Economy Personal Finance Real Estate

Is the 30 Year Fixed Headed to 3 Percent?

Mortgage interest rates hit a new record low last week, and they appear to be on the same trajectory this week.

The yield on the ten-year Treasury note touched a new low Monday, 1.396 percent, before coming up slightly, and mortgage rates track that yield. Money flooded into Treasuries amid new concern surrounding debt in Greece and Spain.

“Now it’s like 1.4 [percent] is commonplace, and we’re probably going to see one and a quarter before too long,” said Holly Liss, ABN Amro’s Global Future’s Director in an interview on CNBC’s “Squawk on the Street.”

Mortgage rates are a full percentage point below where they were one year ago, and that recently sparked yet another spike in mortgage refinance applications, according to the Mortgage Bankers Association. It did not, however, do the same for applications to purchase a home.

“If the 30 year fixed were to drop to 3 percent, that would open up yet another wave of refi’s, perhaps more than the industry can handle,” says mortgage lender Craig Strent of Rockville, Maryland-based Apex Home Loans. “Certainly a 3 percent 30-year fixed would make home buying more affordable for some people that may not qualify at 3.5 percent, but if people are not entering the market at 3.5 percent, which is already insanely low, then they may not enter at 3 percent, as they may simply prefer to rent or may not have the down payment needed to buy.”

Strent is reluctant to predict where the 30-year fixed will end up, but Dan Green, loan officer and mortgage blogger with Waterstone Mortgage in Cincinnati expects the rate to hit 3 percent.

“There’s a case for them to be at 3 percent now. It’s just that lenders are overworked with new applications, so there’s little reason to get price competitive,” says Green. He agrees that 3 percent would just push more borrowers to refinance, even if they already did so recently.

Despite a spring surge in home buying this year, especially in new construction, these lower rates should make the surge bigger and continue it throughout the summer, but that does not appear to be the case. The National Association of Realtors reported a surprise drop in home sales in June, due to low inventory on the low end of the market, which is not as dependent on mortgage rates.

While the housing market needs more home purchases, the overall economy would get a boost from a new surge in refinances, giving more Americans more spending power. Remember, however, those rock-bottom rates don’t apply to homeowners cashing equity out of their homes.

Is the 30 Year Fixed Headed to 3 Percent?
By: Diana Olick
CNBC Real Estate Reporter

Economy Personal Finance Real Estate

To Rent vs Buy a Home? The Argument for Buying!

To Rent vs Buy a Home? Since the financial & housing markets crashed back in 2007/08 interest rates have never been so low! House prices have also fallen and those who are able to get a mortgage are wondering if they should make the leap and buy their first home.

In a previous article I discussed the pro’s of renting, now it’s time to point out the pro’s of buying!

Dead Money

Mortgages are a huge commitment! Due to the cost of moving, you’re pretty much saying that you love a town and property so much that you’re willing to live there for at least the next 5 years! For anyone who’s ever had a 5 year loan, you’ll know that’s a substantial period of time. One of the benefits that comes from committing to a mortgage though, is that it’s also an investment.

If you rent a property you may spend years paying rent to a landlord and you will never see any of that money ever again. This is what many people refer to as dead money! You’re basically paying for someone else’s investment! If you do make the commitment to buy, you will be paying into your own asset. You will not only see some of your money again at some point in the future, but if you view it as a long term investment it will likely grow substantially over a long term period.


When you rent a property you are at your landlords mercy. I’m sure many of you who read this article have felt the fear, or even felt the effects of having to move because your landlord has decided to sell your home! You might have already developed emotional attachments to a home, your children may be in a local school or you might not want to uproot. If you rent, unless you have a long term contract you have no choice.

With a mortgage you have a certain amount of security. As long as you keep up with your mortgage payments and other bills you will never have to move if you don’t want to. This kind of security can give real peace of mind. Your memories are secure, your kids wont have to travel for miles to get to their school, you can be truly secure in your surroundings.

Home ownership also provides security when you enter old age. We all love to think we will be forever young! There will come a time though when you’re no longer able to work, meaning you’re no longer earning a wage. As long as you pay your mortgage off, home ownership gives you the security of knowing that when you reach this age you won’t have to worry about where you’re going to live, your home will be yours! It could also give you a nest egg if your pensions or other investments don’t perform as you’d hoped. The option may exist to downsize and have a cash lump sum to live off.

The benefit system is currently set up to provide financial relief for older people if they can’t afford to rent their own home. With the current state of government finances it would be wise not to bank on this being the case in future!

Adding value

Most of us view our home as an extension of our personality, we want to add our tastes and improve it. Sometimes the improvements that we make can add value. If you make these improvements to a rented property your landlord will reap the financial rewards, not you! This might stop or make you hesitant to make your home truly your own, somewhere you can present your personality to the world for all to see.

Something To Pass On

We all want to do our best to ensure our children’s financial future. In making the decision to buy a home you’re investing in your children’s financial future. Providing this inheritance may in future give your children the opportunity to buy their own home or live mortgage free in yours.

Taking out a mortgage may be a huge commitment, one which I would encourage you not to take lightly! It does however give a certain security now and for the future that renting never could.

Source article and pictures:
To Rent vs Buy a Home? The Argument for Buying!

Economy Personal Finance Real Estate

Mortgage-debt forgiveness preventing foreclosures

NEW YORK (CNNMoney) — Reducing the amount struggling homeowners owe on their mortgages is proving to be a more effective way to prevent foreclosures than other methods, such as reducing interest rates or postponing payments, a new report finds.
In a report presented this week, Amherst Securities Group said that when principal reductions brought mortgages near the home’s market value, borrowers were substantially less likely to fall behind on payments again and lose their homes.

Only 12% of borrowers who received principal reductions re-defaulted in 2011, Amherst found. That’s compared with 23% of borrowers who received mortgage modifications with interest rate reductions (but no principal reduction) and 30% who received forbearance, which postpones their debt repayment.
“[Modifications] with principal forgiveness are apt to be most effective, as the borrower no longer owes the money — so he is no longer hopelessly underwater,” said Laurie Goodman, Amherst’s housing market analyst and one of the authors of the report.

The success these principal reductions have had in turning delinquent borrowers back into paying clients has led many lenders to step up debt forgiveness on the loans in their own portfolios.

So far this year, principal reductions have accounted for 40% of the modifications done by the banks, up dramatically from 25% in 2011 and 11% in 2010, according to Amherst.

The mortgage servicers cannot forgive debt on loans that are owned or backed by one of the two government-controlled mortgage giants, Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FRE), however, and they are limited in what they can forgive on loans owned by investors.

That means, of the vast majority of loans — 6 million since April 2009, according to the Treasury Department — only a fraction have received debt forgiveness. That may be changing, though.

The Federal Housing Finance Agency, which controls the majority of outstanding mortgages through its oversight of Fannie and Freddie, has thus far prohibited the mortgage giants from including debt forgiveness as part of their mortgage modifications.
See also: Most affordable cities to buy a home

Last month, however, Fannie and Freddie announced they would participate in two programs in California and Nevada that will use part of a $7.6 billion Hardest Hit Fund to pay down loans the companies own or back.

However, the move will not cost Fannie and Freddie anything and is a far cry from the principal reduction that private mortgage servicers are extending to borrowers.

“My guess is that eventually, [Fannie and Freddie will] go down that path, but there’s still a lot of reticence there,” said Mark Zandi, the chief economist for Moody’s Analytics. “People have problems with principal reduction. They think it’s unfair.”

Even if Fannie and Freddie remain on the sidelines, Amherst said it expects to see a continued increase in principal reductions.

Mortgage-debt forgiveness preventing foreclosures

Economy Personal Finance

Debt Conciliation Strategies

Credit cards

How to Negotiate With the Credit Card Companies

If you are left high and dry by the sheer burden of debt, it is always advisable to go for a debt conciliation strategy. There is no use carrying such a wearisome weight of loan on your shoulders. It does nothing but adds to your worries and tensions. Therefore, you must ensure that you get rid of it as soon as possible.

The internet is the safest place to gather all information related to settlement and Debt Conciliation Strategies. Therefore, if you do not have a clear idea about how the various settlement programs work, you do not need to worry. The internet will load you with a wealth of options and an array of choice. They will give you a comprehensive account of how to negotiate with the credit card companies.

You can then start negotiating with the credit card company and express your idea of going for conciliation or settlement program. In the present economy, the credit card companies will be more than eager to go for such a program since it is always better for them to recover some amount of money than none at all. Here, you must ensure whether you want to pay in monthly installments or the whole amount at a time. Though it is the duty of the debt conciliation program to arrange everything for you, you must also take an active interest in it. If you have a huge amount to pay, it is advisable to settle all your dues at once instead of going for monthly payments.

Once you have settled on a particular amount, you should insist the credit manager for a written agreement. The concerned agreement should state everything right from the exact amount you are required to pay to the payment process. It should mention that you will owe no more money to your creditors once the process of settlement is complete. Once that is done, you can be rest assured that you have cleared all your dues and finally overcome your financial crunch.

Debt Settlement Programs – A Safer Option Than Filing Bankruptcy

Have you reached a decision regarding the method that you are going to employ in order to be debt free? If you are still in two minds, you need to seek advice from some reliable quarters so that this problem can be solved soon. In all probability, debt settlement programs would emerge as the common solution from all.

There are some pertinent reasons for that. The fact that you have fallen in the trap of dues is ample proof of the fact that your financial condition is at its worst. You are not in a financial state to repay the amount that is owed by you to others and that is why you have become a victim of dues. In such a state, you must be in search of a program that enables you to make minimum payments and yet help you to come out of the mess. This criterion is fulfilled by debt settlement programs.

You might be tempted to file bankruptcy because it apparently eliminates all you dues at one go. You might argue why would you agree to pay even half of the total balance when you are getting an opportunity to escape from the total amount of dues? However, there are some important reasons why you should think twice before treading this path. Bankruptcy is something that looks very convenient at the beginning but as you go deeper, you realize and discover the trappings that come with it.

To start with, filing bankruptcy itself is a Herculean task by itself. It is not at all easy like a settlement program where everything is taken care of by the professionals. Here, you have to make sure you select the right chapter so that your prospects of getting approved are increased.

Why do you need to get into so much trouble when debt settlement programs can easily solve your financial problems? It is true that your credit report can suffer a setback but it would not cause as much harm to it as bankruptcy. In bankruptcy, the damage is often permanent and that is why you need to stay away from it and go for the bankable option of negotiation programs.

By katherine S Young

Economy Personal Finance Real Estate

Americans brace for next foreclosure wave

(Reuters) – Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

“We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

“Last year was an anomaly, and not in a good way,” he said.

In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

More conclusive national data is not yet available. But watchdog group, which helped uncover the “robo-signing” scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash

Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.

Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.

Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).

RealtyTrac CEO Brandon Moore said the “numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”

One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it’s mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.

“The subprime stuff is long gone,” said Michael Redman, founder of “Now the folks being affected are hardworking, everyday Americans struggling because of the economy.”


Until December 2010, Daniel Burns, 52, had spent his working life in the trucking industry as a long-haul driver and manager. When daily loads at the small family business where he worked tailed off, he lost his job.

Unable to cover his mortgage, Burns received a grant from a government fund using money repaid from the 2008 bank bailout. That grant is due to expire in early 2013 and Burns is holding out on hopeful comments from his former employer that he might get his job back if the economy recovers.

“If things don’t pick up, I will be out on the street,” he said, staring from his living room window at two abandoned houses over the road in the middle-class Cleveland suburb of Garfield Heights, the noise of traffic from a nearby Interstate highway filling the street.

Underscoring the uncertainty of his situation, Burns’ cell phone rings and a pre-recorded message announces that his unemployment benefits are due to be cut off in April.

A bit further up the shore of Lake Erie, Cristal Fell, who works night shifts entering data for a trucking company in Toledo, has fallen behind on her mortgage a second time because her ex-husband lost his job and her overtime was cut.

“Once you get behind it’s so hard to catch up,” she said.

Fell, a mother of four, hopes the economy will gather enough speed to help her avoid any risk of losing her home. Her ex-husband has found a new job and she is getting more overtime, so she hopes she can catch up on her mortgage by the fall.

Burns and Fell are the new face of the U.S. housing crisis: Middle class, suburban or rural with a conventional 30-year fixed mortgage at a reasonable interest rate, but unemployed or underemployed. Although the national unemployment rate has fallen to 8.3 percent from its peak of 10 percent in October 2009, nearly 13 million Americans remain jobless, meaning many are struggling to keep up with their mortgage payments.

Real estate company Zillow Inc says more than one in four American homeowners were “under water” or owed more than their homes were worth in the fourth quarter of 2011. The crisis has wiped out some $7 trillion in U.S. household wealth.

“We’re seeing more people coming through who have good loans with reasonable interest rates,” said Ed Jacob, executive director of non-profit lender Neighborhood Housing Services of Chicago Inc, which provides foreclosure counseling. “But in many households only one person works now instead of two, or they had their hours cut.”

“The answer to the housing crisis now is job creation.”


Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.

“The hangover from this crisis will far outlast the party of the boom years,” said Zillow chief economist Stan Humphries.

Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.

According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.

There is other evidence that many of the foreclosures that did not happen in 2011 will happen this year.

A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.

“Now the banks have a settlement, foreclosure numbers for 2012 are going to be high,” said NEDAP co-director Josh Zinner.

A recent survey by the California Reinvestment Coalition, an umbrella group of nearly 300 non-profit groups in the state, of member agencies found 75 percent of respondents expected increased demand for their foreclosure prevention services in 2012 but more than a third had to scale back services because of funding cuts.

“Funding is a major concern given what our members expect for this year,” said associate director Kevin Stein.

All this has non-profits intensifying calls for the Federal Housing Finance Agency to drop its opposition to allowing the government-backed mortgage giants Fannie Mae and Freddie Mac it regulates to reduce principal for underwater homeowners.

Principal reduction involves reducing the amount borrowers owe in order to make a loan modification affordable for struggling homeowners. Republicans and the FHFA oppose principal reduction because of the risk of “moral hazard”- that homeowners who do not need help will seek to abuse largesse and have their mortgages reduced too.

ESOP in Ohio engages in “hits” on Chase branches — they say Chase is the least accommodating major bank when it comes to working with struggling homeowners — where they try to hand letters to bank mangers calling on chief executive Jamie Dimon to lobby FHFA head Edward DeMarco for principal reductions. A Chase spokeswoman said the bank has made “extensive efforts” to work with homeowners, helping 775,000 borrowers stay in their homes since early 2009, avoiding foreclosure “more than twice as often as we have had to foreclose.” Housing groups like ESOP maintain, as they have throughout the housing crisis, that unless the FHFA embraces widespread principal reduction, many more under water borrowers face losing their homes.

“Until banks engage in meaningful principal reduction as a matter of course,” ESOP’s Seifert said after a recent protest at a Chase branch in Cleveland, “this crisis will not end.”

(Reporting By Nick Carey; Editing by Martin Howell and William Schomberg; Desking by Andrew Hay)

By Nick Carey

Economy Entrepreuneurship Personal Finance

Don’t take business advice from nice people

Nice people

How to keep quiet politeness from killing your sales, marketing and probably your business.

I’ll admit it. I’m not a particularly nice person. In fact some consider me brutal with my honesty. (Some just call me a New Yorker.) Either way they’re right. I don’t coddle. I don’t insult, but I call it like I see it and often I offend. I don’t do it to be mean. I do it out of integrity. I believe (often foolishly) that when people engage me in conversation that they are truly interested in my opinions and experiences. So I share, willingly.

A colleague of mine claims one can offer blatant truth, and still be nice. She says: “It’s not what you say, but how you say it.” I don’t buy it. I have often witnessed, when someone has invested their heart, soul and ego into a project, and you tell them has invested their heart, soul and ego into a project, and you tell them truthfully and nicely why it will never work, they still think you are cruel and non-supportive. Don’t take my word for it. Just watch Shark Tank, or American Idol. Except maybe Kevin O’Leary, most of the investors or judges aren’t actually rude or impolite. (Not since Simon left anyway.) They simply point out the errors in the unfounded beliefs of the contestants…dashing their dreams and crushing their spirits…thereby appearing to be cruel and non-supportive.

The alternative to us truth-sayers is people with discretion. They grew up under the rule: If you can’t say something nice, don’t say it at all.” They either lie and say something “supportive” when you bring them your hideous, doomed-to-fail idea, or worse they exhibit what I call Quiet-Politeness and simply say nothing. Most likely they’re not vested enough in your success to engage in conflict with you over your passion.

These nice people are not doing you any favors. In fact they are sabotaging you in three ways.

1. Nice People Waste Your Time.

This happens in sales all the time. You meet people at networking events. They’re polite. They never actually tell you they won’t do business with your company. So you optimistically think they’re worth keeping in your tickler file. You follow up every couple of months. You email them a birthday card. You tell yourself that someday they will come around. They won’t. They politely return your email or take your call, again omitting the fact that they’ll never buy and are generally annoyed with your persistence. In fact they would better serve you both, by stating that they already buy from their brother-in-law or that they hate your CEO, and just cut you loose. In sales, nice people suck up the majority of your time and resources. Just look at your conversion numbers.

2. Nice People Encourage Low Standards.

Most people ask for opinions in hopes they are on the right path with a project. A marketer who has passionately invested months in a new campaign runs it by a nice colleague for her feedback. The nice colleague thinks it’s a six on a scale of 10. The nice colleague supportively says: “ Looks good. Keep it up.” Why create unnecessary conflict in the cubicle next door? She thinks. The marketer feeling reassured, continues on his path of mediocrity. The campaign has lackluster results.

3. Nice People Enable Failure.

When an achiever is passionately driving down a fatal path, nice people tend to clear out of the way. Some are simply avoiding conflict. Others don’t want to appear non-supportive as the achiever reaches the point of no return. The nice people demonstrate their own brand of silent cruelty by not sharing their knowledge that can avert the disaster.

I’m not suggesting we round up all the nice people and ship them to parts unknown. Neither should we abandon all rules of polite society. But if you are an achiever in the business world, nice people will create unnecessary obstacles without some precautionary steps.

1. Defend against the “Golden Rule

State clearly you do not want to be treated by nice people the way they want to be treated. Tell them instead to openly share their honest opinions and experiences or don’t engage. Tell them you intend to do the same.

2. Reward Bluntness

It doesn’t matter if you are an entrepreneur, manager or employee. When you seek feedback, show that you appreciate truth and constructive criticism no matter how harsh and painful. Show you can apply input so people are encouraged to provide more of it.

3. Give Nice People a Safe Path to Disengage

Most nice people can’t help themselves. Help them form nice people cliques and let them sabotage each other en masse. Perhaps you can identify them with an embroidered N on their lapels so they can find each other easily. This way you can avoid them and come hang out with those of us who will be brutally honest and give you the necessary feedback for success and achievement. We’ll be supportive by helping you overcome your real obstacles and we’ll encourage you to do the same for us. Come on over anytime. (You can find many of us at the Bull and Bear.)

It may not be a nice time, but it will certainly be refreshing.

I look forward to reading all your comments both good and bad. Of course I don’t expect the nice people will say anything.

By Kevin Daum