It depends…
If the business is making money (comparable to working for someone else) and all those funds are being reported to the IRS, then I would structure your loan like anyone who is a W-2 employee. The customer would have many loan options such as FHA and if the credit score meets the loan program requirement there would be 100% loan options.
If like most self-employed people, you take as many business expenses/deductions as possible to reduced their tax exposure, then we might have to go with a “Stated Income” loan.
What exactly does that mean?
The customer “states” tells me his monthly income
If we went with a “stated income/stated asset” it would also mean they would “state” the funds available for down payment and closing costs.
It also means they will have to make a down payment. Our “best priced” stated income loan will require a 10% down payments and the mid credit scores at 680 or above.
This program only requires one-year in the “business.” Most stated income programs require a 2-year history.
At this time, the program has the street rate as a regular program but does has 1/2 % origination fee, and the mortgage insurance will be roughly 18-20% higher.
This program can be used for 2nd homes (vacation homes not investment property) but requires a 700 credit score on 2nd homes.
Bottom line- it is more important than ever to keep you credit in good shape; plan ahead and save some money.
BOk Mortgage originates more loans in the state of Oklahoma than any other lender. Call me if you are purchasing or refinancing and I will be happy to assist you.
Karen L Heston
Mortgage Banker
(918)488-7353
Toll Free (800)947-2655 x7353
kheston@bokf.com
Wednesday, December 26, 2007
Wednesday, November 21, 2007
Watch Real Estate Expert Darryl Baskin & Mortgage Expert Jeff Sargent Discuss Mortgage Ripoffs
Click Here for Expert Advice from: Darryl Baskin's "The Future of Real Estate Show"
http://www.youtube.com/watch?v=9GyA1KexJvw
http://www.darrylbaskin.com/tv_shows
You are welcome to "tune in" to hear experts talk about topics ranging from Real Estate, Mortgage Lending, Homeowner's Insurance and other associated subjects each Saturday on KWHB 47, Tulsa Cox Channel 7, beginning at 10:00 a.m. to watch Darryl's Show.
Also every Saturday, please "tune in" your a.m. dial for Darryl's Show on News Talk 740 KRMG for "The Future of Real Estate" for information and timely topics.
On both television and radio you will hear Darryl Baskin and his weekly co-hosts Jerry Szeszulski of American National Insurance & Jeff Sargent of ONB Bank & Trust's Residential Mortgage Division discuss everything under the sun pertaining to real estate and events in the Tulsa metro area.
To send e-mail questions or contact Jerry Szeszulski go to : Jerry.Szeszulski@american-national.com or call him at 918.878.3361
To reach Darryl Baskin and his team of real estate professionals, please call 918.258.2600 or visit his website: http://darrylbaskin.com/
Any time you have questions and need expert advice from seasoned professionals, please contact Jerry for insurance questions, Darryl for real estate and you can reach my team weekdays or weekends at the numbers below:
Thank you,
Jeff Sargent
Jeff Sargent
Residential Mortgage Division-President
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
http://www.youtube.com/watch?v=9GyA1KexJvw
http://www.darrylbaskin.com/tv_shows
You are welcome to "tune in" to hear experts talk about topics ranging from Real Estate, Mortgage Lending, Homeowner's Insurance and other associated subjects each Saturday on KWHB 47, Tulsa Cox Channel 7, beginning at 10:00 a.m. to watch Darryl's Show.
Also every Saturday, please "tune in" your a.m. dial for Darryl's Show on News Talk 740 KRMG for "The Future of Real Estate" for information and timely topics.
On both television and radio you will hear Darryl Baskin and his weekly co-hosts Jerry Szeszulski of American National Insurance & Jeff Sargent of ONB Bank & Trust's Residential Mortgage Division discuss everything under the sun pertaining to real estate and events in the Tulsa metro area.
To send e-mail questions or contact Jerry Szeszulski go to : Jerry.Szeszulski@american-national.com or call him at 918.878.3361
To reach Darryl Baskin and his team of real estate professionals, please call 918.258.2600 or visit his website: http://darrylbaskin.com/
Any time you have questions and need expert advice from seasoned professionals, please contact Jerry for insurance questions, Darryl for real estate and you can reach my team weekdays or weekends at the numbers below:
Thank you,
Jeff Sargent
Jeff Sargent
Residential Mortgage Division-President
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Fed Governor Lists Steps to Remedy Subprime Distress
Fed Governor Lists Steps to Remedy Subprime Distress
With subprime mortgage delinquencies and foreclosures possibly getting worse before they get better, “a high degree of collaboration and innovation to identify solutions” is needed to help borrowers keep their homes, Federal Reserve Governor Randall S. Kroszner told NAHB’s Symposium on Housing Affordability on Nov. 5 in Washington, D.C.
“It is imperative that we work together as a financial services community to look for ways to help borrowers address their mortgage challenges, particularly those who may have fewer alternatives, such as lower-income families,” Kroszner said.
Distress among subprime borrowers has been concentrated in the variable-rate mortgages that constitute two-thirds of that market, he said, and more than 17% of those loans are now more than 90 days in arrears, a tripling of the share since mid-2005.
Contributing greatly to the problem are resets after the initial two- or three-year phase of the mortgage that are significantly increasing interest rates and monthly payments.
“In early 2007, the typical subprime mortgage experiencing a first reset had its rate increase from 7% to 9.5%, producing an increase of 25% to 30% in the monthly payment,” Kroszner told the symposium. “This increase translates into an additional monthly debt obligation of $350 per month for the average subprime variable-rate mortgage."
With the appreciation of home values slowing to a virtual crawl from the rapid escalation of the housing boom years, or even declining in some markets, subprime borrowers, many of whom purchased their homes with little or no money down, don’t have enough equity to avoid payment increases by refinancing.
About two-thirds of subprime borrowers who in 2003 and 2004 took out adjustable rate loans that are reset after two years were able to avoid higher payments by refinancing or selling their home before the first scheduled reset, he said. “Prepayments on subprime variable-rate loans originated in late 2005 and 2006,” the tail end of the boom, “have occurred at a slower pace,” he said.
“The bulk of resets is yet to come,” Kroszner warned. “On average, in each quarter from now until the end of next year, monthly payments for more than 400,000 subprime mortgages are scheduled to undergo their first rate reset. That number is up from roughly 200,000 per quarter during the first half of 2007. Delinquencies and foreclosures are therefore likely to continue to rise for a number of quarters.”
Kroszner said that the Federal Reserve’s Community Affairs Offices have been convening lenders, community leaders and government officials around the country over the past two years to help identify strategies to provide resources to assist borrowers confronting foreclosure.
The Fed, he said, has also been urging mortgage lenders and servicers to look for ways to work with borrowers who are having difficulty in paying their loans — including loan modifications, deferral of payments, extension of loan maturities, capitalization of delinquent amounts and conversion of adjustable-rate mortgages into fixed-rate mortgages or fully indexed, fully amortizing adjustable-rate mortgages.
Among initiatives recommended by participants at the symposium to address current affordable housing needs would be allowing state housing finance agencies to provide refinancing for strapped subprime borrowers.
While there is no comprehensive data available, Kroszner said reports suggest that the number of loan workouts and modifications that have actually occurred “may be limited thus far.”
“One possible contributing factor is that many borrowers are not seeking help or advice from their lenders because they believe that lenders cannot or are not willing to help them. Industry and consumer advocates who testified at our hearings on the home equity lending market last year told us that the greatest barrier to working with troubled borrowers is in simply making contact with them.”
Among national organizations and initiatives that are making headway in helping to resolve problems with troubled loans, he cited:
NeighborWorks America (NeighborWorks) and its Center for Foreclosure Services and 1-888-995-HOPE hotline. The hotline has received more than 100,000 calls this year, more than half in the third quarter.
The Hope Now alliance. “This collaboration among counselors, servicers, investors and other mortgage market participants aims to increase outreach efforts to contact at-risk borrowers through a national direct-mail campaign, encouraging them to either call their lender or a credit counselor.”
Foreclosure Prevention Working Group. “Consisting of 11 state attorneys general plus the Conference of State Bank Supervisors and the state bank regulatory agencies, the Working Group has held conversations with mortgage servicers and will continue to pursue opportunities for preventing foreclosures and encouraging increased loan modifications.”
“All these efforts are important,” Kroszner said, “but there is more to be done to deal with the significant challenges ahead.” Among the innovations that are needed:
“First, at this point, we are hearing that many modifications are done on a case-by-case basis,” he said. “That is understandable given the complexity of the products and the unique circumstances of each borrower. Given the substantial number of resets from now through the end of 2008, however, I believe it would behoove the industry to join together and explore collaborative, creative efforts to develop prudent loan modification programs and other assistance to help large groups of borrowers systematically.”
“Second, I believe that modernization of programs administered by the Federal Housing Administration, which has considerable experience helping low- and moderate-income households obtain home financing, could also help avoid foreclosures,” he said. “FHA modernization could give the agency the flexibility to work with private-sector lenders to expedite the refinancing of creditworthy subprime borrowers and to design products that improve affordability through such features as variable maturities or shared appreciation.”
“Third, we must pursue initiatives to prevent these problems from recurring, and the Federal Reserve is making strides in this direction.” Before the end of the year, he said, the Fed will be issuing proposals to ban deceptive advertising and require important consumer disclosures early in the mortgage process. The Fed will also address practices associated with subprime lending, such as prepayment penalties, failure to offer escrow accounts for taxes and insurance, stated-income and low-documentation lending and the failure to give adequate consideration to a borrower’s ability to repay.
With subprime mortgage delinquencies and foreclosures possibly getting worse before they get better, “a high degree of collaboration and innovation to identify solutions” is needed to help borrowers keep their homes, Federal Reserve Governor Randall S. Kroszner told NAHB’s Symposium on Housing Affordability on Nov. 5 in Washington, D.C.
“It is imperative that we work together as a financial services community to look for ways to help borrowers address their mortgage challenges, particularly those who may have fewer alternatives, such as lower-income families,” Kroszner said.
Distress among subprime borrowers has been concentrated in the variable-rate mortgages that constitute two-thirds of that market, he said, and more than 17% of those loans are now more than 90 days in arrears, a tripling of the share since mid-2005.
Contributing greatly to the problem are resets after the initial two- or three-year phase of the mortgage that are significantly increasing interest rates and monthly payments.
“In early 2007, the typical subprime mortgage experiencing a first reset had its rate increase from 7% to 9.5%, producing an increase of 25% to 30% in the monthly payment,” Kroszner told the symposium. “This increase translates into an additional monthly debt obligation of $350 per month for the average subprime variable-rate mortgage."
With the appreciation of home values slowing to a virtual crawl from the rapid escalation of the housing boom years, or even declining in some markets, subprime borrowers, many of whom purchased their homes with little or no money down, don’t have enough equity to avoid payment increases by refinancing.
About two-thirds of subprime borrowers who in 2003 and 2004 took out adjustable rate loans that are reset after two years were able to avoid higher payments by refinancing or selling their home before the first scheduled reset, he said. “Prepayments on subprime variable-rate loans originated in late 2005 and 2006,” the tail end of the boom, “have occurred at a slower pace,” he said.
“The bulk of resets is yet to come,” Kroszner warned. “On average, in each quarter from now until the end of next year, monthly payments for more than 400,000 subprime mortgages are scheduled to undergo their first rate reset. That number is up from roughly 200,000 per quarter during the first half of 2007. Delinquencies and foreclosures are therefore likely to continue to rise for a number of quarters.”
Kroszner said that the Federal Reserve’s Community Affairs Offices have been convening lenders, community leaders and government officials around the country over the past two years to help identify strategies to provide resources to assist borrowers confronting foreclosure.
The Fed, he said, has also been urging mortgage lenders and servicers to look for ways to work with borrowers who are having difficulty in paying their loans — including loan modifications, deferral of payments, extension of loan maturities, capitalization of delinquent amounts and conversion of adjustable-rate mortgages into fixed-rate mortgages or fully indexed, fully amortizing adjustable-rate mortgages.
Among initiatives recommended by participants at the symposium to address current affordable housing needs would be allowing state housing finance agencies to provide refinancing for strapped subprime borrowers.
While there is no comprehensive data available, Kroszner said reports suggest that the number of loan workouts and modifications that have actually occurred “may be limited thus far.”
“One possible contributing factor is that many borrowers are not seeking help or advice from their lenders because they believe that lenders cannot or are not willing to help them. Industry and consumer advocates who testified at our hearings on the home equity lending market last year told us that the greatest barrier to working with troubled borrowers is in simply making contact with them.”
Among national organizations and initiatives that are making headway in helping to resolve problems with troubled loans, he cited:
NeighborWorks America (NeighborWorks) and its Center for Foreclosure Services and 1-888-995-HOPE hotline. The hotline has received more than 100,000 calls this year, more than half in the third quarter.
The Hope Now alliance. “This collaboration among counselors, servicers, investors and other mortgage market participants aims to increase outreach efforts to contact at-risk borrowers through a national direct-mail campaign, encouraging them to either call their lender or a credit counselor.”
Foreclosure Prevention Working Group. “Consisting of 11 state attorneys general plus the Conference of State Bank Supervisors and the state bank regulatory agencies, the Working Group has held conversations with mortgage servicers and will continue to pursue opportunities for preventing foreclosures and encouraging increased loan modifications.”
“All these efforts are important,” Kroszner said, “but there is more to be done to deal with the significant challenges ahead.” Among the innovations that are needed:
“First, at this point, we are hearing that many modifications are done on a case-by-case basis,” he said. “That is understandable given the complexity of the products and the unique circumstances of each borrower. Given the substantial number of resets from now through the end of 2008, however, I believe it would behoove the industry to join together and explore collaborative, creative efforts to develop prudent loan modification programs and other assistance to help large groups of borrowers systematically.”
“Second, I believe that modernization of programs administered by the Federal Housing Administration, which has considerable experience helping low- and moderate-income households obtain home financing, could also help avoid foreclosures,” he said. “FHA modernization could give the agency the flexibility to work with private-sector lenders to expedite the refinancing of creditworthy subprime borrowers and to design products that improve affordability through such features as variable maturities or shared appreciation.”
“Third, we must pursue initiatives to prevent these problems from recurring, and the Federal Reserve is making strides in this direction.” Before the end of the year, he said, the Fed will be issuing proposals to ban deceptive advertising and require important consumer disclosures early in the mortgage process. The Fed will also address practices associated with subprime lending, such as prepayment penalties, failure to offer escrow accounts for taxes and insurance, stated-income and low-documentation lending and the failure to give adequate consideration to a borrower’s ability to repay.
FDIC Issues Tips on Shopping for & Negotiating a Good Mortgage-Q & A
Press Release
The FDIC Issues Tips on Shopping for and Negotiating a Good Mortgage in the New, Tougher Climate for Loans Other topics in the latest FDIC Consumer News include answers to common questions about deposit insurance and money-wise suggestions for the tax season
FOR IMMEDIATE RELEASENovember 16, 2007
While it may be tougher to get mortgages because of recent problems in the housing market, the latest issue of the Federal Deposit Insurance Corporation's quarterly newsletter for consumers says that "many good loan programs are still available" and offers tips to help people shop for and negotiate the right deal. The Fall 2007 FDIC Consumer News also includes advice for borrowers about restructuring or refinancing their existing mortgage if they face the prospect of losing their homes because of rising monthly payments.
The main article, entitled "The New Climate for Mortgage Borrowers," features a variety of suggestions for obtaining a new mortgage or refinancing an existing one. Among them: Try to raise your credit score in the months before you apply for a mortgage, such as by paying off much or all of what you owe on credit cards. Contact several lenders, let them know you are comparison shopping, and then try to negotiate the best deal. Compare fixed-rate and adjustable-rate mortgages (ARMs), even if the latter carries a lower initial interest rate, because a fixed-rate loan may be cheaper in the long run. Be wary of a loan with payments that can increase substantially, such as mortgages with low monthly payments in the early years in exchange for the deferred repayment of principal and/or interest. And, watch out for unfair and deceptive sales practices that lure people into costly or inappropriate loans.
For people who can't make the payments on their existing mortgage, the newsletter stresses the importance of talking to the lender or loan servicer about restructuring or refinancing the loan as soon as possible. The article also explains that reputable counselors can help negotiate with lenders and warns homeowners to avoid credit-repair and mortgage-rescue scams.
This issue of FDIC Consumer News also answers three common questions about FDIC insurance coverage -- how the agency protects depositors if a bank fails, what happens if a depositor has accounts at two different banks that merge and the combined funds exceed the insurance limit, and how to be sure that an Internet bank is FDIC-insured.
The new publication also includes timely tips for the tax season in areas such as tax payments and refunds, a look at new Web sites that can help consumers manage their money, and a note about a new law intended to reduce student loan costs.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information on financial matters, free of charge. The Fall 2007 issue can be read or printed online at www.fdic.gov/consumers/consumer/news/cnfall07. There is also an online form for ordering up to two free paper copies.
The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in FDIC Consumer News widely available to the public. The publication may be reprinted in whole or in part without advance permission. Organizations may link to or mention the FDIC Web site. This issue also is available on the FDIC Web site in a PDF format that can easily be reproduced in any quantity. Space on the back page of the PDF version was intentionally left blank so that an organization can add its name, logo, a special message and/or self-mailing information.
Current and past issues of FDIC Consumer News, including special editions on selected topics and some for senior citizens, teens and young adults, are online at www.fdic.gov/consumernews. The FDIC also offers a free subscription service that provides an e-mail about each new issue posted to the Web site and a link to stories of interest. Instructions for subscribing are posted at www.fdic.gov/about/subscriptions/index.html.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,615 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-95-2007
The FDIC Issues Tips on Shopping for and Negotiating a Good Mortgage in the New, Tougher Climate for Loans Other topics in the latest FDIC Consumer News include answers to common questions about deposit insurance and money-wise suggestions for the tax season
FOR IMMEDIATE RELEASENovember 16, 2007
While it may be tougher to get mortgages because of recent problems in the housing market, the latest issue of the Federal Deposit Insurance Corporation's quarterly newsletter for consumers says that "many good loan programs are still available" and offers tips to help people shop for and negotiate the right deal. The Fall 2007 FDIC Consumer News also includes advice for borrowers about restructuring or refinancing their existing mortgage if they face the prospect of losing their homes because of rising monthly payments.
The main article, entitled "The New Climate for Mortgage Borrowers," features a variety of suggestions for obtaining a new mortgage or refinancing an existing one. Among them: Try to raise your credit score in the months before you apply for a mortgage, such as by paying off much or all of what you owe on credit cards. Contact several lenders, let them know you are comparison shopping, and then try to negotiate the best deal. Compare fixed-rate and adjustable-rate mortgages (ARMs), even if the latter carries a lower initial interest rate, because a fixed-rate loan may be cheaper in the long run. Be wary of a loan with payments that can increase substantially, such as mortgages with low monthly payments in the early years in exchange for the deferred repayment of principal and/or interest. And, watch out for unfair and deceptive sales practices that lure people into costly or inappropriate loans.
For people who can't make the payments on their existing mortgage, the newsletter stresses the importance of talking to the lender or loan servicer about restructuring or refinancing the loan as soon as possible. The article also explains that reputable counselors can help negotiate with lenders and warns homeowners to avoid credit-repair and mortgage-rescue scams.
This issue of FDIC Consumer News also answers three common questions about FDIC insurance coverage -- how the agency protects depositors if a bank fails, what happens if a depositor has accounts at two different banks that merge and the combined funds exceed the insurance limit, and how to be sure that an Internet bank is FDIC-insured.
The new publication also includes timely tips for the tax season in areas such as tax payments and refunds, a look at new Web sites that can help consumers manage their money, and a note about a new law intended to reduce student loan costs.
The goal of FDIC Consumer News is to deliver timely, reliable and innovative tips and information on financial matters, free of charge. The Fall 2007 issue can be read or printed online at www.fdic.gov/consumers/consumer/news/cnfall07. There is also an online form for ordering up to two free paper copies.
The FDIC encourages financial institutions, government agencies, consumer organizations, educators, the media and anyone else to help make the tips and information in FDIC Consumer News widely available to the public. The publication may be reprinted in whole or in part without advance permission. Organizations may link to or mention the FDIC Web site. This issue also is available on the FDIC Web site in a PDF format that can easily be reproduced in any quantity. Space on the back page of the PDF version was intentionally left blank so that an organization can add its name, logo, a special message and/or self-mailing information.
Current and past issues of FDIC Consumer News, including special editions on selected topics and some for senior citizens, teens and young adults, are online at www.fdic.gov/consumernews. The FDIC also offers a free subscription service that provides an e-mail about each new issue posted to the Web site and a link to stories of interest. Instructions for subscribing are posted at www.fdic.gov/about/subscriptions/index.html.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,615 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-95-2007
Mortgage Economic Update:11/21/07 - Happy Thanksgiving!
ECONOMIC NEWS:
NEW YORK (CNNMoney.com) -- The yield on the 10-year Treasury note fell below 4 percent for the first time in two years early Wednesday. At 9:13 a.m. ET, the yield stood at 4.02 percent, down from 4.06 percent late Tuesday but up from a rate just below 4 percent earlier in the day.
A gloomy U.S. economic outlook and speculation that the Federal Reserve could cut interest rates have worried investors and lifted bond prices - which move inversely to prices. Government bonds rose beginning late Tuesday after the Federal Reserve released a new economic outlook that predicted a slowing economy in the next year. This raised hopes that the Fed will cut rates again when it meets in December.
Worries of a battered financial sector have also put a strain on markets as a string of mortgage lenders took hits from write-downs on mortgage-backed securities. The government-sponsored enterprises Freddie Mac, and Fannie Mae recently reported weak quarterly results on losses from mortgage defaults. Several other large financial services companies - including Citigroup, Merril Lynch, WAMU and Bank of America - have also reported write-downs due to the subprime mortgage crisis.
Wednesday morning, stock futures were lower, sending investors flocking to the safe-haven of bonds, suggesting a tough start for Wall Street ahead of the Thanksgiving holiday.
In currency trading, the dollar fell to a new low against the euro and also fell to a two year low against the yen. Currencies have been climbing steadily against the dollar since August amid fears for the health of the economy.
Surging oil prices have also driven up debt prices. Crude rose to a new intraday record within 71 cents of the $100-a-barrel mark. Light sweet crude for January delivery rose as high as $99.29 a barrel in electronic trading after the New York Mercantile Exchange closed, breaking the previous intra-day record of $98.62 on Nov. 7.
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
NEW YORK (CNNMoney.com) -- The yield on the 10-year Treasury note fell below 4 percent for the first time in two years early Wednesday. At 9:13 a.m. ET, the yield stood at 4.02 percent, down from 4.06 percent late Tuesday but up from a rate just below 4 percent earlier in the day.
A gloomy U.S. economic outlook and speculation that the Federal Reserve could cut interest rates have worried investors and lifted bond prices - which move inversely to prices. Government bonds rose beginning late Tuesday after the Federal Reserve released a new economic outlook that predicted a slowing economy in the next year. This raised hopes that the Fed will cut rates again when it meets in December.
Worries of a battered financial sector have also put a strain on markets as a string of mortgage lenders took hits from write-downs on mortgage-backed securities. The government-sponsored enterprises Freddie Mac, and Fannie Mae recently reported weak quarterly results on losses from mortgage defaults. Several other large financial services companies - including Citigroup, Merril Lynch, WAMU and Bank of America - have also reported write-downs due to the subprime mortgage crisis.
Wednesday morning, stock futures were lower, sending investors flocking to the safe-haven of bonds, suggesting a tough start for Wall Street ahead of the Thanksgiving holiday.
In currency trading, the dollar fell to a new low against the euro and also fell to a two year low against the yen. Currencies have been climbing steadily against the dollar since August amid fears for the health of the economy.
Surging oil prices have also driven up debt prices. Crude rose to a new intraday record within 71 cents of the $100-a-barrel mark. Light sweet crude for January delivery rose as high as $99.29 a barrel in electronic trading after the New York Mercantile Exchange closed, breaking the previous intra-day record of $98.62 on Nov. 7.
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
U.S. House Passes Sub-Prime Lending Bill By Majority Vote
House passes sub-prime billBy a sizeable margin – 291-127 – the U.S. House of Representatives has passed a bill that presents some serious concerns for bankers. As we’ve noted in Friday’s Banker Direct, the bill represents an attempt by Congress to “do something” about the sub-prime mortgage meltdown. Specifically intended to bring mortgage brokers and mortgage bankers into the crosshairs, the bill also hits regulated financial institutions, including banks, and imposes a new standard of lending on all originators of home mortgage loans.It could have been much, much worse – and was as it was introduced. But that’s like trying to comfort the Nebraska football team after Kansas brought them to their knees by scoring a record 76 points against their defense two weeks ago. The result is still bad.What does it do? Some of the most problematic provisions include:
· Title I: requires licensing or registration for all mortgage originators, and for banks it requires registration of bank employees through their primary regulator;
· Sets a federal standard of care that requires licensing and registration (as noted); presenting consumers with “appropriate” options; the potential borrower has the ability to repay the loan in question; in the case of a refinancing package, there’s a "net tangible benefit" to the borrower; and the loan does not have certain “predatory” characteristics;
· Title II: creates a minimum standard for all mortgages, including consideration of the borrower’s ability to repay and, in the case of refinanced loans, determination by the lender that the borrower has received a ‘net tangible benefit’;
◊ The lender must factor in multiple loans to the same borrower, if the lender knows or has reason to know about such loans; ◊ The loan options presented must be “appropriate” for a particular borrower, given his or her individual circumstances. ◊ Prime loans are given a “safe harbor” and are presumed to meet the minimum standards noted.
· Title III: High-cost mortgage triggers under HOEPA (Home Ownership Equity Protection Act) are lowered to 8 percent over comparable Treasuries (from 10 percent);
· Prohibiting balloon payments, financing of points and fees, and requiring pre-loan counseling.
The Oklahoma delegation voted as follows on final passage: (a “NO” vote is a pro-banking vote).
First District: Sullivan - NO Second District: Boren - YES Third District: Lucas - NO Fourth District: Cole - NO Fifth District: Fallin - NO
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
· Title I: requires licensing or registration for all mortgage originators, and for banks it requires registration of bank employees through their primary regulator;
· Sets a federal standard of care that requires licensing and registration (as noted); presenting consumers with “appropriate” options; the potential borrower has the ability to repay the loan in question; in the case of a refinancing package, there’s a "net tangible benefit" to the borrower; and the loan does not have certain “predatory” characteristics;
· Title II: creates a minimum standard for all mortgages, including consideration of the borrower’s ability to repay and, in the case of refinanced loans, determination by the lender that the borrower has received a ‘net tangible benefit’;
◊ The lender must factor in multiple loans to the same borrower, if the lender knows or has reason to know about such loans; ◊ The loan options presented must be “appropriate” for a particular borrower, given his or her individual circumstances. ◊ Prime loans are given a “safe harbor” and are presumed to meet the minimum standards noted.
· Title III: High-cost mortgage triggers under HOEPA (Home Ownership Equity Protection Act) are lowered to 8 percent over comparable Treasuries (from 10 percent);
· Prohibiting balloon payments, financing of points and fees, and requiring pre-loan counseling.
The Oklahoma delegation voted as follows on final passage: (a “NO” vote is a pro-banking vote).
First District: Sullivan - NO Second District: Boren - YES Third District: Lucas - NO Fourth District: Cole - NO Fifth District: Fallin - NO
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Tax on Forgiven Mortgage Debt Hits Owners While Down
Tax on Forgiven Mortgage Debt Hits Home Owners While Down-What Really Happens After You Lose Your Home To Foreclosure?
Ongoing efforts in the housing finance industry to keep home owners from losing their homes, limit the amount of inventory returning to the market and help check further housing price declines are being hampered by federal tax law that legislators on Capitol Hill are attempting to change, according to NAHB economist Robert Dietz.
“The Internal Revenue Service treats all debt amounts that are reduced, forgiven or eliminated as part of a mortgage restructuring or foreclosure as taxable income,” Dietz writes in a special study for NAHB Housing Economics.
“For home owners struggling to make their regular mortgage payments, this phantom income taxation creates a disincentive against restructuring an existing mortgage to ensure continued payment and avoid foreclosure,” he says. “To prevent this tax from applying to home owners and lenders seeking to restructure existing mortgages, Congress must modify the nation’s tax code.”
H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007, which would eliminate the tax consequences associated with debt forgiveness, has been approved by the House of Representatives.
With the exception of taxpayers who are insolvent or subject to Title 112 bankruptcy proceedings, Section 108 of the Internal Revenue Code requires all discharges of indebtedness to be included in gross income, including interest rate reductions of more than 25 basis points.
Looking at the tax consequences, Dietz says that in the typical case “the lender forgives a portion of an outstanding mortgage principal or reduces the interest rate. The forgiven debt is considered income and is taxed at ordinary income tax rates of up to 35%. In the case of a reduced interest rate, the amount of forgiven debt is equal to a calculation of the reduced present value of the debt due to the reduction of the interest rate.”
Some examples cited by Dietz of how the tax could hit distressed borrowers:
Taking a “loss mitigation action,” a lender decides to forgive $20,000 of an existing mortgage balance of $200,000 in order to help a delinquent home owner catch up on payments and avoid foreclosure. The IRS views this as a $20,000 increase in the home owner’s taxable income, and at a marginal tax rate of 28% federal tax liability is increased by $5,600. In many states, the home owner will owe additional income taxes to the state as well.
A lender decides to foreclose on a home with a fair market value of less than the outstanding mortgage principal of $200,000 and foregoes its legal right to pursue other assets of the home owner to collect the difference. In this case, the IRS considers the difference between the selling price of the house and the existing mortgage balance as forgiven debt. If the home is sold for $190,000, the owner is left with $10,000 of unpaid debt after using the proceeds to pay down the mortgage. If the lender forgives this amount, then the home has a tax liability of $2,800 or more.
Current tax rules “create an unfair and odd set of consequences for struggling home owners,” Dietz says.
For most home owners who hold recourse mortgages, “the application of a tax on foreclosure represents a ‘hit them while they’re down’ tax on phantom income that violates the general tax policy principle of assessing tax liability according to ability-to pay,” Dietz says. “Home owners facing foreclosure are not experiencing a cash or liquid asset windfall, so most tax analysts would agree that the tax is punitive and unfair. The tax on restructuring also discourages loss mitigation efforts, thereby increasing the possibility of foreclosure.”
Proposals by members of Congress and President Bush to exempt from the discharge of indebtedness tax any debt forgiveness associated with a principal residence “would significantly improve the feasibility of market-based actions to prevent foreclosure,” Dietz says.
*This Article from National Association of Homebuilders-Nov., 2007
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Ongoing efforts in the housing finance industry to keep home owners from losing their homes, limit the amount of inventory returning to the market and help check further housing price declines are being hampered by federal tax law that legislators on Capitol Hill are attempting to change, according to NAHB economist Robert Dietz.
“The Internal Revenue Service treats all debt amounts that are reduced, forgiven or eliminated as part of a mortgage restructuring or foreclosure as taxable income,” Dietz writes in a special study for NAHB Housing Economics.
“For home owners struggling to make their regular mortgage payments, this phantom income taxation creates a disincentive against restructuring an existing mortgage to ensure continued payment and avoid foreclosure,” he says. “To prevent this tax from applying to home owners and lenders seeking to restructure existing mortgages, Congress must modify the nation’s tax code.”
H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007, which would eliminate the tax consequences associated with debt forgiveness, has been approved by the House of Representatives.
With the exception of taxpayers who are insolvent or subject to Title 112 bankruptcy proceedings, Section 108 of the Internal Revenue Code requires all discharges of indebtedness to be included in gross income, including interest rate reductions of more than 25 basis points.
Looking at the tax consequences, Dietz says that in the typical case “the lender forgives a portion of an outstanding mortgage principal or reduces the interest rate. The forgiven debt is considered income and is taxed at ordinary income tax rates of up to 35%. In the case of a reduced interest rate, the amount of forgiven debt is equal to a calculation of the reduced present value of the debt due to the reduction of the interest rate.”
Some examples cited by Dietz of how the tax could hit distressed borrowers:
Taking a “loss mitigation action,” a lender decides to forgive $20,000 of an existing mortgage balance of $200,000 in order to help a delinquent home owner catch up on payments and avoid foreclosure. The IRS views this as a $20,000 increase in the home owner’s taxable income, and at a marginal tax rate of 28% federal tax liability is increased by $5,600. In many states, the home owner will owe additional income taxes to the state as well.
A lender decides to foreclose on a home with a fair market value of less than the outstanding mortgage principal of $200,000 and foregoes its legal right to pursue other assets of the home owner to collect the difference. In this case, the IRS considers the difference between the selling price of the house and the existing mortgage balance as forgiven debt. If the home is sold for $190,000, the owner is left with $10,000 of unpaid debt after using the proceeds to pay down the mortgage. If the lender forgives this amount, then the home has a tax liability of $2,800 or more.
Current tax rules “create an unfair and odd set of consequences for struggling home owners,” Dietz says.
For most home owners who hold recourse mortgages, “the application of a tax on foreclosure represents a ‘hit them while they’re down’ tax on phantom income that violates the general tax policy principle of assessing tax liability according to ability-to pay,” Dietz says. “Home owners facing foreclosure are not experiencing a cash or liquid asset windfall, so most tax analysts would agree that the tax is punitive and unfair. The tax on restructuring also discourages loss mitigation efforts, thereby increasing the possibility of foreclosure.”
Proposals by members of Congress and President Bush to exempt from the discharge of indebtedness tax any debt forgiveness associated with a principal residence “would significantly improve the feasibility of market-based actions to prevent foreclosure,” Dietz says.
*This Article from National Association of Homebuilders-Nov., 2007
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
What Do Americans Think About the Mortgage Industry?
What Do Americans Think About the Mortgage Industry? A new survey of public sentiment by the National Association of Realtors (NAR) marked some distinct changes in the way people feel about the mortgage industry – and a potential response by the government to problems engulfing the market.The 2007 National Housing Pulse Survey was conducted by the NAR, which polled 1,000 adults living in the United States in October.The survey found that only 5% of respondents are very or fairly worried about being able to make their mortgage payments over the next year.While 53% of those with fixed-rate mortgages feel little or no strain, more than half of those with variable-rate mortgages say they do feel a significant or slight strain.Almost nine out of 10 consumers still believe that buying a home is a good financial decision, and 59% of respondents also agree that now is a good time to buy a home.“Owning a home continues to be a good, long-term investment, and most consumers understand that,” said NAR President Pat V. Combs. “This new survey clearly shows that people believe in the value of homeownership and know that owning a home is one of the best ways for most families to build a nest egg.”While general sentiment about mortgages remains fairly upbeat, people have become increasingly critical of the mortgage process.Americans are more concerned about obtaining a mortgage and having enough money for down payment and closing costs than they have been in five years of polling. Almost six in 10 respondents say it’s hard for people in their area to obtain a fair and affordable mortgage. More than eight in 10 say having enough money for down payment and closing costs are obstacles for home buyers in their area, up 17% from a 2005 survey. Roughly 63% also think the mortgage approval process is an obstacle, up 13% since 2005. Meanwhile, 32% of those surveyed feel the rate of foreclosures in their area to have increased over the past year, 39% report the rate has remained about the same.About 6% believe the foreclosure rate has actually decreased in their area. About 38% of respondents said foreclosures were a very big or moderate problem, but 51% said foreclosures were only a slight problem or not one at all. In the wake of the rising foreclosures and problems with predatory lending, Americans are split on the need for more federal government oversight. Approximately 47% believe the federal government should take a more active role, while 45% believe oversight should be a matter for the private sector. Almost seven in 10 survey respondents are concerned about the cost of housing in their area. For Americans, the lack of affordable housing continues to be a greater concern than jobs, crime or terrorism.
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Thank you,
Jeff Sargent
Jeff Sargent
President – Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Tulsa County Bond Money Update/Letter To Client
Jennifer,
Bond money is available on a "first-come, first-serve" basis. When the money is gone, we must wait for another bond issue to take its place.
There is $8,000,000 coming on 11/15/07 and I would expect that to last approximately 60 days. I will send you some more information about the bond program in next e-mail, but it basically gives the buyers 3% of loan amount as assistance. For example, if the loan amount is $100,000, you would receive $3,000 in bond assistance to use towards down-payment and closing costs. This is combined with an FHA loan, which requires a 2.25% down-payment. You can then ask the sellers to pay the remainder of your total costs, as they are allowed to pay up to 6% of your costs to purchase. You may see advertisements stating that you are eligible for 4% bond assistance in the newspaper. This is how it is often advertised; however the bond authority "takes back" 1% for their fee which leaves you with actual assistance of 3%.
When bond money runs out, it usually takes about 2 months for a new bond issue to arrive. It is ordinarily best to at least get qualified and know that you are able to participate and what you can qualify for so that you can at least begin looking at homes and get an idea as to how much you would like to spend on a home purchase and also know monthly payments, cost to acquire home, etc. Attached, please find a pre-qualification application that you can print, complete by hand and return via fax or pdf/scan e-mail.
Should you have questions, please do not hesitate to contact me or Darryl Baskin and we will be happy to help.
Have a great day.
Thank you,
Jeff Sargent
Jeff Sargent
President - Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Bond money is available on a "first-come, first-serve" basis. When the money is gone, we must wait for another bond issue to take its place.
There is $8,000,000 coming on 11/15/07 and I would expect that to last approximately 60 days. I will send you some more information about the bond program in next e-mail, but it basically gives the buyers 3% of loan amount as assistance. For example, if the loan amount is $100,000, you would receive $3,000 in bond assistance to use towards down-payment and closing costs. This is combined with an FHA loan, which requires a 2.25% down-payment. You can then ask the sellers to pay the remainder of your total costs, as they are allowed to pay up to 6% of your costs to purchase. You may see advertisements stating that you are eligible for 4% bond assistance in the newspaper. This is how it is often advertised; however the bond authority "takes back" 1% for their fee which leaves you with actual assistance of 3%.
When bond money runs out, it usually takes about 2 months for a new bond issue to arrive. It is ordinarily best to at least get qualified and know that you are able to participate and what you can qualify for so that you can at least begin looking at homes and get an idea as to how much you would like to spend on a home purchase and also know monthly payments, cost to acquire home, etc. Attached, please find a pre-qualification application that you can print, complete by hand and return via fax or pdf/scan e-mail.
Should you have questions, please do not hesitate to contact me or Darryl Baskin and we will be happy to help.
Have a great day.
Thank you,
Jeff Sargent
Jeff Sargent
President - Residential Mortgage Division
ONB Bank & Trust Co
8908 S Yale Ave, Suite 250
Tulsa, OK 74137
Office: 918.392.6572
Cell: 918.636.0630
Fax: 918.392.6550
jeff_sargent@onbbank.com
Saturday, November 17, 2007
Should the Government Bail Out Mortgage Companies
It is discussed that the federal government's involvement in the mortgage crisis may result in a bail-out. After the bankruptcy of hundreds of mortgage companies, the crisis continues and the effects are far reaching. What role the government will take in the mess is yet to be seen, but it should hold the companies who made the risky loans accountable. Some of the loans were simply ridiculous. Borrowers who had just completed bankruptcy were qualifying for new loans from greedy, predatory loan companies. It is not not the taxpayer's responsibility to bail them out. The extent of the aid from the government should be to prevent a disastrous domino effect from harming the economy further.
Wednesday, September 12, 2007
Wednesday, September 12, 2007
Wednesday, September 12, 2007
Economic Data Update of US Economy
On August 7th, Ben Bernanke and the FOMC (Federal Open Market Committee) decided to hold steady on the Fed funds rate at 5.25%. They will hold their next meeting next Tuesday, September 18th. The Central Banks around the world have injected vast sums of money into the reserve to contain the crisis of short-term illiquidty. These infusions of cash are the Central Bank's method to add money into the economy so the FOMC does not have to lower the Fed funds rate to 5%. Consumer confidence slipped in August and the world money markets are sitting back waiting to see if the Fed will "bail-out" the Wall Street risk takers on September 18th; many wonder if it will be followed by another .25% cut during the FOMC's next meeting on October 30-31st. Will the rate drop to 4.25% by Spring of 2008? If we had the answer to this, we would be selling our crystal ball and moving to an island in Florida.
30 Year fixed mortgage rates still hover between 6.375% and 6.5% as of this writing. If the inflation lion is still in his cage and remains tame, maybe we'll see more reductions to mortgage rates. Looking back, we were at 6.25% until late May. We can only hope and pray that they fall to that level in the coming weeks (we would all like to enjoy the 6% and below rates we had become used to the past few years). If the fed will begin and continue cutting rates, our US economy may be able to avoid a recession in 2008.
In Tulsa, we should have enough barriers in place to avoid a recession and our economic momentum should carry us into next year like a smooth wave. We Tulsans should continue our optimistic economic outlook and avoid the economic downturns and pitfalls being experienced in other parts of our country because we have been more fiscally conservative in our buying and borrowing practices.
Have no fear when buying a home. Just make sure that you have a good realtor and solid, experienced lenders assisting you. There must be trust established between all of the parties to a transaction. Ask your realtor or lender about any potential businesses you will be dealing with during the home buying process.
If you have questions on Tulsa, Oklahoma homes for sale or commercial real estate, please contact The Baskin Team of McGraw Realtors at (918) 258-2600.
Need a mortgage loan in Tulsa, Oklahoma? Home loans, first time buyer loans, bond money, FHA, VA, Conventional, Jumbo home loans, credit report questions and other mortgage needs in the Tulsa, OK area, you can call our experienced group of professionals at ONB Bank & Trust Residential Mortgage Division, formerly known as Pinnacle Mortgage Corp
@ (918) 481-6833.
Jeff Sargent
President - Residential Mortgage Division
ONB Bank & Trust
8908 S Yale, Suite 250
Tulsa, OK 74137
Economic Data Update of US Economy
On August 7th, Ben Bernanke and the FOMC (Federal Open Market Committee) decided to hold steady on the Fed funds rate at 5.25%. They will hold their next meeting next Tuesday, September 18th. The Central Banks around the world have injected vast sums of money into the reserve to contain the crisis of short-term illiquidty. These infusions of cash are the Central Bank's method to add money into the economy so the FOMC does not have to lower the Fed funds rate to 5%. Consumer confidence slipped in August and the world money markets are sitting back waiting to see if the Fed will "bail-out" the Wall Street risk takers on September 18th; many wonder if it will be followed by another .25% cut during the FOMC's next meeting on October 30-31st. Will the rate drop to 4.25% by Spring of 2008? If we had the answer to this, we would be selling our crystal ball and moving to an island in Florida.
30 Year fixed mortgage rates still hover between 6.375% and 6.5% as of this writing. If the inflation lion is still in his cage and remains tame, maybe we'll see more reductions to mortgage rates. Looking back, we were at 6.25% until late May. We can only hope and pray that they fall to that level in the coming weeks (we would all like to enjoy the 6% and below rates we had become used to the past few years). If the fed will begin and continue cutting rates, our US economy may be able to avoid a recession in 2008.
In Tulsa, we should have enough barriers in place to avoid a recession and our economic momentum should carry us into next year like a smooth wave. We Tulsans should continue our optimistic economic outlook and avoid the economic downturns and pitfalls being experienced in other parts of our country because we have been more fiscally conservative in our buying and borrowing practices.
Have no fear when buying a home. Just make sure that you have a good realtor and solid, experienced lenders assisting you. There must be trust established between all of the parties to a transaction. Ask your realtor or lender about any potential businesses you will be dealing with during the home buying process.
If you have questions on Tulsa, Oklahoma homes for sale or commercial real estate, please contact The Baskin Team of McGraw Realtors at (918) 258-2600.
Need a mortgage loan in Tulsa, Oklahoma? Home loans, first time buyer loans, bond money, FHA, VA, Conventional, Jumbo home loans, credit report questions and other mortgage needs in the Tulsa, OK area, you can call our experienced group of professionals at ONB Bank & Trust Residential Mortgage Division, formerly known as Pinnacle Mortgage Corp
@ (918) 481-6833.
Jeff Sargent
President - Residential Mortgage Division
ONB Bank & Trust
8908 S Yale, Suite 250
Tulsa, OK 74137
Monday, August 27, 2007
Mortgage Nausea Update
Fears in the mortgage market and housing sectors have been front page news for the past two and one-half months. It has seemed as if the turmoil in the financial marketplace has become like a global virus. There are fears of an even more urgent contagion surfacing, and it seems as if the fear may impede people's buying and selling decisions.
Tulsa area real estate expert Darryl Baskin and Jeff Sargent, president of ONB Residential Mortgage continue telling folks around the area that calm is what is needed in our market. When people watch the national news, their stomachs begin to churn and fear can take over unless the voice of reason can be heard. Yes, there have been problems in the mortgage industry. Yes, there are less products offered to assist people in buying homes. Yes, there are still plenty of programs available for qualified homebuyers. The Tulsa area has not been damaged as other regions in our nation have. Our area is one of financial diversity, as Tulsa businesses invested in other industries after the oil bust in the early 1980s in an effort to keep our local economy stable and maintain future growth. So far, their forsight has proved very effective in maintaining our current lifestyle and growth.
The loans created by greedy sub-prime investors were meant to fail, and many people fell prey to unscrupulous mortgage brokers and were duped into taking loans that folks eventually could not afford. These companies and those products are dropping like flies. It was this greed that is causing the financial fears felt by all Americans. As we are in the second most stable market in the U.S., we should not hesitate when considering buying a home. Consider dealing with local lenders and make sure that you are an informed buyer. Make sure to ask your lender if they fund their own closings (meaning they bring their own check to your closing). Ask for total disclosure of costs, which is a copy of a Good Faith Estimate, Truth In Lending Disclosure, copy of your loan application (Form 1003), and don't forget to ask what your 3 credit scores are and make sure that you are given a booklet that will inform you about purchasing a home. These are all items that a reputable lender will give you when you apply for a loan. There are many other things to be aware of when considering a lender. You can contact real estate expert Darryl Baskin of The Baskin Team @ 918.258.2600 for any real estate questions or Jeff Sargent, president of ONB Residential Mortgage @ 918.481.6833 for any mortgage lending questions.
Tulsa area real estate expert Darryl Baskin and Jeff Sargent, president of ONB Residential Mortgage continue telling folks around the area that calm is what is needed in our market. When people watch the national news, their stomachs begin to churn and fear can take over unless the voice of reason can be heard. Yes, there have been problems in the mortgage industry. Yes, there are less products offered to assist people in buying homes. Yes, there are still plenty of programs available for qualified homebuyers. The Tulsa area has not been damaged as other regions in our nation have. Our area is one of financial diversity, as Tulsa businesses invested in other industries after the oil bust in the early 1980s in an effort to keep our local economy stable and maintain future growth. So far, their forsight has proved very effective in maintaining our current lifestyle and growth.
The loans created by greedy sub-prime investors were meant to fail, and many people fell prey to unscrupulous mortgage brokers and were duped into taking loans that folks eventually could not afford. These companies and those products are dropping like flies. It was this greed that is causing the financial fears felt by all Americans. As we are in the second most stable market in the U.S., we should not hesitate when considering buying a home. Consider dealing with local lenders and make sure that you are an informed buyer. Make sure to ask your lender if they fund their own closings (meaning they bring their own check to your closing). Ask for total disclosure of costs, which is a copy of a Good Faith Estimate, Truth In Lending Disclosure, copy of your loan application (Form 1003), and don't forget to ask what your 3 credit scores are and make sure that you are given a booklet that will inform you about purchasing a home. These are all items that a reputable lender will give you when you apply for a loan. There are many other things to be aware of when considering a lender. You can contact real estate expert Darryl Baskin of The Baskin Team @ 918.258.2600 for any real estate questions or Jeff Sargent, president of ONB Residential Mortgage @ 918.481.6833 for any mortgage lending questions.
Friday, August 10, 2007
What is happening to the mortgage market?
According to my friends who are connected to Wall Street, we are seeing history in the making in regards to the meltdown stimulated by mortgage defaults.
But, what has caused all of this and what does it mean? First, what it means is there will be many lending institutions go out of business. According to Mortgage lending implode http://ml-implode.com/ there have been 115 lenders gone out of business and 14 more on the "watch list." While money is tightening it will force more institutions out of business and create tighter lending practices for those who remain standing. It also means high-risk loans will either go away or will cost more through higher interest rates.
In the past several years "creative" lending practices spurred a flurry of activity for mortgage lenders. It became common practice to issue loans to those with documented bad credit, those who "stated" their income and assets (absolutely no documentation to verify), and made either little or NO downpayment. "Interest only" and "reverse amortization" loans were also created. On the former, the borrower only makes the required payment and their principle balance never reduces. The reverse amortization loan is when the principle balance of the loan increases if the borrower only makes the minimum required payment. I have had several folks call me literally in tears when they realized after years of payments, they owed more on their mortgage than they did when the mortgage was originated! When housing prices were increasing at historic levels, the borrower could sell their house if they got into a financial bind, but when pendulum started swinging the other direction and housing prices started to decrease, many folks found themselves in trouble.
What it all means is this; due to recent events those risky loans will either go away completely or will be available at a much higher interest rate. In the past several months we have seen rates on sub-prime market increase dramatically, last week we saw a huge increase in rates for ARMS and Jumbo loans. We have also seen many loan programs disolve. As recent as today, our "piggy back" loans such as 80/20, 80/15/5, and 80/10/10 now have an added cost. All of the above are cosidered higher risk loans so they will be available at a higher cost.
I feel like we have forgotten that owning a home is a privledge that we must earn through showing financial responsibility. You work, pay your bills on time, live within your means and save money. It is really pretty simple and those people are rewarded.
Let's look at the positive side, we live in a very affordable real estate market - well within the conforming range. The Greater Tulsa Association of Realtors for the Tulsa market reports our average sales price on single-family homes is $124,900. Our real estate market is not as volatile as other markets in the US.
It will be evermore important to use a lender you can trust. Bank of Oklahoma/BOK Mortgage is the top lender in the this area and have solid lending practices. We still have a large variety of programs both through secondary market agencies (Conventional, FHA and VA) and portfolio lending (programs created and funded through Bank of Oklahoma).
Just remember as with everything - this too shall pass. People will still buy and sell homes.
If you to talk about this subject you can reach me at 918-488-7353
Karen Heston, Mortgage Banker
Bank of Oklahoma Mortgage
But, what has caused all of this and what does it mean? First, what it means is there will be many lending institutions go out of business. According to Mortgage lending implode http://ml-implode.com/ there have been 115 lenders gone out of business and 14 more on the "watch list." While money is tightening it will force more institutions out of business and create tighter lending practices for those who remain standing. It also means high-risk loans will either go away or will cost more through higher interest rates.
In the past several years "creative" lending practices spurred a flurry of activity for mortgage lenders. It became common practice to issue loans to those with documented bad credit, those who "stated" their income and assets (absolutely no documentation to verify), and made either little or NO downpayment. "Interest only" and "reverse amortization" loans were also created. On the former, the borrower only makes the required payment and their principle balance never reduces. The reverse amortization loan is when the principle balance of the loan increases if the borrower only makes the minimum required payment. I have had several folks call me literally in tears when they realized after years of payments, they owed more on their mortgage than they did when the mortgage was originated! When housing prices were increasing at historic levels, the borrower could sell their house if they got into a financial bind, but when pendulum started swinging the other direction and housing prices started to decrease, many folks found themselves in trouble.
What it all means is this; due to recent events those risky loans will either go away completely or will be available at a much higher interest rate. In the past several months we have seen rates on sub-prime market increase dramatically, last week we saw a huge increase in rates for ARMS and Jumbo loans. We have also seen many loan programs disolve. As recent as today, our "piggy back" loans such as 80/20, 80/15/5, and 80/10/10 now have an added cost. All of the above are cosidered higher risk loans so they will be available at a higher cost.
I feel like we have forgotten that owning a home is a privledge that we must earn through showing financial responsibility. You work, pay your bills on time, live within your means and save money. It is really pretty simple and those people are rewarded.
Let's look at the positive side, we live in a very affordable real estate market - well within the conforming range. The Greater Tulsa Association of Realtors for the Tulsa market reports our average sales price on single-family homes is $124,900. Our real estate market is not as volatile as other markets in the US.
It will be evermore important to use a lender you can trust. Bank of Oklahoma/BOK Mortgage is the top lender in the this area and have solid lending practices. We still have a large variety of programs both through secondary market agencies (Conventional, FHA and VA) and portfolio lending (programs created and funded through Bank of Oklahoma).
Just remember as with everything - this too shall pass. People will still buy and sell homes.
If you to talk about this subject you can reach me at 918-488-7353
Karen Heston, Mortgage Banker
Bank of Oklahoma Mortgage
Friday, May 25, 2007
“Shock of the ARM Mortgages”
Darryl Baskin, Real Estate Broker The Baskin Real Estate Specialists of McGraw Davisson Stewart recently posed a question to Jeff Sargent, Vice President of Pinnacle Mortgage/ONB bank asking about adjustable rate mortgages and the impact they are having on people, for better or worse. Jeff Sargent told Darryl that the ARM (adjustable rate mortgage) products can be good if buyers are only intending to keep the mortgage for a short and specific time period, as the rates can be as much as 1% lower than the fixed rate mortgage products, which are presently at 6.25% for a 30 year term. However, if consumers want to stay in a home and mortgage for anything over 3 to 5 years, they definitely need to look for a fixed rate mortgage because the only adjustments to payments each month would be due to increasing real estate taxes or insurance. Many people have become entangled in their adjustable rate mortgages and were not clear on how the contract really worked. There are different types of ARMs; some adjust after 1 year, others after 3, 5 or 7 years, but most of them have the potential to go up by as much as 6% during the life of the loan at different intervals. Many have pre-payment penalties for specific periods of time and some can be converted to a fixed rate mortgage after a specific date, but many borrowers do not read the documents they are signing and are later shocked to find out what kind of mortgage they really have. If we look back in history, fixed rate mortgages were as high as 17% in 1984 and adjustable rates at that time were 15%. The 2nd mortgage rates during that time were often as high as 21 to 29%. Consumers had no options as there were not so many loan products as we have today. By 1986, the adjustable rate mortgages had adjusted and being able to make the payments became impossible for many, and home prices had begun to decrease. Those that could refinance did, and those that could sell their homes also did but there were many that could do neither and they were forced to file bankruptcy and many lost their homes to foreclosure. Bankers became wary of the bubble envelopes they began receiving each day, as there were probably house keys in them along with a note advising that the client could not longer afford the home and that they could not sell it either. "Those were tough times and I hope we never see all of that again" remarked Jeff Sargent of Pinnacle Mortgage. If you have been watching the news lately, you will see that many of the sub-prime lenders are going out of business because of defaults, bankruptcies and foreclosures. Jeff's opinion is that many people were preyed upon by greedy lenders and were not fully aware of what kind of loans they had taken out to purchase homes. If you plan on staying in a house for more than a few years, consider a good old fashioned fixed rate loan and compare lenders and be fully informed when choosing a mortgage lender.
There was a report a couple of weeks ago that said Tulsa was the number two real estate market in the U.S. for price appreciation. Darryl and Jeff have been talking about the stability of the Tulsa MSA for some time, and it turns out they were right. This area does not rise and fall quickly since the oil bust of the eighties, as most companies and industry diversified. That is not to say that the recent crude price increases have not helped our local economy, as many area businesses still support the oil industry. There are many areas in our country that are now feeling the negative impact of the over inflated real estate markets and the problems brought about by sub-prime, high risk mortgages. Hopefully we will continue to see stable growth in our area as we've seen for the past decade. The plans for growth in Tulsa and the surrounding area are phenomenal and it will only enhance the great lifestyle that can be enjoyed in our wonderful "neck of the woods."
For more information about this topic or other mortgage related questions, please contact mortgage expert Jeff Sargent of Pinnacle Mortgage Corp/a division of ONB bank @ 918.481.6833 or jsargent@pinnaclemortgage.com.
Tuesday, May 15, 2007
Homebuyer “101” - Get the Facts! Workshop
Kick off National Home Ownership Month with
Home Ownership Tulsa (H.O.T.)
and its partners.
Central Library Saturday, June 2 w 9:00 a.m. - noon | Martin Regional Library – Spanish Session Saturday, June 30 w 9:00 a.m. - noon |
Hardesty Regional Library Saturday, June 16 w 9:00 a.m. – noon |
Do you wonder if you would be better off buying rather than renting a home? Do you ever wonder how expensive of a home you could realistically afford? Do you wish you could build up equity in a home?
If you dream of owning your own home, attend our seminar and you will learn the steps required to purchase a home, including how to qualify for first-time homebuyer benefits and programs. Learn how to access various city, county and state programs to cover most of the costs you will be faced with to purchase your first home. To help potential first-time homebuyers understand all aspects of the home-buying process, this informative, interactive workshop provides valuable instruction on all important pre-purchase decisions and how to qualify for a home loan.
Participants also may learn:
- What to expect throughout the loan process;
- How their credit scores will affect their mortgage interest rates and fees; and
- The meaning of common real estate terms
Participants can receive a FREE credit report analysis and one-on-one consultation with a H.O.T partner.
You will also earn credit toward your Housing Workshop Certificate, which may enable you to get up to $3,500 in down-payment assistance from a Community Housing Development Organization in your area.
Pre-registration is required. To register call 596- 1499 or visit our homepage at www.cityoftulsa.org/Community/HOT . For adults. Sponsored by the Home Ownership Tulsa partnership organizations.
Locations: Central Library: Aaronson Auditorium Sat., June 2 and Plaza Rm.
Hardesty Regional: Redbud Auditorium Sat., June 16
Martin Regional: Plaza Room Sat., June 30th. NOTE: This session may also have a call-in number at the Greater Tulsa Hispanic Chamber of Commerce (GTHCC) for registration.
Your Home: Keep It, Maintain it, & Decorate It
Hardesty Regional Library: Redbud Auditorium
Saturday, June 16 w Noon - 3:00 p.m.
Your home may be the largest investment of your life. This 3-in-1 workshop is geared for current or future homeowners.
Keeping it……..
The first part of this session addresses the foreclosure problem that is spreading across America. Any one of us can have hardship situations that create financial problems and cause us to get behind on our mortgage payments. This session provides resources on what to do if this situation arises and will give you valuable information on your rights as a homeowner. Let us guide you on what to do before losing your home and also
provide options and resources available to assist you.
Maintaining it…….
This session will give you the peace of mind you need as a homeowner regarding maintenance and repairs. You will learn simple, practical advice that can save you thousands of dollars.
Decorating it……..
Your home should be your sanctuary, not a place of stress. This session offers tips on decorating on a budget and enjoying the space you create without overspending. FUN ideas for making your house a home!
Lunch will be provided. Pre-registration is required. Pre-registration is required. To register call 596- 1499 or visit our homepage at www.cityoftulsa.org/Community/HOT. For adults Sponsored by Home Ownership Tulsa partnership organizations.
Subscribe to:
Posts (Atom)