Paulson's mortgage bailout is a farce

According to a recent survey conducted , the majority of Americans are opposed to a mortgage bailout program. A government sponsored bailout would be unfair and very costly to American taxpayers. It is unfair to ask people who made prudent financial decisions to pay for those that did not. You could not create a bailout that would be large enough to stop the impending home price correction and the impact it will have on the economy.

Present home prices are disconnected from real estate fundamentals. It is not right for prices to be higher than the level of affordability in so many different areas. It is just natural that prices correct at a later date.

The majority of subprime borrowers are not falling behind because their loans are now adjusting; they are getting behind because they got into more house than they could afford right from the start.

Most experts agree that the plan will not save enough homeowners from foreclosure. Home prices will drop about the same as without the plan.

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No money down financing may be dead in some states due to declining real estate values

If you live in an area that appraisers are checking off declining market on their appraisal report, your underwriter may reduce your property appraised value by 5%. Fannie Mae and Freddie Mac will also take 5% right off the top. If a loan officer is telling you that they can get you 100% financing you may want to ask them a few more questions. Ask them if you are going to get dinged 5% for a declining market. You best bet for getting a home these days is to have some money down in the transaction.

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The Fed endorses new rules to halt shady lending

The Federal Reserve endorsed new rules today that would give consumers taking out new home mortgage new protections from dishonest lenders. The proposal is expected to apply to new mortgage loans made by all lenders which would include brokers and banks. The plan is expected to be finalized sometime next year. The Fed is proposing:

1. Forcing lenders to make sure that subprime borrowers set aside reserves for taxes and insurance.

2. Taking away loan programs that do not require proof of income.

3. Prohibiting lenders from failing to consider a borrowers ability to repay a mortgage.

4. Restricting lenders from penalizing specific non prime borrowers with low income or bad credit - who pre pay their mortgage early. This would only apply to loans.

“Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole,” said Federal Reserve Chairman Ben Bernanke. He also added “They have no place in our mortgage system.

The Feds response has taken on greater importance given the subprime meltdown in the credit and housing markets. This crisis has raised the odds that the economy might be he headed for a recession.

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The best time to buy a new or used car

I keep hearing reports that doing debt negotiation hurts your credit score. I would like to set the record straight. The truth is that debt negotiation does not hurt your credit score. Having too much debt and not paying your bills will hurt your credit score. If you are current on all your bills and stop paying them, your score will go down, no question about it. Debt negotiation is for people that are in serious financial hardship and possibly considering a Bankruptcy. Debt negotiation is not a way to get out of paying your bills. So if you think you are going to run out and charge up a bunch of debt and then let it go, you may have a problem. That could be considered a fraudulent act. Debt negotiation is for people that may have experience a medical emergency or even a job loss.

Bottom line, debt negotiation does not hurt your credit, having too much debt and not paying it is the culprit. Actually the more old debt that you pay off, the better it is for your credit score. So settling your debt actually helps your credit score not hurt it.

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Debt Negotiation does not hurt your fico score

I keep hearing reports that doing debt negotiation hurts your credit score. I would like to set the record straight. The truth is that debt negotiation does not hurt your credit score. Having too much debt and not paying your bills will hurt your credit score. If you are current on all your bills and stop paying them, your score will go down, no question about it. Debt negotiation is for people that are in serious financial hardship and possibly considering a Bankruptcy. Debt negotiation is not a way to get out of paying your bills. So if you think you are going to run out and charge up a bunch of debt and then let it go, you may have a problem. That could be considered a fraudulent act. Debt negotiation is for people that may have experience a medical emergency or even a job loss.

Bottom line, debt negotiation does not hurt your credit, having too much debt and not paying it is the culprit. Actually the more old debt that you pay off, the better it is for your credit score. So settling your debt actually helps your credit score not hurt it.

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Debt Negotiation

Suze Orman visits Larry King, Credit Card Information

I just saw Suze Orman on the Larry King Show talking about credit cards. One of the questions from a caller was about canceling a credit card that was 10 years old and had a zero balance on it. The kicker on this is that the credit card company was charging the client $39 dollars a year on a credit card that they were not using anymore. You need to realize that 10% of your credit score comes from your credit history, so canceling the card will cancel the history with it. She recommended getting a new card and canceling the old one, making sure the new one was a no fee card. You would also want to make sure that the new credit limit was the same or higher than the old card. Doing this should have little or no effect on the credit score.

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Stopping junk mail from Bank of America

This is a continuation of a previous post from a few months ago. With dozens more phone calls to Bank of America, I have been unable to get their junk mail to stop hitting my mail box. I have spoken with countless people all promising to take me off the list. Needless to say I keep getting it. I have come up with an idea I think might get their attention finally. I am going to sent each pre paid envelope they send me back to them with a 30 pound cinder block. I will keep doing this until I can get someone to call me or they take me off of their list. I’m not trying to be funny, I just want to save paper. I’ll let you know how it goes. I’m calling it my own opt out strategy.

If you have any other ideas on how to stop them please let me know.

Stopping junk mail from Bank of America

This is a continuation of a previous post from a few months ago. With dozens more phone calls to Bank of America, I have been unable to get their junk mail to stop hitting my mail box. I have spoken with countless people all promising to take me off the list. Needless to say I keep getting it. I have come up with an idea I think might get their attention finally. I am going to sent each pre paid envelope they send me back to them with a 30 pound cinder block. I will keep doing this until I can get someone to call me or they take me off of their list. I’m not trying to be funny, I just want to save paper. I’ll let you know how it goes. I’m calling it my own opt out strategy.

If you have any other ideas on how to stop them please let me know.

Debt Negotiation as an alternative to Bankruptcy

I think this is going to be the year that America is going to have to face its unhealthy debt problem head on. There has been a big party going on in the real estate industry for a few years and now it is time to deal with the hangover. If you have turned on the TV we are beginning to be bombarded by commericals for debt reduction, debt consolidation, credit counseling, CCCS and debt negotiation services. I do not remember seeing that many of these ads when the real estate market was doing well a few years ago. Debt gurus such as Suze Orman, Dave Ramsey, Larry Winget and Kevin Trudeau have been flooding the airwaves pitching debt salvation with their programs and products.

The fact is that millions of people are just getting to far behind on their bills to even try to bail themselves out. They would love to do a debt consolidation or debt restructure program but they just cannot afford it. Many people will look at the bankruptcy option. Getting a chapter 7 or chapter 13 bankruptcy is not as easy as it used to be. I think if you are considering a bankruptcy you may want to consider the debt negotiation option. Debt Settlement and Debt Negotiation will allow you to settle your debt without the long-term negative impact on your credit like a bankruptcy would have. You can also be out of debt in 36 months or less. Usually you can settle your debts for 40-60 cents on the dollar. In a chapter 13 you will still be making payments. The majority of credit card companies such as Discover, Master Card, Visa, American Express, MBNA, Citibank, Washington Mutual, Providian, HSBC, Chase, Bank of America, Wells Fargo and others will negotiate with you. If you file bankruptcy, they stand the chance of collecting nothing. It is very expensive for them to go to court and try to collect from you. Getting judgements is the easy part, collecting on them is the difficult part.

If you are considering bankruptcy, it is worth your time to investigate the debt negotiation option.

Citibank lowers their loan limits to 85% LTV

Citi Mortgage a division of Citbank will be lowering their Max loan limits to 85% Loan to Value. Declining markets deemed by Citi Mortgage are in Arizona, Colorado, Maryland, Ohio, California, Washington DC, Florida, Massachusetts, Michigan, Pennsylvania, Tennessee, Virginia, Nevada, New Jersey and West Virginia. Not all counties are subject. You will need to check your Citi Mortgage executive to see if you county is excluded in each of the states listed above.

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Did Fannie Mae put your home in a Declining Market Status?

Across the country property values have done a free fall while some areas have remained relatively stable. In Maricopa County Arizona, Fannie Mae has declared this county a declining market. What this means is that every appraisal that they look at, they are going to cut the value of the appraisal by 5%. What this means now is that you will have to have to put money down if you want to buy a home. They will no longer do 100% financing. If you are trying to refinance, you better have equity in your home or they will no longer look at you.

There are portfolio lenders out there that will still do one hundred percent financing, they just charge a higher rate for it. US Bank still offers 100% financing in areas that are deemed declining by Fannie Mae, you can expect to pay about 1.25% higher rates over conventional lenders that sell their loans to the Fannie Mae and Freddie Mac corporations.

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Federal Reserve Myth about Interest Rates

Just because the Fed cuts the Fed Funds Rate, your interest rate will not necessarily follow. Mortgage interest rates on first mortgages have more to do with how the stock market is doing that what the Federal Reserve is doing. For instance, the Fed cut their rate by 1.25% in 2008 so far. If this had translated across the board to mortgage rates, you would be able to get a mortgage for under 5%. This is not the case however, rates are closer to 6.5% now. If you have a second mortgage, you have probably noticed that your rate has dropped. The fed rate is tied into the prime rate of interest which home equity lines or heloc mortgages are tied into.

You gotta think that someone is making money off of this. I can tell you that it is not the little guy. Do buy into bank advertising that rates are down since the Fed cut rates. The reality is they are not.

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