Discover More About Refinancing An Existing Mortgage Loan In This Market
Tuesday, August 18, 2009 7:10Seems like just another day in the mortgage business. First, Bank of America won a restraining order barring Colonial Bank from selling or otherwise disposing of $1 billion in cash and loans held by Colonial. Colonial, who most think will be taken over by the FDIC any day now (and today IS Friday…), was sued by BofA Wednesday. It seems that Colonial, through a Taylor Bean commercial paper network named Ocala Funding LLC, may be holding the cash and loans as a custodian to the tune of more than 6,000 mortgages worth more than $1 billion. And Freddie Mac, as it turns out, bought some of the mortgages while Bank of America is acting as custodian for the deal. BofA’s lawsuit claims that cash sent by Freddie Mac to Colonial, which was acting as an intermediary and required to pass the money to Ocala Funding, wasn’t delivered.
The original complaint requested that Colonial not sell any of the proceeds that it received from Freddie Mac in exchange for mortgage and other loans, and which were owned by Ocala Funding. Colonial held the proceeds as a custodian, agent and bailee through bailee letters, but according to BofA when the bailee letters were terminated Colonial refused to return them to Bank of America. If Colonial fails, it would be the largest bank failure this year.
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The saga of mortgage insurance software continues. I have mentioned MGIC, and Radian, and I was informed that PMI offers their enhanced Rate Quote, including geographic restrictions, complete with their “soft guidelines” built into it. The system will tell clients whether or not the loan qualifies based on the accuracy of the data submitted, and each loan is run through their system for geographic restrictions, FICO, LTV and DTI ratios as well as geographic loan program restrictions.
And while we’re talking MI, RMIC tweaked their eligibility guidelines and documentation requirements to match what the investors are demanding. This applies to loans submitted after October 1. For example, the maximum age of credit documents will be 90 days from the date the note is signed on existing properties, 120 days from the date the note is signed on new construction, or 120 days from the date of conversion of a Construction-Permanent loan to permanent financing. For appraisals, the maximum age will be 120 days from the date of the note for existing properties and new construction, or from the date of conversion to permanent financing for Construction-Permanent loans. “If the appraisal is more than 120 days from the date of the note, or the date of conversion, the appraiser must perform an appraisal update, which includes the following: an exterior inspection of the property; and a review of current market data to determine if the property has declined in value since the original appraisal date.” RMIC also addresses qualifying borrowers for ARM loans, buy downs, income documentation, tax returns, reserve requirements, etc.
Out of Bloomberg comes the story that Joseph Murin, the president of Ginnie Mae (not the same as HUD!), will soon resign after about a year on the job. Gee, these top mortgage-related companies have trouble keeping CEO’s! As we’ve talked about, Ginnie Mae, who insures bonds made up of FHA and VA loans, has seen astronomical growth lately with the increase in volumes of these loans. Critics say that this is the next subprime debacle. To put it into perspective, debt explicitly backed through Ginnie Mae is almost $700 billion (from $360 billion two years earlier) versus Fannie and Freddie’s guarantee on about $5.3 trillion of U.S. residential mortgage debt.
What was the Fed up to last week regarding purchasing our mortgages? They bought another $20.4 billion for the week, mostly 30-yr 5.0% securities (which generally contain 5.25-5.625% loans). They bought very few GNMA securities, and nothing in the way of 15-yr bonds.
Just because a borrower has a 2nd mortgage, does that mean that they are a higher credit risk? Perhaps, although it is not the only reason. But by some estimates up to 50% of “at risk” loans have a 2nd on them.
Thus the government’s program:
As summer winds down, with vacations increasing and “out of office” replies multiplying, we had the Consumer Price Index news this morning. The CPI was unchanged in July, as expected, and over the last year has fallen by over 2% – the most since 1950. Ex-food and energy, since no one uses either of those, the core rate was +.1%, as expected. The bond market liked the news, and is rallying: mortgage prices are better by about .125, and the yield on the new 10-yr is down to 3.58%. Expect a typical summer Friday in the financial markets…
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A Minneapolis couple decided to go to Florida to thaw out during a particularly icy winter.
They planned to stay at the same hotel where they spent their honeymoon 20 years earlier.
Because of hectic schedules, it was difficult to coordinate their travel schedules.
So, the husband left Minnesota and flew to Florida on Thursday, with his wife flying down the following day.
The husband checked into the hotel. There was a computer in his room, so he decided to send an email to his wife. However, he accidentally left out one letter in her email address, and without realizing his error, sent the email.
Meanwhile, somewhere in Houston, a widow had just returned home from her husband’s funeral. He was a minister who was called home to glory following a heart attack.
The widow decided to check her email expecting messages from relatives and friends.
After reading the first message, she screamed and fainted.
The widow’s son rushed into the room, found his mother on the floor, and saw the computer screen which read:
To: My Loving Wife
Subject:: I’ve Arrived
Date: October 16, 2008
I know you’re surprised to hear from me. They have computers here now and you are allowed to send emails to your loved ones.
I’ve just arrived and have been checked in.
I’ve seen that everything has been prepared for your arrival tomorrow. Looking forward to seeing you then!!!! Hope your journey is as uneventful as mine was.
P.S. Sure is freaking hot down here!!!!
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To Our Success,
Mark
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