Gulf Coast Associates' Blog: Lending News

I can hardly put into words (at least not publicly) of how sick I am of some of the mortgage and real estate crowd who are taking the new government rate freeze plan as another opportunity to bash President Bush and the Investors who hold the paper on those loans. What a bunch of sad sacks they all are. Anyone with half a brain can see right through their so called criticisms and understand that all they are really doing is showing their true partisan agenda. And just what is that agenda? Simple, blame the Bush administration for everything that happens. How politically correct they all are. Then, just to show how progressively minded they are too, they bash the greedy investors, who are going to lose money no matter what happens as we move forward.

Now,…

Today, the Bush administration and the Lending Industry announced their plan for helping homeowners who are facing higher mortgage payments when their upcoming subprime ARM loans reset. Faced with the prospect of 2 million subprime mortgages scheduled to reset at higher interest rates in the coming years, the agreement will freeze the loans' current interest rate for the next five years. The administration stressed that the deal is not a bailout because no government money is involved and limits will be put in place as to exactly what type of borrowers will be eligible for the program.

By adopting such limits, only those borrowers who are current on their payments and can't afford the higher reset interest rates will qualify. Borrowers who have been …

Treasury Secretary Henry Paulson announced on Monday there could soon be an agreement between the government and the major players in the mortgage industry to help thousands of American homeowners avoid mortgage defaults by temporarily freezing borrower’s lower introductory rates to keep them from resetting to higher levels for a period of years.

Paulson was addressing a national housing conference and said in his speech that this effort was a “pragmatic response” to the current realities of the worst housing slump in more than two decades. He also noted that the number of homeowners unable to meet their higher monthly mortgage payments because of their rates resetting is currently soaring and will continue to do so unless something is done to help…

The Office of Federal Housing Enterprise Oversight (OFHEO) announced today that the maximum 2008 Conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mac will remain at the 2007 level of $417,000 for one-unit properties. Higher limits will continue to apply for Alaska, Hawaii, Guam and the U.S. Virgin Islands, as well as for properties with more than one unit.

The Conforming Loan limit determines the maximum size of a mortgage that Fannie and Freddie can purchase. By law, the limit is based on the October-to-October change in the average house price in the Monthly Interest Rate Survey of the Federal Housing Finance Board. While the average house price in the survey declined by 3.49% over the last year, the OFHEO once again…

House Bill HR-3915 Passes, Now Heads to Senate

Well, after a few agonizing days, and a relentless email campaign by many in our industry, the House of Representatives finally passed the new Mortgage Reform and Anti-Predatory Lending Act of 2007 (HR-3915) on Thursday. Thankfully, the final Bill was amended to remove the controversial ban on the use of yield spread premiums, which would have crippled the mortgage lending industry; and, in turn, further promoted the current housing slump by raising interest rate costs to anyone looking to finance a new mortgage loan.

 While we agree that some of new Bill's proposed changes will be good for our industry as a whole, we totally disagree that Congress should be in the business of trying to legislate good…

As those of you who have read our Blog before know, we are not fond of how a large segment of the mortgage industry has conducted itself in the last few years. Common sense went out the window in order for lenders to make huge profits under the guise of helping borrowers obtain more housing opportunities. Unfortunately, it doesn't take an economics degree to see where that got us. Making bad loans because you can does not mean you should. And, originators making them in order to pad their income is even worse.

Perhaps the saddest part of all is that, to date, we've seen very little of the industry actually doing anything to curb the abuses. In fact, we were dumbfounded recently after attending a seminar, where it was made crystal clear that subprime is…

We wanted to give you an update on our government reform post regarding the announcement of the new FHA Secure mortgage refinancing program. FHA Secure is designed for families who are good borrowers but were steered into high-cost ARM loans with teaser rates.

To qualify for FHA Secure, eligible homeowners must meet the following criteria:

• The loan must be a non-FHA ARM.
• A history of on-time mortgage payments "prior" to the borrower's ARM loan resetting to the higher rate.
• The Arm loan interest rate must have either reset or be scheduled to reset between June 2005 and December 2009.
• Mortgage late's are allowed after the reset date if they are directly related to your higher loan payment. In addition, if you are in a mortgage…

In response to the so called "crisis" in the mortgage markets, the Federal government responded today, and in some cases, is taking action for trying to clean up the credit mess. While we've suggested in a past post that the industry itself needs to take steps for correcting the situation, some of the moves the government is considering may help those suffering from possible mortgage abuses in the past few years.

President Bush announced today the new FHA Secure program for helping borrowers with good credit to refinance their ARM loans if they are behind in their payments. The program is expected to help around 80,000 individuals who are not in foreclosure but are experiencing difficulties. While it is a step in the right direction, in and of itself, it…