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The Mortgage Curmudgeon on bad mortgages

 Should loan officers and mortgage brokers be responsible for letting a client choose a bad loan? The following letter is a composite of many I have received recently from borrowers who took out option ARMs (OAs) in 2005 and 2006: “I took this loan because the monthly payment was much lower than any of the alternatives “¦ The interest rate was only 1 percent because I qualified for a special program “¦ I was led to believe that it would last for five years “¦ I realize now that it didn’t and that my loan balance has been going up every month “¦ I am afraid that next year my…

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U.S. home price appreciation

 I was too busy with my blog project to post on the OFHEO quarterly data when it came out on March 1. The OFHEO data is a bit different than the National City data (which doesn’t include appraisal data from refinancings) but both estimate the actual appreciation in U.S. home prices. Although the median home price data graphs I make from the ASU data are one of the most popular features of this blog, median home price changes do not measure appreciation. It’s better to know appreciation than median home price changes. The problem with median home price changes is that they tend to exaggerate price changes both up and…

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U.S. homes appreciate 1.8% in 4th quarter, metro Phoenix up only 0.33%

 Nationally, homes continue to appreciate but at a slow pace. Single-family house prices during the fourth quarter of 2006 were up 4.1 percent from the prior year period, when adjusted for the influence of refinance activity, according to the Office of Federal Housing Enterprise Oversight (OFHEO). The fourth quarter advance, however, was at a meager 1.8 percent pace. That follows on the heels of a 1.6 percent rate of gain during the third quarter and marks the first quarterly acceleration since the second quarter of 2005. The pick-up is so small, however, we are disinclined to call this a turning point. Nevertheless, according to National City’s methodology, many metro areas…

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What makes up your credit score?

 Here’s a great little article on what determines your credit score. It’s strange that closing an department store credit card account can sometimes lower your credit score! Another confusing area involves “inquiries”: instances where you or other parties pull your credit report. “Hard” inquiries that indicate you are looking for a new loan, such as when you shop among dealers for a car, can hurt because new loans could contribute to a lower credit score. It’s even worse when you prolong the loan-shopping process over several weeks or months. If you are going to shop for a mortgage do it all in one week. If several mortgage companies pull your…

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More stock plays related to sub-prime fallout

 He doesn’t think we’ve seen the end of the credit-tightening cycle, and says it’s “increasingly likely” credit deterioration will spread from subprime to Alt-A and Option ARMs. Alt-A loans were 77% of IndyMac’s 2006 origination, and option ARMs were 54% of Downey’s. Countrywide Financial Corp. (CFC) carries 42% option ARMs in its portfolio, and insider sales hit a five-year peak this quarter. Or instead of playing the stock market you could just buy a house.

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Economists prognosticate… the Arizona economy

 The national chatter over the flailing home lending industry and its effect on the U.S. economy became more heated this week than an Anna Nicole Smith memorial service. [Nice lede! Who is this guy Chad Graham? Is he new reporter at the Republic?] That state [Michigan] recently joined Mississippi and Louisiana as places that led the nation in late mortgage payments. Arizona ranked 40th in that measure… Nevertheless, I do want to remind you the foreclosures will likely skyrocket the second half of 2007.

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