New Mortgage Rules Coming

Getting a mortgage is a confusing process. Lenders prey on the ignorance of ordinary consumers, making much of their profit from their advantage in knowledge.

THE LAT: New federal rules would require banks to provide homeowners with better information about their mortgages to avoid costly surprises, such as sharp interest rate increases, and provide better service to help them avoid foreclosure.

The rules, to be proposed Friday by the Consumer Financial Protection Bureau, are designed to prevent a repeat of the foreclosure crisis. They track an outline released in April by the agency, which was created in 2010 in part to help protect borrowers.

The public will have two months to comment on rules, and the consumer bureau aims to make them final in January.

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Think The Housing Market Is Getting Stronger?

Most evidence says yes, the housing market is getting better, but many signals are still negative. Mortgage delinquencies are up.

From the LAT: The nation’s slowly improving housing market hit another bump last quarter, with more borrowers missing payments amid continued high unemployment, a report from a trade group shows.

The Mortgage Bankers Assn., in a quarterly delinquency survey issued Thursday, said home loans with at least one missed payment but not yet in foreclosure increased in the second quarter to 7.58% of all mortgages. That’s up slightly from 7.4% in the first quarter.

A separate survey from foreclosure listing firm RealtyTrac Inc. said the number of homes going into foreclosure rose 6% in July compared with a year earlier, the third straight month of year-over-year increases.

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CA Passes Foreclosure Protection Legislation

California will now have the toughest regulations in the country against foreclosing on homeowners who are in the midst of renegotiating their mortgage.

All this legislation makes the mortgage business less profitable for lenders so that they will have less incentive to extend mortgages to anyone but those with the best credit ratings.

The LAT reports:

The measures would outlaw so-called robo-signing — the improper or faulty processing of foreclosure documents— and would allow state agencies and private citizens to sue financial institutions, under limited conditions, for economic compensation and for additional civil damages of up to $50,000 if lenders willfully, intentionally or recklessly violate the law. No lawsuit could go forward if the bank or servicer first fixes the problem with documentation or procedures, according to the bills.

The legislation, SB 900 and AB 278, also would simplify dealings between homeowners and their banks or loan servicers by requiring that clients be given a single representative to work with, helping to prevent bureaucratic runarounds.

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Mortgage Rates Hit Record Lows

You can get a fixed-rate 15-year mortgage under 4.0% but it will take a lot of work, documentation, down payment, and a stellar credit record.

The LAT reports:

Fixed-rate mortgages dropped to record lows again this week, with lenders offering the 30-year loan at an average of 3.62%, according to housing finance giant Freddie Mac.

That was down from the previous record low of 3.66%, set during the last two weeks. Freddie Mac, which has been conducting the weekly survey since 1971, said the 30-year loan has hit or matched a record low in 10 of the last 11 weeks.

Lenders were offering the 15-year fixed-rate mortgage at 2.89% this week, down from 2.94% a week ago and also a record low.

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Federal Housing Administration mortgage loans

FHA loans are Federal Housing Administration mortgage loans that are insured and are provided by FHA approved lenders. These types of loans have allowed people with low incomes to borrow money to make home purchases they would not have been able to afford otherwise. The program first originated during the Great Depression years of the 1930s when home defaults and foreclosures rose sharply. The plan was designed to provide lenders with enough insurance when people defaulted on their loans. The FHA loans program now primarily helps people who do not qualify for private mortgage insurance or cannot afford a down payment to purchase a home.

The FHA does not provide loans but insures loans that are offered by private lenders. In order to obtain an FHA loan it is necessary to contact one or more mortgage lenders to find out if they have been approved by the U.S Department of Housing and Urban Development to provide FHA loans. Each loan company sets its own terms and rates and therefore, comparison shopping is necessary in this market. Potential lenders assess homebuyers to see if they are a good credit risk. Various things are taken into consideration, including payment history on previous debts. An analysis of debt to income ratio allows buyers to know what kind of home they can afford based on their monthly expenses and income and this is another factor that is considered by lenders.

A number of programs are administered by the FHA, including one that is called Section 251. This program insures mortgage rates that are adjustable. Adjustable mortgage rates are particularly advantageous when interest rates are low because it allows homebuyers to make purchases at lower initial interest rates. The interest rate is adjusted on an annual basis in line with market indices that are approved by the FHA. This means that the rates may decrease or increase over the loan term. The FHA program gives encouragement to lenders to give mortgages to borrowers who are creditworthy but may not meet all the criteria to obtain a conventional loan.

First time homebuyers can put down a down payment for as little as 3.5 percent. Buyers are also eligible to receive up to 6 percent towards their closing costs. If loan applicants have little or no credit history, the FHA allows blood relatives, such as parents, to co-sign for the loan without demanding that they also live in the residence. Depending on the state of residence, new homebuyers may get a reduction on their State Transfer Taxes at the settlement. All FHA approved lenders have their own specific guidelines and standards. There are very few lenders that will finance FHA loans for applicants with a credit score of less than 640. People who have credit scores of less than 640 pay higher interest rates.

In order to get the best possible interest rates, it is therefore necessary to raise your credit scores so they are at least 640. The three major credit reporting bureaus are required by law to provide all individuals with a copy of their credit scores once a year. Checking to make sure all information is correct is the first step. If there are errors this should be reported immediately. Raising credit scores can be accomplished by paying off all debts such as credit card bills and car loans. All utility bills and other expenses such as rent must be regularly paid every month. Missing even one payment lowers your credit score by a few points since this gets reported to the credit bureaus. There are several websites that have information on Income Protection that may prove of interest to readers.

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PBS Frontline Tackles Money, Power And Wall Street

Watch the three hours and 47 minutes of four total shows here.

I love PBS Frontline. I think it tends to be fair and to be journalistically solid. The show does have a definite pro-regulation bias. Whether it is tackling cell phone towers or the porn industry, the point of its shows is that people are getting hurt and even dying when left to their own devices and that more government regulation would save lives and be a good thing.

I think that if people want to climb cell phone towers for the money offered them and they want to climb in an unsafe way, I’m not sure that requiring companies to prevent people from doing what they want is a good idea. I’m not necessarily opposed to it either. I’m just not kneejerk uniformly in favor of regulation to prevent people choosing to do things that are bad for them.

The PBS show on Wall Street prominently interviews Joseph Stiglitz as in favor of more government intervention. It does not mention the well-paid public advocacy he did for Fannie Mae and Freddie Mac, the propaganda work he engaged in for these companies dissing their critics who said the companies were a house of cards waiting to fall down. The critics were right, Joseph Stiglitz was very wrong. But Stiglitz pays no price.

Fannie and Freddie have needed a $150 billion bailout so far and more taxpayer money will be needed. At least the banks and AIG and company paid back their bailout and the government even made a profit on it.

As for the Barack Obama government investment in the UAW and GM, that is unlikely to ever be paid back.

The Frontline special says that Wall Street got a bailout but Main Street didn’t. Well, much of the Wall Street bail out was unneeded. Goldman Sachs and some of the major banks needed no bailout but were forced to take one to save face for weaker financial institutions. And all these so-called bailouts were paid back with interest. The U.S. Treasury made a profit on them. They weren’t bailouts as much as stopgap loans.

All the people interviewed for the series either have no discernible ideology or they are left-wing. None of them put any blame on government policies that forced banks to lend to people who were a bad credit risk. Banks can’t invest their funds as they see fit. They have to get regulatory approval for their investments and if they want to expand, they have to buy off left-wing interest groups like ACORN by donating to them hundreds of millions of dollars. If banks could’ve invested their funds as they saw fit and without the distorting effect of Fannie and Freddie looking to buy subprime mortgages, this mortgage crash and economic crisis would not have happened, as it did not happen in Canada, which has banks less susceptible to left-wing interest group lobbying.

Frontline gives a lot of time to the Occupy Wall Street movement but portrays it as mainly wanting to hold banks accountable to sound lending practices when in reality Occupy Wall Street wants to get rid of all debt (such as mortgages and student loans). This would end the Western world’s economy as we know it. This side of the Occupy crowd gets no play on these Frontline documentaries.

Frontline: “The recession destroyed $11 trillion of American’s net worth. Occupy Wall Street wanted bankers held responsible.”

This recession was not primarily caused by bankers, which Frontline alleges. It was caused by government policy that mandated lending to people who were bad credit risks.

Frontline calls for criminal prosecutions of bankers but none for the politicians who created the policies that caused the recession.

Frontline correspondent Martin Smith: “What upsets people is that banks have recovered but the economy hasn’t.”

This is typical left-wing thinking. If somebody is getting rich but these riches aren’t spread evenly, that’s a bad thing.

Whenever there’s vibrant economic growth, the rewards are not spread evenly. If you want even distribution of resources, you can’t have vibrant economic growth. It’s a classic freedom vs. equality dilemma. For conservatives, freedom is more important. For liberals, equality is more important.

And the banks aren’t booming. Bank of America, Wells Fargo and Citi are struggling. They’re teetering on the edge of bankruptcy.

Banking has become a less profitable business thanks to the excessive regulations passed by the Democrats in 2010. Lenders are less likely to lend out money for mortgages and other things because the prospect of timely repayment is diminished by increased government regulation of the free market.

Frontline shows journalists heckling bankers. “Lloyd Blankfein, will you give the American people an accounting of how you spent their money?”

Blankfein runs Goldman Sachs, which didn’t want or need a government bailout, so why should they give an accounting about funds they were forced to take and paid back as soon as they were allowed?

Reporter to banker: “Do you have any regrets about how you spent taxpayer’s money?”

Well, all taxpayer money was repaid as soon as the banks were allowed to repay the funds they were forced to take.

Frontline: “Many questions have been asked but there have been few satisfying answers [from bankers].”

Well, of course bankers can’t give you satisfying answers because if they were free to speak, they would point out government policies that forced them to lend out money they had little prospect of being repaid, and this caused the recession, but if bankers said this publicly, they would simply bring down the wrath of leftists and that would make it harder for them to do business.

Frontline: “Finance might have gotten too complicated for anyone to understand.”

Well, reality will sort it out quick. The market will sort it out. You can’t fool people for long when there is money to be made in accurately gauging what is going on.

Frontline: “Managers of these institutions have been given an impossible task that they won’t be able to comprehend.”

When there is money to be made from comprehending difficult data, people will figure it out right quick. Many people, for instance, made big money in 2007 betting on the collapse of real estate prices.

Frontline shows a Democrat lawmaker yelling at bankers, “You created the mess we’re in. You created CDOs. You created credit default swaps.”

There’s nothing wrong with these financial instruments. The economy was fine until people stopped making their mortgage payments (this increasingly happened from 2006 onward). Who rigged the game so that many people who could not afford mortgages and were bad prospects for paying back mortgages got such loans? Politicians primarily, not bankers. Bankers want to make money. You don’t make money lending money to people who can’t pay it back. Who said bankers have to lend money to minorities with bad credit? Politicians.

Frontline: “It’s hard to pinpoint the origins of America’s financial crisis but one weekend at this resort in Boca Raton, Florida, is a good place to start… At the time, it seemed innocent enough.”

That weekend bankers developed new financial instruments to try to manage risk.

And Frontline blames the bankers for the crash. It never investigates politicians who determine the rules that bankers operate by, except to argue that politicians did not regulate bankers enough. There’s nothing on Frontline about politicians forcing banks to loan out money to those unlikely to pay it back.

What was Wall Street’s primary role in the real estate crash? They played the role of suckers buying mortgage-backed securities they did not understand. Mortgages were a solid business until politicians blew it up by forcing banks to lend out money that was not wise to lend out.

If financial instruments don’t work as expected, those using them will suffer. The stupid will be culled out of the game.

Many of the fancy financial instruments developed over the past 20 years were derivatives. They were a way to manage risk. But if government creates a house of cards that is going to crash down as it did in 2007-2008, most of these fancy ways of managing risk are going to get overwhelmed. But not all bankers were overwhelmed. Goldman Sachs was smart and made money from this disaster as did many other smart people. The dummies were bankrupted.

Most of Barack Obama’s mortgage relief programs were aimed at bailing out people who bought more home than they can afford. Why should people who made prudent financial decisions bail out those who made bad decisions? Why reward people for making stupid decisions? That’s what Obama, the Democrats and many Republicans want to do with their mortgage relief programs. They are programs to relieve those who acted idiotically from the painful consequences of their stupidity. Such relief reduces moral hazard, aka incentives to act prudently.

Bankers who under-estimated the amount of risk they were taking on with their credit-default purchases lost a lot of money just as people who under-estimate the risk they’re taking on with any financial purchase get hurt. That’s called the reality principle and works pretty well until you dull it out government doles.

There’s nothing inherently bad about credit default swaps or fire or water or guns or nuclear weapons. It’s all about how these things are used. If you make a bad choice and only hurt yourself, that’s one thing, but when you make decisions and hurt innocent people, then you’re doing something terrible.

Because of credit default swaps, credit became more widely available. The trouble became serious when U.S. government policy demanded that banks extend this credit to people, frequently politically favored minorities such as blacks, who were unlikely to pay back such loans.

If it had not been for government forcing them to do such risky things, bankers would never have extended many of these risky loans, and therefore, they would not have had such gigantic losses when the real estate market began crashing in 2007.

This Frontline special decries “predatory loans.” What is a predatory loan? A loan with fees and interest rates that journalists deem excessive. Is anyone forced to take a predatory loan? No. Are the people who take predatory loans eligible for prime loans? No. Subprime loans were the best loans that people with sub-standard credit could secure.

If you decry subprime loans and predatory loans, you are for the government diminishing people’s freedom to choose the loans that are best for them. The attitude is — we know better than regular people. We are going to restrict their choices.

Subprime loans would never have become widely available if Fannie and Freddie were not buying such loans. And politicians — chiefly Democrats — forced Fannie and Freddie to buy such loans so as to increase home ownership among blacks and latinos with poor credit.

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Contempt For Banks

On his radio show today, Dennis Prager said: “You know how much fear I have for big government. My contempt for most banks in the world is deep as it is for big government.”

“The profession of banking has soiled itself so often. You don’t have to be on the left to acknowledge how incompetent or corrupt so many in banking have been.”

Dennis Prager talks like this is a moral problem among bankers. I suspect the problem is one of incentives and that most people in that position would act similarly. Bankers get to keep the massive gains they can make from gambling with their money while banks get bailed out if they lose. So losses are shared with the public while huge gains are in private hands. The incentives that bankers face are to gamble rashly. If they win, they win big and get to keep a good chunk of change. If they lose, they get bailed out.

Dennis: “The [real estate] bubble burst and now there’s a run on the banks in Spain. The biggest bank in Spain has a garbage rating from the agencies. Junk. There’s no liquidity. No money in Spain. So they want the Euro to bail them out. I think the Euro could collapse, at least in certain countries, in the course of the next year. The breakdown of nationalism was a bad idea but Europeans don’t trust nationalism. Why? Because the Germans used nationalism as a racist tool to exterminate people, therefore nationalism is bad?”

“What are you then? People aren’t European. You might as well say we’re North American. How many people listening feel North American? Zero. You feel American or Canadian or Mexican. Do you think Mexicans feel bonded to Salvadorans because they’re both latino?”

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Could A Mortgage Settlement Help CA’s Budget Deficit?

We’re looking at gangster government under President Obama and the Democrats over the past three years. Big government has teamed up with big bureaucrats to shake down big business and to decide which bond holders get paid and how much the unions get to keep.

California is in desperate times with a growing budget deficit. The San Francisco Chronicle reports:

California Attorney General Kamala Harris is not happy about Gov. Jerry Brown’s plan to use $411 million in revenue coming to the state as part of the national mortgage settlement to help shrink the general fund deficit.

In his revised 2012-13 budget released last week, Brown proposed using most of the money for housing-related expenditures coming from the general fund, such as debt payments on more than $3 billion in voter-approved bonds used to build affordable housing, homeless shelters and related projects.

Read more:

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Big Mortgage Losses Cause FDIC To Sue Banks

When many people stopped paying their mortgages beginning in 2006 and accelerating over the next few years, the world economy went south. Wall Street gets blamed for inadequately pricing risk. Now big banks are getting sued over mortgage losses.

REUTERS REPORTS: Seeking a combined $92 million, the lawsuits accuse the banks of misrepresenting the risks of residential mortgages they packaged into securities, causing losses for investors once the poor quality and defective underwriting became evident.

The lawsuits were filed on Friday by the law firm Grais & Ellsworth, which has filed many such lawsuits for other clients over residential mortgage securities.

Two FDIC lawsuits were filed in Manhattan federal court and seek a combined $77 million, while a third filed in Los Angeles federal court seeks $15 million.

Bank of America and Citigroup are the only banks named as defendants in all three cases. Deutsche Bank and JPMorgan are defendants in two cases, and Ally Financial Inc, Credit Suisse Group AG , HSBC Holdings Plc , Royal Bank of Scotland Group Plc , UBS AG in one.

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Daphne Panagotacos – A Great Skin Doctor In Westlake Village

If you Google her name, you’ll find many good reviews, and for good reason I hear. I have a friend who swears by her work.

According to “Dr. Daphne I. Panagotacos, M.D., specializes in dermatology. A dermatologist is a doctor who diagnoses and treats conditions of the skin, hair, and nails. Common conditions treated by dermatologists include acne, eczema, psoriasis, and skin cancer.”

Check out the reviews on Yelp.

Many skin diseases are beyond frustrating. I had this excema on my knees for many months. I found once I got a job a couple of months ago, the excema went away. I wasn’t so anxious about money once I had that weekly pay check. For many other skin problems, however, a doctor can be of great help. When it comes to excema, though, there’s no cure.

According to Wikipedia: “Dermatology is the branch of medicine dealing with the skin and its diseases, a unique specialty with both medical and surgical aspects. A dermatologist takes care of diseases, in the widest sense, and some cosmetic problems of the skin, scalp, hair, and nails.”

Here’s more on eczema.

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