Posts Tagged ‘debt’

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Outlook on Real Estate Recovery

Friday, July 31st, 2009

In a recent survey by LoopNet Pulse Poll of commercial real estate and investment professionals, the outlook seems grim for the real estate market. While many have predicted significant recovery in the housing sector by the end of 2009, it seems that most experts aren’t so sure. In fact, only about 10 percent of the real estate and investment professionals surveyed believe that recovery can be expected in 2009. Back in May, 33 percent thought that we could expect recovery in 2009. It seems that hope is waning.

So when CAN we expect the housing market to recover? Over 30 percent of real estate experts – a 5 percent increase from May – believe that to be in 2011. But the majority of those polled, 56 percent (up from 42 percent in May), expect recovery to come next year.

Among other survey findings:

* The majority of respondents expect prices to fall further, within 11 to 20 percent, while 20 percent expect declines of 20 percent or more.
* Among owners, 28 percent think pricing in commercial real estate has bottomed and will decline by 5 percent or less. Nearly 20 percent of investors believe that too.
* Eighteen percent of brokers surveyed expect up to 5 percent declines in prices and 19 percent predicted declines of 20 percent or more.
* Sixty percent expect prices to hit its lowest level between fourth quarter 2009 and third quarter 2010.
* The majority agreed multifamily offers the best long-term investment opportunity in the current cycle.

If you’re considering a loan modification, the best time to send in a proposal to your lender and get an approval would be now. If you wait too long, the chances that you will lose your home will only grow. Gather all important documents together, generate a financial plan for the remainder of 2009 with a target mortgage payment program and ideas of ways to further cut costs, and contact your lender.

Best of luck, from Anderson Chase Financial.

Anderson Chase Financial

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Posted in Loan modification, Uncategorized | 3 Comments »

Homeowners – Are You Underwater?

Thursday, July 30th, 2009

What does it mean to be “underwater” or “upside down”? When a property is underwater, it means that the homeowner owes more than the property is worth. People who bought their homes in 2006, the peak of the housing bubble when prices were highest, are now left with property that is impossible to sell.

bubble

Now the government is redressing its Home Affordable Refinance Program to help out homeowners who have not been delinquent in payments but are upside down and dealing with negative amortization. Lenders can now offer new mortgages to borrowers if the property value is up to 25 percent greater than the mortgage amount. It used to be that lenders could only refinance loans for borrowers whose mortgage was no more than 5 percent greater than the home’s value. However, considering the significant drop in real estate prices, 5 percent wasn’t going to cut it for many homeowners.

You may be wondering, “Don’t we have bigger issues to deal with? Like homeowners who’ve already MISSED payments?” And yes, the government has been trying to mend this issue with various initiatives which have helped to varying degrees, and many loan modification agencies – ones that breed integrity and customer value – are serving consumers for this purpose. But we want to not only remedy the present but also stem future waves of foreclosures.

Many borrowers who AREN’T late on payments are still stuck with mortgages characterized by high interest rates or the potential to adjust beyond the homeowner’s means in coming years. To make matters worse, lenders and mortgage insurers have tightened underwriting rules, typically requiring borrowers to have at least 15 percent equity in a home.

There is some fine print in this new refinancing program. Borrowers must hold a loan that was purchased by Freddie Mac or Fannie Mae, the government-controlled companies that buy most mortgages. To determine whether you have a Fannie or Freddie loan, go to the “loan lookup” tab at www.MakingHomeAffordable.gov.

If you qualify, your interest rate will very likely be slightly higher than the market’s best loan rates, especially if you refinance with someone other than your current servicer. And if you are 5 to 25 percent underwater with a Fannie Mae loan, you must refinance with your current servicer to qualify.

No matter what your current mortgage situation, there is help available. You just need to know where to look and who to consult. Even if it may not seem like your situation is particularly pressing, there are steps that can be taken now to alleviate potential problems in the future.

Anderson Chase Financial

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Posted in Debt Settlement, Loan modification, Uncategorized | 28 Comments »

Taking Action to Relieve Debt

Wednesday, July 29th, 2009

Just about everyone I talk to recognizes that debt is part of life. It’s part of being a consumer. It seems that all of us are juggling debts, whether it’s a mortgage, student loans, credit cards – or all three. Taking loans can help you afford a home or earn a college degree (something that most Americans do not have), so debt is not felt by just the have-nots. In a recent blog entry, we addressed the misperception that “subprime borrowers” are to blame for our current housing crisis, but the truth is, debt affects the poor and the privileged, every part of the socio-economic spectrum.

However, when you have more debt than you can handle, particularly when it’s high-interest credit card debt, it negatively impacts your mood, your health and your relationships. It is important to understand not just how to handle debt and manage your finances, but also how to manage the stresses related to debt and the prospect of paying off loans.

Keep track

Part of handling your debt and handling your stress is learning how to keep track of your spending. Exactly how much debt do you have and how much money can you put toward paying it down each month? Add up your credit card balances, then track your expenses for about a month, taking stock of every dollar that goes out of your wallet. It will be easier to see what can be eliminated. Put extra money toward the card with the highest interest rate while paying the minimums on the others.

When to seek help

It’s possible your debt load is so large, you just can’t manage it. Your monthly income won’t allow you to make payments while keeping up with other expenses and putting food on the table. If that’s the case, don’t just tread water. Start with a credit counseling agency. A savvy counselor should be able to put you on a debt management plan that will have you out of debt in three to five years.

Find ways to relax your body

Every day, do something that makes you feel calm and cools your mood.  It will help clear your mind and reset your brain.  Make an effort to fit in some heart-pumping exercise, as well.  You don’t need to pay for gym membership – a run, some jumping jacks or a walk will do just fine.

Anderson Chase Financial

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Posted in Debt Settlement | 11 Comments »

Why Lenders May Be Reluctant to Modify

Monday, July 27th, 2009

When you consider the effects of a loan modification, it looks like a win-win-win situation. The homeowner benefits because with a loan modification, they are able to make their lowered monthly mortgage payments and keep their home, the lenders save the huge cost of repossessing and reselling a foreclosed property, and neighborhoods avoid the negative effects on real estate values in the community. This is the reason why the Bush administration launched an effort to encourage loan modifications, and the reason why the Obama administration greatly expanded on it. However, we are still faced with the fact that of the initially estimated 4 million households that would benefit from Obama’s loan modification initiative, only 350,000 borrowers have even been offered new loans. On the other hand, 1,155,299 properties faced new foreclosure filings between March and June.

Why are lenders not offering more modifications? Why have so few modifications gone into effect?

There are two reasons lenders may be reluctant to modify a loan:

1) A Minority of Homeowners Just Need Time – Not Help
Approximately 30% of troubled debtors eventually can pay off a mortgage without a modification. Therefore, for lenders, 30% of the total cost of modifying loans is wasted. Since lenders don’t know beforehand if a particular homeowner falls into the percentage who will eventually make it out without a modification, they are more reluctant to grant modifications overall.

2) A Loan Modification May Not Be a Permanent Solution
The second problem is the risk that many borrowers redefault on a modified loan. By the time that happens, the value of the house has declined further, and foreclosure costs the lender even more than it would have earlier. The HAMP program includes $10 billion for partial protection against that risk, but it may not be enough, especially given the sour outlook for employment.
If you are looking for a loan modification, you need to be serious about committing to change. Do not view loan modifications as an “easy way out” or a temporary relief. A successful loan modification with lasting effects will require you to take charge of your finances and be diligent about making your payments. A loan modification should not be the beginning of another cycle. It should be the beginning of a new path.

forest-path1

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Posted in Loan modification, Uncategorized | 4 Comments »

Loan Delinquencies Hitting Record Highs

Monday, July 20th, 2009

The American Bankers Association (ABA) is blaming the dismal economy and low demand for new employment for a rise in consumer loan delinquencies, which have hit record highs.

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ABA says that more than two million jobs were lost in the first quarter of 2009, meaning that layoffs now total more than 6 million since the beginning of the recession. As job losses increase, more Americans become unable to make their mortgage payments. The delinquent balances on accounts included in the ABA’s composite of eight different installment loan categories increased to 3.35% in the first three months of 2009, up from 3.16% in the last quarter of 2008, according to the ABA’s most-recent Consumer Credit Delinquency Bulletin.

“The number one driver of delinquencies is job loss,” says James Chessen, the ABA’s chief economist. “When people lose their jobs, they can’t pay their bills. Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround.”

While stalled mortgage payments are going up, delinquencies in home equity credit are also hitting record highs. Home equity loan delinquencies rose to 3.52%, an increase of nearly half a percentage point from the previous quarter. Delinquencies on home equity lines of credit, meanwhile, jumped 43 basis points to 1.89%.

“Even if home prices stop falling later this year, unemployment will keep home equity delinquencies high for some time,” Chessen added.

The first quarter composite ratio is made up of the following closed-end loans. All figures are seasonally adjusted based upon the number of accounts:

* Home equity loan delinquencies increased from 3.03 percent to 3.52%

* Property improvement loan delinquencies decreased from 1.75 percent to 1.46%

* Indirect auto loan delinquencies decreased from 3.53 percent to 3.42%

* Direct auto loan delinquencies increased from 2.03 percent to 3.01%

* Marine loan delinquencies decreased from 2.35 percent to 2.04%

* RV loan delinquencies increased from 1.38 percent to 1.52%

* Mobile home loan delinquencies increased from 2.96 to 3.70%

* Personal loan delinquencies increased from 2.88 percent to 3.47%

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Posted in Uncategorized | 5 Comments »

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