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In the UK the credit crunch firmly wrote itself into the history books when one of the largest mortgage lenders in the country – Northern Rock – was nationalised. The nationalisation of the bank was undertaken by the government to prevent the bank from completely collapsing, which effectively rescued thousands of jobs and a large chunk of the UK economy.

In late 2007 Northern Rock became the first real victim of the credit crunch in the UK and was a prime example of how the freezing up of the money markets was destroying financial institutions and businesses alike. Unlike many traditional banks and building societies which create mortgages by lending money secured on their customers’ deposits, Northern Rock had a relatively small portion of deposits on their balance sheet and instead wrote mortgages on the back of money obtained from other institutions on the credit market.

When these institutions stopped lending money to Northern Rock they were unable to continue issuing mortgages to their customers and subsequently faced ruin. This problem was exacerbated by thousands of customers withdrawing their savings from the bank, further damaging their liquidity. Because of the run on the bank by thousands of its customers the government stepped in and granted the lender a state loan worth £24 billion. Northern Rock pledged to repay the loan by 2010.

The crisis at Northern Rock was to be the first of several spectacular collapses in the financial services industry. At about the same time, across the pond, Lehman Brothers closed its sub-prime mortgage lending institution, BNC Mortgage. The closure resulted in 1,200 job losses and a big hit to the balance sheet of its parent company. Several months later it emerged that Lehman was facing a huge loss due to its exposure to the sub-prime mortgage market which it held because it was unable to sell the lower rated bonds it created with these low rated mortgages.

Over the course of the next six to twelve months Lehman entered a cycle of reporting record losses, enduring large drops in its share price, laying off staff, and attempting to sell off assets in order to remain solvent. During this time the US government announced that it would not be offering a rescue package to the investment bank which led to further speculation that the institution could collapse. The company eventually filed for bankruptcy in September 2008 and has since been liquidated.

Suffering a similar fate was Bear Stearns. This investment bank was also heavily exposed to the sub-prime mortgage market and began to experience trouble when the credit crunch took effect in late 2007. Bear Stearns was eventually sold to JPMorgan Chase for less than ten percent of its value.

Meanwhile, in the UK, several other large banks were coming close to suffering the fate of Northern Rock as the government unleashed a raft of measures attempting to rescue the rapidly failing banking system. Several of the largest and oldest banks in the UK were at risk, including Royal Bank of Scotland, Barclays, and Lloyds TSB. The general public watched in disbelief as once seemly impenetrable financial institutions claimed they were rapidly closing in on bankruptcy as they could no longer raise capital on the money markets.

Apply for your next Mortgage by contacting one of our experienced advisors at UK Mortgage Source today http://www.ukmortgagesource.co.uk

Article Source:http://www.articlesbase.com/mortgage-articles/all-about-the-bank-bail-out-part-2-886620.html

Happy Weekend all!  It is certainly good to see jumbo mortgages being talked about again - I welcome this article for that reason alone.  A sure sign that real estate is at least not sliding further is a continued market in the upper-end homes.  Jumbo mortgages fit this small, but very profitable niche.  Enjoy.

A “Jumbo” mortgage is defined as a loan that is too large to be bought by Freddie Mac or Fannie Mae. Depending on the state, limits range from just under $420,000 to $730,000.

When the credit crisis was at its peak, jumbo mortgages were hard to find. Lenders looked at them as an unecessary risk and these mortgages were down 70% in 2008 from prior years. Now that the dust has cleared, some companies are considering the jumbo mortgage market a new opportunity. As mortgage rates continue to drop, so do rates for 30-year jumbo mortgages.

Recently Bank of America began publicizing a program offering 30-year fixed rate mortgages with interest rates in the upper 5% range. ING Direct has been offering jumbo loans in the for close to 5% for several months.

Guy Cecala, publisher of Inside Mortgage Finance claims that the Bank of America rates are lower than main competitors Wells Fargo, J.P. Morgan Chase and Citibank, and that it won’t be long before others will be jumping on the bandwagon. He was right.

First Internet Bank just announced a “hybrid” adjustable-rate mortgage with a fixed rate for five or seven years (may be reset annually to an adjustable rate), with an interest rate of 5.375%, with no points.

GMAC is also advertising competitive jumbo loans where the initial required payment is 20 to 30 percent, unlike those during the boom that were offering 100 percent of the home’s value. As a recipient of funds from the Obama bailout plan, GMAC is modifying between 7,000 and 10,000 loans per month; a possible 100,000 by the end of the year. ResCap Chief Executive Officer Thomas Marano estimates that jumbo loans may increase from 5 percent to 15 percent of the company’s volume over the next year.

He commented, “You have an opportunity to originate jumbos the way they were originated 5 to 10 years ago, where the borrower had some real skin in the game,” Marano said. “We’re originating some of the highest-quality jumbos that I’ve seen in the past 10 years.”

Keith Gumbinger, Vice President for HSH, comments that jumbo loans don’t get the same number of institutional buyers as do regular loans, as a result, when money is tight, jumbos aren’t offered as freely. Today many investors are transfering their assets from the stock market to more stable investments, whereby increasing the bank’s cash flow and enabling them to offer more loans. In addition, many lenders are receiving support from the federal government and the low interest rates are prompting more home owners to refinance.

Instead of many small loans with quick turnarounds, a jumbo loan gives the bank a long term asset with a 6 to 7% return.

The requirements for jumbo mortgages vary from lender to lender, and are definitely much tighter than in previous years. Bank of America requires a minimum downpayment of 20% (or 20% home equity on a refinancing), a 720 credit score or higher, and six months of reserves in the bank. ING requires a minimum of 25% down.

Like any mortgage, shop around for the best deals, comparing all the fees and costs associated with each.

Joshua Sloan is your experienced REALTOR® for San Diego real estate. Visit his website at SanDiegoRealEstateBuzz.com to find short sales in San Diego, see the latest property listings, and more.

Article Source:http://www.articlesbase.com/mortgage-articles/jumbo-mortgages-making-a-comeback-871740.html

American investors, as well as investors in stock markets throughout the world were mildly alleviated from panic when the Senate approved Bush’s $700 billion bail-out package yesterday, October 1, 2008, after it was rejected by the House of Representatives two days prior on September 29, 2008.

Although the proposed Bush administration’s bail-out plan is aimed to lessen the blow of the pending American financial crisis, it is important to note that this package in no way will avoid the imminent recession in our economy’s future. More emergency rescue plans, tighter lending markets, and numerous bank failures are most likely in America’s future. This disaster will spread not only from Wall Street to Main Street USA , but will spew overseas to Europe. This increasing contagion is partly due to the public, as well as the policymakers who represent it, failure to understand the grandiosity of the financial crisis.

American banks such as Washington Mutual and Wachovia are not the only ones involved in the pending financial disaster. Earlier this week, Germany’s second-largest property lender, Hypo Real Estate, faced an emergency rescue, arranged by the government, of the equivalent of a $51 billion loan from both the government and banks. Four other European banks received emergency rescue loans including Britain’s Bradford & Bingley, Iceland’s Glitnir, Fortis, and Dexia; the former received financing from the Netherlands, Belgium, and Luxembourg while the latter received financing from France, Belgium, and Luxembourg. Moreover, some argue that European banks are more susceptible than their American counterparts because of higher lending amounts per deposit denominations. This means that in order to compensate, European banks must rely on now wary investors in money-markets. Unfortunately, the crisis has spread beyond America and Western Europe to banks in Russia, India, and Hong Kong. Therefore, the financial crisis has truly reached a global status.

So what does this mean? Credit will continue to slow through markets to banks, businesses, and consumers. Banks are now hoarding their cash and charging other banks extremely high rates to borrow from one another. This affects business’ survival through higher interest rates on present loans and denial of loans in the future. Businesses, in order to pay off some of their debt, cease new investments or projects and cut down on costs partly by means of job lay-offs, which trickles down negatively affecting consumers. Consumers will then find that loans are extremely expensive if even attainable and find themselves forehead deep in a recession.

Although the crisis was supposedly initiated here in America, it is up to the coordinated efforts of governments around the world to pull everyone out of this mess. Consumers, businesses, and banks need government intervention at times.

If you find yourself affected by the lack of freely flowing credit through the markets, banks, businesses, and consumers it may be time to reevaluate your personal finances. Creditors that may be offering lending will most likely lend to consumers with a great credit history. If after reviewing your credit report you find inaccurate, misleading, or outdated information, all of which may lower your credit score, the law offices of Smith & Gromann, P.A. may be able to help you. Please call toll free 800-508-0041 or visit the Credit Law Group credit repair website.

The Credit Crunch: World on the edge (October 2, 2008). The Economist print edition.October 2, 2008.

Smith & Gromann, P.A./CreditLawGroup is a national law firm concentrating on providing representation to consumers, including those affected by the current mortgage and debt crisis. We provide cost-effective and accountable representation on the matters of: Foreclosure Postponement, Loan Modification, Mortgage Document Audits, Refinance and Transaction Services, Shortsale/Payoffs, IRS Debt Negotiation, Real Estate Tax Appeals, Credit Repair, & Debt Settlement. We are a real law firm representing clients under federal and state law. Don’t trust your future to unlicensed “consultants” and generic companies. With a law firm you can assure that your interests are properly represented on what are critical legal matters.

The hiring of a lawyer is an important decision that should not be based solely on advertisements, Before you decide, ask us to send you free written information about our qualifications and experience. This blog subject to the terms and disclosures set forth at www.creditlawgroup.com

Article Source:http://www.articlesbase.com/mortgage-articles/american-financial-crisis-goes-global-863532.html

I’m really fearful naive folks will be even more gullible in this mortgage mess.  Here’s a good article on home mortgage scams from http://www.LJWorld.com

Scams perpetrated by people claiming to assist with modifying mortgages are showing up across the state, Kansas Attorney General Steve Six said.

The mystique of Mortgage modifications

It may appear that a new “super hero” has appeared on the scene, ready to rescue anyone being defeated by a crippling mortgage, but is this a real “hero” or just some guy dressed in a cape? Can mortgage modifications rescue you, or is it all just hype?

What is a mortgage modification and can it really rescue you from the threat of foreclosure?

A mortgage modification is an adjustment to your current loan perimeters. It has the potential to lower your current loan payments, or interest percentage, although in some cases it may just be temporary.  In most cases a mortgage modification will affect the interest on a loan, not the principal. Interest is typically what is crippling you, in the first place. A lot of times what has happened is that you acquired a mortgage with a low variable rate and as the economy changed so did the rate, possibly as much as 100%.

The mortgage modification re-adjusts this interest rate, reducing it back to an amount you can deal with. By reducing the interest rate you can reduce the amount of the monthly payment and overall interest paid drastically. Sometimes this is only for a limited period of time, such as 5 years. This may be just long enough to allow you to survive in the short term and provide you with time to gain strength for the future. A mortgage adjustment can occur in another way. Rather than reducing the interest rate it may extend the life of the loan.

While mortgage modifications may not be the only thing dressing up as a “hero”, the other options may not be actual “Hero’s” out to rescue you but rather simply stalling tactics. One example of these stalling tactics is“forbearance”. This is a temporary discontinuation of payments to allow you a chance to catch your breath. Kind of like the time between rounds in a boxing match. Just like in a boxing match, you will eventually have to get back in the ring.

Another stall tactic is a “repayment plan”. This may be bundled with forbearance. This is the practice of allowing you to catch back up on missed payments, by allowing you to pay an additional amount on your monthly payment till you are caught up.

Will this so-called “super hero” rescue anybody?

Mortgage modifications are usually for those that have the ability to get back on their feet. If you are in such disarray that the lending institution cannot realistically picture you recovering, then you most likely will not be granted a modification.

Unfortunately, if there is no visible evidence of you being able to get back on track, then chances are you will be “out of luck”. For example, if your expenses exceed your income with no visible evidence of this changing then in most cases foreclosure will be inevitable.

While mortgage refinancing can offer a chance for you to survive, it is ultimately up to the lending institution as to whether you will qualify. So while mortgage modifications may seem to be the “hero” you will need to help you survive, a typical mortgage modification will not help everyone.

However you should never allow the situation make you loose hope. If you think your financial situation can be saved then by all means, pursue a mortgage modification, and if at first you get turned down then you may want to find a source that may be willing to help you succeed.

To discover how you can ethically modify your home mortgage loan and save as much as 47% off your current mortgage payment in as little as 60 days without refinancing visit www.RescuedBySaintJude.com,  For your FREE CD, FREE e-book, and FREE coaching call with Mortgage Modification Expert and Business Man of the Year Billy Alvaro visit www.RescuedBySaintJude.com, Saint Jude’s Mortgage Rescue.

Billy Alvaro is the Countries Leading Expert and Modification Insider. Former CEO of the 136th Fastest Growing Privately Held Mortgage Banks In America, Business Man Of the Year and Top 40 Business under the age 40

Article Source:http://www.articlesbase.com/mortgage-articles/what-is-a-mortgage-modification-and-can-it-really-rescue-you-from-the-threat-of-foreclosure-840143.html

First of, what is LIFT? The LIFT scheme, stands for the Low-Cost Initiative for First-Time Buyers, is a shared equity scheme for residents in Scotland. If you’re financial resources are limited this scheme can help you to buy a property. You do have to prove your income and need for the funding as well as live in an area where the local market prices are beyond your reach. How does the LIFT scheme work? The Scottish Government will take a stake in the property through one of the Registered Social Landlords. The Registered Social Landlord will receive the home which will be put against the cost of the home. Typically a LIFT purchaser will put up between 60 and 80 per cent, they will need to take at least a 51 per cent stake. Buyers Commitment As part of the scheme you will need to agree to put up the maximum amount you can afford against the property. You are allowed to keep five thousand pounds of personal savings but anything above this will need to go the purchase of the home. Your full financial details will need to be disclosed including other money you have maybe in the form of shares, property, debentures. The buyer is responsible for… all costs associated with buying the home, including legal and survey costs. There are other conditions to be met such as the buyer will occupy the property and it will be their only residence. They may be able to sub let but it is at the discretion of the Scottish Government. They are also responsible for all the running costs of the home, such as: Mortgage repayments House Insurance (Building and Contents) Council Tax and Utility bills Repairs and maintenance Under the lift scheme, the purchaser owns the home outright subject to certain conditions designed to protect the investment by the Scottish Government. Such as the need to inform them should you wish to sub let a room. Can I sell the Property? You certainly can. The sale amount is simply split depending on the equity stake taken by the Scottish Government. The buyer is however responsible for all costs associated with this, including marketing costs.

Chris Borthwick writes articles covering a broad range of subjects. His main area of expertise is mortgage advice and writes many articles on mortgages for finance industry, mortgage brokers and for the general public. Most recent articles detailed the benefits of a fee free mortgage broker.

Article Source:http://www.articlesbase.com/mortgage-articles/the-lift-scheme-helping-you-buy-a-home-841487.html

MORTGAGE MAGIC

How can a “tortoise” become an “Easter bunny”? Easy, if you know how to convert mortgage notes into asset based securities, place them into a trust and then sell the certificates of investment into this trust to anyone that can write a check.

Wow, what does all of that mean to me? I have to get up tomorrow morning, check the oil in my truck and go to work. Well, Sammy, here is what it means and this might explain to you what you have been watching on the “tube” lately. You see, when you closed on your home you signed two documents. One was the mortgage which was recorded with the tax collector in your area. The second and most important piece of paper was the note.

It is a promissory note that is a negotiable document that means it is worth a lot of money. Now, if you had a piece of paper that was worth $200,000 will you not take care of it? You darned right you would. Well, when you closed on your mortgage the most important document was the note. The mortgage company needed that in order to get paid… Who paid the seller and where did the money come from. It was all electronic. There was no cash at the table. The title company handled everything. Now, where did the note go to?

Your mortgage company most likely didn’t put up one thin dime. They already had it promised/sold to a bank that does nothing but buy mortgage notes. However, this bank DOES NOT USE MONEY. They use credit and once they have decided which investor group that will buy these long term investments, that is where the cash comes from. This gets very complicated, but if you pay attention, you will learn something in (10) minutes that most folks will never learn in a lifetime.

Now, remember, your mortgage company that closed on your loan did not put any money into the deal. They might have negotiated the job of collecting the monthly payments from you and forwarding them to the investment group. This group is called a TRUST. So, it only stands to reason that as long as they (1st bank) have no money in the deal, then when the foreclosure is resolved, they have no money coming. In legal terms, they have no damages. So, what right do they have to hold their hand out looking to own your home or get paid when it sells on the court house steps?

Okay, on with the magic show. Let’s fast forward to this group of investors. They are identified in the trust as certificate holders. So, when an investor puts up money, they are NOT buying your individual note. They are buying increments of investments. So, it is possible for over (100) certificate holders to have an interest in your note.

Ready for more “hocus pocus”. The investors/certificate holders have their investment insured. Yes, that is true. The companies, like AIG, Bears & Stearns, Barney & Company are the folks that insured these investments. BUT, they were not called insurance certificates, but “credit enhancements” or “swaps”. In, other words, the company would provide the credit swap or funds so that when a loan went bad, the investor was not out anything.

Here is where the rabbit got lost and screwed up the show. What they were doing was NOT ILLEGAL. It was a good business model and perfectly legal under the guidelines of the SEC. But, no one anticipated the volume of foreclosures; hence the “credit enhancements” were causing havoc on the insurance company’s cash flow. That is exactly why some companies went “belly up” and why we (you and I) have to put billions into AIG and others. It is ONLY for the reason to keep investors from taking these folks to court for fraud.

There is a violent undertow going on in the halls of Wall St as we speak. Many disgruntled investors are raising their voices. Congress is listening and the bankers are jumping to whatever music comes out of Washington.

Now, let’s move on into the final curtain of this magic show. IF, the investor loses nothing and is made whole by the insurance carrier, where is the damage? BUT, yet these “blood thirsty” banks are still taking peoples homes and pocketing the money. Yes, when average people are not defended with the professional representation, they lose and the banks have a windfall. Unfortunately, there are not enough attorneys that fully understand this. As a result, Joe Citizen loses.

What happens when the insurance company cannot pay the investor? The investor has NO claims for damage against the consumer because he had NO contract with the consumer. Remember, in this magic act the investor bought pieces and the homeowner agreed to pay someone that was identifiable. Under Federal Law, the homeowner has the right to know who to pay.

Regis Sauger

Regis Sauger is a licesned mortgage broker in Florida. He has had numerous articles published and currently has over 30,000 readers. Tow of his articles were featured on the Oprah Winfrey credit show.

http://www.yurcredit.com http://www.regisp.imnotleaving.com

Article Source:http://www.articlesbase.com/mortgage-articles/the-mortgage-mess-839727.html