US Home Value Continue to Fall

The financial net worth of homes and of individuals in the United States has decreased dramatically to $ 66,740 in 2010 from the $102,844 from 2005. The Census Bureau has recently realized the crisis that is currently facing the nation, according to their findings: there has been a 35% decrease in the net worth during the years between 2005 and 2010.

These findings also pose as warning to the financial status of many US citizens for their total capitals have fallen. The cause of this decline is not a mystery at all to the agency. These causes are the tremendous economic depression that occurred in the nation in 2008, and rapid increase in the total number of households in the nation.

The prices of houses have declined in the market and this triggering economic turmoil such as problems in banks to massive unemployment of citizens. In fact, the cost of owning a house is cheaper compared to debt in mortgages and loans; the value of stocks and other assets have also fallen behind housing.

The census of the government was able to measure the problem in numbers; however there is another report from the Federal Reserve whose findings are opposed to the data they gathered. The data exists for about a year and a half now, but they include the problems that are hovering over the investors and consumers.

According to CoreLogic, 11 million of the mortgages and that is equivalent to twenty three percent of the loans in homes in America are charged with fees above the real value of the house. The value of stocks however, has been a little better compared to how it was in 2010.

The Survey of Consumer Finances which is released by the Federal Reserve in three year intervals contains the latest analysis of the finances of families in the country.

Decrease in Mortgage Debt of Americans

During the first quarter, home equity increased to $6.7 trillion, which is the highest level in four years. This is because homeowners have paid their principal by benefitting from the low borrowing costs to refinance their loans. Based on data from the Federal Reserve, the increase of 7.3 percent was the biggest leap in over 60 years.

According to Richard DeKaser, the deputy chief economist at Parthenon Group in Boston, the increase is the greatest indication that the housing loan debt of Americans is starting to lessen. Moreover, data from Freddie Mac, a government-owned mortgage buyer, shows that one half of the refinanced mortgages during the fourth quarter decreased in loan size.

In addition, as former chairman of the American Bankers Association’s Economic Advisory Committee, DeKaser said that there has been a significant change in the enthusiasm of homeowners to have housing debt. In particular, when the market was thriving, a mortgage was considered as leverage, but it is considered a risk at present.

Based on a study conducted by the Fed released in the previous week, homeowner equity was 41 percent of US residential property value during the first quarter, and this also takes into account homeowners who do not have mortgages. It was during the third quarter of the year 2008 when the homeowner equity share was as high as 43 percent.

In 2007, residential mortgage debt was at its highest at $10.6 trillion, and becoming twice as much in six years. After that, it has decreased to 7 percent because there was a decrease of 23 percent in the value of all residential property.

DeKaser believes that the decline in mortgage debt was because of a fear factor. The bursting of the housing bubble still has one of every 15 people having no job and has convinced a few borrowers the importance of being thrifty. DeKaser adds that people are concerned of declining home prices and the economy as well.

CFPB Getting Points on Mortgage Points and Fees

Since the foundation of the Consumer Financial Protection Bureau, it has been conducting surveys and collecting feedback from consumers about how they view their current credit card deals, student loan providers or how they are affected by compulsory settlement cases.

Currently, the agency is trying to get the say of customers on mortgage points and fees. The company wants to make customers understand what they are paying for and have knowledge about the different deals financial intermediaries are offering.

Here are some of these policies and perks that are being pushed by the CFPB that the institutions must follow. A policy that makes certain customers who pay discount points get a minimum reduction from the interest rate. If for example a borrower would pay a discount point to get lower interest rates, the customer will be charged depending with his credit worthiness. A discount point causes 1 percent of a borrower’s total fee, so if the loan costs $500,000 then every point will cost you $5,000.

Another policy is one that requires lenders to ask customers if they want to avail a no-discount-point loan. Another policy proposed by the agency is not to allow origination fees that would vary on the loan’s amount.

The bureau also plans to collect mortgage fees and to find out the experiences and damages for mortgage lending originators, those people who take the information from people who want a loan.

Currently, theoriginations follow different protocols that are under the state and federal rules of the country. The CFPB is thinking of implementing rules that would make all the agencies follow the same standards. They would be thoroughly investigated for irregularities and fraud.

The bureau also plans to implement rules similar to what the Federal Reserve Board has. These rules would be helpful in preventing originators from charging higher amounts for the loan to generate money.

If ever these new proposals from the agencies are imposed then it will be great news for all borrowers and it will ensure safety and equity for the whole industry.

Number of Felonies Gone Down

Equifax has announced that the total number of first mortgage delinquents has gone down $500 billion dollars in March 2012; this has been the lowest it has ever been since January in 2009.

According to the March National Consumer Credit Trends Report of Equifax and Creditdorcase.com, the number has fallen to 49.5 million outstanding mortgages that’s almost an 11% drop in from the previous 55 million cases during the same period last 2008.

79 percent of the total breaches in the home equity credit categoryis from the 2005 to 2007 loans. The credit levels are continually falling in the past weeks. Recently it has dropped by 25 percent from $ 1.3 trillion in the year 2008.

More good news:

The balances in first mortgages are at below 3.5 percent compared to the number in March last year. The decline has been continuous every year for 36 successive months.

The number of first mortgage loans that has exceeded the 30 day past due rule is at its lowest, this is lower than the one recorded on June 2007.

The past 60 days due to past 90 days due are also at their lowest levels. The share of loans that are in their worse cases that have been due past 90 days has also fallen over in 24 months.

Existing liabilities for home equity revolving credit have dropped by 17 percent from the month of March in 2009 to this year.

The percent of credit lines opened January of this year has risen by 16% than January 2009, but is 67% lesser than the January 2008 record.

Rates, balances and ratios of credit limits have been stable at 55% since March 2009. The credit available however has decreased from $575 billion to only about $470 billion.

Home equity installment loans went down to 46%, now it is $150 billion from $275 in 2008. The total rate of crimes is also lower by 14% in March 2011.

The Effect of Your Spouse’s Bad Credit in Buying a Home  

After getting married with a spouse having a bad credit, does it stop you from buying a house with your good credit record? The answer is “no” because your plan to buy a home you want is still very possible or within your reach. Before you castigate your spouse for ruining his credit, take note that after the severe financial crisis in 2008 only few Americans were greatly affected by the credit crunch. In fact, many American families are uncertain about their financial situations. In other words you are not alone in such kind of situation.

Tips to buy a house with Bad Credit

It is not only you and your spouse who are struggling to buy a house because of bad credit. Here are some options you can choose from when your spouse’s credit is not desirable.

1. Buy the house together: If you buy it together, you can set aside the bad credit of your spouse. This is an option which will charge you high interest rate and no financial expert would advise anyone to choose this option but this is just one way for you to buy a house.

2. Buy it alone: If your spouse’s credit is bad but yours is good then buy it using your own credit. This will be easier for you to get a loan because of your good credit record. The amount of loan will be based on your income and available cash.

3. Loan granted with no verification of income: This is an option where the single income of the one who has a good credit record or the bad credit record of the participating spouse are not the basis for granting the loan. This type of loan, however, requires a large down payment ranging from 25 to 30 percent of the principal. The bad news is this option eliminated because of the financial collapse.

4. Replacement of “Bad” Credit with “Good” Credit: A third party can help a couple to buy a house. Usually one of the parents with excellent credit rating can replace the spouse with a bad credit. The third party is required to co-sign the couple’s house loan.