Mortgage and Debt Consolidation Resources

The Mortgage Bust Goes Global

2008-04-07T05:25:00.000-07:00

Happy Monday! Here is some great news to start your week from the NY Times:

NORMALLY, St. Jakob’s Hall here is home to soccer tournaments or the occasional hockey game. But on a sunny morning in February, the stadium offered a corporate face-off every bit as contentious as any athletic event. More than 6,000 shareholders of the Swiss banking giant UBS packed the house to vent their fury over tens of billions in losses on American subprime mortgages and what they saw as an insult to traditional Swiss values like prudence and thrift.

The target of their anger wasn’t just UBS’s chairman, Marcel Ospel, or any of the bank’s other top executives, who were arrayed under a giant screen near where goalies usually tend the net. Instead, much of their ire was aimed at the United States itself — specifically an addiction to high-octane risk-taking, easy credit and dubious financial assumptions that created the domestic mortgage mess in the first place.

“The American El Dorado has become a scene from a Western,” declared one middle-aged shareholder, Therese Klemenz. “UBS was the figurehead of Swiss business. As a good housewife, I know you shouldn’t put all your eggs in one basket. A bank is not a casino.

Read the full article here.

McCain Guru Linked to Subprime Crisis

2008-03-31T05:30:00.000-07:00

Straight from Politico.com:

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Read the rest of the story here.

Fed May Buy Mortgages?

2008-03-24T05:24:00.000-07:00

Here is an eye opener for a Monday morning from Bloomberg:

Forget lower interest rates. For the Federal Reserve to keep the financial markets from imploding it needs to buy troubled mortgage bonds from banks and securities firms, say the world's biggest Treasury investors.

Even after cutting rates by 3 percentage points since September, expanding the range of securities it accepts as collateral for loans and giving dealers access to its discount window, the Fed has been unable to promote confidence. The difference between what the government and banks pay for three- month loans doubled in the past month to 1.92 percentage points.

The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, said Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. While purchasing some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.

If you think that the dollar was in trouble before, you ain't seen nothing yet. Finish reading the article here.

Facing up to Debt Contagion

2008-03-17T05:31:00.000-07:00

First off, check out the definition of contagion. Now you ready to read about debt contagion in this opinion article from USA Today:

These days must be humbling for Wall Street financiers, high government officials and others who not long ago were preaching the virtues of leaving debt markets alone to heal themselves.

They've plainly failed, and at potentially enormous cost to everyone else.

Facing the possibility of a serious financial meltdown, Federal Reserve Chairman Ben Bernanke on Friday engineered a temporary federal bailout for Bear Stearns & Co., a Wall Street investment bank battered by its heavy involvement in mortgage-backed debt, while the troubled firm rushed to sell itself to a more stable suitor.

This action came on top of a broader assistance package unveiled Tuesday that included the Fed taking $200 billion in toxic mortgage-backed securities off the books of major firms in return for U.S. Treasuries — a terrible trade-off for taxpayers but apparently necessary to keep the financial system functioning.

You can read the rest of this article here.

401k To Pay Off Mortgage Debt

2008-03-10T05:30:00.000-07:00

Well that is what they are saying over at Daily Paul...

I emailed my deadbeat congressman requesting he move on this. It just makes too much sense. Allow our 401k $$ to be used to pay down/off mortgages, saving consumers hundreds of thousands of $$ in interest, freeing up monthly $$ for investing or consumption. They need to take away the taxes and penalties so we can do this. It would:

1. Help homeowners to save themselves in this mortgage crisis.
2. Help banks to ease back all of this leverage.
3. Help the economy to bounce back with this new found liquidity.

The Dems would say, "US citizens would just borrow this $$ again, and cause another bubble, losing their retirement in the meantime". Hey. We'll meet you half way, I say. Take the $$ amount transfered from the 401k to the mortgage, and have that deducted from the property appraisal for loan purposes (have a sunset date of like 5 or 10 years - or even when they turn 59 1/2, like a regular 401k plan).

This makes way too much sense. I would transfer mine in a heartbeat.

Here is the full article...

Anyone have any thoughts on this idea?

Reverse Mortgages

2008-03-03T05:28:00.000-08:00

If you are unfamiliar with reverse mortgages, the following article should help clarify things:

Foreclosures are up, and it looks like they won't be coming down anytime soon.

Troubled homeowners have a few options to stave off foreclosure, and Congress is looking at creating others. But older homeowners, age 62 and up, for years have had a tool that's sometimes overlooked: a reverse mortgage.

This allows you to take out a loan against your home to pay off your existing mortgage and remain in the house as long as you want. You don't have to repay the reverse mortgage until you move out or die. At that time, the house is sold and the lender repaid.

Reverse mortgages can be an expensive form of borrowing, and you must have some equity built up in the house to get one. But for older, cash-strapped homeowners headed toward foreclosure, the reverse mortgage can be the answer.

This article in its entirety can be found here.

Mortgage Rates Post Biggest Increase in 14 Years

2008-02-25T05:18:00.000-08:00

PR Newswire let us know that on Feb. 20th, mortgage rates had their biggest increase in 14 Years. Not quite the news you want to read on a Monday morning...

Mortgage rates spiked this week, with the average conforming 30-year fixed mortgage rate now 6.37 percent. According to Bankrate.com's weekly national survey of large lenders, the average 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing leapt to 5.87 percent, and the average jumbo 30-year fixed rate soared to 7.55 percent. Adjustable mortgage rates increased, but in a less pronounced fashion, with the average one-year ARM rising to 5.56 percent, and the average 5/1 ARM jumping to 5.77 percent.

Mortgage rates posted the largest one-week increase since April 1994, and over the last four weeks has increased by the largest amount since mortgage rates shot up from record low levels in the summer of 2003. Despite the pronounced move in mortgage rates, there wasn't one single factor that spurred the increase, but rather several contributing to the upward movement in recent weeks. The realization that the world hasn't come to an end is leading bond investors to unwind positions taken in January when economic and financial pessimism reigned. Inflation continues to percolate, as evidenced by $100 per barrel oil and yet another troubling uptick in the Consumer Price Index. But mortgage rates have increased much more than Treasury yields as investors reassess mortgage-backed securities in light of higher conforming loan limits to be announced in March.

The above text was quoted from this article.

Let us hope that this trend does not continue for too long...

Tax Relief for Foreclosures and Canceled Debts

2008-02-18T05:24:00.000-08:00

Here are some more of the details about the Mortgage Forgiveness Debt Relief Act of 2007 and how it impacts your taxes. Here is a snippet...

Highlights of Mortgage Debt Relief

* Exclude up to $2 million of debt forgiven or canceled by a mortgage lender on a main home.
* Both mortgage restrucuring and foreclosures qualify
* Available for the years 2007, 2008, or 2009.
* Claim the tax relief using IRS Form 982 (PDF)

What is Canceled Debt Income?
Anytime a lender cancels, or forgives, your debt, that is considered income to the debtor. The tax laws considers this income, and the debtor is taxed on forgiven debt unless an exception applies.

Canceled Debt That is Taxable
Anytime a lender cancels or forgives debt, that is usually a taxable event. "Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income." (Source: Publication 525)

Debt forgiveness is reported by the lender using Form 1099-C, Cancellation of Debt. Individuals report the forgiven debt on their Form 1040, Line 21 as other income.

The tax laws provide several exceptions to the tax treatment of forgiven debts. Tax-free treatment of mortgage debt is the most generous and easiest to calculate.

The whole article can be seen here.

Mortgage Workouts, Now Tax-Free for Many Homeowners

2008-02-13T05:30:00.000-08:00

The nice people over at the IRS has some good news for all the troubled homeowners. Lets hope that it helps...

Homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their 2007 federal income tax return, according to the Internal Revenue Service.

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on IRS.gov.

“The new law contains important provisions for struggling homeowners,” said Acting IRS Commissioner Linda Stiff. “We urge people with mortgage problems to take full advantage of the valuable tax relief available.”

Here is the link to the full article...

Two New 2007 Tax Breaks

2008-02-04T05:53:00.000-08:00

While taking a look around SFGate, I saw a headline that could brighten up a Monday Morning. "Two new 2007 tax breaks help struggling homeowners" of course sounds goods, but what does it really mean?

In a year of bad mortgage news, there's a bright spot or two for homeowners: Foreclosure comes with a tax break, and 2007 mortgage insurance payments may be tax-deductible.

Congress acted on both provisions late last year, extending the mortgage insurance deduction for three more years and creating a tax break for homeowners facing foreclosure.

The mortgage insurance deduction will help certain low- and moderate-income homeowners, especially first-time home buyers and those struggling with higher house payments as adjustable-rate mortgages reset.

This type of insurance should not be confused with the insurance you take out on your home and its contents in case of fire or other disaster. It's also not the same thing as mortgage protection insurance, which is a form of life insurance some people buy to pay off a mortgage when they die.

So now if you are facing down the barrel of a foreclosure shotgun, you at least have something to smile about :(

Here is the article...

What Causes Interest Rate Movement

2008-01-22T06:04:00.000-08:00

Here is a snippet of an article that covers some of the finer points that are involved with interest rate movements.

Consumers are often misled when it comes to the subject of the Federal Reserve and how it affects mortgage interest rates. Often the media is the culprit causing the confusion. In the last few years, the Fed has taken action that caused mortgage interest rates to move in a direction other than what consumers expected, because the media provided weak reporting on the subject.

The Federal Reserve affects short-term interest rate maturities, the Fed Funds rate, and the Overnight Lending rate. These factors have a direct impact on the Prime rate. If you took only this into consideration, you may mistakenly conclude that changes made by the Fed will cause a similar movement in mortgage interest rates. However, mortgage interest rates are dictated by the trading of mortgage-backed securities, which trade on a daily basis. The real dynamic at the heart of interest rate movement is the relationship between stocks and bonds.

To finish reading this article, check out the Real Estate Blog...

Mortgage Rate Reset

2008-01-14T05:49:00.000-08:00

I was reading some articles over at Bloomberg.com and came across this piece...

This will be a brave new year for U.S. homeowners with adjustable-rate loans.

Terms will be tougher for the credit-challenged. Fewer bargain teaser rates will be offered. And for those facing higher resets on adjustable-rate mortgage payments, it's time to negotiate.

If your mortgage is ratcheting up to a monthly payment you can't afford, you may have some leverage in lowering the rate. Your lender may even welcome the move and allow you to do a low- cost loan modification.

To date, some $150 billion in adjustable loans have reset with $300 billion more in the pipeline, according to the Federal Deposit Insurance Corp. The greatest number of mortgage-rate increases is likely to hit borrowers this year.

In many cases, your lender may call you first to see if you want to modify your loan's terms. That's what happened to Dick Lepre, a loan officer for Residential Pacific Mortgage Corp. in San Francisco.

John makes some good points in the article, and had some good tips. Like he said in the article "It costs nothing to ask."

Here is the full article...

Reverse Mortgages: A Way Out of a Bind for Older Homeowners

2008-01-02T05:42:00.000-08:00

I am sure that by now you have heard of Reverse Mortgages, but do you exactly understand what they are? If not, the following article should help you out...

Reverse mortgages used to be a way for homeowners to get extra cash during retirement. Now they're also being used for a more-pressing purpose: helping people who are struggling to meet payments on high-interest-rate loans to keep their homes.

The strategy, which is relatively novel but gaining popularity among legal-aid attorneys and housing advocates around the country, calls for persuading lenders to take the cash generated by a reverse mortgage in lieu of foreclosing on older homeowners.

With a reverse mortgage, the bank makes payments to the homeowner instead of the homeowner making payments to a bank. The loan is repaid, with interest, when the borrower sells the house, moves out permanently or dies. The products are complex and have high fees -- typically about 7% of the home's value -- and they make it difficult for homeowners to leave the property to their heirs. But they may be the best option for people who have built up equity in their home and would otherwise lose it.

Here is the link for the full article...

No Taxes on Forgiven Mortgage Debt

2007-12-20T07:50:00.000-08:00

A collective sigh of relief from a lot of Americans...

Congress passed legislation Tuesday to protect mortgage borrowers from getting a surprise tax bill when they restructure their loans to avoid foreclosure.

The House adopted legislation passed by the Senate last week to spare homeowners for three years from taxes as high as 35% on canceled mortgage debt.

"Homeowners who restructure their mortgages to avoid foreclosure should not be hit with a tax bill as a result," Treasury Secretary Henry M. Paulson Jr. said. "This legislation will temporarily exclude homeowners who have restructured their mortgage loans from having to pay taxes on the mortgage debt forgiven."

Here is the full article...

Bush Subprime Mortgage Plan - Devil Is in the Details!

2007-12-10T05:41:00.001-08:00

Yes I stole that title from the article I am about to reference. Why? Because it is a little catchy (especially for a Monday morning) and it is do true. Here are some excerpts from the Bankruptcy Law Network article...

Harvard Professor Elizabeth Warren says the plan “seems to be nothing more than a guideline for when some lenders or servicers might let some borrowers extend lower interest payments for a while before the interest jumps up later. The loan on the house stays the same, even the family owes much more than the house is now worth–a circumstance that will cut off any refinancing option and any real resolution of the problem. The plan doesn’t require any new laws or government intervention because no one is bound to anything.”

And...

There is no help in the plan for people whose ARM rates have already reset and payments increased, those who have already missed a mortgage payment or two and are facing foreclosure, and those who owe more mortgage debt(s) than the home is worth, according to the plan summary document.

You can read the entire article here...

Severe CDO Rating Cuts Over...

2007-12-03T05:31:00.000-08:00

While reading over at Money Central I saw this article which caught enough of my attention while drinking my coffee...

The worst of severe rating cuts of collateralized debt obligations tainted by U.S. subprime mortgages is probably over and 2008 should begin a "healing process," a senior director at Fitch Ratings said.

Deteriorating value of U.S. subprime mortgage debt has resulted in $67 billion of rating cuts of CDOs by Fitch, including top-tier "AAA"-rated debt that now has been lowered on average to "BB"-rated debt known as junk bonds.

Asked if Fitch expects further CDO downgrades ahead, Richard Hrvatin, a managing director at Derivative Fitch in New York, said the worst cuts were behind.

"I never say never, but I think the answer is the rating action that we've taken is meant to be adding stability to the ratings," Hrvatin said on Sunday, during the Opal Financial Group CDO Summit. "I think the answer to that question is no."

Fitch last month completed a global review of CDOs tied to deteriorating subprime mortgage debt resulting in total downgrades of $67 billion, including affirmations of $10.7 billion of structured finance CDOs across 158 deals.

Got to love those subprime mortgages! Here is the rest of the article...

Foreclosure Prevention Counselors.

2007-11-26T05:43:00.000-08:00

What is an "foreclosure prevention counselors" and how would I get one? Good question, and hopefully this article from TwinCities.com will help clarify a few things...

Do you fear foreclosure will cause you to lose your home?

Help is on the way.

On Friday, members of a private-public partnership announced that an additional $1.8 million will be available to fund foreclosure prevention counselors.

The extra money will fund 37 counselors - up from 18 working statewide.

Homeowners needing help working through their mortgage or foreclosure problems should call the Home Ownership Center at 651-659-9336, or 866-462-6466 outside the Twin Cities.

"Many of these foreclosures can be prevented by asking for help," said Minnesota Gov. Tim Pawlenty, who announced the beefed up program Friday at Lutheran Social Services.

The earlier people call for help, the easier it is for them to stay in their homes, state Commerce Commissioner Glenn Wilson said.

State, nonprofit and business officials estimate the extra counselors will be able to prevent an additional 5,700 families from losing their homes.

But that's just a fraction of the number of families who might face foreclosure.

The Greater Minnesota Housing Fund estimates that 20,573 families will lose their homes through foreclosure this year. Another 60,000 will fall behind on their mortgage payments. Even experts don't know how bad the mortgage crisis will get before the market - and families - are able to find stability.

Here is the link the full article...

Freddie Mac Take a Big Hit

2007-11-20T05:15:00.000-08:00

Here is a headline you would not want to see if you worked for Freddie Mac: "Freddie Mac Reports Third Quarter 2007 Net Loss of $2.0 Billion or $3.29 Per Diluted Share".

Ready for some crazy numbers?

Freddie Mac FRE today reported a net loss of $2.0 billion, or $3.29 per diluted common share, in the third quarter of 2007, compared to a net loss of $715 million, or $1.17 per diluted common share, for the same period in 2006. The company also reported a decrease in the fair value of net assets attributable to common stockholders, before capital transactions, of approximately $8.1 billion for the third quarter of 2007, compared to an increase of approximately $300 million for the same period in 2006. Compared to the second quarter of 2007, the company reported declines in both net income and fair value primarily due to increased credit-related expenses and losses on mark-to-market items.

"Without doubt, 2007 has been an extremely difficult year for the country's housing and credit markets and, as our third quarter financial results reflect, we have been impacted by the deterioration in these markets," said Richard F. Syron, Freddie Mac chairman and chief executive officer. "We recognized the challenges facing the mortgage markets, however, and have taken further steps to address them. At the same time, as our charter mandates, we have continued to meet our mission by playing a stabilizing role in the markets and supporting our customers.

This chunk of article was borrowed from MoneyCentral on MSN. You can read the whole thing here.

How bad can a US downturn possibly get?

2007-11-13T05:52:00.000-08:00

That is a good question and I would like to know the answer. Luckily the people over at The Financial Times has an article with the same title...

First, the good news. The US housing slump is unlikely to drag the US economy down very much. It is true that up to now, the major source of weakness in the US economy has been the housing sector. At the end of Q2, 2007, the Federal Reserve Board reported the market value of the US residential housing stock $21.0 trillion and single family mortgage debt at $10.1 trillion. About 14 percent of the mortgage debt, $1.3 trillion, say, is sub-prime. According to the Case-Shiller data, since the end of 2006, the average US house price may have fallen by 5 percent or so, knocking about one trillion dollars of the value of the US housing stock. The brain behind these data, Bob Shiller of Yale University, believes a further decline, over a period of years, of 15 percent is in the cards.

The reason for the good news is that there is no first-order wealth effect from a change in house prices on private consumption; a decline in house prices is a redistribution from home owners to consumers of housing services, that is, from landlords to renters.

Then a lot more details...

The major source of demand strength is the US economy is the external sector. This is not surprising, as the rest of the world is growing faster than the US and the real effective (that is, trade-weighted) exchange rate of the dollar has dropped like a stone. Exports are a much more important source of demand in the

US (12.0 percent of GDP in 2007Q3) than they were in 1975, for about 8.5 percent of GDP or in 1965, when they were 5.2 percent of GDP. From its peak in 2002Q1 the broad effective real exchange rate of the US dollar had depreciated by 25 percent by 2007Q3. The precipitous decline of the nominal and real exchange rate of the dollar since September can easily have added another 5 percent to the cumulative real depreciation rate. In real terms, the dollar today is as weak as it has been at any time since 1970.

And a lot more details...

Here is a link to the blog entry...

Don't Get In Debt For Christmas

2007-11-09T07:14:00.000-08:00

Well most of us are already in debt, and Christmas is definitely not going to help. This article has some good advice for handling debt and the holiday season...

One thing that really upsets me each January is hearing how stressed a number of Fool readers become after overspending at Christmas.

Although the festive season is a wonderful time of year, all too many of us get carried away with the parties, Christmas meals and the wish to buy lavish gifts for our loved ones, meaning that we start the New Year in that dreaded word, debt. And of course, with many of us being given ridiculous credit card limits and overdraft facilities it's all too easy to spend more than you earn.

What's more, I know a number of people who have only just paid off the debt accrued last Christmas this month - but are ready to wield that credit card and start all over again!

But just take a moment to take a deep breath before you hit the shops to do your Christmas shopping. Are you already in debt -- and by that I don't mean mortgage debt? Do you have an outstanding balance on your credit card, or are you paying off a personal loan or overdraft?

If the answer is yes, it's time to think carefully before spending any more. Remember, the more you owe, the more interest your debt will accrue and the longer it will take you to pay it off. And I don't know about you, but I absolutely hate owing any lender any money -- and knowing that the interest I'm paying them is effectively going into some overpaid director's bonus!

There is a lot more information in this article which can be found here.

Y! Answers How To Get Out of Debt

2007-11-06T05:35:00.000-08:00

I always keep an eye open for any articles related to this website, and today I came across one from an unusual location: Y! Answers (Australia).

The Headline: "Big Problem- Income is less than cc debt, utilities, mortgage, car payment; no money left over for anything!?"

The Details: "Both my husband and my income is less than our debts, this doesn't even include food and gas! All of this due to our cluelessness when we bought our home with no money down, 100% financed, 3/1 (interest only) ARM!!, that can not be refinanced because property values have gone down so much. Thanks in advance for the advice!"

Some answers were helpful:
"1. cut up the credit cards
2. cancel all that is worthless (cell, cable, internet, 3 way calling, newspaper, etc)
3. sell the house
4. stop buying EVERYTHING but food
5. start listening to Dave Ramsey to get out of the hole."

Some were not:
"welcome to the American dream. you and most of the country want to know what to do. well do what some have then fake a disability collect and live in a fixed income housing spending your disability check on booze and drugs blaming things on the government."

Click here to see all the great words of wisdom....

Mortgage Magic

2007-10-29T05:27:00.000-07:00

"New mortgage magic is merely sleight of hand" was a decent enough title to get me to read the following article...

A new kind of mortgage can, as if by magic, make a 30-year mortgage disappear in half the time.

That's what readers are telling me, just before asking if it is "too good to be true."

The new mortgage is from Australia. It's called a "line-of-credit mortgage." Instead of making a monthly payment from your checking account to a mortgage company, the line-of-credit mortgage becomes your checking account. Like your checking account, your paychecks are deposited to the account. The monthly cost of the mortgage, interest-only for some period, is automatically deducted from the account.

The paycheck deposits bring an immediate advantage. The amount of your mortgage is reduced by each deposit. Since your mortgage interest payment is a fraction of your monthly income, you get to save the interest cost on the difference — every month.

You can read the whole article over at the Houston Chronicle website and discover some of the magician tricks.

Debt Help

2007-10-24T05:51:00.000-07:00

Bills.com has a pretty decent help section regarding debt.

Bills.com has all the debt help, resources, and information you need to start tackling your debt. We even have a Debt Help Savings Center that will help find the best solution for consolidating and paying down your debt. There are actually a number of debt help solutions available to you. Bills.com will help identify what options you have and which ones are best suited to help you tackle your debt. Browse through our articles, debt help guides, and debt relief tips and get all the information you need to get your finances back in order. Bills.com is the answer to effective debt help.

Here is a link to the Debt Help section...

Subprime Lending Woes

2007-10-17T07:26:00.000-07:00

I read an article entitled "Subprime Lending Woes: How Declining Home Prices Can Have Tax Implications for Unlucky Owners" that was written by Bill Bischoff a couple of days ago. Here is the opening sentenece which should grab most reader's attention...

Current subprime mortgage lending woes, combined with lower home prices in many markets, can have negative implications for taxpayers who are forced to sell their personal residence or if their lenders foreclose.

He also gives us some easy-to-follow examples...

Example 1: Let's say you paid $190,000 for your personal residence, which you could currently sell for a net of $250,000. However, the first and second mortgages against the property total $280,000. If you sell, you'll have a tax gain of $60,000. Why? Because the net sale price exceeds the property's tax basis by that amount ($250,000 sale price minus $190,000 basis equals $60,000 gain).

Will the IRS cut you any slack since you're $30,000 in the red on the deal ($280,000 of debt compared to $250,000 sale price)? Unfortunately, the answer is no. The sad truth is you can have a tax gain without actually having any cash to show for it. Reason: Your mortgage debt doesn't affect your gain or loss calculation.

Click here for the whole article to see how you might be affected come tax time...

$75 Billion Mortgage Debt Fund

2007-10-15T06:08:00.000-07:00

I was trolling the internet yesterday when I stumbled upon this article...

Citigroup, Bank of America and JPMorgan are on Monday expected to announce plans for a fund to buy mortgage-linked securities in an attempt to allay fears of a downward price-spiral that would hit the balance sheets of big banks.

A person familiar with the discussions said that US banks collectively were expected to put up credit guarantees worth about $75bn for the fund, named the Single-Master Liquidity Enhancement Conduit (SMLEC).

But bankers said the scheme would evolve with the market and may only be as large as demand requires. The SMLEC would be temporary and capped in value, and would not be backed by any state guarantee. A person familiar with the proposals said it was hoped that other banks would join the syndicate.

I have always had a problem with the word SYNDICATE for some reason...

Here is a link to the full article...

The Mortgage Forgiveness Bill of 2007

2007-10-12T10:35:00.000-07:00

What is "The Mortgage Forgiveness Bill of 2007"?

One of the most controversial and paradoxical real estate and mortgage finance stories to hit the media in recent weeks was that of a newly crafted real estate tax bill – the so-called Mortgage Forgiveness Bill of 2007. The bill, which may help you hold onto your money if you face foreclosure but will likely hit you hard in the wallet if you own a second home, was drafted by Democrats and approved by the powerful House Ways and Means Committee.

Tell me more...

The New Bill Would Cut Out the Tax but Repay it by Curbing a Tax Break

If the Mortgage Forgiveness Bill of 2007 passes and becomes law, homeowners facing foreclosure won’t be responsible for paying taxes on debt forgiven by lenders. That is the main focus of the bill, and is great news for those homeowners.

But in order to make up for tax revenues that will be lost if the bill goes through, a major tax break for those who own second homes will be drastically trimmed.

Where did you get this info from?

Here

Drowning in Mortgage Debt?

2007-10-03T06:31:00.000-07:00

Well I thought that it was a catchy title when I came across it over at StarNewsOnline.com. It covers some of the options that you can explore if you are in the hole...

The road to foreclosure can start with a late mortgage payment and end at the courthouse steps, where your house will be auctioned to the highest bidder.

But you don't have to go down that road, even if you have fallen seriously behind on your payments.

Your mortgage company can help in several ways, but the key to keeping your home and your credit rating is to act early, say lenders, counselors and attorneys.

The people to whom you owe thousands of dollars are in the lending business, not the property business. Especially in a housing market where prices are stagnant and homes are hard to sell, why would they want to be saddled with owning and keeping up your home?

Here is the full article...

What's with Subprime?

2007-09-27T08:08:00.000-07:00

These days a whole lot of "Subprime" is being tossed around. But what exactly uis subprime? Luckily the Mortgage Professor can help...

Subprime Lenders Defined

A sub-prime lender is one who lends to borrowers who do not qualify for loans from mainstream lenders. Some are independent, but increasingly they are affiliates of mainstream lenders operating under different names.

Subprime Borrowers Defined

A subprime borrower is one who cannot qualify for prime financing terms but can qualify for subprime financing terms. The failure to qualify for prime financing is due primarily to low credit scores. A very low score will disqualify. A middling score might or might not, depending mainly on the down payment, the ratio of total expense (including debt payments) to income, and ability to document income and assets.

The article not only defines the terms, but goes into some of the problem with subprime loans. Click here for the whole article...

2007 Subprime Mortgage Financial Crisis

2007-09-25T06:53:00.000-07:00

Well you know that the sh*t has hit the fan when you have a Wiki article entitled "2007 Subprime Mortgage Financial Crisis". It was created back on March 15th of this year and has been updated quite a few times. Here is a snippet...

The subprime mortgage financial crisis was the sharp rise in foreclosures in the subprime mortgage market that began in the United States in 2006 and became a global financial crisis in July 2007. Rising interest rates increased the monthly payments on newly-popular adjustable rate mortgages and property values suffered declines from the demise of the US housing bubble, leaving home owners unable to meet financial commitments and lenders without a means to recoup their losses. Many observers believe this has resulted in a severe credit crunch, threatening the solvency of a number of marginal private banks and other financial institutions.

Click here for the full article...

Mortgage News Daily

2007-09-21T07:14:00.000-07:00

What is it?

A website

What kind of information do they cover?

Daily Mortgage News

Brilliant. Any other ingenious insights?

No

Can I at least have a link?

Sure.

Avoid Bankruptcy

2007-09-17T11:09:00.000-07:00

I was looking at some other debt related blogs on Blogger and came across Debt Consolidation Management Assistance. Here is a snippet of one article that caught my eye:

Here is a snip:

Avoid Bankruptcy: You May Have to Pay the Debt Back Anyway

The most widely held misconception about bankruptcy is that it’s the debtor’s version of the “get out of jail free” card in Monopoly. While most people know that bankruptcy affects your credit for 7 to 10 years, very few people know that it’s possible that you’ll have to pay back the debt anyway, even if you file a Chapter 7 “straight” bankruptcy. The formal definition of bankruptcy is “a proceeding in federal court in which an insolvent debtor’s assets are liquidated and the debtor is relieved of further liability.” On the other hand, the commonplace definition of bankruptcy is probably “the process of completely wiping out your debts for free.” In some cases, the latter definition may be appropriate, but in a good number of scenarios, it’s likely that even with bankruptcy, you’ll still have to pay back at least a portion of the debt.

Click here to read the whole article.

I was unaware of that whole scenario. Good to know....

Consolidation Loan Tip

2007-09-13T10:37:00.000-07:00

Here is a tip that I found yesterday:

The truth is, you probably have more options then you realize. Traditional "consolidation loans" from a financial institution may not even be your best choice. Instead, you may want to think about:

* using credit cards
* a home equity loan
* a loan from your insurance policy or retirement plan
* a loan from a relative to consolidate

Each of these options can be extremely helpful or extremely dangerous depending on how you use them. The key when you consolidate is to create a plan that will have you out of debt in three to five years, and to stop adding to your debt

I came across this tip while Googling for tips. It came from the nice people over at Gay Mortgage Loans.

Click here for the whole article.

10 Debt Consolidation Myths

2007-09-10T07:03:00.000-07:00

What are the biggest myths surrounding debt consolidation? I am glad that you asked...

1. Credit counseling, debt-management programs -- it's all the same.
2. Credit counselors can cut your monthly payments in half.
3. Some companies offer lower interest rates than others.
4. Some agencies can negotiate lower DMP payments than others.
5. Debt settlement is the cheapest way to go
6. You need a formal program to get out of debt.
7. Debt consolidation always saves you money.
8. DMP helps your credit rating.
9. Bankruptcy will ruin your life.
10. Bankruptcy is no big deal.

This is just a high level overview. To find out more of what each of these mean, read the full article over at BankRate...

Debt Consolidation FAQ

2007-09-06T07:38:00.000-07:00

I came across a pretty informative FAQ about Debt Consolidation over at FH Financial Service.

Here are some of the questions:

1. Why should I use FH Financial Debt Settlement Plan?
2. What is debt settlement?
3. What is a Debt Management Plan?
4. Is Debt Settlement the same as Debt Consolidation?
5. Is Debt Settlement the same as Consumer Credit Counseling?
6. Can you settle your debt on your own?
7. How long does the Debt Settlement program take?
8. Are your Debt Settlement services guaranteed?
9. What is the effect of how much debt I have on my credit score?
10. How will Debt Settlement affect my credit score?
11. How does Debt Settlement compare to bankruptcy?

Well that should answer a couple of questions at least.

Here is the link to the Debt Consolidation FAQ.

Pros and Cons

2007-09-03T12:47:00.000-07:00

Should I consolidate? Well one would think the answer would automatically YES, but there are some Pros and Cons. The following link is a page that can help answer this question.

The calculator provides two types of information about each of these options. One is the total monthly payment, which consists of mortgage payments, mortgage insurance premiums if any, and non-mortgage debt payments if any. Borrowers on tight budgets must be concerned with the monthly payment, but it should not be the major determinant of their choice. It fails to reflect differences in tax savings or debt reduction as between the options.

The second type of information the calculator provides about all the options is their total cost over a period specified by the user. If the user’s time horizon is, say, 5 years, the total cost of each option is the sum of the monthly payments over 5 years including lost interest, less the tax savings and reduction in total debt over that period. Minimizing this cost should be the borrower's major objective.

Here is the link to the article...

Debt Consolidation Calculator

2007-09-02T07:07:00.000-07:00

Being that this blog is trying to find out some helpful information about Mortage Debt, I thought that a "Debt Consolidation Calculator" would be useful. There is a decent one over at Mortgage 101. Over there it says:

Discover your potential monthly savings by combining your bills into a single source. Eliminate high interest rate credit card and installment loans with a tax deductible (consult your tax advisor) consolidation loan. Use our calculator to figure how long before your savings equal the cost of obtaining a new consolidation loan.

Here is the link for the Calc.

Mortgage/Debt Elimination Scams

2007-08-30T11:52:00.000-07:00

I came across an interesting article that covered Mortgage/Debt Elimination scams. Here is a quick clip from the article:

Never missing an opportunity to profit from others’ pain, many scam artists flooded the Corn Belt selling various books and kits that espoused hinky theories about why the farmers weren’t really liable under the law to repay the banks on their loans. Many of these theories involved so-called “Allodial Title” schemes, while others involved thwarting sheriff sales by repeatedly putting bogus liens on the property. Other popular theories involved the remarkable claim that money isn’t really money, and that the banks never actually made any loans in the first place.

It was an interesting read, and just another notch on the Resource Belt.

Source: www.quatloos.com
Article: Mortgage Elimination/Debt Elimination Scams

Dangers of Debt Consolidation

2007-08-29T10:38:00.000-07:00

While poking around the web I came across an article from over at bankrate.com that tells a different story then most other sites. It says:

But, says Viale, 70 percent of Americans who take out a home equity loan or other type of loan to pay off credit cards end up with the same (if not higher) debt load within two years.

Viale's statistics underscore a major problem with debt consolidation: It feeds upon the tendencies that got you in trouble in the first place. By taking on yet another creditor, you're adding the proverbial fuel to the fire. In this case, it's your money that's burning.

Here is the full article.

Just Getting Started

2007-08-28T10:57:00.000-07:00

Just here trying to gather some good information regarding mortgage and debt consolidation. I will hopefully be adding links to resources as I discover them. If anyone has any hints or tips, go ahead and send them this way. Thanks.