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
Wednesday, November 21, 2007
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.
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