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Constant Fluctuations in the Mortgage Market

Constant Fluctuations in the Mortgage Market

There are continuous fluctuations in the mortgage market this summer following an 8 percent increase in the lending between the months of June and July.

Based on the data from the Council of Mortgage Lenders (CML), the loans for home buyers and remortgages increase to £12.7 billion in July, which is it’s a record high since September and is up by 2 percent in the same period of the previous year.

The overall market was generally invariable, although the lending figures fluctuated due to distortions brought about by one-off events, like the Olympics and the Diamond Jubilee.

Meanwhile, according to CML, they still cannot confirm whether or not the recently released £80 billion Funding for Lending plan has motivated banks to lend more to hopeful homeowners.

Caroline Purdey, CML market and data analyst, said that they are looking forward to September figures because the effects of the Olympics and Diamond Jubilee are already insignificant.

However, Mark Harris, the chief executive of SPF Private Clients, cautioned that any constant recovery in the housing market is still a long way to go. Moreover, Harris said that the ongoing eurozone crisis, the focus on Olympics, and the low consumer confidence might lead to a slight decrease in transactions over the next two months.

In the past few weeks, there have been several inexpensive five-year fixed-rate deals released. This has been considered as an answer to the Treasury and Bank of England’s lending scheme. Its objective is to improve the economy by allowing credit to flow to home owners and businesses.

Earlier, a lot of homeowners had been glad to remain on their lender’s standard variable rates after mortgage deals expire. However, remortgaging is currently anticipated to increase. Moreover, the deals have been mostly intended at borrowers who can pay huge down payments and there are doubts that the scheme will not succeed in improving lending to first-time buyers.

Lack of Affordability – Accessible Housing a Problem for Persons with Disabilities

A huge problem for people with disabilities is that they are not able to access affordable housing. Roughly 54 million Americans have at least one disability, comprising the biggest minority group in the state.

According to Federal guidelines, affordable housing means total costs (i.e. rent/mortgage, utilities, insurance and taxes) do not go beyond 30 percent of a renter’s or homeowner’s household income.

At present, persons who are qualified for Supplemental Security Income (SSI) in California receive $854.40 every month and $1,444.20 for couples. Based on the Federal guidelines, persons living alone on SSI must not pay over $256.32 every month and couples must not pay over $433.26. Taking this into consideration, it seems impossible for persons with disabilities to access affordable housing and a lot of them will be on waiting lists.

In addition to problems with affordability, another problem is accessibility. Many California communities are attempting to solve the problem of accessibility by, for instance, implementing the Universal Design Model Ordinance. This ordinance provides more opportunities for persons with disabilities, whether temporary, developing or permanent, to age in place.

Experts in the industry say that education will make a significant difference. People must be made informed about the programs and agencies that are working together with lenders, housing authorities and service providers in making new housing alternatives, like smart-home technology. Moreover, experts advise that persons with disabilities talk to elected leaders regarding their real-life experiences and the need for laws that enhance affordability and accessibility.

Elsa Quesada, chair of the California State Independent Living Council, said that they are committed to support persons with disabilities and providing information, training and education to help them. In partnership with the California State Department of Rehabilitation, the California State Independent Living Council prepares and oversees the State Plan for Independent Living. They are continuously asking for public feedback in order to guarantee that services reached persons with disabilities.

Five Tips Before Considering a Reverse Mortgage

Five Tips Before Considering a Reverse Mortgage

Reverse mortgages are known for allowing senior homeowners aged 62 or older stay in their homes. However, this comes together with excessive fees and limitations. Before considering whether or not to get a reverse mortgage, the following are five tips recommended by experts.

First, delay the timing of the loan because by doing this, you can borrow more against your equity and save more in terms of interest. Another way that you can save on interest is when you begin receiving payments. Moreover, there is more accumulation of interest if the loan period is longer.

Second, be aware of the different types of reverse mortgages. In general, there are three categories: Home Equity Conversion Mortgages (HECMs), which are backed by the federal government; proprietary reverse mortgages, which are basically private loans; and single-purpose reverse mortgages, which come together with limitations in terms of what you can spend the money on.

Third, assess the fees and rates. Reverse mortgages charge a lot of fees, for instance, origination fees, costs for closing and servicing the loan, premium for insurance, and interest rates.

Fourth, avoid lump sum payout. Taking as much money at once results to a situation where homeowners have to handle the money properly, and at the same time still paying for property taxes, insurance, and other costs. If the homeowner fails to pay, the home can be lost to foreclosure. Moreover, the homeowner can end up paying fees that are 5 percent more than those who don’t take the money.

Fifth, look for alternatives. One option is to sell the home because you can draw all the equity you have built up, unlike in reverse mortgage, where you only receive a portion of the equity since you have to pay for fees and interest. Another option is to sell the home to relatives and then renting it back so that it stays within the family.

New Foreclosure Prevention Law Signed

New Foreclosure Prevention Law Signed

Among a number of new state laws signed is a foreclosure prevention bill that would require banks to evaluate the advantages of modifying mortgages against the disadvantage they get by foreclosing on a home. It also states a provision that would require banks more clarity in proving home ownership prior to putting a house in foreclosure.

Gov. Deval L. Patrick signed it on August 3 and portions immediately took effect. However, some local officials and activists were not familiar with the new law yet. Patrick is still accepting any additional legislation that will provide homeowners more protection.

The bill is known as An Act Preventing Unlawful and Unnecessary Foreclosures. It requires creditors to verify whether the net present value of modifying a loan is greater than the possible value of foreclosure. If so, the loan must be modified.

In contrast, if the net present value of modifying the loan is less than the value of foreclosure, then creditors are not required to modify it.

In addition, the provision of the new law required lenders to do everything to certify that they own the loans before they put a house into foreclosure.

According to District 3 City Councilor George Russell, the new law is a good one because it can help majority of the families affected by foreclosures, which are actually tenants and not owners. Russell added that banks evict the family living in the house, sell it for a lesser amount of money or a short sale to a third party, and the banks take the loss.

City Manager Michael O’Brien is also in favor of the new foreclosure prevention law. According to O’Brien, what caught his interest were the provisions concerning the proof of ownership. In housing court, there have been a lot of lawyers showing up at hearings and each claiming their client is the owner of the property.

Moreover, O’Brien said that the new law will provide various incentives to the public to encourage home-ownership.

New Home Lending Rules Proposed by CFPB

New Home Lending Rules Proposed by CFPB

The Consumer Financial Protection Bureau (CFPB) proposed a policy which states that mortgage servicing must provide clear monthly billing statement, must warn borrowers prior to interest rate hikes and assist them avoid foreclosure. Moreover, it requires companies to credit people’s payments without delay, correct errors immediately and keep better internal records.

According to Richard Cordray, director of CFPB, the main disappointment among companies in the industry reflects that all services must meet basic standards of good customer service. Cordray added that the proposal shows two basic, common-sense standards.

The key players in the nationwide crisis are the mortgage services since they are accountable for foreclosing on homes when people are no longer able to pay. They have encountered a lot of criticism for their practices such as charging of excessive fees, foreclosing without completion of the required paperwork, and not helping people stay in their homes through modifying their loan terms.

The proposal states that companies will be required to provide billing statements that give details about how much of a payment is going to pay down principal, how much goes to interest and how much goes to fees. Also, if interest rates are expected to change, they should provide the borrowers with an estimate of the new payment amount. Lastly, consumers will be allowed to consider refinancing if they dislike the new rates.

In addition, the proposed policy help ensure that borrowers are not coerced to pay excessive premiums on homeowners insurance that services oblige them to have. Moreover, companies would be required to inform the borrowers twice prior to charging them for insurance. If the borrowers can prove that they already had coverage, then companies would have to cancel the insurance.

Finally, companies would be required to associate a staff with delinquent borrowers so that they can be assisted in avoiding foreclosure.

The public can give a comment about the proposal until October 9 and the rules will be finalized by CFPB on January 2013.

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