A look inside the Mortgage Industry

When contemplating what I would actually blog about this subject I must admit that I had to talk myself out of leaning towards writing about the dark side of the industry. I really didn’t want to be sarcastic or condescending about the unwillingness of our current lender to fully comprehend that our home is totally upside-down and the only way we could contemplate a loan modification would be if they were to take $250,000 off the principal and then pray we both live to work another 75 years.  Truth be told, it felt good to see that in writing.
                                                                  
Personal feelings now firmly placed aside, this is my take on what happened and why the Mortgage Industry is hard at work trying to repair itself from a very negative market in the last decade. So many factors played a role, such as, the appeal of lower interest rates which resulted in many homeowners choosing to refinance their loans in 2004-2007.  The downside to that was that many of the appraisals for those refinance loans were artificially inflated to permit lenders to increase loan amounts and homeowners borrowed more than was prudent because the rates were so attractive.  Then, the real estate market bottomed out; there were too many houses on the market and not enough people making the money to purchase them. Then the unemployment rates went up and homeowners could no longer afford to make their loan payments. Foreclosure rates rose and the lenders ran into big problems with such a glut of bad loans that they couldn’t (and some still can’t) process in a timely fashion, nor could they entice other banks to invest in them.
 
The government stepped in and the Making Homes Affordable Act came into effect as an idealistic goal that homeowner’s would be able to modify their loans to better fit their budgets and save their homes; the major lenders would be able to keep foreclosures at bay and the market would level off.  However while trying to service loans the lenders were busy trying to digest the reams of documentation that governed the program. Depending on who answered the phone in customer service, homeowners would receive totally different, often conflicting information about the hoops they needed to jump through to qualify for the program. It was not tremendously successful.
 
The real estate market is beginning to turn upward and foreclosure rates seem to have stabilized in many areas.  While mortgage rates are beginning to creep back up, the mortgage industry will see a slow up-turn in applications for loans.
 
If you are contemplating purchasing a new home, now is probably the best time to do so while the rates are low.  Before you decide on a lender, please visit Rateyourlender.com to read reviews on Mortgage Lenders from recent consumers and be sure to find the company that’s right for you.

 

A look inside the Mortgage Industry

When contemplating what I would actually blog about this subject I must admit that I had to talk myself out of leaning towards writing about the dark side of the industry. I really didn’t want to be sarcastic or condescending about the unwillingness of our current lender to fully comprehend that our home is totally upside-down and the only way we could contemplate a loan modification would be if they were to take $250,000 off the principal and then pray we both live to work another 75 years.  Truth be told, it felt good to see that in writing.
                                                                  
Personal feelings now firmly placed aside, this is my take on what happened and why the Mortgage Industry is hard at work trying to repair itself from a very negative market in the last decade. So many factors played a role, such as, the appeal of lower interest rates which resulted in many homeowners choosing to refinance their loans in 2004-2007.  The downside to that was that many of the appraisals for those refinance loans were artificially inflated to permit lenders to increase loan amounts and homeowners borrowed more than was prudent because the rates were so attractive.  Then, the real estate market bottomed out; there were too many houses on the market and not enough people making the money to purchase them. Then the unemployment rates went up and homeowners could no longer afford to make their loan payments. Foreclosure rates rose and the lenders ran into big problems with such a glut of bad loans that they couldn’t (and some still can’t) process in a timely fashion, nor could they entice other banks to invest in them.
 
The government stepped in and the Making Homes Affordable Act came into effect as an idealistic goal that homeowner’s would be able to modify their loans to better fit their budgets and save their homes; the major lenders would be able to keep foreclosures at bay and the market would level off.  However while trying to service loans the lenders were busy trying to digest the reams of documentation that governed the program. Depending on who answered the phone in customer service, homeowners would receive totally different, often conflicting information about the hoops they needed to jump through to qualify for the program. It was not tremendously successful.
 
The real estate market is beginning to turn upward and foreclosure rates seem to have stabilized in many areas.  While mortgage rates are beginning to creep back up, the mortgage industry will see a slow up-turn in applications for loans.
 
If you are contemplating purchasing a new home, now is probably the best time to do so while the rates are low.  Before you decide on a lender, please visit Rateyourlender.com to read reviews on Mortgage Lenders from recent consumers and be sure to find the company that’s right for you.