Avoiding Common Mortgage Scams

Despite tougher mortgage guidelines and better loan disclosures for consumers, mortgage fraud is on the rise, according to the FBI.

Fraud has many varieties and it's estimated cost to the nation is between $4-6 billion annually.  Today, common mortgage fraud scams target homeowners behind in their mortgage payments and/or facing foreclosure. And, despite the hordes of legitimate organizations that dedicate themselves to helping consumers, mortgage fraudsters proliferate.

In this 3-minute piece from NBC's The Today Show, you'll learn to spot common frauds, and to avoid them.

Some of the frauds highlighted include:

1. The Rent-to-Buy arrangement
2. The Bait-and-Switch
3. The "Phantom fees"

With respect to mortgage paperwork, it's always wise to read what you're signing, and to take time to understand what it means. If you're uncomfortable reading mortgage documents, ask for an attorney's help. And don't worry if you don't have the budget -- many states offer free or discounted help via advocacy groups.

Bank Reposessions Top 100,000 In A Month For The First Time Ever

The number of foreclosure filings rose 3 percent in September, according to foreclosure-tracking firm RealtyTrac. The term "foreclosure filing" is a catch-all word for housing, comprising default notices, scheduled auctions, and bank repossessions.

September marked the 19th straight month that the number of filings topped 300,000, and the first month in which 100,000 repossessions were logged.

As usual, a small number of states dominated the national foreclosure figures, accounting for more than half of all repossessions.

1. California : 17% of all repossessions
2. Florida : 13% of all repossessions
3. Michigan : 7% of all repossessions
4. Arizona : 7% of all repossessions
5. Texas : 5% of all repossessions
6. Georgia : 5% of all repossessions

Thankfully for home sellers, mortgage servicers appear to be metering the pace at these newly bank-owned homes are made available to the public. RealtyTrac notes that, in doing so, servicers prevent "the further erosion of home prices".

That said, distressed properties still sell at a steep discount.

In the second quarter of 2010, the average sale price of homes in the foreclosure process was 26 percent lower than the average sale price of homes not in the foreclosure process. It's no surprise, therefore, that, based on RealtyTrac's preliminary data, 31 percent of all homes sold in September were "distressed".

There's lot of good deals out there, in other words, but they come with certain risks.

Buying a foreclosed home is not the same as buying a non-foreclosed home. Specifically, you're buying from a corporation and not from a "person". Contracts may vary, and so may terms.

Therefore, Maple Grove home buyers -- even experienced ones -- should talk with a real estate agent before making an offer. It's important to understand the foreclosure-buying process.

Fed Minutes Edge Mortgage Rates Higher

The Federal Reserve released its September 21, 2010 meeting minutes Tuesday afternoon. Mortgage rates in Wisconsin are slightly higher today.

It's unwelcome news for this season's home buyers, and existing homeowners with plans to grab lower rates. Mortgage rates made new lows last week and may have reached a turn-around point.

The "Fed Minutes" is published 8 times annually, and is the official meeting recap for the Federal Open Market Committee. Similar to the meeting minutes released after a corporate conference or condo association gathering, the Fed Minutes details the conversation and debate between meeting attendees.

Minutes are the lengthy companion to the Fed's brief, post-meeting press release.

Because of its content, the Fed Minutes is closely read by Wall Street and economists. It's insight into the talk that shapes our nation's monetary policy and, within the text, there's often clues about the Fed's next move.

Here's some of what the Fed discussed last month:

• On inflation : It's running at lower-than-optimal levels
• On housing : Post-tax credit, housing stalled in July
• On stimulus : The Fed may intervene in open markets within the next few months

 

The over-riding theme within the minutes was that the U.S. economy is growing a steady pace, albeit slower than what's optimal. The Fed is prepared to push things along if the economy slows further and news like that is helping stock markets.

Bond markets are losing. Rates are rising.

For now, mortgage rates hover near all-time lows.  If you haven't locked a mortgage rate yet, your window may be closing.  Once the economy turns around for certain, mortgage rates will be among the first of the casualties.

What's Ahead For Mortgage Rates This Week : October 12, 2010

Mortgage markets improved last week on mixed messages about the economy, and a growing belief that the government will move to stimulate the economy.

Conforming mortgage rates in Minnesota eased lower.

According to Freddie Mac's weekly mortgage market survey, average mortgage rates nationwide fell to new all-time lows last week. On the other side of that point, however, is that the accompanying "points" for today's low rates have climbed to their highest levels of 2010.

In other words, mortgage rates are down, but closing costs are up.

There were two main stories driving mortgage rates last week. The first was the Federal Reserve. 

Although nothing has been said specifically, markets are speculating that the government will add new layers of market support to spark the economy.

The prevailing thought is that -- if there's intervention -- the Fed will buy treasuries and mortgage bonds, driving up prices and pushing down yields. Rates dropped last week in anticipation of such a move.

The second factor in falling mortgage rates was Friday's jobs report.

Economists expected the economy to shed 5,000 jobs in September. Instead, it lost 95,000, anchored by the elimination of temporary census workers and job losses in local governments. The private sector didn't fare so poorly, adding sixty-four thousand jobs. However, that, too, fell short of expectations.

The results contributed to a mortgage market rally already in-process.

This week, there's a number of releases that should keep mortgage rates on the move -- up and down -- including Fed Minutes (Tuesday), Producer Price Index (Thursday), and Consumer Price Index, Retail Sales and a confidence survey (Friday).

Mortgage rates are low and may not stay that way. If you're floating a mortgage rate, or wondering whether now is the time to lock, talk to you loan officer. Rates are expected be volatile this week.