Loan Modification - Next $350 billion in rescue plan aren't available without loan modification

A key lawmaker on Friday said that Congress would be unlikely to approve any request from the Treasury for an additional $350 billion in bank bailout funds unless there was an agreement to have some of the money be used to modify mortgages.Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the FREE loan modification help and strategy Ebook."If they were to seek $350 billion, there would be members of Congress that would insist on a vote and I don't think there is any way Congress would approve it without a resolution of the mortgage-modification issue," said Senate Banking Committee Chairman Christopher Dodd, D-Conn.Treasury Secretary Henry Paulson has publicly opposed using money from the bank bailout fund to employ a proposal introduced by Federal Deposit Insurance Corp. Chairwoman Sheila Bair.Dodd has joined many Democrats in Congress along with Bair in seeking $24.4 billion or more in bailout funds for a mortgage modification program that they believe would help avoid 1.5 million foreclosures.Rep. Maxine Waters, D-Calif. on Thursday introduced legislation with eight co-sponsors including Rep. Carolyn Maloney, D-NY, that mirrors Bair's proposal.So far, the Treasury Department has already committed $330 billion of the $700 billion bank bailout package.Treasury has allocated $125 billion to buy minority stakes in nine large banks and another $25 billion to dozens of smaller banks. It has also committed another $100 billion to invest in additional financial institutions as well as a separate $20 billion infusion into Citigroup Inc.

Refinancing Models Beginning A New Boom?

Richard Bove, a Ladenburg Thalmann analyst, states that “U.S. government programs will work and the negative assumptions concerning the weakening of the economy may be excessive.” He bases his analysis on data from the Federal Deposit Insurance Corp for the third quarter of 2008. Bove goes on to say that “To this point investors in bank stocks have paid little attention to the new programs believing them to be inadequate to reverse the economic decline underway. Therefore, bank stocks are falling to levels not experienced since the late 1980s and early 1990s.” If that is the case, wouldn’t a wise investor be interested in buying into financial stock right now?I look for refi to open up in 2009 to the point where people can see some growth in the economy. I also believe that we are a long ways from being out of the woods just yet. Smart investors are not going to jump on every recommendation from an industry expert. We need to remember that billions have been lost, and fortunes wiped out. To jump right back into the fray is foolhardy right now. And that, I believe, is what is going to hamper the jump start of the economy. Tonight’s NBC news predicts that 26% of retail stores will be closing shop next year because of the dismal turnout during the holiday season, when retailers depend on 50% of their income to stay afloat. We see Mervyn’s, Linens & Things, KB Toys and many others going belly up. I am sure a lot more are to follow. Certainly, the playing field is beginning to level.

When is it a good idea to refinance?

If you have an adjustable-rate mortgage (ARM) and you think that rates will rise or you want the security of knowing exactly how much your future payments will be, you may want to consider refinancing to a fixed-rate mortgage. Or you may want to get another ARM that has more favorable terms, such as a lower adjustment rate cap—a cap that limits the adjustment to no more than 2 percent above your starting rate. (There are also "lifetime caps" specifying the maximum your rate can ever be over the life of the loan.) If you've built up a good deal of equity in your home, you may want to do a "cash-out refinancing" to get money for home improvement or other major purchases. In any case, you’ll need to consider the cost of refinancing including application fees, closing costs, and even prepayment penalties against the savings you will make through lowering you interest rate and monthly payment. Finally, all these calculations need to be seen in the context of how much longer you continue to live in your present home.

How do I find the right lender, broker, or bank?

Finding the right lender, broker, or bank to work with is crucial to your mortgage search. Who you work with can save you time and money.. A broker typically acts as a "middleman" between a customer and lender and does not may or may not actually provide financing. A lender typically provides financing but often does not offer depository services. A bank provides financing and depository services. Each brings with it different strengths: brokers may be able to compete more on price, while banks may be able to move faster on your loan. So what should you be looking for in a lender, broker, or bank? Mortgage experts say it all comes down to credibility, dependability, and longevity in the marketplace. Most people start with word-of-mouth recommendations from people they trust. But consider the source: Everyone’s financial life is different. When it comes to buying a mortgage, do what's best for your unique circumstances

Fed Moves Forward with MBS Purchases

On Tuesday, the Federal Reserve named four investment companies it has appointed to start buying up billions of dollars worth of mortgage-backed securities (MBS) during the coming months, in an effort to stabilize the national economy and mortgage market.
The enlisted companies are BlackRock Inc, Goldman Sachs Asset Management, PIMCO, and Wellington Management Co. These parties will assist the Fed in purchasing between $80 and $100 billion of mortgage-backed securities every month in order to meet the goal of $500 billion of MBS by the middle of 2009.
The Fed had announced plans in November to buy up MBS starting in early January in order to provide more liquidity in the ailing lending markets.
Tuesday’s statement made the Fed’s intentions clear. “Under the MBS purchase program, the Federal Reserve will purchase MBS backed by Fannie Mae, Freddie Mac, and Ginnie Mae,” the statement said. “The program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally.”
After the original announcement, mortgage interest rates dropped dramatically and have continued falling. The Fed hopes that by injecting more cash into banks, rates will stay low and encourage both lenders and mortgage borrowers to be more financially active.
In order to pay for these MBS purchases the Fed has said it will increase the money supply, or in other words, print more currency and hope that inflation remains in check.
This aggressive MBS strategy comes just weeks after the Fed reduced its target interest rate to a range of zero to 0.25 percent, effectively eliminating its power to influence the economy with rates alone. The Federal Reserve promised at that time to use all available tools to stimulate the economy and stabilize the mortgage markets.

by Alan Wince