As a twelve-year veteran of the mortgage industry I’ve helped clients with hundreds of divorce home buyouts. During that time I’ve learned that this often complicated process can be treated overly casually by judges, mediators and attorneys. I can’t tell you how many times I’ve come across people who have completed their entire divorce without ever investigating whether they can actually afford what the court or settlement agreement has determined. That’s a recipe for disaster. Sometimes dates for when a buyout must be completed aren’t even put into the agreement, leaving the transaction hanging indefinitely or at the mercy of a reluctant ex-spouse.

Tags: divorce buyout mortgage, quitclaim deed, separation agreement, buyout, refinance, mediator

The reason people are often told not to run their credit is to avoid excessive credit runs called "inquiries" diminishing their credit scores. It is possible to lose points temporarily from having excessive credit inquiries, but the key word here is "excessive" credit runs. Credit bureaus track the last ninety days of inquiries to determine if a credit fraud is being perpetrated against or even by someone. As the number of credit inquiries grows the credit score drops temporarily to limit credit availability and ward off fraud. You will not lose any points during normal shopping for a loan, car, credit card or mortgage unless you really go overboard with the shopping. The exact number of inquiries allowed every ninety days before scores drop is not clear as credit grading formulas vary by bureau and the bureaus also keep their grading formulas a trade secret. But, talking to a few legitimate companies while you're shopping and allowing them to give you accurate quotes by running your credit will make no difference in your credit.

Tags: credit points inquiries runs fico score

All mortgage rates follow one financial index or another to set their pricing. Fixed rate mortgages mirror the US 10-Year Treasury Bond or T-Bill. You can see graphs of this index's activity on financial websites by searching the symbol $tnx. Increases in the interest yield will mean higher fixed mortgage rates and decreases indicate lower fixed rates.

Variable rate loans or ARM loans can be tied to a number of indices, but the most prevalent are The US 1-Year Treasury Bond and the LIBOR or London Inter Bank Daily Rate. If your variable rate loan is tied to one of these loans and you're past the introductory period you can track upcoming changes by looking up these indices and comparing them to where they were when you originally took your mortgage loan.

Tags: rates banks rate setting trends index prime

edited title for accuracy - ed

Long overdue.

Chicago Tribune:

Sen. Barack Obama (D-Ill.) proposed a sweeping set of federal reforms Tuesday to combat mortgage fraud, ratcheting up enforcement and creating a national database of brokers who have been disciplined.

Obama's bill would increase funding for federal law enforcement programs, create new criminal penalties for mortgage professionals found guilty of fraud and require industry insiders to report suspicious activity.

Mortgage fraud is "robbing thousands of Americans of their dream of homeownership, and costing the mortgage industry hundreds of millions of dollars each year," Obama said. "Congress needs to come to the table and do its part."

Tags: mortgage fraud legislation fbi

The unusually warm January weather in the Northeast has led to outliers in economic data, most notably the best January in housing starts since 1973.

On the surface, a torrid pace of housing starts seems to be a good thing for the economy, but in this case it appears that the weather has skewed the data from home heating (way down) to retail (way up, especially in building materials.) After December's very disappointing figures, January's numbers may not add up to an increase in demand for this year, but merely a shift in timing.

Tags: housing starts economy weather demand

Slower housing price gains and higher interest rates are contributing to a slowdown in the housing market. Experts forecast growth in the upcoming year, though not at the torrid pace of the last few years.

Bloomberg News:

Higher home prices and borrowing costs will curtail demand this year, according to real estate industry forecasts. Demand for refinancing and home equity loans, which have driven consumer spending and boosted economic growth, may also fade. Federal Reserve Bank of St. Louis President William Poole said business investment will begin to replace housing as an engine of growth.

Tags: realestate data housing homeprices rates interest

Credit consumers could use a bit more education on the subject. That's the (unsurprising) conclusion of three independent studies of borrower's knowledge about their mortgages.

A recent article on Bankrate entitled "Mortgage borrowers know that they don't know much" sums it up:

The need for consumer education underlies all three of these surveys: Radian's, which found that homeowners wish they knew more about mortgages; Freddie Mac's, which reported that delinquent borrowers don't know their options, and LendingTree's, which uncovered confusion about all kinds of debt.

Banks and mortgage industry consortiums are howling at Fannie Mae's announcement that it intends to expand it's pilot program into contruction loan origination.

The Washington Post writes:

A plan by Fannie Mae to make $10 billion worth of home construction loans over the next 10 years has renewed calls among banks and lenders for legislation that would tighten regulation of the housing finance giant and its sibling, Freddie Mac.

Although the company first announced the plan as part of an affordable-housing initiative two years ago, remarks made yesterday by Fannie Mae chief executive Daniel H. Mudd at a gathering of the National Association of Home Builders in Orlando stirred concerns in the banking industry about a move by the giant company into construction finance, a $350 billion industry.

The statistics are sobering...existing home sales dropped 2.7% in the month of October, while unsold homes hit a 20-year-high. David Lereah, chief economist for the National Association of Realtors, believes we are past the peak of a housing boom. He sees the softening as "not sharp, but meaningful", with signs pointing to the strong possibility that we are transitioning from a seller's market to a buyer's market.

After months of consecutive rate increases by the Fed, and many experts predicting higher rates in 2006, Lereah suggests that sellers across the US may have to adjust their expectations in the coming months, but most especially in the Northeast.

Americans Feel The Pinch:
by Matt Killikelly

With the new bankruptcy law in force this fall and credit card companies virtually doubling their minimum payments within the next few months, a major shift in American personal finance has arrived. The new bankruptcy legislation was signed into law in April 2005 and took effect on October seventeenth. This new law makes it significantly harder to discharge debt through bankruptcies and will benefit credit card companies by significantly reducing losses they experience due to bankruptcies. In a related move, prompted by a 2003 directive, credit card companies in America are raising their minimums, ostensibly to improve a borrower's ability to payback their balances more quickly and encourage more prudent use of credit cards. With two such important changes happening simultaneously there will undoubtedly be some negative long and short term effects and perhaps even some benefits.

Tags: bankruptcy law congress creditcard payments