Mortgage

Patty, an accountant, found it easy to "work out a lot of numbers" when she and a friend decided to buy a home near Collegeville, Pa., a Philadelphia suburb. Patty and her friend checked out the total interest paid for traditional 30-year mortgages and 15-year mortgages, plus a less common type of loan that is paid off in 20 years."The difference in total interest was astronomical," she said. "The 15-year had much less interest but was scary because the payments were so high. We worked out the tentative payments for a 20-year loan and found we would still be able to pay off the debt quicker, own sooner and not spend a fortune in interest."

Since my wife, Georgina, and I moved to a new beachside home in 2001, our "house payments" have gone up to $1,226 a month from $838. And that's without a mortgage. I'm talking about the money we set aside for the homeowner's, windstorm and flood insurance premiums, the property tax bill and homeowner's association dues. Throw in the electric bill, and our monthly cost to live at home has gone up an additional $34, and that's without counting repairs and upkeep. I bring up these numbers because, as the mortgage woes of overextended homebuyers capture headlines, other significant home expenses can be overlooked.

WASHINGTON -- Amid tightening credit, rising default rates on home loans and concerns that larger investors aren't sufficiently scrutinized, a top Treasury Department official told Congress yesterday that his agency is reviewing rules with an eye toward greater regulation of the financial services sector. Robert K. Steel, Treasury's undersecretary of domestic finance, told the House Financial Services Committee in written remarks that by early next year Treasury would release "a blueprint of structural reforms" to provide broader and more effective regulation.

The slide of thousands of homeowners into foreclosure because of the subprime mortgage mess won't stop without strong intervention from the federal government. This crisis needs to be managed because it affects so many sectors of the economy and the few remedies proposed so far haven't made a dent. President Bush's announcement last week to freeze interest rates for some homeowners provides needed relief over five years, but only for a select group, and it's voluntary. The agreement with a handful of lenders and investors targets homeowners who kept up their mortgage payments but risk default when their loans reset in 2008 and after - that's at least 500,000 borrowers.

As financial regulators and Congress probe more deeply into the delinquencies and foreclosures roiling the subprime home loan market, one key contributing factor is receiving increased attention: the lack of mandatory escrow accounts. According to some industry estimates, a majority of subprime mortgages closed during the housing boom years carried no escrows for property taxes and hazard insurance. That is in stark contrast to the prime mortgage market for consumers with good credit, where mandatory escrow accounts are routine.

The number of homes sold in the Baltimore area last month plummeted 17 percent from August 2006 - the largest drop in volume this year, statistics released yesterday showed. Average prices remained flat in Baltimore and the five surrounding counties. The price of an average home, $323,134 last month, was down $81 from a year earlier, according to data from Metropolitan Regional Information Systems Inc., the Realtors database of property listings for Maryland. With the slowdown in the housing market stretching well into its second year, the inventory of unsold homes swelled to a record 20,265 listings in metropolitan Baltimore.

When you apply for a mortgage and get a barrage of irritating and confusing phone calls from competing lenders before noon the next day, can you turn to the government for help? The Federal Trade Commission issued its long-awaited answer to that question this month, and it's already attracting criticism. The agency, which has regulatory oversight powers concerning consumer credit, says it lacks the legal authority to crack down on unwanted "trigger list" phone solicitations to consumers who've applied for mortgages within the preceding 12 to 24 hours.

To add to mortgage meltdown miseries, the credit panic, plunging home sales and rising foreclosures, here's a new worry: a proposed cutoff of mortgage-interest tax deductions for all houses with more than 3,000 square feet. One of Capitol Hill's most experienced and powerful legislators is drafting a "carbon tax" bill that would do precisely that. Rep. John D. Dingell, the Michigan Democrat who heads the Energy and Commerce Committee, expects to introduce comprehensive climate change reform legislation once the House returns next month.

The Maryland Court of Appeals has agreed to hear arguments in the foreclosure case of Kwaku Atta Poku, the Columbia cab owner who lost his home after refinancing, despite making every mortgage payment. The decision by the state's highest court to review the case pleased Atta Poku and his lawyers, and the outcome also could affect how Maryland courts handle similar cases as foreclosures become more common in the slumping Maryland housing market. Gerald M. Richman of Ellicott City, one of Atta Poku's lawyers, said the court will "determine whether or not you have a right to appeal a foreclosure action."

Charles McCloud had never owned a home, but as he entered his late 50s he thought it was time to have the security and stability that would come from having a place of his own. So two years ago, he bought a detached two-story house on a quiet corner in the Howard Park section of West Baltimore for $225,000, borrowing the money for the closing costs and taking out two loans, one of which had an interest rate of more than 10 percent. A self-employed gospel pianist who had never made more than $35,000 a year, McCloud had just gone on disability for a variety of ailments, including congestive heart failure that often requires him to use oxygen.

Financial literacy is necessary to reduce the likelihood that our country will repeat the mistakes that have brought our economy to its knees. Basic consumer education is sorely lacking in our public schools and should be a graduation requirement - not an elective. Sadly, even the smartest consumers and brightest economists were unprepared for the alphabet soup of creative and complex mortgage products such as YSPs (yield spread premiums), CDOs (collateralized debt obligations) and NINAs (no income no asset loans)

Who is more likely to walk away from a house and a mortgage - a person with super-prime credit scores or someone with lower scores? Research using a sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50 percent more likely to "strategically default" - abruptly and intentionally pull the plug and abandon the mortgage - compared with lower-scoring borrowers. National credit bureau Experian teamed with consulting company Oliver Wyman to identify the characteristics and debt management behavior of the growing numbers of homeowners who bail out of their mortgages with none of the expected warning signs, such as nonpayments on other debts.

WASHINGTON - - When you do a short sale of a house, or modify the mortgage, is there much of an effect on your credit score? What if you walk away from the mortgage altogether? A scoring company created by the three national credit bureaus - Equifax, Experian and TransUnion - has some eye-opening numbers. VantageScore Solutions, whose risk-prediction scores are now being used by some of the largest mortgage companies and banks, has found that the way consumers handle their mortgage problems can profoundly affect credit scores.

WASHINGTON - - How's this for a business plan? A company buys or rents lists of recent default filings from across the country - thousands of people who have been notified by lenders that if they don't get their mortgage payments back on track, the next step will be foreclosure. Then it sends each homeowner on the list a letter with an urgent message: "We know you're having a tough time right now, but we can save your home! It's not too late! We know how to get through to your lender and work things out to save your house.

Baltimore City will attempt to show a federal judge on Monday that it has lost millions of dollars because of what it contends were racially biased predatory lending practices by Wells Fargo. In what will amount to a mini-trial before U.S. District Judge Benson E. Legg, attorneys for Baltimore and Wells Fargo will present evidence and call witnesses, as the city fights the California-based bank's motion to dismiss its lawsuit. It is a critical juncture in the city's suit against the lender, because if Legg allows the case to continue, Baltimore could gain access to Wells Fargo documents and subpoena its employees.

Monday's scheduled foreclosure auction of the Senator Theatre has been canceled, as city officials work on plans to acquire the 70-year-old North Baltimore landmark. C. Larry Hofmeister, an attorney representing mortgage holder 1st Mariner Bank, said Tuesday that there are no plans to reschedule the auction at this time. Baltimore Mayor Sheila Dixon announced Saturday that the city, which is the guarantor on $600,000 of the Senator's $950,000 mortgage, would seek to purchase the mortgage from 1st Mariner.

bankruptcyforce: @SondaT mortgage "banks" are actually just bill collectors who rent a banks name but get paid more to foreclose than rework a deal niallok: Bank's gonna foreclose on the mortgage! Family can't make the payments cos bad man is oppressing them! A-Team shows up... niallok: Oh that A-Team. Today they're loggers making a lumber delivery. The bank would foreclose on the mortgage without it! gilbie: why foreclose on a family if they only owe 7000? So many empty homes and some many homeless in this country.

With little more than a week remaining before the auction of the historic Senator Theatre, Baltimore officials have agreed to purchase the mortgage on the property and either sell or lease it in the future. The city would use $600,000 in cash already guaranteeing a loan to the theater toward approximately $950,000 for the mortgage, held by 1st Mariner Bank, and legal fees. In addition, Mayor Sheila Dixon will seek Board of Estimates approval within the next month to make up the difference with economic development bond funds approved for capital projects, said Deputy Mayor Andrew Frank.

I called my mortgage company last week to ask about a refinancing rate and closing costs. The electronic message said I might have to hold for an hour. I hung up. The Obama administration's gargantuan guarantees and monetary injections into the mortgage market are bearing fruit, even if the system is temporarily clogged. Now we need the same kind of action on car finance. Maryland new-car sales fell 37 percent for the first two months of this year versus the corresponding period in 2008, and 2008 sales were down from 2007.

WASHINGTON - The administration's plan for a housing rescue aids two groups of homeowners largely left out of previous efforts but will deny benefits to those who have been greedy or unwise, according to details released yesterday. President Barack Obama's plan would greatly expand mortgage relief to those who have not missed payments and those whose homes are worth less than the mortgage. What the program will not do, officials insisted, is reward the unwise or the greedy. Nor will it provide much help to those in the highest-priced areas, though it does reinstate last year's higher loan limits for refinanced or modified mortgages to $729,750 in the most expensive areas, such as Southern California.