Mortgage Market

The term "mortgage meltdown" has become so commonplace - on TV, in headlines and even during casual conversations - that you might assume that this is a tough time to get a mortgage. But the reality is starkly different: Mortgage money is plentiful, the majority of mortgage products remain relatively unaffected by troubles in the subprime segment, and interest rates for 30-year fixed-rate loans remain in the low 6 percent range for people with reasonably good - not necessarily perfect - credit backgrounds.

If you have been toying with the idea of taking out a reverse mortgage, note that the market today is significantly different from what it was just a couple of months ago. Monthly insurance premiums on new loans went up last week, making an expensive product even more so. But the Department of Housing and Urban Development has offset that rise by introducing another reverse mortgage — the Home Equity Conversion Mortgage Saver — which...

WASHINGTON -- Anyone looking to point a finger of blame for the meltdown in the subprime mortgage market may need more than two hands. It took the action, and the inaction, of many players to produce today's mess, which threatens to slow the U.S. economy further. "Everyone has a share in the blame - lenders, borrowers, regulators, investors. There were a lot of mistakes, and everyone made them," said Mark M. Zandi, the chief economist for Moody's Economy.com, a consultant in West Chester, Pa. The federal government might be considered to have failed most of all. It shirked its responsibility to regulate this critical area of home finance - much as it had during the savings-and-loan crisis of the 1980s.

I read the Jules Witcover column ("Blaming Bush no longer works for Obama," July 14) in absolute amazement that one of The Baltimore Sun's many liberal journalists still spins the pro-Obama, anti-Bush record with no sense of balance as to accountability. Just wondering when one of the journalistic wonders of the Baltimore Sun will report on the contributions of their beloved "Democratic favorites" to the demise of the U.S. economy. They could start with the reduced requirements for obtaining mortgages that was pushed by President Bill Clinton and Rep. Barney Frank in the late '90's, which sent the mortgage market into a tailspin.

The adjustable-rate mortgage market slid to a three-year low in popularity last year as homebuyers preferred fixed-rate mortgages with interest rates at 30-year lows, according to an annual survey by Freddie Mac. Adjustable-rate mortgages grabbed only 12 percent of the mortgage market in 2001, down from 21 percent in 2000, according to the survey. The 12 percent is the lowest share since 1998's 11 percent share, which was an all-time low. ARMs were first offered in the early 1980s. Homebuyers did not find the spread between adjustable-rate mortgages and fixed-rate mortgages advantageous since, according to Freddie Mac, the initial rate for a one-year ARM was 5.27 percent compared with fixed rates that hovered between 6.5 percent and 7 percent by the end of last year.

If you have been toying with the idea of taking out a reverse mortgage, note that the market today is significantly different from what it was just a couple of months ago. Monthly insurance premiums on new loans went up last week, making an expensive product even more so. But the Department of Housing and Urban Development has offset that rise by introducing another reverse mortgage — the Home Equity Conversion Mortgage Saver — which...

LONDON -- Mortgage market turmoil. A painful housing slump. Economic concerns don't get any worse than they are these days in America, right? Wrong. Try coming to Britain. After a decade of unprecedented economic growth, this nation of perhaps the world's most overextended borrowers might finally be forced to pay the piper. High debt "really snuck up on me without me realizing how bad things were getting," said Erire Obano, 40, a songwriter who had to sell her London home this month after she remortgaged her property - twice - to pay her rising debts.

Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been - with banks unwilling to lend even to other banks. But what about mortgages and real estate? Can you still get a home loan with less than a 20 percent or 30 percent down payment? Or with a credit score below 720? Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light there than in most other financial sectors.

WASHINGTON -- The Federal Home Loan Bank system won permission yesterday to double the amount of capital that it can spend to purchase mortgage bonds in an effort to boost home lending and revive the nation's housing market. The Federal Housing Finance Board approved a plan that would allow the 12 privately financed, government-sponsored Federal Home Loan Banks that the system regulates to purchase about $100 billion in mortgage bonds over the next two years. The home loan banks will snap up more newly issued mortgage bonds, or securities, which are packaged by the government-sponsored enterprises Fannie Mae and Freddie Mac. The effort supports the sagging housing market by ensuring that there is enough cash in the system, so that lenders are willing to lend and borrowers to borrow.

Q: Is it advisable to pay off a mortgage on my home by taking the money out of savings and paying off the $46,000 balance due, or leave it and pay monthly payments until the mortgage is paid off?A: The tax deductions you can take for paying interest on a mortgage usually make it more valuable to keep a mortgage and make the regular monthly payments rather than take money out of savings and pay the mortgage off early.The interest payments that make up most of the monthly mortgage payments are tax-deductible, as are the real estate taxes and all the points paid to your lender at closing.

Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been - with banks unwilling to lend even to other banks. But what about mortgages and real estate? Can you still get a home loan with less than a 20 percent or 30 percent down payment? Or with a credit score below 720? Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light there than in most other financial sectors.

In the current credit squeeze, if you have less than a 20 percent down payment, there's pretty much only one major source of mortgage financing available: the Federal Housing Administration, the Depression-era home loan insurance agency that still offers 3 percent down, 30-year fixed-rate mortgages with consumer-friendly credit standards, even on jumbo loans in high-cost areas. But there is a potentially troublesome problem looming for FHA: New loan volume is exploding - tripling in the past 12 months alone - and Congress just handed the agency the responsibility for virtually all the government's efforts to keep economically distressed homeowners out of foreclosure by refinancing their unaffordable loans.

WASHINGTON - The Bush administration, moving to prevent an economic cataclysm, urged Congress yesterday to grant it far-reaching emergency powers to buy hundreds of billions of dollars of distressed mortgages despite many unknowns about how the plan would work. Treasury Secretary Henry M. Paulson Jr. made it clear that the upfront cost of the rescue proposal could easily be $500 billion, and outside experts predicted that the bill could reach $1 trillion. The outlines of the plan, described in conference calls to lawmakers yesterday, include buying only from U.S. financial institutions - but not hedge funds - and hiring outside advisers who would work for the Treasury, rather than creating a separate agency.

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building. Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults. The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier.

Congressional action to assist mortgage giants Fannie Mae and Freddie Mac, and the failure of California bank IndyMac, gave bloggers plenty of targets this week. A sampling of the commentary: Q.: What's your diagnosis of what happened to Fannie Mae and Freddie Mac? A.: First of all, they had too little capital to withstand adverse circumstances. And the adverse circumstances were the severe downturn in housing, the decline in house prices, and the rising default rate on mortgages. I don't know of anyone who early enough was saying that there would be a major national decline in house prices, so I can't hold them to that standard, but I can hold them to a standard of holding adequate capital to be able to withstand unforeseen circumstances.

WASHINGTON -- The Federal Home Loan Bank system won permission yesterday to double the amount of capital that it can spend to purchase mortgage bonds in an effort to boost home lending and revive the nation's housing market. The Federal Housing Finance Board approved a plan that would allow the 12 privately financed, government-sponsored Federal Home Loan Banks that the system regulates to purchase about $100 billion in mortgage bonds over the next two years. The home loan banks will snap up more newly issued mortgage bonds, or securities, which are packaged by the government-sponsored enterprises Fannie Mae and Freddie Mac. The effort supports the sagging housing market by ensuring that there is enough cash in the system, so that lenders are willing to lend and borrowers to borrow.

I read the Jules Witcover column ("Blaming Bush no longer works for Obama," July 14) in absolute amazement that one of The Baltimore Sun's many liberal journalists still spins the pro-Obama, anti-Bush record with no sense of balance as to accountability. Just wondering when one of the journalistic wonders of the Baltimore Sun will report on the contributions of their beloved "Democratic favorites" to the demise of the U.S. economy. They could start with the reduced requirements for obtaining mortgages that was pushed by President Bill Clinton and Rep. Barney Frank in the late '90's, which sent the mortgage market into a tailspin.

In the current credit squeeze, if you have less than a 20 percent down payment, there's pretty much only one major source of mortgage financing available: the Federal Housing Administration, the Depression-era home loan insurance agency that still offers 3 percent down, 30-year fixed-rate mortgages with consumer-friendly credit standards, even on jumbo loans in high-cost areas. But there is a potentially troublesome problem looming for FHA: New loan volume is exploding - tripling in the past 12 months alone - and Congress just handed the agency the responsibility for virtually all the government's efforts to keep economically distressed homeowners out of foreclosure by refinancing their unaffordable loans.

Almost everything seems to be going wrong for the American economy at once. People are buying less, but most things are costing more. Mortgage rates are rising, the dollar is falling and prices of key commodities such as oil are leaping from one record high to the next. Yesterday, the dollar plumbed new lows against the Japanese yen, the euro and other major currencies; the price of an ounce of gold rose above $1,000 for the first time, and lenders raised home loan rates once again. Government figures showed retail sales fell in February as consumers cut back on cars, furniture and electronics.

In a potentially groundbreaking lawsuit intended to stem foreclosures in Baltimore, Mayor Sheila Dixon's administration is suing a leading mortgage provider for what the city says has been a pattern of predatory lending in black neighborhoods. The lawsuit, which the Dixon administration plans to file today in U.S. District Court, alleges that California-based Wells Fargo Bank sold higher-interest subprime mortgages to blacks more frequently than to whites and that the practice, known as reverse redlining, violates federal housing law. Lenders are increasingly coming under legal attack from borrowers and investors stung by the subprime mortgage crisis, but Baltimore's lawsuit could be the first in the nation in which a city is attempting to recapture costs associated with foreclosed homes that wind up vacant.