Specializing in Batesville Mortgages, Indiana Home Loans, Batesville Second Mortgages, Batesville Indiana Debt Consolidation

 

Welcome to L.F.S. Mortgage Market Monitor

The residential mortgage market is UNDER SIEGE and I am here to help you monitor it and guide you through it. 

First, a bit about our company relative to the current market mess.  Legacy Financial is a relatively boring mortgage company.  Well over 90% of our lending is standard, vanilla mortgages that are supported by the Federal Housing Administration (FHA) or Fannie Mae.  These loans are fully documented and have a standard loan amount vs. home value ratio.  As a Company, our default rate, or the number of our loans that have ended in foreclosure is less that 0.02 or two tenths of 1%.  We do not place people into loans that they cannot afford and will come back to bite them.  Net, our business has been largely unaffected by the recent meltdown in the mortgage market outside of dealing with changes in mortgage interest rates. 

Thanks to our experience and expertise in staying out of risky home lending, we are well positioned to help people who are struggling with out of control mortgages or simply trying to take advantage of the outstanding buying market we are experiencing.

 

 Legacy Financial Services Press Release - December 2007

New Mortgage Relief Plan is Full of Gaping Holes

Batesville, IN - Last week President Bush announced the new mortgage relief plan for borrowers trapped in high- risk adjustable rate subprime mortgages. The approval was granted last week in an effort to slow down the subprime mortgage market implosion. At first glance this new plan would appear to be a gift from the heavens for borrowers facing eye-popping interest rate increases. Truth be told, this plan serves only a small fraction of the borrowers “stuck” in these high-risk subprime loans.

First, the plan will only help homeowners who have 3% or less equity in their home. Granted, this will assist homeowners who purchased their homes recently with no down payment, otherwise known as 100% financing. What about those buyers who bought last year? In most markets nationwide, the average rate of appreciation on a home is between 3-4%. What this means is that if you have owned your home for 1 year or more, you would fall outside of this relief plan.

Secondly, borrowers will need to prove that they were able to afford their house payment before their adjustment and also prove that the interest rate increase will cause them to fall behind on their mortgage payments. This will be very tough to prove because many are already struggling to keep up with their payments because of the higher interest rates that are common with subprime loans.

Furthermore, this plan ignores the fact that many of these homeowners accumulate unwanted and dangerous credit card debt in an effort to stay afloat with their mortgage payments. So, if they do qualify for this mortgage relief plan, did they really gain anything other than a delay of the inevitable?

The best opportunity for these unfortunate homeowners is to have congress step up and vote “yes” on Bush’s second initiative to raise the government insured loan limits. Government insured loans are much more stable and have substantially lower interest rates than sub-prime loans. If congress can agree to pass this proposal, then homeowners will truly benefit by virtue of their improved cash flow.

 

CAMERON'S MORTGAGE MARKET NEWS

For my $$$, the news feed below is the BEST for UNDERSTANDING what's happening in the mortgage markets vs. just reporting "news".   News is just set of facts.  These articles put learning around these facts.

Please read the articles below so you understand why the market is moving and how best to protect yourself or profit from these moves!

Mortgage and Housing at Seeking Alpha

  • Homebuilder Update [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    Homebuilder Stocks


    Complete Story »
  • More On Housing And Employment Correlative Effect [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    Quotes of the Day


    Complete Story »
  • Failed Short Sales Exacerbate Foreclosure Losses For All [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    Foreclosure Data


    Complete Story »
  • Global Subprime Review [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    U.S. Missteps Are Evident, but Europe Is Implicated. “Experts say European lenders… embraced many of the riskiest practices of their American counterparts, bulking up on risky debt and relying on short-term loans, rather than deposits, to finance their operations… While the deposit guarantees and capital injections deployed in [Europe] might allay the immediate panic, these steps will not necessarily free up credit for European businesses… An ocean of short-term debt issued by European banks is set to come due over the next two quarters, with $375 billion maturing in Q4’08 and another $339B needing to be refinanced in Q1’09… Heavy borrowing has made European banks vulnerable.” (NY Times, Oct. 12) 


    Complete Story »
  • Can the Banking System Handle Huge New Write-Downs?
    Bill Zielinski submits:

    As discussed in a previous post, Bank of America agreed to offer concessions to 390,000 subprime and pay option ARM borrowers by reducing both the principal owed and/or the interest rate to a level that allows these borrowers to have a an “affordable and sustainable” monthly mortgage payment. An affordable and sustainable payment was determined to be a mortgage payment (including taxes and insurance) that would not exceed 34% of gross monthly income. With this agreement apparently setting a standard for future concessions to homeowners, consider some recent mortgage transactions/applications that I have seen.

    • Woman wants to refinance her Connecticut home which she bought in early 2006. The home today would probably sell for no more than $260,000.  Home was purchased for $305,000 with 95% financing; the current interest rate is at 11.625% and she owes $285,000. The negative equity is only $25,000. Borrower has a gross monthly income of $3,780 per month and her current monthly payment of principal, interest, taxes and insurance is $3,682 giving her a debt ratio of 97%. She is currently in arrears on the mortgage and obviously not capable of making the payment. In order for her payment to become “affordable and sustainable” with a 34% debt to income ratio, the lender would have to reduce her loan balance to $158,000 with an interest rate of 1%.

    If the home owner gets this deal, not only would her payment become affordable, she could also sell the house and reap a gain of $102,000. The applicant’s income is about the same today as it was when she purchased the home, so there was no drastic decline in income. Obviously, this woman should have never been approved for a mortgage in the first place; both the bank and borrower knew this.


    Complete Story »
  • It's All About Guaranteeing Counter-Party Risk [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    Quote of the Day

    “So that would drive Libor down and basically tell the banks, 'Look, do your normal business, if anything goes wrong, we'll pay for it.'” - Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. on Treasury Secretary Paulson’s plan to buy equity stakes in banks. (Reuters, Oct. 10)


    Complete Story »
  • Buffett and Cramer Agree: It's Time to Buy Stocks
    Benjamin Taylor submits:

    It’s a little amusing to me how much attention Jim Cramer’s comments about pulling your “5-Year-Money” out of the market and sitting it in a safe place like cash or bonds garnered over the past few days. I for one, having given similar advice, didn’t find it that controversial. An investor, especially an individual investor, should never put their near term money at risk in the stock market.


    Complete Story »
  • Time to Pick Up the Pieces of the Global REIT Thud
    The Sovereign Society submits:

    By Eric Roseman

    One of the biggest casualties of the global financial crisis is the big bust now underway in REITs, or real estate investment trusts. Until mid-2007, U.S. REITs dominated global investment performance in the post-2000 tech stock "bubble" era with eye-popping 25% annualized returns.


    Complete Story »
  • Mortgage Rates Falling [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    Mortgage Trends


    Complete Story »
  • Prices Fall, But Sales Rise [Housing Tracker]

    Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

    House Price/Sales Data


    Complete Story »

 

Today is 10/13/2008

 

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