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Archive for Avoid Foreclosure

The Three Primary Benefits of a Mortgage Refinance

You’ve heard that a mortgage refinance can be a beneficial step to take.  Maybe you’re considering such a step.  But what are the true benefits of a refinance?  Let’s go over the three primary ways that a mortgage refinance can improve your financial situation.

1.  Decrease your monthly payment. The amount of your monthly payment varies depending on your loan term length, the interest rate of the loan, the total loan amount, and other factors such as private mortgage insurance and expenses that have been rolled into the total loan amount.  A refinance allows you to adjust many of these variables.  If your interest rate is higher than the market’s current mortgage rates, you can refinance into a lower rate and decrease your monthly payment.  This is one of the most common motivating factors behind a refinance.

2.  Access home equity as cash. If you’ve built up equity in your home through consistent payments or through increased property values, a refinance allows you to withdraw some or all of this equity in the form of spendable cash.  The amount you withdraw will affect the total loan balance remaining, but if you need access to money to pay for medical bills, college tuition, or other expenses, a refinance is a far better option than a standard bank loan or consumer credit.

3.  Change the length of your loan term. Your original mortgage length may have been fifteen years, thirty years, or more.  Either way, a refinance allows you to alter this length, and this can have a significant impact on your financial situation.  Refinancing into a shorter term will increase your monthly payment amount but will save you money in the long run.  Refinancing into a longer term, which is much more common, will have the opposite effect.

These are the three primary benefits of a mortgage refinance.  Analyze your own financial needs and goals to determine the value that a refinance can offer you.

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Foreclosures Up….Again

Nationwide foreclosure statistics continue to rise.

According to RealtyTrac, the number of foreclosures nationwide are up 14% over last month and over 121% over the same period last year.  For the 2nd quarter of 2008 there were more than 740,000 foreclosures filed nationwide.  That equates to more than 8000 foreclosure filings per day.

While this is a frightening statistic, there is a light at the end of the tunnel.  As we continue to see the bulk of foreclosures move through the system, a bottom in the housing market is eminent.  Some estimates claim that we will see a bottom before the end of the year.  For some areas of the country, the bottom has already come and gone.

This long term outlook is good for just about everyone except potential buyers.  Those who wait for a bottom before buying may very well lose any gains through the monthly payment as mortgage rates have now risen to the highest level in almost a year.  Over the last 9 months, we have seen the best buying opportunities available in decades, and those opportunities are going to become more scarce as we get closer to a bottom.

For those sellers still experiencing pain with their home, check out PreForeclosureFSBO.com.  There you can find resources to help sell your home through a short sale and avoid foreclosure with the help of a nationwide database of investors, and help finding a local professional to get the job done.

Celebrities In Foreclosure – Latrell Sprewell

Even though he once turned down a 3 year deal for $21 million, Latrell Sprewell might re-think that deal today.

MILWAUKEE — Former NBA star Latrell Sprewell‘s home is up for foreclosure and his yacht sold at auction to help pay off the $1.3 million he owes on the boat, according to court filings.

Sprewell, who once turned down a three-year, $21 million contract extension saying, “I’ve got my family to feed,” has apparently fallen on tough times.

Latrell SprewellSprewell

RBS Citizens NA, or Citizens Bank, filed a foreclosure suit last week in Milwaukee County for the $405,000 home Sprewell bought in the Milwaukee suburb of River Hills in 1994.

In court documents, the bank said Sprewell owed $295,138 in outstanding payments plus interest.

Sprewell failed to make his mortgage payments of $2,593 per month from September 2007 to January 2008, the documents said.

The Associated Press tried to reach Sprewell for comment Monday but a telephone number in his name was disconnected. A message to one of his attorneys, Robert A. Gist of Atlanta, and an agency in New York were not immediately returned.

The 37-year-old Sprewell played 13 seasons in the NBA for the Minnesota Timberwolves, the New York Knicks and the Golden State Warriors. The Milwaukee native was a four-time All-Star, but perhaps best known for choking coach P.J. Carlesimo during a Warriors practice in 1997.

He hasn’t played professional basketball since turning down the $21 million extension from the Timberwolves during the 2004-05 season. He was making $14.6 million at the time.

Last month, Sprewell’s 70-foot yacht, named “Milwaukee’s Best,” was sold at auction for $856,000 to a man from Milwaukee.

It was originally worth about $1.5 million. The bank holding that mortgage, New York-based North Fork Bank, asked that it be seized to pay off $1.3 million in debt.

Sprewell’s firm, LSF Marine Holdings, hadn’t made its $10,322 monthly payments on time or maintained the necessary insurance on the boat, the bank said. Sprewell bought the yacht built by the Italian firm Azimut-Benetti in 2003, according to court records.

A federal marshal seized the boat last summer in Manitowoc, about 80 miles north of Milwaukee, where it was in storage.

The sale price means the bank is still owed about $500,000, and it said in court filings it plans to go after the rest.

Last week, prosecutors in New York said they’d drop their case against Sprewell, who was accused of assaulting his girlfriend in front of their children. Prosecutors in Westchester County said the charges will be dismissed in a year if Sprewell stays out of trouble.

Copyright 2008 by The Associated Press

Justice Department Mortgage Fraud Investigation

Today, the FBI and the Justice Department announced “Operation Malicious Mortgage” netted a total 144 fraud cases and 406 defendants in a nationwide mortgage fraud sweep.

This is not a tremendous shock as it has been discussed for months who is to blame for the subprime meltdown and credit crisis.  Mortgage fraud was a contributing factor to today’s current real estate and mortgage market, but it wasn’t the only factor.  I would also go so far as to say it is not even the most significant.

Much of what was created in the mortgage and real estate market has to do with the over zealous loosening of underwriting criteria for the sake of increasing profits in an incredibly competitive market.  This same competitive atmosphere, I’m sure, had an affect on those in the industry that saw the need to cross the line to get a loan done.

Personally, as a mortgage banker and a licensed mortgage broker for 11 years, I see 2 different sides to this “clean sweep” by the Justice Department.  On the one hand, unscrupulous mortgage originators give a black eye to all of the hard working honest mortgage professionals that try to do the right thing and coach their borrowers on what is the best possible option for their financial situation.  On the other hand, there is no shortage of borrowers that believe that it is some sort of birth right to own a home, and they will pursue it at all costs, even when they can’t afford it, or it doesn’t make financial sense.

I hope that those mortgage insiders that participated in predatory practices with malicious intent see punishment for their actions.  But, I also fear that there will be innocent victims that get caught up in the government “dragnet” as well.  It should be interesting to see how it plays out.

Here is a link to the full story posted on the Department Of Justice website.

Foreclosure Filings Continue To Soar

Foreclosure filings for last month were up 48% over the same period last year.

According to a recent article on MSNBC, 261,255 homes received some sort of foreclosure filing in the month of May.  This is an increase of 48% over May 2007, and a 7% increase from April.  Additionally, a report by Credit Suisse has predicted that as many as 6.5 million mortgages will fall into foreclosure over the next five years totaling 8% of the entire housing market.

Estimates are that between 50 and 60% of home owners in foreclosure will lose their homes.  The rest will be able to either sell or refinance.  Many of those sales will end up being “Short Sales”, meaning that they will sell for less than what is owed on the property in order to avoid foreclosure.

No “Hope Now” For Government Program

Hope Now government sponsored mortgage bailout program falls short.

While the Hope Now organization claims to have helped more than 1 million home owners since its inception late in 2007, a recent inquiry by another high ranking government official claims that the numbers are much lower.

For anyone who thinks that the government is going to swoop in and save you from your problems, here is yet another glowing example that government programs suck up tax payer money while providing little help.  According to a recent investigation by the treasury department, only 187,000 home owners have been helped by the program.  Of those, only 30,000 resulted in an actual mortgage modification.

This of course is no surprise to me, or most people in the real estate industry, but it is an example that you are better off in the private sector than muddling through a government program.  A press release posted on PRWeb.com today makes mention of a new company here in Pensacola that is seeking a solution (or at least more help) for the problem with foreclosures.  In many cases, the problem is deeper than a modification.  If you can’t afford to keep the house, you are better off selling to avoid foreclosure so that you can be in a better position to buy in the future.

PreForeclosureFSBO.com is using the simple concept of a short sale to help home owners sell with no equity to escape foreclosure.

Celebrities In Foreclosure – Evander Holyfield

Even Evander Holyfield couldn’t avoid the knock out punch of foreclosure.

Evander Holyfield in foreclosure

I have a soft spot for those facing foreclosure in the country today. The economy is shaky, and many people have gotten themselves into homes they couldn’t afford and mortgages that didn’t make sense.

That being said, I’m going to have to go ahead and file Evander Holyfield in the “stupid is as stupid does” folder. According to public notice filed in Fayette County, GA, the former heavyweight champ is in foreclosure on his sprawling estate. This is where it gets good; the (stay with me here) 104 room, 54,000 square foot (yes that is not a misprint) estate is scheduled to go on the auction block on July 1st.

Now, I don’t claim to know anything about Evander Holyfield or his finances. But what I can tell you, as both a mortgage banker and a person with some level of common sense, if you buy a 54,000 square foot home, and you need to have a mortgage on it…….You Don’t Need To Be Living In A 54,000 Square Foot Home. There, i said it. I’m sure most of you are thinking it, but there it is.

A fool and his money are easily parted, and apparently this is just another example of that.