With the mortgage industry in such a mess following the subprime mortgage crash and the other problems with the economy, some are wondering if the federal government needs to intervene into the situation even more than it already has.

One of the proponents of the “more government” mindset is Bill Gross, the head of PIMCO. He oversees more than $1 trillion of investments and he was a recent guest speaker at the Treasury Department’s discussion concerning Freddie Mac and Fannie Mae’s future. He thinks that the mortgage industry’s dependence on the federal government isn’t something that we can do “cold turkey” without creating more problems than we already have. It’s a relationship the industry has with the government lately and The Christian Science Monitor likens it to the relationship that a heroin dealer has with his customers.

Gross says that the mortgage industry is in a bind. With the mortgage giants owning about $5 trillion in debt, it is not feasible to assume that the industry can break its reliance on the government without some major problems. In fact, Gross tends to favor more involvement by the federal government. He suggests allowing Fannie and Freddie to fold into one federal housing agency which would guarantee the overwhelming majority of mortgages, both current and future ones. This way, the taxpayers would support the mortgage lending process and the $5 trillion in debt would be passed along to the federal budget.

Others are proposing that the $5 trillion be absorbed by the private market. Of course, this can’t be done all at once. But with a gradual absorption, the mortgage industry can begin to break its addiction to the help that the federal is giving the industry. If the private market sells the mortgages in small increments, it can be done successfully without closing Fannie and Freddie. While the process may take several years, we have to remember that it took a few decades in order for the subprime mortgage industry to have the blistering effect that it has had on the housing market and the economy as a whole.

Is the answer in more government intervention or the mortgage industry slowly separating itself from the government’s help? What are some of the thoughts you have about this?

If you are one of the hundreds of thousands of homeowners in America that wants or needs a mortgage modification to stay in your home, you may want to make the trek down to Palm Beach this weekend.

The Palm Beach Convention Center already has thousands of people lined up outside its doors as the Neighborhood Assistance Corporation of America, or NACA, is holding a workshop-type event aimed at helping people modify their mortgage to more favorable terms before they are forced to go through a foreclosure. Despite the rain and inclement weather, these thousands of people are either desperate or dedicated to making something work so they are not forced to just walk away from their homes.

The event at the Palm Beach Convention Center is scheduled to last for five days and troubled homeowners from across the country are showing up as a last ditch effort to save their homes. People are coming from California, Detroit, Pennsylvania and many other of the hardest hit areas to see what their options are in terms of modifying their mortgage and getting some financial help from trained counselors.

When they speak with a counselor, they will find they have several options for mortgage modifications as long as they qualify. For one thing, they can change their mortgage terms from an adjustable-rate mortgage to a fixed-rate mortgage with a lower interest rate. This will make their payments more stable and predictable and even lower the monthly payments to ease the financial burden. Others may choose to extend their 30-year loan to a 40-year loan which is becoming very common in the mortgage modification market. This 10-year extension means paying more in the long run, but the monthly payments will be less.
If you or someone you know could benefit from a mortgage modification and you qualify for one, why not check out the Palm Beach Convention Center this weekend? The event is running until Tuesday, August 31st in West Palm Beach, Florida. If you cannot make the trip, contact your mortgage lender for more information about a mortgage modification. It only takes a few minutes and you’ve really got nothing to lose.

With today’s economy, it isn’t uncommon for mortgage borrowers to have late payments or even missed payments on their home. Some times, these missed payments can be worked out with the mortgage lender. However, depending on the circumstances, it could result in a foreclosure. Here are some common questions that today’s homeowner has about missing payments and foreclosing on their homes. Hopefully, the answers will clear things up and relieve some worry.

What are my options if I am late on a mortgage payment?
At the first inclination that you may miss a mortgage payment, contact your lender. They are more willing to work with you favorably if you alert them beforehand that you are going to be late. Once you become 30 days late on your mortgage payment, you will receive a notice in the mail. You will get another notice if you are 60 days late. The worst thing you can do, however, is ignore the lender. During these times when so many people are just walking away from their mortgage, lenders are willing to work with more people if the borrowers show an interest in working with them.

How do I know if I’m eligible for a mortgage modification?
Mortgage modifications are becoming more popular as banks are trying to keep borrowers from simply walking away from their loans. A modification often includes a reduction in the principle balance, the interest rates or an extension of the loan to reduce the monthly payments while stretching them for a longer period of time. If you are having problems making your payments, a loan modification is often up to the lender. Fortunately, the federal government is pushing loan modifications lately and mortgage lenders are as well to encourage people to stay in their homes. Modifications often require mortgage counseling, too.

Are banks foreclosing on homes as quickly as they used to?
A recent story shows that a large percentage of borrowers who are 60 days late on their mortgage payments are not being turned over to their lender’s loss mitigation departments. Because of those figures, it does seem like banks are not as quick to foreclose as they once were. If they foreclose on you, they are stuck with a foreclosed home that probably needs repairs before it will sell. They will likely have to sell it at a discount, too. It rarely works in the bank’s best interest to foreclose on your home so they are giving borrowers more chances these days.

Do you remember the days when everybody was just hoping that mortgage rates would drop below 5 percent once again? It doesn’t seem like those days were very long ago. In fact, it was just a few months ago. Now, mortgage rates are below 5 percent. Not only that, but you might even be able to qualify for a rate that’s below 4.5 percent. How much lower are they going to go?

According to Freddie Mac, the average mortgage rates for a 30-year fixed rate loan fell once again to a record low 4.36 percent. That’s the ninth week in 10 weeks that mortgage rates have dropped and there doesn’t seem to be an end in sight. Since the first week of August, these same mortgage rates have been below 4.5 percent. Since May, the average mortgage rates for a 30-year fixed mortgage has been below 5 percent. Those are exciting numbers for people who want to purchase a home or refinance now that their credit situation is better than it was when they purchased their home.

The news is even better for 15-year fixed rate home loans. If you qualify for the lowest rate, you can get a loan at about 3.86 percent. For homebuyers who prefer an adjustable rate mortgage, you may be able to get a loan at 3.5 percent.


Analysts are citing three reasons for the constant declines in the housing market and mortgage rates. For one thing, the mortgage industry and housing market is in distress right now and it has been for some time. The lowering mortgage rates are a sign and symptom of that problem. In addition, the federal government is also producing policies that are designed to increase demand for homes, which also helps lower the rates. Finally, there is an overwhelming feeling that deflation is just around the corner.

Unfortunately, the record-low mortgage rates are not doing much to increase home sales recently. The number of sales in July fell by more than 275,000 units, which is more than a 12 percent drop. According to the National Association of Realtors, the number of existing home sales has gone down by more than one quarter, which is the lowest existing home sales figure in at least 15 years. Unemployment continues to be a major factor in the number of home sales recently and the economy has left fewer people in the position to borrow money to buy a home.


So there is both good news and bad news in the mortgage industry. Hopefully things will start to turn around in the coming months so more people can take advantage of these record-low mortgage rates. We’ll just have to see what happens.

With so many troubled homeowners needing modifications on their home loans, more lenders are turning to 40-year options when modifying loans.

The federal government has ordered many mortgage lenders to modify the loans of many homeowners rather than allowing them to go through foreclosure. The reason for doing this is to cut the borrower’s monthly payments enough so that they are less than one-third of the person’s income. For some, this is a great way to get out of their delinquency problems with their mortgage. Lower payments allow them to make their payments with some flexibility left in their budget. Others, however, are not encouraged by the idea.

Maria Olmo is a 63-year-old homeowner who has recently needed a loan modification so she can make her payments on her home. Her lender modified her loan into a 40-year mortgage. Olmo says the modification is “ridiculous” as she will be dead before her mortgage loan is ever paid off. This modification from a 30 year to a 40 year mortgage loan is becoming more common, too. More than 50 percent of the nearly 400,000 mortgage modifications that have gone through the Making Home Affordable Program have extended the mortgage terms by ten years while reducing the monthly payments.

It was only six months ago that less than half of those modifications (about 42 percent) were getting 10-year extensions. The federal government isn’t being specific about the number of homeowners who have received these 10-year extensions as part of their loan modification. However, lenders are reporting that this type of extension is the most common type of modification going through these days.

Other modifications include trimming down the principal balances for homeowners who are “underwater” on their homes and reducing interest rates. The former has helped nearly one-third of all homeowners who received a modification while the latter has been a term of the modification for all modified loans.

Unfortunately, according to Orlando lawyer Matt Englett, these people receiving the 10-year extension are turning their homes into rental properties essentially. For homeowners over 60, getting a 10-year extension essentially means that they will never pay off their mortgage because they are more likely to die first. As a result, they will have a payment for the rest of their life, much like Maria Olmo. But the government is pushing these extensions and lenders prefer these new options rather than writing off principal from the balances. Some lenders are offering counseling sessions to help homeowners in danger of default and foreclosure choose the best modification that fits their financial needs the best.

Of course, with the current mortgage rates the way they are, refinancing is also becoming a popular option for some homeowners. If you qualify, this is probably the best option for you!

With all of the problems going on in the mortgage industry, it appears that maybe being 60 days late on your mortgage payments is not as big of a concern as it used to be.

The State Foreclosure Prevention Working Group, or SFPWG, released a study this week that showed as many as 60 percent of mortgage borrowers did not have their accounts forwarded to the mortgage lender’s loss mitigation department when they are 60 days or more late on their payments. That’s an astounding figure, but understandable considering the current economic climate.

Many of the borrowers in the study had seriously delinquent accounts that lenders were not taking action on lately. Part of the reason may be because there are so many foreclosures going on right now that banks are not as quick to put a borrower through foreclosure without giving them ample time to catch up on their mortgage payments. Since October of 2007, there have been more than 2.3 million foreclosures and giving borrowers some extra time to get back on their financial feet is often the only thing needed to help them get back on track.

Nobody really wants a foreclosure. It displaces homeowners and it makes banks lose money because they often sell these homes at deep discounts. As such, being slower to foreclose on a home may be a strategic and intentional decision that banks are making in hopes of getting more money that is owed on the mortgage rather than foreclosing on them.

In addition to that, loan modifications are another option for troubled homeowners. In many cases, it can give the mortgage borrower the opportunity to get lower mortgage rates. According to the SFPWG, mortgage borrowers who modified their home loans last year are about half as likely to have seriously delinquent account six months following their modification than those troubled homeowners who modified their home loans in 2008.

This shows that homeowners are more likely to take their second chance more seriously than they do their first chance. Possibly, once they find themselves in trouble with their home loan and get help with it, they make a more concerted effort to stay out of that trouble again. Of course, many home loan modifications lower payments so this also helps mortgage borrowers stay in their homes rather than letting them become delinquent and go through foreclosure.

Despite the historically low mortgage rates staying as low as they have been in recent months, sales of existing homes continues to not only suffer but plummet to figures we haven’t seen in over 15 years.

The sales figures for last month seem to indicate that people just aren’t buying homes like they used to. There were about 3.8 million fewer home sales in July 2010 than there was in the previous month. Figures from one month to the next have never declined as sharply as that since 1968. Many are taking this drastic drop as a sign that the economy really isn’t doing much better despite what the federal government is trying to tell us.

Even homes that were in the lower price ranges didn’t fare so well last month. Home sales in the Midwest dropped by nearly 50 percent for the market priced between $100,000 and $250,000.

The expiration of the first-time homebuyer’s tax credit is one of the reasons many analysts are citing for the sudden drop in sales. The credit expired at the end of April and home sales have not done much since then. As a result, the inventory of unsold homes has risen to almost 4 million for the month of July. That means that there is more than a 12 month supply of homes if prices remain at the current state they are in. That number is higher than it has been in over 10 years and it doesn’t seem to be getting better any time soon.

Some people have been trying to sell their home for quite some time and they haven’t been able to get out from underneath them. Laurie Salaman, a New York resident, has had her home on the market for more than a year. She has dropped the price of her home by more than $25,000 and she still hasn’t had to many people show interest in it. She would like to move to the suburbs of New York but she can’t until she sells her home.

Other factors are contributing to the plummet in home sales. The unemployment rate for the nation is at about 9.5 percent. Some states are seeing higher rates than that which is hindering many people from being able to qualify for a mortgage even in the lower price ranges of homes. Combine all these factors with the uncertainty of the nation’s economy and individual jobs and you have a perfect storm of reasons why home sales have plummeted.

The only question is: How much more are sales going to plummet in August?