Refinancing

Howard County officials hope to save several million dollars by refinancing a portion of the county's debt at lower interest rates.Interest rates for high-grade municipal bonds peaked at nearly 7 percent in 1994. They have fallen gradually since then, approaching 5 percent recently.County officials estimate they could save about $3 million -- $150,000 a year on average -- by refinancing $62 million of debt at current interest rates. The savings could be higher if interest rates continue to fall, as some forecasters expect.

Fitch Ratings said Tuesday it has issued a AA- rating on two series of bonds worth $299 million to be issued to The Johns Hopkins Health System for refinancing and capital improvements. One series of revenue bonds from the Maryland Health & Higher Educational Facilities Authority valued at $152 million will be used to refinance four series of outstanding bonds. Another series of taxable bonds will fund the implementation of new clinical systems and other capital projects. Both series are expected to sell in early May. Fitch also affirmed its AA- rating on Hopkins outstanding debt.

Homeowners who refinanced last year cut interest rates on 30-year mortgages by an average of 2.20 percent, the Federal Home Loan Insurance Corp. reported last week.More than two-thirds of all borrowers reduced their monthly payments, a survey of 740,000 Freddie Mac loans across the country showed.During 1986, the last major year of refinancing, homeowners reduced rates by an average of 2.60 percentage points.The latest survey showed 83 percent of borrowers refinancing 30-year mortgages ended up with lower payments, while 94 percent of homeowners refinancing into adjustable-rate mortgages wound up with lower payments -- both records.

The state's House of Delegates recently passed by a 134-to-0 vote a bill that would make it easier for homeowners to refinance mortgages at today's low rates. The bill, modeled after a law Virginia adopted more than a decade ago, would allow homeowners to proceed with refinancing a first mortgage without permission from a second mortgagor. The process of seeking such approval can be costly, confusing and time-consuming, according to the bill's sponsors. “Too many homeowners struggle to make payments on more than one mortgage,” said Del. Sam Arora, a Montgomery County Democrat who co-sponsored the bill, HB 88. “We have a real opportunity to help them by removing an unnecessary barrier to locking in lower interest rates and stay in their homes.” For the law to apply, the principal of the second mortgage would have to be $150,000 or less.

The popularity of refinancing into a 15-year fixed-rate mortgage has dipped, according to quarterly statistics released by Freddie Mac, a congressionally chartered corporation that buys mortgages from originating lenders.The number of borrowers going from a 30-year fixed-rate mortgage to a 15-year term dropped to 28 percent in the second quarter, from 30 percent for the first three months of 1997. Even those holding a 15-year mortgage decided against refinancing back into another 15-year term.

With more equity in their homes due to higher home values, Freddie Mac has reported that 83 percent of homeowners refinancing their property in the third quarter this year took out new mortgages that were at least 5 percent higher than their original mortgages. By contrast, in the third quarter of 1999, 70 percent refinanced mortgages that were at least 5 percent higher. Freddie Mac, which supplies funds to lenders and in turn purchases mortgages to sell in financial markets, credited a "strong" economy in its quarterly refinancing review with enabling homeowners to refinance at a higher amount and take equity out of their properties.

When Cindy and Peter Jones decided to refinance the mortgage on their slate-blue Colonial in Columbia, they had no idea how hard they'd have to compete for their lender's attention. Phone lines were jammed, the office was crowded and the loan officers seemed friendly but frazzled."We had no idea how many people had the same idea we did. had to be aggressive to get the lender to take our loan," Mrs. Jones says.With mortgage rates at their lowest point in a decade and a half, lenders are smothered under refinancing applications.

U.S. mortgage applications declined last week for the third time in the past four as higher borrowing costs led to less refinancing, according to a survey released Wednesday. The Mortgage Bankers Association's index of applications fell 0.6 percent to 657.6 for the week that ended Nov. 11 from 661.3 the previous week. The refinance index dropped 5.4 percent to 1,702.4, the lowest this year, from 1,798.8. Home purchase applications rose for a second week. Refinancing has declined 28 percent in the past year as rising mortgage rates have made it less beneficial for homeowners to tap into home equity, removing a source of cash for consumers.

Q: I need more cash, and I want to lower the interest rate on my home mortgage. Should I refinance my mortgage or take out a second trust deed -- or even get a home equity loan? My goal is to repay the money I need quickly, so I can cut my monthly payments. -- J. P.A: How much money do you need? If it is a small amount, refinancing the mortgage may cost you more than it is worth; most refinancings carry fees and points totaling at least $2,000.But if your mortgage rate is 10 percent or more, you might consider a refinancing, because current rates on 30-year fixed mortgages are about 8 percent.

Homeowners nationwide are rushing to refinance their home loans as interest rates have dropped to their lowest level in four years.Mortgage bankers around the country report a surge in refinancings as the national average for a conventional 30-year fixed-rate mortgage slipped below 9.5 percent last month.Refinancings now account for about 40 percent of mortgage activity nationwide while mortgages for home purchases make up 60 percent. Refinancing enables homeowners to cut their monthly house payments or be rid of fluctuating adjustable-rate mortgages.

The Maryland Department of Housing and Community Development is planning a series of events for next year about refinancing home loans, Lt. Gov. Anthony G. Brown announced at the 2012 Governor's Housing Conference that was held Tuesday at the Hilton Baltimore hotel. “These events could affect thousands of homeowners who are not facing foreclosure, but may feel trapped by their negative equity position in homes and could benefit from a reduction in their mortgage payment,” said DHCD Secretary Raymond A. Skinner.

Legg Mason Inc. reported Friday that it lost $9.5 million in the first quarter, citing the costs of restructuring debt and launching two funds. On a per-share basis, the Baltimore-based investment firm lost 7 cents. Total revenues for the quarter reached $630.7 million. A year earlier, Legg earned $60 million, or 40 cents per share, on total revenues of $717.1 million. Analysts had expected Legg to report a profit of 3 cents per share, according to Bloomberg, which noted that this was the company's first quarterly loss since early 2009.

Add this to your to-do list if you're refinancing or about to sell a home: Make sure the original mortgage actually gets paid off. Today's reminder comes courtesy of Todd R. Bettin of Crofton, who was sentenced Wednesday to more than four years in prison for diverting mortgage payoffs on 17 Maryland properties to himself and a co-defendant, according to federal prosecutors.

For more than four years since he lost his Columbia home to foreclosure — despite never missing a mortgage payment — Kwaku Atta Poku has fought a legal battle for financial stability and personal vindication. After several legal setbacks, a federal judge's ruling has given new hope to Atta Poku, who built a small taxi business along with a new life in America — only to watch as it was ruined by a mortgage nightmare that all agree he was not responsible for. "Thank God. Finally, somebody …" Atta Poku said Tuesday when he learned of the judge's ruling.

Prospective home buyers turn to real estate agents and loan officers when they want new homes. They rarely hire a lawyer. Diane Cipollone is trying to change that. Cipollone, an attorney with the nonprofit law firm Civil Justice Inc. in Baltimore, has worked with scores of homeowners in danger of foreclosure, and she's convinced that many could have avoided trouble by consulting with an attorney before buying their home or refinancing their loan. No one walked them through the financial implications or pointed out booby traps in the mortgage documents — until it was too late.

The developer of the Ritz-Carlton Residences in Baltimore announced Wednesday that it has secured a $176 million loan to refinance the upscale condo project, a challenging but vitally important step that allowed RXR Realty to pay off contractors and gave it more time to market the many unsold units. The condos, on Key Highway overlooking the Inner Harbor, started construction during the flush days of the housing boom but finished in 2008 - squarely in the slump. Just 23 of the 190 units have changed hands.

Homebuilders expressed heightened confidence in their industry last week and refinancing activity continued to fall as buyers grappled with rising interest rates. U.S. homebuilder optimism rose to the highest level in more than 3 1/2 years, the National Association of Home Builders said, pointing to its housing market index that gauges builder sentiment. The figure jumped to 71 in August, the highest since January 2000. The Washington-based group's index has risen for four consecutive months, the longest string of increases since 1995.

Fifty-nine percent of homeowners who refinanced their mortgage in 1999 borrowed some of the equity in their homes, trading the old mortgage for a new one that was at least 5 percent greater than the original loan. According to Freddie Mac's annual refinance review, the 1999 number was higher than the 48 percent of homeowners who refinanced in 1998 for an amount at least 5 percent higher. In the fourth quarter of 1999, 77 percent of those homeowners refinancing borrowed on housing equity as opposed to 45 percent in the fourth quarter of 1998.

Federal and state officials announced a coordinated campaign Monday to combat a rising tide of con artists who use mortgage-relief scams to bilk homeowners struggling to stave off foreclosure. As the housing crisis and job losses from the recession have combined to push more Americans to the precipice of foreclosure, fraudulent mortgage-relief services for homeowners have surged, Attorney General Eric Holder said, with the FBI investigating 2,100 mortgage-fraud cases - five times the number five years ago. "The unscrupulous actions of individuals and companies to exploit the misfortune of others is despicable.

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.