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
Wednesday, November 21, 2007
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
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