Struggling Mortgage Lenders

The mortgage industry is in more trouble now than it has been in years. The rate of defaults and foreclosures is higher than ever, and mortgage lenders are closing down or laying-off employees to cover the losses. But how did it come to this when only a few years ago the mortgage industry was booming with all time record sales? And how low will the industry go before things start to pick up?

The decline began only a little over a year ago when mortgage lenders began reporting a rapid increase in the rate of defaults and foreclosures. Along with this came the closing down of many smaller mortgage industry players, thus creating a higher demand for the secondary market. This secondary market is the true source for a majority of the industry’s economy, and many minor as well as major sub-prime mortgage lenders began to buckle under the pressure, closing down or declaring bankruptcy. As of the later part of August of this year, Accredited Home Lenders (AHL), out of San Diego, CA, stopped accepting new loan submissions. That means no more loan approvals, resulting in a loss of over 1500 jobs. But this isn’t the only major lender in trouble. HSBC Group announced the closing of a mortgage financial office, resulting in a loss of over 500 jobs, Impact Mortgage cut over 100 jobs, and Delta Financial intends to cut over 300 jobs in 2008. The list goes on and on, even some of the largest mortgage lenders such as Countrywide and Capital One Financial Corp. are borrowing billions to maintain operations, laying off hundreds, and even closing down certain markets. All told, over a hundred of some of the largest lenders have drastically cut their operations or closed their doors.

So how is this happening? Many people speculate that the two major causes of the industry’s decline is the low housing market (nationwide) and the sad but true story of how many people are getting into mortgages that they simply cannot afford. This is obviously gross negligence on the part of the lenders. By trying to make a sale, they are allowing people to take on a loan that is really beyond their means, forcing these people to eventually default or foreclose. This is not a winning scenario for anyone, but it also cannot be blamed entirely on lenders. The national economy also impacts the ability of the average person to make their house payment. When people are losing their jobs or taking cuts in pay, this obviously puts stress on their pocketbook.

It is extremely uncertain when the business will begin to turn around, judging by how these major players are adapting, and though this may be a bit frightening to the mortgage lender, it doesn’t mean that it is a bad time to buy a new home or get a mortgage. On the contrary, lenders are still looking to approve loans for responsible individuals. So if you have a good credit score and an adequate income, this might be a great time to buy, especially with the housing market at a national low.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Condo Mortgages

For some potential buyers, purchasing a condominium rather than a home just makes more sense. For those that don’t want responsibilities like leaky roves, plumbing problems, or keeping up a lawn, sharing the burden may sound much more appealing. This is exactly the case with condominiums. These multi-unit living alternatives first came in the form of apartment complexes that converted into permanent living, and they are now built with permanent living in mind. The space and comfort provided in many modern condos is very competitive to that of an actual house, and the advantage of permanent living versus renting a space is similar to renting a home versus purchasing a home. Instead of paying money every month into someone else’s investment, you are now contributing to your own mortgage, thus building equity and providing for a more secure future. Most people purchasing a condo will do it with the help of a mortgage, similar to most that buy a house, and though there are many similarities, there are some slightly different variables to consider when purchasing a condo unit.

Houses are considered to be larger investments in scale. This is due to the fact that home sale prices are usual higher than condos and thus the appreciation is somewhat greater. Of course, this is a gross generalization, as there are some condos that are worth far more than certain houses. But when comparing similar spaces, locations, and types of construction, home prices are generally more expensive. Apart from the actual sale price however, condos also require residents’ fees, which cover the maintenance expenses associated with keeping the complex in operation. These fees are collecting into an account known as a reserve fund to then be used for maintenance costs. It is very important to obtain information about this reserve fund before beginning the mortgage process. You should be able to request information about the balance of the reserve fund directly from the Condominium Board of Directors as well as the costs of scheduled repairs or maintenance. Some condo associations or boards have gotten themselves into a financial mess that you do not want to walk into. You will also need to factor in the cost of condo fees with your mortgage payment to determine what you can afford to pay on a monthly basis.

If the fees are reasonable and the reserve fund is healthy, you may be ready to make a purchase, assuming you like the unit and its location. At this point, you will go through the exact same steps as acquiring a home mortgage. Everything, down to the interest rates and the actual paperwork should be the same. If you are still shopping around, feel free to get some mortgage quotes from several brokers before you decide on the right one.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on about Ability Mortgage group and programs please visit www.marylandsmortgage.com.

Getting Ready for Closing?

You are so close that you can taste the end of the home buying process, and it is time to get ready to close the deal. Nobody wants to hit a snag or have any problems in these final stages, so it is important to make the right preparations. The goal is to have your real estate transaction finish smoothly and on time.
Take the time a few days before the closing date to go over your entire final closing statement. This might also be known as your HUD-1 Statement, depending on what area of the country you live in. Consider all of the calculations you see in this statement, and make certain that you receive credit for all deposits and any other credits the seller might owe through other agreements. Analyze all of the fees, including those associated with the lender, the title, and escrow, and make sure they line up with everything you have previously discussed and agreed upon. Though it may seem silly, you should also go ahead and check all of the arithmetic on the final statement. Believe it or not, mathematical errors actually do occur in closing documents.
Next, carefully review all documentation, looking for any inconsistencies. Look over the guarantee of title, reading all of the fine print about the description of the property, liens, encumbrances, or any other factors that might be included. If you find anything that you do not agree with, have it removed. The escrow or title agent should have the proper vesting that you have chosen so that you may take title in the way you choose. Changing the vesting takes a great deal of time, and if it is not noticed until closing, it can delay the entire transaction.
Even if you have looked at the property over a hundred times, make one last inspection to make sure everything is in order. Everything should be exactly how you are expecting it at this time. All agreed repairs and maintenance should be complete, so it is wise to double check so that you do not find a big surprise on move in day. If there are any conditions in your purchasing agreement, these things should be complete.
Protecting your interests in a real estate transaction is extremely important. A small miscalculation or oversight might end up costing a good deal of money and affect your entire mortgage. Double check everything from arithmetic to interest rates, to fees and the property itself. When you come across one small mistake, you will be glad you did.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Maryland mortgage rates please visit www.marylandsmortgage.com.