Mortgage Mirror

Back before the financial crisis of 2008, banks and brokers were able to use whichever appraisers they wanted. They decided which ones to use, and the compensation for those services was decided between the two parties. It wasn’t until late 2008 that then New York Attorney General and now Governor Andrew Cuomo pressed Fannie Mae and Freddie Mac to buy only mortgages that had originated from a third-party AMC, or appraisal management company. They called this change HVCC, or the Home Valuation Code of Conduct. Why was this put in place? Well, Cuomo’s office found out that Washington Mutual, which …

The “no doc” or no-income-documentation loan was a type of mortgage that required little or no income verification. This loan was put together on behalf of self-employed or commission workers who tend to write off expenses or who use different taxes breaks to lower their income to pay less in income taxes. The way the loan worked, you would state what your income was but it was not verified. So if you said that you made $10,000 gross per month, that is the amount that was used to see if you could be approved for the mortgage. Typically, you would …

The Federal Reserve has made its most aggressive move ever! On Sept. 13, the Fed announced a third round of bond buying, called Qualitative Easing, or QE, increasing its purchase of mortgage bonds to $40 billion per month from the average of $15 billion per month that they were previously buying. They also announced that this is an open-ended program with no end date, and that their short-term rates would remain low until 2015. In the past, the Fed has always put an amount that they would buy monthly, and also when they would stop. The Fed’s official statement noted …

Most people think that the bank they make their mortgage payment to actually owns the mortgage, but in most cases, the bank that you make your payment to just services the mortgage and it is ultimately owned by one of the two mortgage giants. Fannie Mae and Freddie Mac where chartered back in the early ’70s, and later became public companies that were traded on the stock exchange. The purpose of Fannie Mae and Freddie Mac was to raise funds from investors to purchase mortgages from banks. Fannie and Freddie will sell bonds called “Mortgage Backed Securities,” or MBS, that …

QE, or quantitative easing, is the action the Federal Reserve takes to buy mortgage and treasury bonds in the open market with the hopes of pushing down interest rates to a point that will jump-start the economy. QE also has a great effect on the stock market because it artificially boosts stock prices, giving the economy a chance to come around. The Federal Reserve has already implemented two rounds of quantitative easing, which has swelled their portfolio of mortgage and treasury bonds to a record $1.8 trillion. The treasury also recorded over $70 billion in trading profits in 2011 from …

The Home Affordable Refinance Program (HARP) was started in early 2009 for homeowners who wanted to refinance but were thwarted because of declining home values. The program was initially aimed at loans that had been originated prior to March of 2009, and allowed for a home’s value to come in at 25 percent below that mortgage amount. In March of 2012, the government release HARP 2.0, which allowed lenders to do refinance loans that were originated prior to May of 2009 and lifted the limit as to how low the value of the home could be relative to the mortgage. …

A few years back, there was a mortgage program that was called a “No Doc” or “No income verification” program, which made it easier for non-salaried workers to qualify for home loans by not forcing them to verify their income. This program was a great for someone that had a good down payment or sizeable equity for a refinance, but didn’t show a lot of income. Unfortunately, this program was being used by W-2 employees to qualify for larger mortgages than they could afford. So they would state that they made more money than they actually did, and “qualify” for …

Many people don’t realize that their credit dictates what they can buy and what they will ultimately pay for it. A low credit score will almost always lead to an increase in what you pay to obtain credit. Your score will dictate what type of financing you get and if you will get financing at all. The lower the score, the higher the closing cost or interest rate. Credit scores are determined by your payment history, the amount of available credit that you have, the amount of ongoing balances that you have relative to you limit, the types of accounts …

Well, Fannie Mae and Freddie Mac promised the world and delivered far, far less. Finally released in March, the Home Affordability Refinance Program (HARP) was supposed to facilitate refinancing among borrowers who are “underwater” (when the home is worth less than the outstanding mortgage). What we are seeing is that, unless you can walk on water, it will be hard to qualify for these loans. Fannie Mae and Freddie Mac have said that they will purchase these loans from banks, but not all banks are welcoming the program with open arms. Banks are saying that these loans are risky and …

The Federal Reserve recently announced that it is going to keep short-term rates low until the end of 2014. This reflects an effort by the Fed to be more transparent with Wall Street as well as the American people In the past, the Fed has not been so open with their direction, but with the problems that our economy is facing, as well as the austerity problems that are occurring in Greece, Italy and Portugal, they are trying to keep the markets calm and rates low in the hopes of spurring the economy. What does this have to do with …