportunity to breath a little easier – especially if you are worried that you might run into financial problems later.

On the other hand, you might be interested in long-term savings. This means paying off your loan as quickly as possible, even if it means a higher monthly payment. A shorter term at a lower interest rate can mean a savings of tens of thousands of dollars over the life of your loan. If you have the room in your budget, this can make sense. But if you will be stressed to make your payment each month, this might not be practical.

Getting the Best Interest Rate

When you refinance (or get any loan for that matter), getting the best possible interest rate is important. Before you apply for your refinance, check your credit to see if you need to improve your situation. If your credit score could use improvement, take a few months to fix problems.

Dispute errors on your report so that the mistakes are remedied. Make your payments on time. Pay down debt. Avoid opening new lines of credit. If you do these things, you will be able to improve your rate. You might also be able to pay points on your refinance to bring down the interest rate a little bit more.

Don’t forget to consider closing costs. If you can’t get a rate at least 1% lower than your current rate, it might not be worth it to refinance, since the closing costs might not be offset by your savings.

Documentation

Don’t forget to consider the documentation that you will need to refinance. You normally need to show that you can afford your new payments (especially if they are higher), and that you have the assets available to pay closing costs and other out of pocket expenses.

When I refinanced my mortgage earlier this year, I was required to pay off a small second mortgage that I got when I bought the house. This was an out of pocket expense that was considered in my refinance. I had to provide account information from my taxable investment account and my retirement account, as well as bank account information and PayPal income information. Find out what is required ahead of time so that you can avoid unnecessary delays.



Also, be aware of the timing involved in canceling your autopay with your old mortgage lender. Talk to your new lender about the timing, and try to coordinate so that you don’t end up missing payments. My new lender, Quicken Loans, was great about helping me properly cancel my autopay at the right time so that I was up to date on my payments before they paid off the mortgage.

Bottom Line

Remember that your refinance is a mortgage loan. You basically get a whole new mortgage to pay off the old mortgage. As a result, you need to be prepared to go through all of the steps associated with getting a mortgage. Prepare ahead of time so that you know how your refinance will fit into your long term financial plan, and so that you know what you need to make the transaction successful.

source: financialhighway.com

Advantages of Renting a Home Instead of Owning

Right now, home prices (especially in the U.S.) are quite low, and mortgage rates are fairly low as well. A number of foreclosures means that there are cheap homes on the market. As a result, it is really tempting to buy a home. However, in some cases it might be to your advantage to keep renting. This has occurred to me as my family faces the prospect of moving and possibly selling our house, as well as the expenses associated with paying for a flooded basement. I’m wondering if maybe we should go back to renting. Here are some of the reasons that renting is looking tempting:


 Owning a Home is Expensive


Forget about the line from real estate agents about a home being a great investment or your biggest asset. Your home is a purchase. An expensive purchase. By the time you pay interest (even though you can get a tax deduction), property taxes, maintenance costs, repair expenses, insurance and utilities, the expenses really start to add up. Even if you do sell your home for more than you paid, it may not be enough to offset the accumulated expenses associated with owning a home for decades.

Renting, on the other hand, is usually less expensive. You aren’t responsible for the repairs or maintenance costs (unless you do something you shouldn’t), renter’s insurance is much cheaper than homeowner’s insurance, and you don’t have interest or property taxes. Depending on the market you’re in, a rent payment for a decent-sized home may be a couple hundred less than a mortgage payment. Some folks like to invest the difference, hoping for a better long-term return.

Greater Flexibility

 

If you aren’t going to be an area for very long, the flexibility of renting might be attractive. Aside from having to sign a one year initial lease, renting offers the ability for you to pick up and leave if you need/want to. We had hoped to be in our current home for a longer period of time, but, like so much in life, it isn’t working out. We will probably have to move to a new town, and that means trying to sell this house. If we were renting right now, we could just offer 30 days’ notice to the landlord and leave when ready. And, because we don’t want to be landlords, we will probably have to take a loss on the home when we sell it.

Bottom Line

 

ready to buy a home, and we might not rush into it in the next place we live. While we can afford to live in the house, the responsibility of it, and the expense associated with it, can be irritating at times — especially when I think that we are likely to be moving after staying in the home for less than five years.

In the end, carefully weigh the pros and cons of buying a home versus renting it. Think about what is likely to happen in the future, and whether or not the money you put into home ownership might be better used elsewhere.

source: financialhighway.com

Interest Rates: APR vs. APY (and why it Matters)

When comparing interest rates that a bank offers on a mortgage, home equity line of credit, car loan, credit card, certificate of deposit, or savings account, it’s important to know exactly what rate you are looking at.

Even a 0.5% difference in interest rate could cost you hundreds or thousands of dollars when compounded over years.

This post will serve as a quick primer on interest rate terminology and calculations.






What is Annual Percentage Rate (APR)

Annual percentage yield, or APY, is the effective interest rate, with compounding factored in. For that reason, it is also referred to as the effective APR, or EAR.

Banking institutions have deposit products that compound over various periods – daily, weekly, monthly, annually, etc. They are required to express interest rates in the form of APY, or EAR, so that you can compare rates between institutions.

It is essentially the real rate you are are effectively receiving or paying, when compounding is factored in.

How to Calculate APR and APY
APR = Periodic rate x number of periods in a year

For example, a credit card with a 1% monthly interest rate would have a 12% APR (1% x 12 = 12%)

APY = (1 + nominal APR/n)^n – 1

    n = the  number of compounding periods per year.
    nominal APR is expressed in decimal format (i.e. 12% = 0.12)

For example, a credit card with a 12% APR, compounded monthly, would have an EAR equal to 12.68%. The equation would be (1 + .12/12)^12 – 1 = .1268 = 12.68%

If the credit line compounded daily, the EAR equation would be (1 + .12/365)^365 – 1 = .1274 = 12.74%

Why APY is Important

In any borrowing or investment scenario that involves compounding and/or fees, you want to know what the EAR (APY) is.

In a mortgage or loan scenario, you’ll want to know what the EAR is after closing or other fees are factored in.

In a credit card scenario, companies will often quote you a nominal APR (annual percentage rate). However, since your balance compounds monthly, you do not end up paying the nominal APR. Due to the compounding, your EAR will be higher.

Knowing EAR allows you to compare apples to apples and make precise calculations.

APR vs. APY Discussion:

Do you ever feel like you were misled by a bank or credit card company when only being presented with APR vs. APY?

source: 20somethingfinance.com

Feds hit Wells Fargo with mortgage-fraud suit

NEW YORK -- The U.S. attorney in Manhattan has accused Wells Fargo of defrauding a government-backed mortgage insurance program, in another major civil case brought in the wake of the housing bust and financial crisis.

The mortgage-fraud suit, filed by U.S. attorney Preet Bharara, seeks "hundreds of millions of dollars" in damages for claims the U.S. Department of Housing and Urban Development has paid for defaulted loans "wrongfully certified" by Wells Fargo.

The suit alleges the San Francisco banking giant falsely certified loans insured by the government's Federal Housing Administration.

“As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance," Bharara said in a statement.

Adding "accelerant to a fire," Bharara said, was Wells Fargo's bonus system that rewarded employees based on the number of loans it approved.

The lawsuit alleges the bank failed to properly underwrite more than 100,000 loans it certified to be eligible for FHA insurance. When Wells Fargo discovered problems with the loans, it failed to notify HUD, which administers the FHA program, as required, the suit said. The action alleges more than 10 years of misconduct.

"The extremely poor quality of Wells Fargo's loans was a function of management’s nearly singular focus on increasing the volume of FHA originations -- and the bank’s profits -- rather than on the quality of the loans being originated," Bharara's office said in a statement.

Wells Fargo denied the lawsuit's allegations, saying it acted in good faith and in compliance with government regulations.

"Many of the issues in the lawsuit had been previously addressed with HUD," Wells Fargo said in an emailed statement. "Wells Fargo is the leading FHA lender and has acted as a prudent and responsible lender with FHA delinquency rates that have been as low as half the industry average. The Bank will present facts to vigorously defend itself against this action. Wells Fargo is proud of its long involvement in the FHA program, which has helped so many people obtain affordable mortgages and become homeowners."

The Wells Fargo case is the fifth such mortgage-fraud case against a major lender brought by Bharara's office.

Three of those cases settled this year: CitiMortgage Inc. for $158.3 million, Flagstar Bank F.S.B. for $132.8 million, and Deutsche Bank and MortgageIT for $202.3million. A lawsuit against Allied Home Mortgage Corp. is pending.

A separate mortgage-fraud task force led by the New York attorney general brought an unrelated lawsuit against JPMorgan Chase & Co. last week.

Wells Fargo stock fell on news of the lawsuit. The bank's share's lost 70 cents, or 2%, to $35.10 in Tuesday trading.

source: latimes.com

Mortgage delinquencies rose in second quarter, trade group says

The Mortgage Bankers Assn. says home loans with at least one missed payment but not yet in foreclosure rose to 7.58% in the second quarter from 7.4% in the first quarter.

The nation's slowly improving housing market hit another bump last quarter, with more borrowers missing payments amid continued high unemployment, a report from a trade group shows.

The Mortgage Bankers Assn., in a quarterly delinquency survey issued Thursday, said home loans with at least one missed payment but not yet in foreclosure increased in the second quarter to 7.58% of all mortgages. That's up slightly from 7.4% in the first quarter.

A separate survey from foreclosure listing firm RealtyTrac Inc. said the number of homes going into foreclosure rose 6% in July compared with a year earlier, the third straight month of year-over-year increases.

That trend reflected the fact that last year many foreclosures were on hold as banks focused on cleaning up flawed processes for seizing homes after the "robo-signing" scandals.

The Mortgage Bankers Assn. survey said the quarter-to-quarter increase in delinquencies appeared to result instead from a fundamental change: The slowing of the economy's recovery during the first half of the year.

Although in no way reversing the longer-term trend of declining delinquencies — the missed-payment rate was 8.44% a year earlier — the increase raised eyebrows at the lender group.

"It's not the direction you would want to see," Mortgage Bankers Assn. economist Michael Fratantoni said in an interview. The key determinant, he said, will be the job market, which has shown signs of improvement lately.

In a brighter sign, the percentage of loans in all stages of the foreclosure process, or at least 90 days past due, dropped to 7.31% in the second quarter from 7.44% in the first quarter and 7.85% a year earlier.

The slow decline in this "seriously delinquent" category shows that lenders are gradually working through the huge backlog of soured loans made during the housing boom, Fratantoni said.

Federal Housing Administration loans entering foreclosure were a notable exception. The percentage of loans in foreclosure soared to 4.23% in the second quarter to a record high. Foreclosure starts for FHA loans also increased to 1.53%, also a record high.

The increase was due to major lenders, particularly Bank of America Corp., starting up foreclosures on loans that had been delinquent but held up because of to the federal government's investigations into faulty foreclosure practices, said Shaun Donovan, secretary of Housing and Urban Development, which oversees the FHA.

"We had a significant period of time where Bank of America was not starting foreclosures or completing foreclosures for FHA loans," Donovan said in an interview with The Times. "What you are seeing is basically many, many months-long backlog of particularly Bank of America claims that are being submitted, and have caused artificially that rate to rise."

"It doesn't reflect an underlying trend overall for the broader portfolio," he added.

The report confirmed signs that California, once the poster child for collapsing housing markets, is generally in recovery mode.

Across the nation, 4.27% of all home loans were in the foreclosure process at the end of the second quarter, the home lenders group said. In California, 3.1% of residential mortgages were in foreclosure.

That compared with 13.7% in Florida, 7.7% in New Jersey and 6.5% in New York, all states in which foreclosures are processed through the courts, resulting in huge legal entanglements. Most foreclosures in California are processed more quickly without judicial reviews.

Fratantoni said that with home prices rising again in many California markets, more struggling homeowners are finding it possible to sell their homes rather than see them taken away in foreclosures.

source: latimes.com

Mastermind of NV mortgage fraud scheme sentenced

A former Las Vegas businessman has been sentenced to nearly 22 years in federal prison for masterminding a mortgage fraud scheme that cost financial institutions more than $24 million.

The Las Vegas Review-Journal reports (http://bit.ly/KHJ3kV ) Senior U.S. District Judge Roger Hunt on Friday also ordered Brett Depue of Gilbert, Ariz., to pay $1.6 million in restitution.

Depue was accused of conspiring to recruit straw buyers with good credit to buy about 100 homes with mortgage applications containing false information, then renting the properties before selling them at a profit.

Prosecutors say he acknowledged making as much as $13 million off the scheme through investment companies he operated from 2005 to 2007.

The 38-year-old Depue was found guilty by a jury in March of multiple conspiracy and wire fraud charges.

source: lasvegassun.com

Seniors struggle as land rent for manufactured homes rises

Terrence Thudium sits at a bluish-gray “almost-granite” countertop in his recently refurbished kitchen. He speaks with a combination of fear and fight. The disabled Vietnam War veteran uses words such as “extortion,” “ridiculous” and “exhausted.”

Thudium lives in Mountain View Community, a manufactured housing park for seniors in Henderson. He signed a 20-year lease for land there and settled in a manufactured home he purchased for $75,000. Over the next five years, he spent another $75,000 transforming it into his home. He tore down a hall wall for circulation, added ceramic tiles in the kitchen and redesigned just about every feature to make it perfect.

Thudium is proud of the investment but faces a dilemma. The rent for the land his house sits on has jumped from $680 to $747 in four years. He pays almost the same amount in land rent as his neighbors pay to rent land and a home.

When Thudium settled in Mountain View, park owner Hometown America Communities allowed only homeowners to rent land. When Equity Lifestyle Properties, Inc., took over the park earlier this year, they opened it up to renters.

Thudium can move his home off the lot, but that would cost him more than $5,000. For a 67-year-old, that’s not practical.

“If you try and pay $1,000 per month in mortgages and $800 in rent, you got no money,” Thudium said. “It’s ridiculous. It shouldn’t be this bad. It’s not like renting the house and the land ... which is going for the same dollar figure I’m paying for land. Isn’t that extortion?”

Thudium’s lease dictates that park owners can raise the land rent a minimum of 3.5 percent as long as they give 90 days notice. Thudium signed the lease believing that would only happen in inflation emergencies. He was wrong.

Equity Lifestyle Properties agreed to freeze land rent for the next two years. But there is nothing preventing the company from increasing rent afterward.

So Thudium is trapped at the mercy of the park owners, hoping his rent doesn’t extend beyond what his disabled veterans benefits and social security income can afford. He has already been forced to put off any vacations or trips home to Chicago. He dreads the day rent creeps above $900, the maximum he can afford.

“Look at all I got invested,” Thudium said. “I’m 67, I can’t do this crap again another time. I’m exhausted, and I’m not done with (fixing the house).”

Equity Lifestyle Properties did not comment.

For the past 13 legislative sessions, the Nevada Association of Manufactured Homeowners (NAMH), which represents manufactured home owners, has proposed a rent justification bill to help homeowners like Thudium.

The bill would require park owners to justify raises in rent to a board if rent is increased more than a certain percentage. Each time, it failed.

Doris Green, president of the NAMH, said land rent at many manufactured home parks in Clark County has skyrocketed since the recession.

If owners, often seniors, become sick or lose a spouse, many are forced to move out. That opens the door for the park to take ownership of the homes and rent them new tenants. Green said she sees it frequently at Cabana Park, where she lives.

“Now what we have in our own park is people who have moved out or abandoned their home, and now (the park owners) are renting it (out),” Green said. “We have about one-third of the park out to renters.”

Pat McHugh, 74, has lived in Mountain View for the past 14 years. As the economy faltered and rent increased, she watched friends leave the mobile home park as their savings dried up. McHugh, who runs Pat’s Sunshine Shuttle service for her neighbors but barely breaks even with the business, fears that when her lease is up, she will suffer a similar fate.

“I am very fearful that in another four years I will not be able to afford to live here,” McHugh said. “I love living here, but I may not be able to afford it.”

Still, not everyone in Mountain View worries about rent. Joanne Miller, 78, said she has had no issues but also knows she’s lucky to continue to work.

A rent justification bill could help allay residents’ fears. Bob Varallo, a consultant for the NAMH since 1997, said members will try again to get the bill passed. He has little hope they’ll succeed.

Outside Thudium’s home, a moat of red rocks surrounds the walkway. Visitors are forced to trek up his driveway and around the corner of his house to ring his doorbell.

He wants to put eight cement steps in place to make access easier, but paying $1,200 for it makes no sense to him.

Improving the land around his house is pointless, Thudium said. If he decides to move his home to a new lot, it won’t go with him. If he abandons the home, it only will make it a more attractive property for the park to rent out.

Thudium sees no way out of his predicament. He has tried writing letters to park owners, but they just scan back the page of the lease he signed agreeing to accept land rent increases.

Thudium beamed with pride the day he signed those documents. Now, he’s not so sure.

“First time I owned a house,” Thudium said. “Boy did I get stuck.”

source: lasvegassun.com

Top US bank sets up BPO in the Philippines

Despite moves by US President Barack Obama and the United States Congress to discourage outsourcing, one of the biggest US banks has decided to locate some of its non-core business support activities in the Philippines.

Wells Fargo & Co., the second largest US bank in deposits, home mortgage servicing and debit cards with $1.3 trillion in assets, is setting up a business support center in Manila as the country’s booming business process outsourcing (BPO) industry is projected to produce more than 120,000 new jobs this year.

Company officials did not disclose the value of the investment neither the number of BPO workers the operations would employ.

“We selected the Philippines to be part of Wells Fargo’s international footprint based on the country’s reputation for strong customer service, a large English-speaking population and a cultural affinity to the United States,” said David Caldwell, managing director of Wells Fargo Philippines Solutions, the local subsidiary of the US banking giant.

The new investment is also good news for property developer Megaworld Corp. on whose McKinley Hill Cyberpark project will rise a new building to serve the outsourcing needs of the US banking giant.

“Our location in McKinley Hill gives us a strong foothold as we are among our peers in the industry,” Caldwell said.

Wells Fargo joins other high-profile BPO locators at the 14-hectare McKinley Hill Cyberpark, including Accenture, HP and Thomson Reuters.

Wells Fargo Philippines Solutions already occupies two floors of buildings 8 and 10 Upper McKinley Road, and it will also lease a campus-type building currently being constructed in McKinley Hill Cyberpark.

PH reputation enhanced

The US bank’s launch of an in-house business support center here was welcomed by labor leader and former Sen. Ernesto Herrera, saying it has reinforced the Philippines’ reputation as “an exceptional global hub for labor-intensive and information technology-enabled outsourcing services.”

“We are counting on Wells Fargo’s new center to help provide gainful employment to our college-educated, fluent English-speaking professionals, many of whom remain idle,” said Herrera.

Variety of functions

He said Wells Fargo’s new Philippine center deals with a variety of functions, including customer service and back office support.

Herrera, who is locked in a struggle for leadership of the Trade Union Congress of the Philippines (TUCP), said his labor group’s new members include VOICE, a labor federation of contact center employees.

According to Herrera, the country’s booming BPO industry, which fully employs some 630,000 Filipinos, produced $11 billion in revenues in 2011.

The Business Processing Association of the Philippines sees industry revenues jumping 18 percent to $13 billion this year, he said.

Based on the projected incremental revenues of $2 billion, Herrera said the industry could create around 126,000 new jobs this year.

Worries over US bill

According to Herrera, Wells Fargo’s decision to shift more jobs offshore comes amid worries in the Philippines over an anti-outsourcing bill in the US Congress.

Herrera said the proposed US Call Center and Consumer Protection Act, introduced by New York Rep. Tim Bishop, would require the US Department of Labor to track firms that shift contact center jobs overseas. Those firms would be ineligible for any direct or indirect US federal loans or loan guarantees for five years.

Boost for cyberpark

The bill would also require contact center staff to disclose their location to US consumers, who would be given the right to be routed to a US-based call hub upon request, Herrera said.

However, Herrera said he does not expect the US Congress to pass the bill, which he said is being opposed by US corporations that are benefiting from outsourcing.

Megaworld said the entry of Wells Fargo was a big boost to the McKinley Hill Cyberpark, which is on a rapid expansion mode, with the ongoing construction of the four-tower Science Hub beside the Venice Piazza commercial and retail area.

As an IT park accredited by the Philippine Economic Zone Authority, McKinley Hill Cyberpark offers locators income tax holidays and other perks, including the duty-free importation of office equipment.

“We are proud that one of the United States’ top four banks, Wells Fargo, has chosen McKinley Hill Cyberpark to set up their new Philippine service center,” said Jericho Go, Megaworld’s first vice president for business development.

“This move highlights the attractiveness of the Philippines as an investment destination and its human resource capabilities,” Go said.

One of US Big 4

Founded in 1929, the San Francisco, California-based Wells Fargo is one of the so-called Big 4 US banks regarded as “too big to fail” at the height of the 2008 global financial crisis. The three others are Bank of America, Citigroup and JP Morgan.

JP Morgan and Citigroup have long existing in-house back offices in Manila through JP Morgan Chase Bank N.A. Philippine Customer Care Center and Citigroup Business Process Solutions Pte. Ltd.

Bigger franchise

Although Bank of America does not yet have in-house back offices here, Herrera said the Charlotte, North Carolina-based lender is known to have outsourced some of its customer support activities to an independent BPO provider with extensive Philippine operations.

Wells Fargo is emerging from the 2008 financial crisis with a bigger franchise, after it acquired rival banking giant Wachovia Corp., which had been weakened by mounting bad loans, Herrera said.

A highly diversified financial services company with more than 80 different business lines, Wells Fargo has 6,335 branches, 12,094 ATMs, 70 million customers and 264,000 employees, he said.

source: http://newsinfo.inquirer.net/159323/top-us-bank-sets-up-bpo-in-the-philippines

Obama urges passage of mortgage relief

WASHINGTON - US President Barack Obama on Saturday urged Congress to approve his plan to provide relief to millions of homeowners who are having trouble paying mortgages.

"In order to lower mortgage payments for millions of Americans, we need Congress to act," Obama said in his weekly radio and Internet address. "They're the ones who have to pass this plan."

The $5-10-billion plan, showcased by Obama this past week, would be financed by a portion of a fee on the most wealthy US banks.

The blueprint is intended to help borrowers who are up to date on their mortgages to refinance and take advantage of low interest rates, which could save an average of $3,000 a year.

It will simplify mortgage disclosure forms, so people can better understand the loans they take out and offer support to help those facing foreclosure to stay in their homes.

The plan also includes a government-led effort to make foreclosed properties that cannot be sold available to renters.

Obama urged people who agree with this plan to call, email or visit their representatives in Congress and demand its passage.

"Tell them to pass this plan," the president said. "Tell them to help more families keep their homes, and more neighborhoods stay vibrant and whole."

He cautioned, however, that "it will take time" for the US housing market to recover and for the economy to fully bounce back. — Agence France Presse

source: gmanetwork.com

Secured Loan is Best Financing Option For People With Bad Credit

When it comes to trying to find a loan with bad credit, secured loan is the best financing option to get the loan at low interest rate. A secured loan is a loan where the borrower's property is used as collateral in place of the loan. Collateral is what this property for mortgage is called.

There are personal secured loans. These are loans, which can come in varying amounts. The amount that a lender is willing to offer depends on what is being put up as collateral. The borrower has to place valuable collateral like valuable property like home, car, real estate, stock certificates and so on...

You can apply for a secured loan at your local bank or credit union. Bring proof of income and evidence of your collateral.


A secured loan calculator is recommended and very useful. It helps you to decide and keep you within your budget depending on your financial situation. These calculators will guide you to the available options and offer you the most effective loan plan.

Process of Applying Home Equity Loan

Finding the best home equity loan offers perhaps the most important step you will take in the complete process of applying for a home equity loan. It's very important to choose the best lender when applying for a home equity loan. In this way, homeowners can wisely compare loans and lenders before accepting any offer. There are multiple companies which offers home equity loan, so that means the market competition strikes the interest rate to better standards. You just have to shop around for you to obtain and get the best deal.

A lot of homeowners prefer to take a home equity loan, because the process is faster and cheaper instead of refinancing your home. One of the most important factors if you're considering a home equity loan is the effective interest rate on the loan.

Get the best mortgage loan capital to help you save money. There are several banks and company lenders that offer home equity loans and other forms of loans and the best way to find the best rates is to have time and do some research. Shop around at different banks and lending companies. Do not be afraid to negotiate a better deal. The terms of the condition will ultimately depend on your credit score.

Achieve Positive Cash Flow Properties with Rent to Buy Houses

Have you thought of buying a house but just don't have enough money for the down payment? Are you interested in investing with rental houses but then again your finances are not enough to purchase even one? Rent to Buy Houses might be the chance that you have been waiting for. Recently, the values of houses are getting higher and because of the crisis our economy faces, it can be hard for an individual to own a home or for an investor to purchase a house for his business. Banks do not give everyone a fair chance to make a loan and not all investors were given a second chance once they have rendered a bad credit history. Rent to Buy Houses gives a good opportunity that other options cannot provide.

Rent to Buy Houses has specific yet different way of letting you own such a house. Based on what you and your provider would agree, with this, you have usually the option to change your mind in the next few years if you decided not to purchase the property anymore. The rental rate is higher because of the fact that there is no deposit needed for you pay initially. It is well calculated that you will have an even pay each month depending on the number of months you want to pay such mortgage. On the other hand, you are in a way renting the property yet your money is not wasted because in time, it will be yours totally. This option is quite more favorable to those medium to low earners or investors.

Many people in the community do not have a permanent home. Not because they do not want to but they just can afford it. Just like, Buy House No Deposit, those who aims to own a house can choose to purchase thru Rent to Buy Houses. When you do that math, in renting, you do not earn anything at all. The property owner can simply shoo you away anytime they want or when you have failed to pay your rent. With Rent to Buy Houses, you will apparently become the owner and no landlord can shoo you off. Owning a home means security and confidence in your future. If you are indeed concerned about that and your family, you will find ways to own a home.

Investors can also achieve positive cash flow properties thru Rent to Buy Houses. When you have it for rent, your monthly payment and costs will be compensated by the rental fee you get from it. The remaining is yours. There is indeed a positive cash flow. It does not take a genius to make it happen. It just needs your hardwork and perseverance with the right approach and advises from experts you can rely on. Again, just like Buy House No Deposit, you will definitely own a house and achieve positive cash flow properties in Rent to Buy Houses.

Read about Rent to Buy Houses and read about Buy House No Deposit and also read about Positive Cash Flow Properties

Article Source: http://www.ArticleBiz.com