Financial Solution News

The preferred stock ratings of Freddie Mac and Fannie Mae have been downgraded from A1 to BAA3 by Moody’s Investors Service. Additionally, Fannie and Freddie’s Bank Financial Strength Ratings has been downgraded from B minus to D plus.
The downgraded ratings remain on review for possible further downgrade. Moody’s said the downgrades of the financial strength ratings reflect its view that the government sponsored enterprise’s flexibility to manage volatility in their mortgage risk exposures is “constricted” because they now have “limited access to common and preferred equity capital at economically attractive terms.”
The downgrades of the preferred stock ratings reflect a greater risk of dividend omission stemming from two issues.
First, the Government Sponsored Enterprises mortgage portfolio performance is “worse and more volatile than Moody’s expected”, which could lead them to breach the capital requirements governing their ability to pay a preferred dividend. Second, there is uncertainty about how the preferred stock would […]

Original post by Admin

The preferred stock ratings of Freddie Mac and Fannie Mae have been downgraded from A1 to BAA3 by Moody’s Investors Service. Additionally, Fannie and Freddie’s Bank Financial Strength Ratings has been downgraded from B minus to D plus.
The downgraded ratings remain on review for possible further downgrade. Moody’s said the downgrades of the financial strength ratings reflect its view that the government sponsored enterprise’s flexibility to manage volatility in their mortgage risk exposures is “constricted” because they now have “limited access to common and preferred equity capital at economically attractive terms.”
The downgrades of the preferred stock ratings reflect a greater risk of dividend omission stemming from two issues.
First, the Government Sponsored Enterprises mortgage portfolio performance is “worse and more volatile than Moody’s expected”, which could lead them to breach the capital requirements governing their ability to pay a preferred dividend. Second, there is uncertainty about how the preferred stock would […]

Original post by Admin

If you are considering refinancing your mortgage online, there are several things you need to know to avoid overpaying. Online mortgage brokers such as Lending Tree claim that they do not charge you for their service; however, if read the fine print in their disclosure statements you find this is not true. Here are several tips to help you avoid overpaying when using an online mortgage broker.
Home mortgage refinancing online, is fast becoming the way to get a low cost home loan when you need it. In a recent article, Henry Gardner, vice president with e-mortgages says, he thinks that online mortgages will be the mainstream in the next two to three years.

Lending Tree is just one example; there are many other companies on the Internet pulling the same scam. How do these online mortgage broker sites take advantage of homeowners when mortgage refinancing? Lending Tree openly claims that they […]

Original post by Everything Finance

House and Senate negotiators have reached an agreement on loan limits, and it appears that the maximum amount for the Government Sponsored Enterprise (GSE)Fannie Mae, Freddie Mac, and Federal Housing Administration FHA loans will be $625,000.
Negotiations on a massive housing bill are getting serious, with the House of Representatives scheduled to vote on the legislation tomorrow.
In markets where housing prices exceed the $417,000 conforming loan limit, the maximum loan amount of Fannie Mae and Freddie Mac loans would be determined by multiplying the median home price by 115%, up to a maximum of $625,000, sources say.
The same holds true for FHA loans, except that the multiplier kicks in at $271,050, or 65% of the conforming loan limit. If the median home price is $300,000, the maximum FHA loan amount in that area would be $345,000 ($300,000 x 115%).
House Financial Services Committee Chairman Barney Fran, D-Mass., told […]

Original post by Admin

The federal banking and thrift agencies today issued final guidance outlining the supervisory review process for banking organizations implementing the new advanced capital adequacy framework known as Basel II.  The final guidance relating to supervisory review is aimed at helping banking organizations meet certain qualification requirements in the advanced approaches rule, which took effect April 1.
The advanced approaches rule consists of three pillars:  minimum risk-based capital requirements (Pillar 1); supervisory review of capital adequacy (Pillar 2); and market discipline through enhanced public disclosures (Pillar 3).  The final Pillar 2 guidance details the agencies’ standards for ensuring that each institution subject to the advanced approaches rule has a rigorous process for assessing its overall capital adequacy in relation to its risk profile and a comprehensive strategy for maintaining appropriate capital levels.
Although the guidance does not differ significantly from the proposed Pillar 2 guidance issued in February 2007, the agencies made some […]

Original post by Admin

Financial stocks, especially those tied to the mortgage industry, helped fuel a 237-point drop in the Dow Jones industrial average on Wednesday.
Freddie Mac’s shares plunged by $3.20, or 24%, on the day, closing at a new 52-week low of $10.26.
Fannie Mae’s shares fell $2.31, or 13%, to close at $15.31.
Bank of America, which recently closed on its acquisition of Countrywide Financial, saw its shares fall $1.48, or 6%, to close at $22.06.
Radian Guaranty’s shares fell by 18 cents, or 11%, to close at $1.53.
Analysts attributed Wednesday’s broad market decline to concern about a slowing economy, more bad debt at banks, and higher oil and commodity prices.
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Original post by Admin

It appears that HUD is trying to pilot a FHA Foreclosure Prevention but as simple as it appears, why has it taken so long?
The Department of Housing and Urban Development is starting a pilot program in Detroit to purchase Federal Housing Administration single family loans from lenders after all loss mitigation options have been exhausted and foreclosure is the next step.
“Under this program, we will create means for lenders or investors to sell their non-performing mortgages before foreclosure to HUD and a joint venture partner who will be responsible for servicing the loan and helping families stay in their homes,” HUD Secretary Steve Preston said.
HUD expects to purchase the FHA loans at a “significant discount” so the joint venture partner can modify the loans and make it more affordable for the homeowners.
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Original post by Admin

Foreclosure filings declined 3% in June but were still 51% higher than the level recorded a year earlier, according to RealtyTrac.
The company’s U.S. Foreclosure Market Report indicates that foreclosure of 252,363 filings that consist of default notices, auction sale notices, and bank repossessions, were reported in June.
“June was the second straight month with more than a quarter million properties nationwide receiving foreclosure filings,” said James J. Saccacio, RealtyTrac’s chief executive officer.
“Foreclosure activity slipped 3% lower from the previous month, but the year over year increase of more than 50% indicates we have not yet reached the top of this foreclosure cycle”.
Bank repossessions continued to increase much faster than default notices or auction notices in June, he said.
The company reported that Nevada, California, and Arizona again recorded the highest foreclosure rates in June.
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Original post by Admin

How will sunsetting zero down and fourty year mortgages affect Canadians? Neilson, the animating blogger behind No Communism, is sharing his views from a mortgage broker’s perspective. Thank you for the guest post. I appreciate it.
Let’s all take a minute to wave bye bye to zero down and forty year amortization mortgages. So long pals! It was nice for you to come by, even if you only stayed for a little while, stayed on our couch and drank our beer! Tootle-loo!
All kidding aside, this is absolutely huge for the mortgage market. And not in a good way.
In the real world, I’m a mortgage broker. For those of you unfamiliar with a broker, I work as a liaison between the borrower and the financial institutions. I take the application, pick which lender and product would best suit the borrower, then submit the deal to the lender, and […]

Original post by Financial Jungle Guy

Proposed changes in accounting rules that could force Fannie Mae and Freddie Mac to move certain Mortgage Backed Securities (MBS) onto their balance sheets should not have a major impact on their capital requirements, according to the Government Sponsored Enterprise (GSE) regulator.
The Office of Federal Housing Enterprise Oversight is working with the Financial Accounting Standards Board on changes to FAS 140, OFHEO Director James Lockhart indicated.
The two government-sponsored enterprises already have a 45-basis-point capital charge on their guaranteed MBS, he noted. Investor concerns that an accounting change would trigger a dramatic rise in their capital requirements “makes no sense,” Mr. Lockhart said.
Wall Street stock investors dumped Fannie and Freddie shares on Monday on fears that the GSE might have to raise $75 billion in new capital due to accounting changes.
In an interview on CNBC-TV, Mr. Lockhart stressed that Fannie and Freddie are adequately capitalized and have raised $20 billion in […]

Original post by Admin