It’s difficult to pick up a newspaper lately and not see something about the Goldman Sachs debacle which has developed in recent weeks. Earlier this week, several of the leaders of the company were on Capitol Hill taking questions and meeting with rugged senators – both Democrat and Republican – who were not too happy with the alleged fraud and other wrongdoings committed by Goldman Sachs in terms of their handling of mortgages and other investments.

One of the issues at stake in this week's questioning and the situation in general is the company’s aggressive marketing of mortgage-based investments. This is not the best time to push those types of investments with the decline of the housing market and the economy in such bad shape. However, the four officials from Goldman Sachs who stood before the subcommittee said the company did nothing wrong and they did not mislead their clients when it came to purchasing these investments.

This week's hearing was part of a greater debate concerning the overhaul of financial regulation in the United States. The Senate has been debating this idea for awhile now and the Goldman Sachs situation seemed to play into the debate quite seamlessly. Senators discussed the need for more transparency as well as the conflict of interest between investment banks and clients. In addition, the question of ethics in the finance industry was brought up during the debate. The officials from Goldman Sachs were also asked about any changes they would make in regards to the financial regulatory system.

One of the main themes during the hearing was the gap that exists between “Main Street” and “Wall Street.” Senators consistently pointed out the idea that banks have been seeing huge profits while the overall economy was suffering greatly.

The officials from Goldman Sachs certainly had their feet held to the fire today as senators put them on the defensive for their actions. At times, some senators were getting frustrated at what they felt was the officials trying to dodge questions or stall for more time when answering a question. Senator Susan M. Collins even asked each of the four officials if they felt that it was their duty to keep the best interest of their clients at the heart of all their decisions. Only one of those officials said he felt it was his duty to do that while the other three did not answer the question directly. The four officials were also asked if they had sympathy or remorse over their decisions which contributed a great deal to the financial downturn. One official said that they have sympathy for the people who got hurt due to the company’s mistakes, but there was no improper conduct for which to be apologetic.

I’m sure this is not the end of the Senate’s questioning of Goldman Sachs officials. We’ll keep an eye on this situation as more news develops.

With about 11 million homeowners in over their heads with their current mortgage, Wells Fargo decided to do something to help those with a home loan at its company. Helen Riggs, age 75, is one of those people. She showed up yesterday at a workshop for distressed homeowners that Wells Fargo was sponsoring in hopes of getting a reduced monthly mortgage payment.

Riggs is a distressed homeowner whose husband recently passed away. His $50,000 annual salary was more than enough to pay the $2,135 monthly mortgage payments, but since his death, Riggs does not have that much money to put toward bills. She has already gone through the $37,000 the couple had in equity in their home to pay other bills and she has had to get a job as a greeter at Costco to help make ends meet. Wells Fargo held a three-day workshop to help people like this get back in control by discussing options with them face to face.

The workshop was held earlier this week at the Oakland Marriott Center in California. More than 1,000 homeowners showed up to take advantage of this unique opportunity which was designed to help people who have found themselves “underwater” in their home loans. Many of the recent foreclosures have been the result of subprime loans which included low interest rates at first but much higher payments after a few years. With the surge in unemployment and other economic problems, millions of homeowners found themselves in financial trouble and simply lost their homes as a result.

The Wells Fargo workshop had more than 125 representatives from the company and they each spent about an hour talking to each borrower about the various programs they can use to help them get through this bump in the road. They discussed federal programs, loan modifications and other options designed to bring down their monthly payments so they can afford to stay in their homes. The discussions were held in individual booths to help ensure privacy during this often embarrassing discussion. Wells Fargo hopes to have a decision on at least half of the requests that were brought to them during the three-day event.

One piece of good news, at least for one person, occurred when Dorothy Huggins, a 63-year-old homeowners, was able to reduce her mortgage payments from $2,100 to $1,400 on her East Palo Alto home in California. Hopefully, many more homeowners will receive decisions like that. She said she has spend about two years trying to accomplish this goal but her mortgage was modified “on the spot” when she attended he workshop.

If your home loan lender holds a workshop like this in your area, be sure to check it out. You’ve got nothing to lose!

As the deadline looms for the extended homebuyer tax credit, homebuyers are rushing to close. Though it's not too late to take advantage of the tax credit, prospective buyers need to move fast. Here is a list of suggestions to avoid delays in the homebuying process.

Work with reliable people. Find a real estate agent you are comfortable and want to work with, and then ask for recommendations for loan officers and inspectors. Everything in life is relationship driven, and all agents have people that they trust to get the job done. In addition to relying on referrals, it’s a good idea for buyers to speak with several lenders. Plus, it’s essential to acquire pre-approval on a loan.

Expect paperwork requests. Securing a mortgage can be a thorny process. Financial paperwork must be organized, submitted and updated with accurate and complete information.

To streamline administrative activities and expedite the transaction, be efficient and flexible. Expect to send the same documentation more than once. Keep copies of everything. Remember to turn in recent pay stubs. Also, respond to documentation requests immediately. Your organization and responsiveness will help minimize costly delays.

Speed up inspections. Once you present an offer on a house, there is a 10-day cut-off date for the initial inspection. Rather than waiting until the 10th day, schedule the inspection as quickly as possible. By doing so, you will accelerate the process at the forefront, and pave the way for timely repairs, approvals and negotiations.

Anticipate different schedules. Escrow professionals generally work eight-hour days, Monday through Friday. Respect their schedules, especially as the tax credit deadline approaches. Furthermore, keep in mind that escrow workers can’t proceed until they receive the loan documents from the lender.

Even though you can’t rush the lender or escrow associate, you can remain poised for action. The moment the loan documents come through, events will unfold very quickly. Be ready to attend a last-minute signing. Know in advance what to bring to the meeting, such as a cashier’s check.

Keep an eye out for other delays. There are other situations that may occur during the settlement process that may push back the date of your real estate closing. Establish open lines of communication with your real estate agent and lender. Tell them that you want to take advantage of the homebuyer tax credit, and ask them how to prepare for (and resolve) problems early on.

Finally, as you move forward in your springtime home shopping, you may want to steer clear of certain types of properties that are known for incurring delays. These transactions include short sales, bargain homes and rehabilitation loans.

After breaking through 5% and surging to 5.20% three weeks ago, the 30-year average mortgage rate has settled in and declined slightly. As of today, the average is 5.11% according to BestCashCow/Informa data. The lack of inflation in the economy and the growing view that rates may stay low for an extended period of time have helped to push Treasury rates, and by connection mortgage rates lower.

What Does This Mean for Homebuyers?

I've been following actual rates, not just averages for a 30-year fixed rate loan in Massachusetts for the past four months. Until two weeks ago, a homebuyer could get a $200,000 loan at 0 points for 4.5%. Three weeks ago, the rate shot up to 5.125%. It now rests at 4.875%.

Other Mortgage Rates

Other rates moved up slightly. The average 15-year fixed rate mortgage rose from 4.42% to 4.45%, up from a low of 4.34% in March. As the chart shows, the 5-year ARM has dropped significantly in recent weeks from 4.03% to 3.86% this week. The 1-year ARM, one of the most volatile of the rates tracked actually remained steady for once at 4.87%.

View mortgage rates by state and zip code.

We have all had questions about mortgages at one point or another and getting the answers we need is not always easy. But Tom Champion, who has been a mortgage loan originator and now works as a regional manager for Mortgage Loan Inspection, took some time in an interview with the Baltimore Sun to answer some pressing questions. Here are some highlights of that interview with a paraphrasing of the questions asked and the answers given.

What is the problem with a family making about $63,000 a year financing a home that costs $226,500? Is this a realistic mortgage payment for such a family?
According to Tom Champion, there is a problem with simply being able to afford a mortgage payment. In this case, the family would be approved for the loan according to FHA guidelines. However, after reviewing their budget, they would only have about $100 left over at the end of the month and they would not be able to contribute to any savings plans, college funds or retirement accounts. If someone gets sick or misses a paycheck, the family could be on the road to financial disaster.

Mortgage loan lenders are not going to be concerned about how much you have left over after making the mortgage payment. They will tell you that you can afford the payment but they will not often tell you that you can barely afford it. When taking out a mortgage loan, always separate yourself from the emotion of the purchase and make a realistic decision based on your budget. Tom calls people who simply “afford” their mortgage payment “house poor.”

How can a person or family determine how much mortgage they can comfortably and realistically afford?
Before applying for a mortgage loan, a family should always come up with a written budget. This budget should have a list of your expenses and your income. Include all of your expenses throughout the year, including your property taxes, insurance payments and more. Once you have this, adjust the data to include the new house payment, the new property taxes, the new insurance and any other expenses for the new home. You should even consider how much farther (or closer) you will be to your job and the different gas expenses.

Once you have all of this, you have a bottom line for what you can afford and still have money left over for living expenses, savings and other necessities. You can also see if any lifestyle changes are needed in order to afford the mortgage payments comfortably.

Champion urges home buyers to take their mortgage loan seriously. You are committing to a 30-year debt in most cases so it’s not something you can take lightly. For most people, buying a home will be the largest investment they will ever make. Allow your logic and rational side to make the decision rather than your emotional side to ensure a well-informed decision.

When shopping for a mortgage, you may get overwhelmed by the process if you don’t know what to expect. One thing that can discourage you is when lenders and others that you talk to throw around terms that you don’t know. Here are some terms you will run into when getting a mortgage so you know what others are talking about.

Amortization Schedule
This term refers to the schedule of repayment for the mortgage loan. The table breaks down the interest, balance, tax and insurance payment as well as any other fees or charges that the mortgage borrower is responsible for.

Equity
When referring to a home, the equity is the amount you have invested in the property. In short, it is the difference between the home’s value and the balance you owe on the home. For example, if the home is worth $120,000 and you owe $100,000, you have $20,000 of equity built up in it.

Escrow
Escrow is basically a third-party which keeps any money or objects of value until the home purchase goes through. Escrow accounts are generally used for the borrower to deposit money for taxes and hazard insurance before the deal is final. After closing, the mortgage lender then uses that money to pay those fees when they come due.

Fannie Mae and Freddie Mac
These are the two government agencies that purchase mortgage loans from the lenders.

Fixed-Rate Mortgage
A fixed-rate mortgage is on in which the interest rate and monthly payments are the same throughout the term of the loan. The interest rates never change and, as a result, the monthly payments remain the same as well.

Adjustable-Rate Mortgage
With an adjustable-rate mortgage, your monthly payments will fluctuate depending on the current interest rates.

Grace Period
A grace period refers to the number of days following the payment due date which you can pay your bill without getting charged late fees. Grace periods are only for mortgage loans in which the interest gets calculated each month.

Mortgage Rates
This refers to the current interest rates that banks are charging. Currently, they are hovering around five percent. However, mortgage rates are increasing which means paying more overall during the term of the loan.

Homeowners Insurance
A homeowners insurance policy is vital for protecting your most expensive investment. In some cases, you will be required to have a homeowners insurance policy because the lender requires it to protect their investment as well.

Housing Bubble
This refers to a significant increase in home prices doe to the expectation that the prices will continue to go up.

These are just a few of the more common terms you will encounter when searching for a mortgage loan. Hopefully, knowing these terms will make the shopping around process a little bit easier and understandable for you.

With many Americans facing the very real threat of foreclosure, many are looking for ways to avoid it. One option, and a topic that has garnered a lot of industry interest, is a short sale. Normally reserved for stocks and other finance-related transactions, short sales are becoming an increasingly popular, and common, foreclosure avoidance tactic for homeowners.

Whether you should do a short sale or let the home go to foreclosure depends on several factors. While for some homeowners, it is easier to throw up your hands and let the bank take your home, that might not be the wisest thing to do.

At its best, a short sale can be a win-win for both parties. For the seller, a short sale provides the opportunity to avoid foreclosure and the dreaded implications that a foreclosure brings, in addition to being able to return to home ownership sooner; alternately, the lender receives most of the value of the loan sooner, and avoids incurring additional legal or carrying costs while the foreclosure process plays out, which can sometimes even take years. And, frankly, short sales are great options for savvy buyers - but these buyers need to not only be looking for a bargain, but have the time and skills to negotiate effectively as well.

What are the rules for buying again after a short sale or foreclosure. In a short sale scenario, if your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years. If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.

After a foreclosure, you may be eligible to buy another home in 5 years if the home was your primary residence, with certain restrictions. Without restrictions, the wait is 7 years. If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

The decision to do a short sale or foreclosure also affects your credit score. A short sale is not a derogatory mark on your credit because credit bureaus do not show the word "short sale" on your credit report. It may say "pay as agreed" or "paid as less than agreed," among other categories. Some clients have reported negative FICO Score drops from 50 points to 130 points. The point drop is typically due to being in default, that is behind on your payments. In the case of foreclosure, a number of sources have reported FICO score drops from 200 to 400 points. Generally this credit score will remain on your credit report as a public record for 10 years.

In summary, the short sale will typically leave you in a better situation financially. If you are eligible, it is definitely a path worth considering.