California Current

on September 30, 2008

in Refinance

. 2 Comments

This past week, California’s Governor Schwarzenegger vetoed a bill that aimed to severely reform the mortgage loan industry. Advocates of the bill state that the bill would have addressed many of the problems that we are now paying the price for here in California. In particular, many aspects of the bill would introduce increased oversight of mortgage brokers and restrictive measures against specific lending practices.

Mortgage Reform Bill Summary AB 1830

Outlaw many negative amortization loans ( home owners monthly payment is less than interest due on loan) because many now owe more than their homes are worth
Prevent mortgage brokers from steering borrowers into more expensive and riskier loans if they qualified for lower-cost mortgages
Prepayment penalties would be capped
A lack of fiduciary duty to borrowers could result in loss of state licensing and up to $10,000 for each violation.

Schwarzenegger’s Reasons Behind The Veto

Restrictions would have only applied to state-regulated mortgage brokers
Federally charted banks would not be regulated and this would lead to unequal protection for consumers
Increased litigations where plaintiffs have much to gain and little to lose. Lenders and defendants would not be able to recover legal fees.
Increased restrictions and disclosures would lead to consumer confusion

The Housing Bills He Did Pass
In July, Governor Schwarzenegger passed a bill, addressing the increasing inventory of foreclosures in California, requiring mortgage lenders to contact specific borrowers (loans made in 2003 to 2007) to discuss loan modifications prior to starting their foreclosure proceedings. He also approved bills requiring brokers to disclose their state license number upon first contact and allow regulators to suspend licenses for violations of state law.

In a related veto, Schwarzenegger stopped a bill requiring lenders to give a 90 day notice of adjustable rate loans about to reset higher with details of increased monthly payments. Again, Schwarzenegger cited that such notifications could lead to confusion.

Here in California, reform bills such as these could do a lot to prevent fraudulent brokers and illegal activity. Although this Mortgage Reform Bill did not go through, there are still ways to protect yourself from such predatory lending. Be sure to read my “3 tips to avoid getting taken advantage of” if you are interested in more information.

(10 votes, average: 4.9 out of 5)

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Find Ways to Save Even If You Can’t Refinance

Published

on September 26, 2008

in Refinance

. 0 Comments

Forget the headlines, the breaking news, and the latest acquisitions. I know you’re concerned with the bottom line, and that bottom line is you. Who cares if mortgage rates are historically low if you aren’t able to refinance. If you have an adjustable rate loan that is about to spike or been scoping out the possibility of lower mortgage rates, you have probably seen how hard it is to refinance lately.

In parts of California, if you bought a house with the traditional twenty percent down, you’re still not guaranteed to qualify for a refinance today. Prices are returning back to their “normal” values and mortgage loans are harder to obtain because of tightening credit standards. Nowadays, excellent credit is only good credit, and good credit is only mediocre credit. I know we’re home to Disneyland, but say goodbye to the days of Mickey Mouse Lending. If you want to refinance, you had better be qualified.

So, What If You Can’t Refinance? Here are some ways you can still save:

Save Money with Loan Modifications
Lost your job? Suffered a financial hardship? Surprised by a significant change in your monthly mortgage? If you can present a substantial case to your lender, a loan modification is your next best option to a refinance. However, expect to meet a certain amount of resistance and get ready to “rumble” with your lender. Lenders may be more receptive because of the current crisis, but they are also overwhelmed by the growing number of those who need help. If you can present a convincing argument, a lender can modify your loan to reduce the interest rate or loan amount.

Save On Taxes by Re-Assessing Your Property Value
Can’t refinance because you don’t have enough equity? After you phone your friends and family about how this crazy market has taken away your equity, make sure you call the county and let them know as well. If your property value has dropped significantly since you purchased your home, having your property re-assessed will lower your property taxes. The savings may not be as much as a refinance, but every bit helps.

If you’re facing a foreclosure or your home is in jeopardy because you can’t refinance, make sure you actively look for help. Speak to your lender and contact mortgage professionals in your area. For more information, also check out helpful resources such as Hope Now and California Housing Finance Agency’s Foreclosure Avoidance Program.

(4 votes, average: 4.75 out of 5)

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Protect Your Home From the Foreclosure Wave

Published

on September 25, 2008

in Home equity

. 0 Comments

Overgrown Lawns. Vandalism. West Nile Virus.

Foreclosures and short sales inevitably take their toll on surrounding homes, but the worst part is the eyestrain they cause their community. As homes are left vacant by their lenders, they often become the a home for transients, vandalism, and theft. So what’s a homeowner to do?

Here in California, residents of San Jose are encouraged to fight back the negligence of these lenders. Michael Hannon, the deputy director for code enforcement, says lenders can be fined up to $1,000 for multiple violations and can also be responsible for paying city contractors to maintain such properties. In addition, the recent bill passed by Congress has allocated local governments money to help the spreading problems of the foreclosure crisis. In California, allocations were already announced last weekend and cities will now have about 30 days to submit their plans to HUD.

What Can You Do?

If you have a foreclosed home in your neighborhood that you feel is an eye sore, the best thing you can do right now is contact your city’s Code Enforcement Division. A quick Google Search of “[Insert Your City] California Code Enforcement” should bring a list of relevant sites with phone numbers you can contact.

Code Enforcement Officers typically address violations such as illegal signage, fencing and border limitations, and general property nuisance. By contacting these authorities, lenders will be held more responsible and hopefully cure some of these neglected properties.

Because of the high number of foreclosures in California, it may be hard to hold all these lenders responsible. But as homeowners, it certainly won’t hurt to get on their case by calling your city’s code enforcement. It won’t cure the housing crisis and it won’t stop dropping values, but it will certainly help relieve some of the eyesores we are all suffering from.

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Home Equity Loan Shortage Causes Trouble Beyond Housing Industry

Published

on September 24, 2008

in Home equity

. 0 Comments

Home Equity Loans have always been great mortgage options to tap into your equity. Unfortunately, due to tighter credit standards and declining home values, accessing the equity in your home is no longer a simple phone call away. Here in California, homeowners who already have equity lines of credit have trouble simply accessing these funds because of the certain lenders freezing their loans.

Last month, I mentioned these Frozen HELOCs a bit and some readers also shared their personal encounters with these disappearing funds. But today I wanted to highlight a ripple effect that might make you reconsider your financial plans.

An article by the Herald Tribune reported that the second quarter statistics for auto-loan delinquencies jumped nearly 11.5 percent as reported by the credit reporting agency TransUnion. Art Spinnella, president of the automotive research marketing company CNW, also mentioned that one third of new vehicle sales in California were made with the use of home equity lines of credit. In addition, he continued on by saying that new sales would continue to suffer because of the limited home equity lines in certain declining states.

Rethinking Your Moves
Home Equity Loans have been popular sources for home improvements, college tuitions, and other significant financial moves. But before you make any plans to tap into your home equity, you may want to seriously reconsider this option. Aside from inflated home values, one downside of this recent housing craze was the ATM-syndrome caused by rising equity. People saw their growing equity as their secondary checking account and were spending as if it would keep on growing.

Now, values are down and homeowners have little to no equity to turn to. But is it that terrible? I’m not saying dropping home values should be welcomed, but maybe this is a chance to correct the flawed financial habits we’ve picked up over the years. Paying for college tuitions and consolidating high interest debt I can understand; but mortgaging your house to finance your new car or high priced ticket items may not be the best move.

So while other industries may be suffering because of tightening credit opportunities, perhaps this is just what we needed to return back to the work-hard-and-save mindset; instead of the borrow-and-spend attitude that got us here in the first place.

(3 votes, average: 4.33 out of 5)

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Published

on September 22, 2008

. 0 Comments

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