In a rebuff to the Obama administration, two big banks on Tuesday drew a line in the sand on cutting the mortgage balances of beleaguered homeowners, saying that the tool would be applied sparingly.

The idea of reducing loan principals last month became a centerpiece of the administration’s efforts to help seven million households threatened with foreclosure, David Streitfeld reports in The New York Times. But an official at one of the banks, David Lowman of JPMorgan Chase, said principal reduction could reward households for consuming more than they could afford, might punish future homeowners by raising the cost of borrowing and in any case was simply unworkable.

“We are concerned about large-scale broad-based principal reduction programs,” Mr. Lowman, the bank’s chief executive for home lending, testified during a hearing of the House Financial Services committee.

Mr. Lowman’s comments were briefly echoed in more restrained form by an executive from Wells Fargo. “Principal forgiveness is not an across-the-board solution,” said the executive, Mike Heid, co-president of Wells Fargo Home Mortgage. Two other bankers who testified, from Bank of America and Citigroup, largely avoided the issue.

A Treasury Department spokeswoman declined to comment on the hearing.

The government modification program has been under attack by lawmakers and community groups for doing too little too slowly. The Congressional Oversight Panel is issuing a report Wednesday that says, “Treasury’s response continues to lag well behind the pace of the crisis.”

In response, the Treasury Department said that its latest modification report, also to be released Wednesday, showed that the number of permanent modifications grew in March to 230,000 households, an increase of 35 percent from the previous month. The Treasury also stressed it was still introducing programs, including those aimed at reducing mortgage principal.

The testimony on Tuesday, however, offered the first public acknowledgment that these latest foreclosure prevention measures might encounter some resistance among banks, ultimately rendering them less effective than hoped.

One of the new government programs will require lenders to strongly consider reducing the mortgage balance for distressed borrowers who qualify for the government’s modification plan.

A more radical plan urges lenders to refinance loans for borrowers who may be solvent but who owe much more on their homes than they are worth. Many of these loans have been securitized into investment pools but are serviced by the big banks.

The investment pool would get the mortgage off its books for the current market value of the property — less than it is owed, perhaps, but more than it would receive if the house went into foreclosure. The borrower would receive a new government-insured loan at market value, presumably making him less likely to walk away.

It is this last program that seemed to irk JPMorgan Chase.

“If we rewrite the mortgage contract retroactively to restore equity to any mortgage borrower because the value of his or her home declined, what responsible lender will take the equity risk of financing mortgages in the future?” Mr. Lowman asked in his prepared comments.

In any case, he said, Chase cannot rewrite most of these deals. The bank’s contractual arrangements with the investors do not allow for principal reduction.

Furthermore, Mr. Lowman argued, the cost of reducing principal will be built into future loans, resulting in less access to credit and higher costs for consumers.

What Chase — one of the strongest of the big banks — might be really worried about is not the primary mortgages it services but the $133 billion in home equity loans and lines of credit it carries on its own books.

The question of what happens to these secondary loans in a mortgage modification was at the heart of the Congressional hearing on Tuesday.

Investors who own the primary loans argue that the others should be second in line, getting only the money that is left over after they have been satisfied. But banks like Chase, which own the majority of second loans, want a better deal. Since they have the power to disrupt any modification, the result so far has been a standoff.

Alan M. White, an assistant professor at Valparaiso University School of Law who has closely studied the various modification plans, said, “Chase and Wells are attacking a straw man. Nobody is arguing for across-the-board principal reduction. But I think that they feel a need to push back hard on any attempts to get them to write down the troubled second mortgages and home equity lines of credit in their portfolios.”

Mr. Lowman emphasized the moral side of the issue. Mandating write-downs in home equity loans would be a particularly bad idea, he said, because these loans were simply used to consume rather than pay for housing.

Buy-To-Let mortgages

Here are my top 3 festive buy-to-let mortgages from a selection by Moneyfacts:

1. Best Fixed rate product must go to Whiteaway Laidlaw Bank with their 5.99% 5 year fixed available up to 70% LTV and with an arrangement fee of £999. This is of interest to any landlord who want to make sure they are not caught out if interest rates turn.

2. National Counties BS are currently offering a 5.44% term variable rate. The arrangement fee is a very reasonable £995 but it's only available up to 60% LTV.

3. Principality BS has recently launched a very low 3.69% tracker up to 31/01/12. The downside again is the low LTV, only 60% and the hefty arrangement fee of 3.5%

The Most Common Mortgage Types

The Most Common Mortgage Types
If you live in the UK and want to buy a house, you will need a mortgage. At first it seems overwhelming but with a little information you can be prepared for one of the biggest decisions of your life.

Buy to Let Mortgage
Buy to let mortgages are intended to for people waning to let the house after you buy it. You can choose a capital and repayment or an interest only.

Capital and Interest Mortgages
This is the most common type of home loan. The house belongs to you after you pay it off, which normally takes about 25 years. You don’t end up paying about twice the price of the home in interest because the bank makes money off the interest.

Endowment Mortgage
This is similar to an interest only mortgage, except you pay money into an endowment linked to the house. The endowment pays off the capital at the end of the mortgage loan.

Capped Rate Mortgages
The interest in capped rate mortgages is still variable and will go up and down. The big difference is the interest is capped and will never go above the cap.

Discount Mortgages
This has a discount interest rate at the beginning but goes back to normal after a period of time.

Adverse credit Mortgages
This mortgage is for those with a bad credit rating.

Shared Ownership Mortgages
Also known as a right to buy, this is where a housing organization allows you to purchase a property at a discounted rate.

Flexible Mortgage
This type of mortgage can be great or horrible. Get some solid advice before choosing this one.

Interest Only Mortgages
Here, you pay the interest on the loan. Then at the end of the loan you must pay off the capital.

Fixed Rate Mortgages
The rate stays the same for a set amount of time before fluctuating.

Self Build Mortgages
This is done in stages as you buy and build on a property. However, the payments are still due even if you are behind schedule in building.

These are the most common kinds of mortgages. First, choose a couple that sounds like it would fit your situation. Then, armed with this information, do a little more research to determine exactly which mortgage is best for you.

Private Mortgage

A private mortgage is a financed property agreement through a company that allows a person to borrow to buy a home, but yet the company is not a bank, lender or loan broker. Although not able to apply for a traditional mortgage through traditional means, with private mortgage the borrower can consolidate their debt and pay off bills or remodel their home. A private home mortgage can be applied for online at any time. is required by any lending institution that approves a homebuyer’s mortgage loan with a down payment of anything less than 20% of the home purchase price.

Mortgage insurance assures the lender of loan repayment in case of default by the borrower for any reason. Risk-free loans assured by this coverage allows lenders to offer homebuyers larger title loans than would normally not be allowed with such low down payments. Many buyers are finding they can get a $200,000 property financed with 10% of the down payment of purchase price when mortgage insurance is attached to the loan.

This coverage offers homebuyers a chance to buy more house for their down payment percentage as well. Rather than require the typical 20% down payment for a cheaper home, private mortgage insurance allows buyers to enjoy an upscale home with less down payment. Mortgage insurance can be paid for with an extra monthly payment separate to the regular payment or it can be paid in one, complete sum at closing. Private mortgage insurance can also be included in the interest rate or included in the financed amount. This coverage may also be discontinued under certain circumstances in regard to accrued equity.

New Mortgage Loan

Allow consumers to receive financial assistance when purchasing a new house. These are available through mortgage companies that advertise and do business over the Internet. A new home loan is also available through mortgage companies that offer communities the conventional way of working with mortgages, through the local lending company. There are many different options with mortgage companies, and consumers can take advantage of the current low interest rates and the great services being offered by many lenders.

Researching the different options can give a homebuyer the opportunity to find the best deal and package for their family’s needs. There are so many loans and lenders online, consumers can almost get a customized new home loan package that fits their unique financial circumstances. There is a myriad of options when it comes to a mortgage. New home loans can be FHA loans, or a variety of other types. There are reverse mortgages available, and there are interest only mortgages being advertised online.

The first step in finding the right new home loan for the individuals needs is to find what the current interest rates are and what the economic indexes are indicating. Then, the consumer should find a reputable mortgage company that is trustworthy, but competitive. New construction home loans that have a float-down option allow borrowers to lower the interest rate, if rates go down during the lock period. New construction home loans that are structured to become a permanent mortgage may allow a borrower to get better mortgage terms and a more desirable rate lock. This option is advertised as a “one time close.

The advantage of a one time close in a mortgage is that the borrower deals with one lender, one agreement, and one closing. Obtaining financing for new building has advantages over a conventional purchase. The borrower chooses the model, feature, and finishes that will work best for their unique situation. Knowing who the builder is, how it is built, and the quality brings satisfaction. A new construction home loan may even allow the borrower to live in a planned community complete with park, pathways, and pools. Do some research online for competitive interest rates, low or no down payment options, and shorter terms. Pray about choosing a reputable builder and mortgage company.

Thinking of Refinancing Your Mortgage? A Checklist to Consider

Interest rates on fixed rate mortgages remain at historic low levels. The rate on the 30-year mortgage with no points is about 5 percent. But I don’t think this situation will last much longer. Read my previous blog post for reasons why.

Homeowners with mortgages with balances up to the conforming limits and fixed rates above 6 percent (or an adjustable rate mortgage) who ignore this opportunity do so at their own financial risk. Here’s a checklist to consider:

Run the numbers. The monthly savings from refinancing a larger mortgage are greater and can recover the costs of a refinancing transaction sooner than refinancing a mortgage with a smaller balance.

Consider refinancing if you have an adjustable rate mortgage. This is especially worth considering if your ARM is set to adjust before you plan to sell the house. You reduce your risk when refinancing to a fixed rate mortgage where the payment will be higher but never changes, versus continuing with an ARM that resets to a higher payment.

Consider a no-cash refinance. This may make sense if you don’t have the cash to pay closing costs; you can roll the closing costs into the new mortgage. The result will be slightly larger mortgage amount, but smaller monthly payments. Then use the cash flow savings to make additional payments against the mortgage to quickly pay down the principal by the amount of your closing costs.

Calculate your break-even point to recover closing costs. Compare the monthly savings from lower payments to your closing costs to determine if you will recover your closing costs before you sell your home or otherwise pay off your mortgage. If you haven’t yet recovered the costs of your last refinancing, you’ll need to figure that in as well.

Look out for any prepayment penalty. Read your current mortgage note carefully to determine if any penalty applies for prepayments. Prepayment penalties typically apply in the first three years of your mortgage, and can be as much as six months interest on the original mortgage amount. On a $200,000 mortgage, that can be over $6,200.

Use escrow services. If you’ve been paying property taxes and homeowners insurance directly, consider using the lenders’ escrow payment services. Often lenders will offer a lower interest rate if you agree to use their escrow services for payments for taxes and insurance.

Avoid state fees. Some states such as New York levy a mortgage tax of about three-quarters of a percentage point to refinanced mortgages. The way to avoid this is to assign the mortgage to the new lender and have them modify it to conform to the terms of the new mortgage.

Finally, if your ultimate goal is to save money over the life of the loan, consider a 15-year mortgage. Interest rates for 15-year fixed-rate mortgages are around three-quarters to one-half of a percentage point lower than rates for 30-year mortgages. Since the mortgage will be paid off over 15 years, the payments will be more, but the interest savings are worth it.

And if you like the savings of the 15-year mortgage but need the flexibility of the lower payments on the 30-year mortgage, you can accomplish almost the same results by making an additional payment or two each year on a 30-year mortgage. If you do this, you can pay off a 30-year mortgage in about 16 to 20 years. If cash flow gets tight, you can fall back to the required payments on the 30-year amortization, and make extra payments later when you can afford to do so again.

What You Need To Know About Bankruptcy Equity Home Loans

For some of us, bankruptcy looks like the only option to get out of debt in anything resembling a reasonable length of time. But deciding to declare bankruptcy is not simple. It can be even more difficult to establish credit after declaring bankruptcy. However, even though it is difficult, it is not impossible. Even a person who is in the middle to declaring bankruptcy can still qualify for an equity home loan. There are however, some facts regarding bankruptcy equity home loans that people should be made aware of.

Such bankruptcy equity home loans are sometimes utilized to satisfy a chapter 13 kind of bankruptcy before term. The court system gives a person three to five years to discharge all their debts under chapter 13. On special occasions, the debtor’s lawyer can submit a formal request to create an additional debt with the intention of eliminating the original debts more quickly and with a smaller amount of interest.

Once this request is approved, the lawyer can work with various banks to negotiate a bankruptcy equity home loan that you can afford and that will give you enough money to pay off a good share of your unsecured debt.

It is important to understand that if you already have an outstanding home equity loan at the time of bankruptcy, you are dealing with a secured form of credit. This means that the only way to discharge this debt through bankruptcy, under any chapter, is by surrendering one’s property and leaving the home.

The same holds true for home equity loans obtained while covered under a bankruptcy proceeding. If you’re looking to eliminate such a loan you will have to repay it by following the rules you acknowledged at the time you obtained the loan or to turn over your house.

This fact can work to the advantage of homeowners who are going through a bankruptcy. A bank is much more willing to extend a line of credit to a person with enough security to cover what the loan will be for and also has a strong reason to want to pay it back according to the terms of the loan.

A bankruptcy equity home loan can also provide the basis on which to begin rebuilding good credit when one emerges from bankruptcy. If you are careful about always submitting your payment on time, the financial institution will pass that information along to credit reporting companies who will then use it to make your credit rating rise.

While you are in bankruptcy, it can be very difficult to get any type of line of credit, but a bankruptcy equity home loan is one way a person can start traveling down the road to credit repair and in a better position than he/she could have imagined. It can help to pay off creditors much more quickly than would otherwise be possible. The monthly installments will also be lower since the debtor will have more than the normal 36 to 60 months in which to repay the loan entirely. Debtors need to keep in mind that no matter what, the bankruptcy equity home loan must be repaid as it is secured by a house that can be foreclosed upon if the the payments are not made.

How You Can Make An Adverse Remortgage Work For You

It’s probably unsurprising that if you have bad credit, you’re going to have a very hard time finding anyone who will lend money to you – especially with the way this economy looks. The question is what happens to those who have already gotten credit, possibly even a mortgage, and now find that they are falling behind and their credit score is suffering. Many of these individuals are partially trapped in adjustable rate mortgages that may be a large part of the problem. This situation is when homeowners can benefit from an adverse remortgage.

‘Adverse credit remortgage’ is another phrase for ‘adverse remortgage’. This type of loan was created to aid people whose credit ratings are poor. These people can repay what they owe on their mortgage while they create new terms for a separate loan which is more favorable to them.

This type of refinancing is not a good idea for those with good credit because interest rates and other fees will be higher than they could get under normal refinancing plans.

Usually those who are going to try to get an adverse mortgage can be separated into three different levels based on their credit reports. Those who are only a little behind in payments and have no judgments against them or bankruptcies are assigned to a low risk group.

There is the medium risk group, who have had credit problems over a great length of time, have one or more judgments against them of low value, but have no bankruptcies. All others fall into the high risk group.

The advantage of seeking an adverse remortgage lies in the fact that financial institutions who make these kinds of loans look not only at a person’s credit score, but at how the person got into credit trouble and what steps are being taken to alleviate the problem. The primary factor is how well the person is doing at making the current payments on their existing mortgage.

After the risk level of the person taking out the loan has been determined, the lender will determine what rates should be offered; these will usually include a higher fixed interest rate because of the higher risk the lender is taking. Usually, your interest rate will be relatively high, but still more advantageous to you than your current adjustable rate mortgage. If the loan taken out is large enough, then other debts may also be covered as well, lowering multiple payments into a single one.

Unfortunately, since most banks are having to be careful about how they are lending their money, it is becoming more difficult to get adverse remortgage financing. One factor that can make it easier for adverse mortgage, however, is having a good relationship with the bank that owns the current mortgage. Usually, unless you present a very significant risk to them, your bank will be very willing to help you prevent foreclosure on your property. This is because the bank is aware that the current housing market is such that they would have to incur a substantial loss in order to sell a foreclosed property. On the other hand, working with the homeowner to get an adverse remortgage will ensure that they will, eventually, make back the full amount of the loan.

The Truth About Bad Credit Home Loans

After the mortgage crisis and collapse of lenders including Washington Mutual and Lehman Brothers, most lenders have restricted the availablity of loans and tightened the qualifications to get money. Nowhere in the country can one find a bank that is willing to lend money without substantial proof that it will be paid back. People that don’t have perfect credit histories should not despair, however. Bad credit home loans can still be obtained.

Banks have tightened the reigns on handing out loans by making the restrictions even tougher, but the fact is, they don’t just look at your credit history to qualify anyone for a loan. The credit histories of many people have been damaged because of unrealistic prospects at the time they received loans, and banking institutions recognize that unsatisfactory banking practices are partly to blame for this.

If you’re looking for a bad credit home loan, there are lenders that will help you out. The key is knowing that factors such as collateral to secure the loan, employment history, salary, and other bills will be looked at closely when making a determination of eligibility for a loan. Just know that you might not qualify for a low interest-rate loan if your credit is less than perfect.

You’ll also need to have a substantial down payment ready when looking to buy a new home; a lender is more willing to loan money to someone with poor credit if he or she has an investment in the property. The worse one’s credit score is, the more of a down payment will be required by the bank.

Many banking institutions are currently demanding credit counseling as a prerequisite of being qualified to receive bad credit home loans. The hope is that this will provide instruction on how to create a budget that ensures all payments will be made in a timely manner while leaving the customer with enough cash to handle day to day occurrences and necessities.

Credit counselors also help people manage their finances so as not to repeat the poor-credit cycle.

Second mortgages are much more difficult to get, regardless of your credit history, even if it is excellent. Depending on the amount of equity you have on your home, it could either be very hard or very easy to get another loan for your house; if chances are slim, you could just get a refinance loan.

It is not uncommon for people to have a poor credit score these days considering the current economic crisis, loss of jobs and general recession. This situation, along with the stricter criteria that banking institutions are currently using to determine who is and who is not eligible for a loan, can increase the difficulties associated with obtaining a bad credit home loan.

Never stop trying because there are lenders out there willing to go the extra mile but it may take time a little more effort on your part.

Bad Credit Mortgage Refinance Loan Tips and Tricks

Bad credit is a problem that is affecting an increasing number of Americans. Whether it’s a sub prime home loan, trading in an automobile while behind on payments, or drowning in credit card debt many people find them trapped in a bad credit nightmare. Thankfully, a bad credit mortgage refinance loan is definitely attainable, and can help you secure your debt and consolidate it into more manageable balances with lower interest rates, so that you can get your life back together.

Basically, the banks take no pleasure in foreclosing on your home, just like you. Due to the amount of money they have to spend afterward make the home a virtual money pit that just makes them lose capital in the long run, as they struggle to find a buyer for less than they spent to get it back. This fact works in favor of homeowners who are in a credit bind.

Your mortgage payment is likely the biggest bite out of your monthly budget, as you have to pay for your home. Of course homeowners would gladly make this payment on time, but often other bills eat away at family funds such as credit card payments, insurance payments, car payments and many other monthly payments.

So if a homeowner is in danger of falling behind on their payments a bank would usually want to work with them to avoid foreclosure than than end up with a property on their hands that will only spell a loss for them as well.

Help can come in the form of a bad credit mortgage refinance loan. Banks can work with a person to secure them the money needed to alleviate some of their debts, especially high interest payments such as credit cards, and also help to lower all of their monthly payments. Money from refinancing can also be used to improve the property, which increases its value to the homeowner and to the bank.

A bad credit mortgage loans is the best way to gain additional finances when one is already swimming in debt. Banks, again, just don’t find the prospect of foreclosure appealing, in a financial or any other sense. They would much prefer to work with you and lower your payments to an affordable level over a longer period than foreclose.

It is your responsibility as a homeowner to realize when your family finances are spread too thin and take the step to contact your bank and find help. Do this as soon as you know you won’t be able to do it; if you wait until after you start missing payments, it’ll be much harder to secure a mortgage because you didn’t communicate well enough with the bank, whereas otherwise you can prove you want to pay them.

Bad credit is a problem increasing at an alarming rate in this country and overwhelms many individuals affected by it. In general, though, banks would love nothing more than to work out a deal with you that ensures some kind of payment, rather than wait for you to just check out of the partnership and wait for them to perform a costly foreclosure.

Finding A Mortgage Lender If You Have Bad Credit

The recent collapse in the banking industry was partially brought about by the large number of subprime mortgages that had been made. When the overall economy took a turn for the worse, many people lost their jobs and defaulted on their mortgages, leading to an incredible number of foreclosures. For those reasons, the banks tightened the grip on the amount of money they were lending and raised the standards for those looking to qualify for a loan. Still, if one knows where to look, there are several bad credit mortgage lenders willing to work with people to get them into a home of their own.

Most banks look at the persons credit score which in the end really determines whether the person will get the loan or not. There are some, however, that still look more at the individual than at a credit score. Institutions like those have come to realize that most credit scores have dropped because of the economy and not because that person was wreckless in their economic decisions.

Many people had excellent credit until the beginning of the current recession. Then, because of losing their jobs or some other unforeseeable misfortune, they were unable to make timely payments. Some banks take this into account when deciding on the merits of a loan application. These banks are especially willing to work with people who have been loan customers in the past and had good repayment records.

There are also some lenders who will extend mortgage credit to those with bad credit on a first time basis. These lenders are willing to take a chance on the hope that the person will repay the loan in a timely manner. Lenders do not generally want to foreclose on homes, since they will probably have to sell it at a huge deficit just to be able to clear it off of their ledgers.

Refinancing a mortgage to take advantage of better terms and interest rates can also be done with bad credit. This is due to the fact that banks today recognize the positive actions that an individual is taking so that they can increase their ability to repay a debt by making a lower monthly payment and extending the terms of the loan.

There are even cases where getting a loan with bad credit mortgage lenders is easier when you can prove that extending the loan and aiding in the purchase of a property will result in a lower monthly payment for the mortgage which is being paid in rent. This scenario might allow the buyer to be able to pay more each month on current outstanding balances and, therefore, improve his or her credit rating.

It will take a lot more research to locate bad credit mortgage lenders than it used to. You should be able to find some financial organizations that will lend to people with poor credit online. Having a good and long standing relationship with that particular bank could also help you when you’re looking to get a mortgage with bad credit. The main thing one should remember is that there are still lenders available who are willing to work with those with bad credit. It is just not as easy to find them.

Once you are able to find a bad credit mortgage lender, you will be able to ease your financial burdens and start to improve your credit rating. All you need is a lender that has some faith.

What You Need To Know About Bankruptcy Equity Home Loans

For some of us, bankruptcy looks like the only option to get out of debt in anything resembling a reasonable length of time. But deciding to declare bankruptcy is not simple. Repairing credit ratings after bankruptcy is also not easy. Difficult, but not impossible. Even a person who is in the middle to declaring bankruptcy can still qualify for an equity home loan. But you need to have some information about bankruptcy equity home loans before you try to get one.

You can discharge your chapter 13 bankruptcy ahead of schedule by getting a bankruptcy equity home loan. When declaring a chapter 13, you are allotted between 36 and 60 months to satisfy all debts. On special occasions, the debtor’s lawyer can submit a formal request to create an additional debt with the intention of eliminating the original debts more quickly and with a smaller amount of interest.

Once approved, the attorney can then negotiate with banks to find a home equity loan that has terms the person can pay off on time and will provide enough money to discharge a good share of the unsecured debts against this person.

If one already has a home equity loan outstanding when filing bankruptcy, it is important to note that this is a secured form of credit. With it being secured, the only way to get rid of the debt using any form of bankruptcy is to let the lender have your property and leave your home.

This is also true for any home equity line of credit that is established while declaring bankruptcy. The only way to discharge this debt is to pay it back according to the terms agreed to when signing the loan papers or to surrender the property.

This is a fact that can come in very handy for a homeowner who is filing bankruptcy. Banks are more willing to consider making a loan to someone with sufficient security to cover the amount of the loan and sufficient reason to ensure that it gets paid back on time.

A bankruptcy equity home loan can also provide the basis on which to begin rebuilding good credit when one emerges from bankruptcy. If you are careful about always submitting your payment on time, the financial institution will pass that information along to credit reporting companies who will then use it to make your credit rating rise.

While you are in bankruptcy, it can be very difficult to get any type of line of credit, but a bankruptcy equity home loan is one way a person can start traveling down the road to credit repair and in a better position than he/she could have imagined. It can help to pay off creditors much more quickly than would otherwise be possible. A person may even be able to get smaller payments and get more than the allowed three to five years to make a full repayment. Debtors need to keep in mind that no matter what, the bankruptcy equity home loan must be repaid as it is secured by a house that can be foreclosed upon if the the payments are not made.