Reverse Mortgage Proceeds Likely to Decrease October 1

/PRNewswire/ -- Seniors should be informed that the budget proposals working their way through both the House and Senate, as currently drafted, bring a 150 percent increase in annual FHA (Federal Housing Authority) insurance premiums, as well as reductions in available proceeds on FHA-insured HECM (Home Equity Conversion Mortgage) reverse mortgage loans.

"Now is a good time for seniors to take advantage of low rates on reverse mortgages and get the maximum return on the product before the new fiscal year starts this fall," said Jeff Lewis, Chairman of Generation Mortgage Company.

According to Lewis, starting October 1st, both bills will change the HECM value proposition if approved in their current form. "With the upcoming Senate vote, seniors have limited time to take advantage of the current pricing on reverse mortgages," commented Lewis. "Reverse mortgages provide financial independence to thousands of seniors struggling to sustain their retirement. A majority of our borrowers use reverse mortgages to pay off existing traditional mortgages, and free up much-needed income."

In early July, the Transportation Housing and Urban Development, and Related Agencies Appropriations Subcommittee met and provided $150 million in funding for the Federal Housing Administration's reverse mortgage program. The bill passed the full House Appropriations Committee late last month and went to the House of Representatives two weeks ago. In the house, the appropriation was lowered to $140 million, and later passed by a vote of 251 to 167. It is not yet clear when the bill is headed to the Senate.

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Eight Tips to Help Homeowners Get Their Loan Modification Application Reviewed by Mortgage Company

/PRNewswire/ -- Many homeowners seeking a loan modification to lower their monthly mortgage payments and avoid foreclosure continue to find the application process a complex web, often causing them to give up before their application is ever reviewed by their mortgage company.

Certified housing counselors for CredAbility, a national nonprofit credit counseling and education agency, speak daily with hundreds of homeowners seeking a loan modification or other solutions to keep their homes. The organization has several tips for people that will help them increase the chances that their application is reviewed as quickly as possible.

"A homeowner needs to collect and send several documents that tell the mortgage company why you need a modification, and it needs to be done in a timely, organized manner," said Michelle Jones, senior vice president of counseling for CredAbility. "Once a homeowner has submitted these documents, they need to stay in regular contact with the company. With hundreds of thousands of applications under consideration, homeowners must take matters into their own hands to make sure their application gets to the right person at the company."

Here are CredAbility's recommendations for homeowners seeking a loan modification:

Speak With a Nonprofit Housing Counselor to Understand Investor Rules for Your Loan. Every homeowner's mortgage loan is different, so don't rely on information you may have heard from your neighbor or your sister-in-law, even if they received a loan modification. For example, if your 30-year, fixed interest rate loan is owned by one investor, and your neighbor's is owned by another investor, the rules governing a loan modification may be quite different. A certified counselor at a nonprofit credit counseling agency can help you find the investor who owns your mortgage and determine your options.

Submit All Documents That Prove Your Current Income. Income verification is critical, but homeowners sometimes don't provide their mortgage company with recent documents. If you lost a job in June, don't provide pay stubs from March. In addition to recent pay stubs and other traditional income sources, homeowners should also provide a document called a "contribution letter." This letter explains the source of any household income that is not easily verified. For example, a servicer will want to know the total household income of a married couple, even if only one person's name is on the loan. The letter could also include income verifying that you have a roommate that pays rent.

Submit Current Bank Statements. Recent bank statements allow your mortgage company to verify your income and expenses. This information enables the mortgage company to see your monthly expenses for food, utilities and other expenses and determine whether you will have enough money to make your mortgage payment.

Mail Your Documents to the Mortgage Company. Many people prefer to send all of their documents by fax or scan their documents and send them via email. However, postal mail is usually more reliable, especially if it's addressed to the person you spoke with at the mortgage company. Faxes often get lost.

Label Each Page With Your Name and Loan Number. One of the most common complaints among homeowners is that the mortgage company loses their documents. You can help your own cause by writing your name and loan number on each page of every document.

Fully Explain Any Recent or Unique Income Changes. For example, a bank deposit may show various one-time transactions, such as an asset sale, cash gifts from family members or a bonus. Unless you explain this one-time increase in income, the servicer may not understand it and use this information to deny your loan modification.

Include a Timeline in Your Hardship Letter. Every application for a loan modification must include a "hardship letter" that explains the reasons for your request. But the letter must have specific dates explaining when an income loss has occurred. If your spouse lost her job on July 15 and your family income will decrease by $3,000 beginning in August, your letter needs to provide these details.

Call Your Mortgage Company Every Week. Many homeowners work extremely hard to submit all of their paperwork to the servicer - and then wait for weeks before picking up the telephone to call them about the status of their application. This is a mistake for several reasons: the person handling your application may quit; the application may be transferred to another person; the company may need more information. You get the picture.

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LPS' Mortgage Monitor Report Shows Total Delinquent Loans 21.3 Percent Higher Than Last Year; Foreclosure Rates At Record High

/PRNewswire/l/ -- The latest Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE:LPS) , a leading provider of mortgage performance data and analytics, shows that the total number of delinquent loans was 21.3 percent higher than the same period last year. Although the data showed a small 1.45 percent seasonal decline in delinquencies from January 2010 to February 2010 month-end, the national delinquency rate still stood at 10.2 percent. The report is based on data as of February 2010 month-end.

The nation's foreclosure inventories reached record highs. February's foreclosure rate of 3.31 percent represented a 51.1 percent year-over-year increase. The percentage of new problem loans also remains at a five-year high. The total number of non-current first-lien mortgages and REO properties is now more than 7.9 million loans. Furthermore, the percentage of new problem loans is also at its highest level in five years. More than 1.1 million loans that were current at the beginning of January 2010 were already at least 30 days delinquent or in foreclosure by February 2010 month-end.

As a result of the federal government's Home Affordable Modification Program (HAMP), delinquent loans that were modified and that remained current through HAMP's three-month trial period - called "cures-to-current" - have increased. Advanced delinquency rolls, however, remain elevated from a historical perspective.

Other key results from LPS' latest Mortgage Monitor report include:

Total U.S. loan delinquency rate: 10.2 percent
Total U.S. foreclosure inventory
rate: 3.3 percent
Total U.S. non-current* loan rate: 13.5 percent
Florida, Nevada, Arizona,
Mississippi, California, New
Jersey, Georgia, Illinois, Ohio and
States with most non-current* loans: Indiana
North Dakota, South Dakota, Alaska,
Wyoming, Nebraska, Montana,
States with fewest non-current* Vermont, Colorado, Washington and
loans: Minnesota

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Note: Totals based on LPS Applied Analytics' loan-level database of mortgage assets.

LPS manages the nation's leading repository of loan-level residential mortgage data and performance information from approximately 40 million loans across the spectrum of credit products. The company's research experts carefully analyze this data to produce dozens of charts and graphs that reflect trend and point-in-time observations for LPS' monthly Mortgage Monitor Report.

To review the full report, listen to a presentation of the report or access an executive summary, visit http://www.lpsvcs.com/NEWSROOM/INDUSTRYDATA/Pages/default.aspx.

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Commercial Mortgage Defaults in 2010: Hard Times for Some Banks

/PRNewswire/ -- Commercial mortgage defaults will be highly elevated in 2010 and could wipe out profits at a number of U.S. banks.

But it does not appear that this problem will morph into a true crisis that would endanger U.S. or global financial systems.

These are the key conclusions of a research study published today by SMR Research Corp. It is entitled The Commercial Mortgage Dilemma: Banking's Next Credit Challenge.

"The saving grace for the financial system is that most really large U.S. banks are modestly exposed," said SMR President Stuart A. Feldstein.

For example, highly delinquent commercial mortgages recently were only 0.1% of Citigroup's assets. JP Morgan Chase also appears "walled off" from the dilemma. Exposure at Bank of America is just slightly higher. None of the nation's largest banks risk failure due to commercial mortgage defaults, SMR noted.

The same cannot be said for some medium-sized and smaller banks. At small banks with less than $1 billion of assets, commercial mortgages recently were 32.5% of total assets - a level of dependence six-fold higher than at big banks with $50 billion or more of assets.

As of September 30, 2009, 154 banks had highly delinquent commercial mortgages equal to 3% or more of their total assets. In a reasonably good year, banks earn profits of only about 1% of assets. Many of these institutions will be hard-pressed to make any money in 2010, SMR said. Some could become insolvent.

The study includes specific 2010 risk rankings for each of the nation's 477 largest bank holding companies.

As of late 2009, the 90-day-plus delinquency rate on all commercial mortgages (including multi-family apartment building loans and commercial construction loans) was rising fast. It reached 5.59% on September 30, up from 3.51% just six months earlier.

Meanwhile, the vacancy rate on apartment buildings had reached its highest level since at least 1965. Vacancy rates were high as well at shopping centers and office buildings. The total commercial mortgage loan market was $3.4 trillion as of the third quarter of 2009.

Despite the gloom, SMR found reasons for cautious optimism.

Among them: The early-stage delinquency rate on commercial mortgages appears to have peaked in the first quarter of 2009.

In addition, overall delinquency and write-offs on commercial mortgages were still below levels seen in the last commercial lending crisis in 1991.

"If the economic recovery continues apace, the new commercial mortgage crisis may peak in 2010 and improve in 2011," Feldstein said.

SMR utilized more than 150,000 regulatory financial reports from banks and thrifts to present an 18-year history of commercial mortgage credit figures, from 1991 to 2009.

The firm also tapped its property records database to calculate recent foreclosure rates on commercial properties by type, by state, and by metro area.

Multi-family apartment buildings had the highest foreclosure rate. Properties dependent on consumer discretionary spending - including greenhouses and car washes - also showed high foreclosure rates.

Foreclosure rates were low at churches, medical buildings, funeral homes, and private schools.

Some local markets with high home foreclosures also had high commercial foreclosures, including Arizona and Florida. But the correlation wasn't perfect. Hawaii, for example, showed a high commercial foreclosure rate as the falloff in tourism clobbered hotels and restaurants.

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Consumer Credit Counseling Service of Greater Atlanta to Offer Free Reverse Mortgage Counseling

/PRNewswire/ -- Beginning immediately, Consumer Credit Counseling Service (CCCS) of Greater Atlanta will offer free reverse mortgage counseling sessions nationwide.

The decision comes as a result of a $1.8 million grant from the U.S. Department of Housing and Urban Development (HUD), which was awarded to the national nonprofit counseling agency late in 2009. While most of the agency's other services are offered free to consumers, reverse mortgage counseling has historically required a consumer payment. This new grant funding will allow CCCS of Greater Atlanta to provide more than 12,500 reverse mortgage counseling sessions at no cost through September 2010.

A reverse mortgage (also called a home equity conversion mortgage, or HECM) is a loan that allows a homeowner to convert the equity in their home into tax-free income without having to sell the home, give up the title, or take on a new or additional monthly payment. Instead of making mortgage payments each month, the homeowner can receive income in the form of a lump sum, or as monthly payments. As long as the homeowner lives in the home, pays the property taxes and insurance, and keeps the home in good condition, they will not lose the home.

To be eligible for a reverse mortgage, homeowners must be 62 years of age or older, have paid off their mortgage or have only a small balance remaining, and their home must be their principle residence. In addition, HUD requires consumers to speak with an approved HECM counselor prior to obtaining the loan.

"A reverse mortgage can offer seniors greater financial security," said Suzanne Boas, president of CCCS of Greater Atlanta. "It can be used to supplement social security or meet unexpected medical expenses, allowing seniors to remain in their homes. However, it can be an expensive option, and is not the right solution for everyone."

"We hope seniors across the country will take advantage of this opportunity," Boas continued. "Obtaining this free counseling from a reputable and qualified nonprofit agency will help them understand all aspects of a reverse mortgage loan, and make an informed decision that is best for their unique situation."

HUD requires all reverse mortgage lenders to provide homeowners a list of nonprofit counseling agencies that provide reverse mortgage counseling. CCCS of Greater Atlanta is one of a small number of counseling agencies designated by HUD to provide counseling nationwide.

Seniors can schedule a reverse mortgage counseling session by calling CCCS of Greater Atlanta directly at 866-616-3716, seven days a week, in English and Spanish. Counseling can also be initiated online at www.cccsinc.org/reverse.

All of the agency's reverse mortgage counselors are college graduates, have completed the Home Equity Conversion Mortgage (HECM) qualification exam approved by HUD and participate in reverse mortgage education classes.

To learn more, visit www.cccsinc.org and click on "I'm looking for information on a reverse mortgage" in the "Get Help Now" menu. There you will find a step-by-step guide to evaluating a reverse mortgage as well as helpful resources from organizations such as AARP.

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Equifax Data Show U.S. Consumer Payment Trends Continue to Deteriorate

/PRNewswire/ -- Consumer delinquency rates for bankcards, first mortgages and home equity lines of credit again rose month-to-month in November, according to Equifax Inc.'s (NYSE:EFX) monthly Credit Trend Report.

Home mortgages at least 30 days late reached another record of 7.91 percent in November (in total dollars), up from 7.76 percent in October and 7.65 percent the previous month. This record rate is a significant increase over the 5.83 percent rate of November 2008 and the 3.93 percent rate of November 2007.

In addition, home equity lines of credit (HELOC) available to consumers are now an estimated $68 billion lower and the number of accounts is an estimated 855,000 lower than the September 2008 peak of approximately 14.5 million accounts. This represents an improvement from October when outstandings were $77 billion lower and accounts were lower by approximately 934,000. Delinquency rates have crept up from 3.39 percent in October to 3.43 percent in November. These rates far exceed the 2.95 percent rate of November 2008 and the 1.92 percent rate of November 2007.

"The story of 2009 continues to be one of consumer retrenchment and credit tightness as people strive to pay down debt or are forced to abandon it, and lenders more aggressively manage risk in their portfolios," said Dann Adams, president of Equifax's U.S. Consumer Information Solutions.

U.S. consumers reduced their debt by more than five percent or $575 billion from a year ago. First mortgage debt dropped 5.4 percent; credit cards by 7.3 percent and auto loans by 9.5 percent. The declines put overall consumer debt at September 2007, pre-recession levels of about $11 trillion.

Bankcard issuers continued a year-long trend of closing accounts and reducing credit lines. Card risk management programs have accelerated since July of 2008, reducing card credit lines by $803 billion and the number of accounts by 93 million. Delinquency rates for bankcards picked up notably since the end of 2008 in tandem with rising unemployment. The November 2009 60-days-past-due rate of 4.62 percent is almost a full percent higher than the November 2008 rate of 3.76 percent. However, the rate still remains below the peak of 4.79 percent in May 2009.

In addition, the number of bankcard accounts opened in September -- 2.4 million -- was 45 percent lower than September 2008. Year-to-date, the number of new accounts is down 46 percent from the same period in 2008. Also, lenders are being more selective about who they give credit to as the percent of cards issued to those with credit scores greater than 740 grew from about 30 percent in 2007 to almost 51 percent so far this year.

With U.S. home prices declining, originations for home equity lines of credit are also declining. In September of this year (the most recent month that data is available) originations were 75,600, 36% below the September 2008 total of 117,800. Year-to-date 2009 new home equity lines opened -- 761,000 -- were 47 percent below 2008 year-to-date totals of 1.5 million. This continues a trend from 2008 when total originations were 1.7 million lines, 41% below the total for 2007 (2.9 million lines).

Furthermore, home equity lines have primarily been issued to lower-risk consumers. Eighty-one percent of the consumers who received HELOCs in September 2009 were considered low-risk (Equifax Risk Scores of 740 and above) an increase from 66% in September of 2007. In conjunction with declining home prices and home equity, average home equity lines are 25% lower over the past two years, declining from approximately $105,000 to $79,000 today.

"The contraction in home equity lines is a reflection of the credit crunch both consumers and small businesses are facing," said Adams. "Restrictions in this traditional source of financing make finding credit harder than ever."

Regionally, home equity line originations have diminished in states where home price values have been the most volatile, notably California and Florida. California comprised almost 20% of line originations two years ago with nearly 38,000 originations in September 2007 but dropped to second with about 7% or 5182 originations in September 2009. Florida, once the second top state by originations has dropped to ninth.

The dramatic impact of these shifts is illustrated by new credit lines available in California declining from $6 billion in September 2007 to well under $1 billion today.

Data for the Credit Trends Monitor Report is sourced from Equifax's nearly 200 million files of US consumers using credit.

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Groups Warn of Risk Retention Provision in House Financial Services Bill

/PRNewswire/ -- Following is a Joint Statement on Risk Retention from the Community Mortgage Banking Project and the Community Mortgage Lenders of America:

Late Tuesday evening, the House Financial Services Committee released draft legislation to address systemic risks and "too big to fail" concerns. We appreciate the efforts of the Committee to enact reforms that will ensure that the events that led to the current financial market crisis are not repeated. However, we are deeply concerned that one Subtitle of the just-released draft Financial Stability Improvement Act would have a devastatingly, adverse impact on the secondary mortgage market, forcing community-based lenders to reduce lending or go out of business, which will significantly raise the cost of credit for consumers seeking affordable mortgages.

We are concerned that the broad risk retention provisions in the draft Financial Stability Improvement Act could jeopardize affordable mortgages for consumers by crippling the ability of community-based lenders to tap the secondary mortgage market for funding. This would further accelerate the consolidation of the mortgage market into just a handful of the largest institutions. The result would be reduced competition and choice for consumers - an ironic and counterproductive result for a bill intended to mitigate "too-big-to-fail" concerns.

The draft bill requires all lenders to retain up to ten percent of the credit risk on any loan sold into the secondary market. In addition, entities that acquire mortgages and issue mortgage-backed securities will also be required to retain up to ten percent of the credit risk. The committee's intent is to create incentives for sound underwriting standards and enhanced risk management practices by creditors and issuers of mortgage-backed and asset-backed securities.

However, by setting risk retention requirements at each step of the process from sale to securitization, and layering it over multiple years of originations, the cumulative impact of these requirements on lenders and issuers will reduce liquidity significantly and undermine the ability of the secondary mortgage market to deliver hundreds of billions of dollars of low cost mortgage credit needed each year.

The impact would be particularly severe for local lenders, including independent community mortgage bankers and local banks. Today, these lenders provide consumers with safe and affordable mortgage products, local market knowledge and top quality service. But these companies rely heavily on their ability to sell these loans into the secondary market. Today, these local lenders account for more than 40% of all home mortgage originations, and more than 50% of FHA loans. These companies are critical to our nation's mortgage supply chain, but simply are not structured to retain cumulative layers of credit risk over multiple origination cycles.

Independent mortgage bankers would be forced out of business, while community banks would face liquidity and balance sheet constraints that would sharply limit their lending activities. Even the largest institutions would be constrained in their ability to effectively utilize the attributes of the secondary mortgage market in delivering mortgage funds efficiently.

By contrast, H.R. 1728, which already passed the House earlier this year, addressed the risk retention standards in the mortgage market by establishing standards for "qualified mortgage" products that would be exempt from the risk retention requirements, and would therefore enjoy ample availability in the primary market. Qualified Mortgage products are traditional fixed and adjustable rate mortgages. These plain vanilla products, appropriately underwritten, were not the products that drove the current mortgage market debacle. Other provisions of H.R. 1728 (such as requiring creditors to document income and assets and assess ability-to-pay) help ensure that mortgage lenders utilize strong risk management practices and conduct sound underwriting, but with fewer adverse implications for secondary market liquidity.

There is no need for Congress to chance such a drastic outcome, when a more sensible compromise on this issue was forged in H.R. 1728 and passed earlier this year. The undersigned organizations look forward to working with Congress to achieve its objectives, without potentially disrupting the well-functioning secondary market for safe and affordable traditional mortgages.

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Georgia Department of Banking and Finance's Order to Cease and Desist Issued to Atlanta Home Modification Services, LLC d/b/a Atlanta Home Mods Final

On September 21, 2009, an Order to Cease and Desist issued by the Georgia Department of Banking and Finance (“Department”) to Atlanta Home Modification Services, LLC d/b/a Atlanta Home Mods located at 1588 Atkinson Road, Suite 106, Lawrenceville, Georgia, 30043 became final.

This Order to Cease and Desist was issued by the Department after it obtained evidence that Atlanta Home Modification Services, LLC d/b/a Atlanta Home Mods engaged in residential mortgage brokering activities without a license or under an applicable exemption in violation of O.C.G.A. § 7-1-1002.

Pursuant to Georgia law, it is prohibited for any person knowingly to purchase, sell, or transfer a mortgage loan or loan application from or to an entity that is not licensed or exempt from licensing or registration provisions to engage in mortgage broker or lender activities.

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Taylor, Bean & Whitaker Mortgage Corp. Announces Customer Payment Options

(BUSINESS WIRE)--Taylor, Bean & Whitaker Mortgage Corp. (TBW), following up on its August 5, 2009, announcement that it has officially ceased a majority of its operations, is notifying its customers of payment options for their mortgages.

TBW stated that it is unable to either offer an online payment option or automatic payment deductions for its home mortgage customers. The company said no automatic debit payments have been made since August 4, 2009.

For those reasons, customers are being asked to submit payments by mail directly to TBW. The address is: Taylor, Bean & Whitaker Mortgage Corp., Attn: Cashiering, 1417 N. Magnolia Ave., Ocala, FL 34475.

The company notified its customers that they should include loan numbers on their checks, as well as any special payment instructions, such as additional payments to principal or escrow.

“If you have recently received notification that your loan was transferred to a new servicer, please disregard these payment instructions and follow the instructions outlined in the transfer notice,” the company said.

Although TBW officially ceased a majority of its operations on August 5, it will continue functioning in a reduced capacity until all loans have been transitioned to new servicers.

“We apologize for any inconvenience this has caused our valued customers,” the company said.

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Subprime Mortgages Didn't Necessarily Lead to More Homeowners: St. Louis Fed Analysis

/PRNewswire/ -- Proponents of subprime mortgages argued that this type of financing could encourage homeownership for people who otherwise couldn't afford to buy a house, but a recent analysis from the Federal Reserve Bank of St. Louis suggests that the number of subprime mortgage loans terminated between 2001 and 2006 outweighed the number of estimated first-time homebuyers who sought subprime mortgages.

The analysis appears in the March/April issue of Review, the St. Louis Fed's bi-monthly journal of economic and business issues, and was conducted by Yuliya S. Demyanyk, a senior research economist with the Federal Reserve Bank of Cleveland. The data analysis for this article was conducted when she was an economist in the Banking Supervision and Regulation Division of the Federal Reserve Bank of St. Louis.

Demyanyk focused on whether borrowers intended to keep their subprime mortgages long enough to substantiate an increase in homeownership or planned a quick exit strategy at origination, using subprime loans as bridge financing to speculate on house prices -- in other words, quickly sell the house for profit after its value increased.

Her research showed that loans originated between 2001 and 2006 generally lasted less than three years. In fact, almost half the loans exited the market either through pre-payment or default within the first two years of origination and about 80 percent did so within three years of origination.

Demyanyk said her results are consistent with an earlier study that showed the unusually high default rates among loans originated in immediate pre-crisis years (2006 and 2007) did not occur only months from origination because those subprime mortgages were much worse than all loans that originated earlier. The quality of loans was deteriorating for at least six consecutive years before the crisis occurred.

"Subprime mortgages were very risky all along," she said. "The extent of their risk, however, was hidden by the rapid appreciation in house prices, allowing termination of the mortgage by refinancing or pre-payment. When pre-payment became costly -- with zero or negative equity in the house increasing the closing costs of refinancing -- defaults took their place."

The number of defaults in the limited sample of subprime purchase-money mortgages within two years of origination is almost equal to the number of first-time homebuyers who took a subprime mortgage. "If the data for the rest of the market were available," said Demyanyk, "the number of defaults would no doubt be even greater."

Demyanyk's paper is available online at the St. Louis Fed's web site: http://research.stlouisfed.org/publications/review.

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Credit Unions are Thriving While Other Lenders are Barely Surviving

/PRNewswire-USNewswire/ -- One by one, as the big "money center" banks stagger and fail, Americans hold their breath and clutch their statements, wondering if their institution will be the next victim.

During these difficult economic times, consumers look for a financial institution to trust, and for many Americans, that will mean joining a credit union.

As consumers read about banks dying each day they worry about where and how they will find the funds to purchase or refinance a home in this new economy. But for many they have a surprising alternative to banks -- credit unions.

Credit unions are among the few financial institutions that have mortgage money to lend to struggling consumers while at the same time operating for the benefit of their members. For the most part, credit unions will not be included with the growing list of financial institutions paying large salary bonuses to executives or throwing large parties at the expense of the financial institution or the American taxpayers.

"Credit unions never made the kind of risky loans banks made," explained Fred Becker, CEO of the National Association of Federal Credit Unions (NAFCU) based in Arlington, Virginia. He points to the industry's most recent numbers on loan defaults, which show loans originated at credit unions are defaulting at a rate less than half that of loans made by institutions insured by the Federal Deposit Insurance Corp. (FDIC), meaning banks.

Richard Maxstadt, SVP/COO of CUC Mortgage agrees. "We take our direction from our credit-union members," said Maxstadt, "Credit unions as a rule are conservative in their lending. Our loans tend to be plain vanilla, primarily 20- and 30-year fixed rate," he said, adding: "Too many consumers forget that credit unions do make mortgages."

In addition, the soon to open Realtor FCU, will be the first Internet-based credit union -- without branches -- serving a nationwide, single association, the National Association of Realtors.

"Many of the nation's largest CUs are experiencing substantial increases in mortgage loan volume as millions of homeowners seek to lock in lower rates through refinancing their existing loans," stated ACUMA Chairman, John Reed, President/CEO of the Main Savings FCU in Hampden, ME. "This is just another example of how America's credit unions are seizing the incredible opportunity in the current lending markets."

Most consumers are unaware they can join a credit union and apply for a mortgage loan. Even a large percentage of the more than 87 million Americans currently members of credit unions do not understand the benefits. There is a credit union available for anyone who wants to join.

One hundred years ago the nation's oldest credit union opened its doors in New Hampshire and successfully weathered world wars and the Great Depression without once closing its doors. With that kind of track record, common in the credit union movement, major media outlets like the New York Times, Wall Street Journal and NBC/Universal can't help but take a new interest in this potential sleeping giant as a means for coming to the rescue of the slumping American housing market.

"Being the best kept secret for mortgage loans is not the distinction we desire or deserve. We have thousands of sound and trustworthy financial institutions ready to help American homeowners or those pursing the American dream of homeownership" said Bob Dorsa, ACUMA President.

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Bankrate: Mortgage Rates Flirt with Record Lows

PRNewswire-FirstCall/ -- Mortgage rates fell sharply in the first week of 2009, with the average 30-year fixed mortgage rate plummeting to 5.33 percent. According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.39 discount and origination points.

The average 15-year fixed rate mortgage dropped to 4.85 percent, while the average jumbo 30-year fixed rate slumped to 6.91 percent. Adjustable rate mortgages were mixed, with the average 1-year ARM inching higher to 5.98 percent and the average 5/1 ARM pulling back to 5.72 percent.

Mortgage rates fell sharply as the Federal Reserve initiated a program of mortgage bond purchases. The average 30-year fixed mortgage rate is at the third lowest point ever, 5.33 percent. The two prior occasions when rates were lower both occurred in June 2003. Low mortgage rates will be a theme in 2009 as Fed and Treasury policies aim to stabilize the housing market by facilitating refinancing and enticing home buyers into the marketplace.

The sharp decline in mortgage rates since Halloween has sparked a refinancing frenzy. In late October, the average 30-year fixed mortgage rate was 6.77 percent, meaning a $200,000 loan would have carried a monthly payment of $1,299.86. With the average rate having since fallen to 5.33 percent, the monthly payment on a $200,000 loan is now $1,114.34.

SURVEY RESULTS
30-year fixed: 5.33% -- down from 5.64% last week (avg. points: 0.39)
15-year fixed: 4.85% -- down from 5.16% last week (avg. points: 0.38)
5/1 ARM: 5.72% -- down from 5.86% last week (avg. points: 0.47)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. A plurality of panelists, 42 percent, predict rates will continue falling. One in three expect rates to rebound, while the remaining 25 percent believe rates will remain more or less unchanged.

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New Tax Law Changes Can Help Millions of Taxpayers Save Money

/PRNewswire-FirstCall/ -- As we near the final days of 2008, what continues to weigh heavy on the minds of many people is the slowing U.S. economy -- unemployment has reached the highest percentage in years at 6.7 percent*, layoffs and business closures continue and the housing market remains weak. This year, lawmakers have passed more than a hundred new tax law changes intended to help millions of individual taxpayers. Jackson Hewitt Tax Service(R) encourages taxpayers to find out how these new tax credits and deductions can help lower their individual tax liability and possibly put more money back in their pockets this tax season.

"With more than a hundred pro-taxpayer credits and deductions, many taxpayers will qualify for new benefits that may not have been available last year," said Mark Steber, vice president of tax resources at Jackson Hewitt Tax Service. "Taxpayers affected by these changes could see significant savings, and with the current recession, it is even more important that taxpayers get all of the tax benefits they deserve."

Tax Law Changes
Steber outlines some money-saving tax law changes for 2008, including:

-- Economic Stimulus Payment and Recovery Rebate Credit: This initiative
is a two-phased program consisting of the economic stimulus payment
and the recovery rebate credit. Phase one was the economic stimulus
payment which was an advanced payment of the projected amount of
recovery rebate credit available on the taxpayer's 2008 return. Phase
two is the 2008 component of the program, so taxpayers who did not
receive their full economic stimulus payment in 2008 may qualify for
the remainder as a Recovery Rebate Credit on their 2008 tax returns.
For example, Jane, a single taxpayer, filed her 2007 tax return in
February 2008. She filed single, without children, and received a
$600 economic stimulus payment. In November, Jane gave birth to a
baby girl. Because she had a child in 2008, Jane may be eligible for
an additional $300 credit when she files her 2008 tax return and
claims her child as a dependent.

-- Mortgage Debt Forgiveness Relief Act: Homeowners who experienced
foreclosure on their primary home can exclude the cancelled debt
amount from their taxable income. For example, a married couple
filing jointly with an adjusted gross income (AGI) of $35,000, and a
home foreclosure that includes $10,000 in cancelled debt, could
decrease their tax liability by $1,500 under this act. In the past,
the $10,000 of cancelled debt would have been considered taxable
income to the individual that owed the debt. The home must meet the
following criteria:
-- It must be the taxpayer's main residence
-- The amount of debt forgiven cannot exceed $2,000,000
-- The loan must have been used to buy, build or substantially
improve the home.

-- Housing Assistance Tax Act: Taxpayers who pay real estate taxes and
are not otherwise eligible to itemize deductions can increase their
standard deduction amount by the lesser of:
-- Real estate taxes paid in 2008 OR
-- $500 ($1,000 if married filing jointly)


For example, a married couple filing jointly with an income of $28,000 that did not itemize their tax return but paid $1,200 in real estate taxes in 2008 could increase their standard deduction amount by $1,000. This additional standard deduction would decrease their tax liability by $100.

-- Additional Child Tax Credit: The Additional Child Tax Credit is a
refundable credit. This year, the income threshold has been decreased
to $8,500 from $12,050, allowing certain taxpayers to qualify for up
to $533 more per child in a potential refund. For example, a single
parent with two children and an income of $15,000 would receive a
refund of $5,799. Before the change, the potential refund amount
would have been $5,266.

-- First Time Homebuyers Credit: Taxpayers who purchased a new home for
the first time after April 8, 2008, may qualify for a refundable
credit up to $7,500. Part of the American Housing Rescue and
Foreclosure Prevention Act, this refundable tax credit works like an
interest-free loan for all qualified taxpayers. The credit must be
paid back in equal parts over a period of 15 years beginning in 2010.

Extending expired tax benefits
Lawmakers also extended several expired tax benefits, including:
-- Tax-free charitable donations for taxpayers 70.5 or older who choose
to direct up to a $100,000 donation from a traditional or Roth IRA
directly to a charitable organization.
-- A two-year extension of the Educator Expense Deduction which allows
teachers an above-the-line tax deduction of up to $250 for
out-of-pocket classroom expenses.
-- A two-year extension of the Qualified Tuition Deduction which allows
students to directly deduct up to $4,000 of qualified tuition and fees
paid to a college or trade school.
-- A two-year extension to the sales tax deduction. Taxpayers can claim
the greater of their state and local income taxes paid or their state
and local sales taxes paid when itemizing deductions. This is of
particular interest to taxpayers that live in states with little or no
income tax and those that purchased high-ticket items during the year.


"These are just some of the changes in the tax laws this year," added Steber. "Taxpayers should consult a trained tax preparer this year in particular, to ensure they don't miss out on the benefits available as a result of these new credits and deductions or any other commonly overlooked deductions. Clearly it is even more important this year that taxpayers ensure they get back the money they deserve or keep more money in their pockets."

Unemployed in 2008

For those taxpayers who were unemployed in 2008, it is important to remember that unemployment compensation is taxable on federal and most state tax returns. Income tax is not automatically withheld from unemployment compensation, however, individuals can elect to have taxes deducted. If you did not have taxes withheld throughout the year, you may have a potential balance due when you file your 2008 income taxes.

For those taxpayers looking for a job during 2008, there are deductible costs they can claim if they itemize deductions, including:

-- Mileage costs accrued on a personal vehicle while job hunting
including trips to job interviews and to the unemployment office.
Between January 1, 2008, and June 30, 2008, taxpayers can claim 50.5
cents per mile. Between July 1, 2008 and December 31, 2008, taxpayers
can claim 58.5 cents per mile.
-- Costs for creating, printing and mailing a resume
-- Costs for a headhunter or job placement agency
-- Transportation costs such as a bus, taxi, train or plane to an
interview
-- Meals and lodging if out of town for an interview
-- Parking and tolls when driving to an interview
-- Long distance or mobile phone call charges directly associated with a
job search
-- Business research services
-- Physical exam expenses if required by a potential employer


If a taxpayer accepted a new job which required relocation, he or she may be able to deduct qualified moving expenses not reimbursed by the new employer. Taxpayers should keep receipts related to all moving expenses in order to substantiate these expenses.

For more information, including a list of the most commonly overlooked deductions, credits and updates on recent tax changes, visit www.jacksonhewitt.com.

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Bankrate: Mortgage Rates Remain Volatile

PRNewswire-FirstCall/ -- Mortgage rates fell this week, with the average 30-year fixed mortgage rate dropping to 6.2 percent. According to Bankrate.com's weekly national survey, 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 retreated to 5.95 percent, while the average jumbo 30-year fixed rate was down slightly to 7.61 percent. Adjustable mortgage rates were sharply lower, with the average 1-year ARM down to 5.89 percent and the average 5/1 ARM pulling back to 6.21 percent.

Mortgage rates continue to be volatile, yo-yoing up and down from one day to the next. Heightened economic worries pushed mortgage rates lower versus last week, but the continued twists and turns of the credit crunch are certain to produce more volatility in mortgage rates. Although mortgage rates are pegged to long-term Treasury yields, the spread above risk-free Treasury yields is ever-changing as credit worries prevail. The movement of fixed mortgage rates is not directly influenced by the Federal Reserve's cut to short-term interest rates.

This year has been a wild ride for mortgage rates, with a low in January of 5.57 percent and a high of 6.77 percent in July. At today's rate of 6.20 percent, a $200,000 loan carries a monthly payment of $1,224.94.

SURVEY RESULTS

30-year fixed: 6.20% -- down from 6.41% last week (avg. points: 0.4)
15-year fixed: 5.95% -- down from 6.14% last week (avg. points: 0.44)
5/1 ARM: 6.21% -- down from 6.49% last week (avg. points: 0.36)



Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. More than half of respondents, 53 percent, expect rates to retreat further in the coming weeks. However, 41 percent predict a rebound in mortgage rates, while just 6 percent forecast that mortgage rates will remain more or less unchanged in the next 30 to 45 days.

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Wall Street Bail Out and the Credit Card Industry

24-7-- It almost sounds like a waste of time to spend my days writing about the Wall Street bailout. With every media outlet in the world zeroed in on our economy and the socio political ramifications that would ensue, should a bailout not occur. Let's be clear, it's a bailout, not a loan or some other disarming term. The credit card industry is already and will be profoundly affected for years to come because of this meltdown; the question to merchants and cardholders is how to keep that facet of the credit industry moving ahead without too much heartache for both parties.

As I'm stroking keys in my office, acquiring banks are contemplating risk as it pertains to their customer's available credit. This type of hard look at your available card balance and if they want to decrease it or take it away from you all together is the front line of the credit crunch that consumers will likely see in the months to come. My intent isn't to alarm anyone, because this may not come to fruition, but if our economy were to enter a credit freeze, the first fat to be trimmed will likely be available card balances. Why? Because it's the easiest way to decrease potential future loss. As banking institutions consolidate, go under and fear becoming under government control; they need to eliminate risk as much as possible. This is really an easy mathematical calculation; multiply the number of cardholders by their available balance and you'll have the sum of their exposure in an economic crisis.

If the government bails out these and other banks on toxic loans and bad debt, it's unlikely that delinquent credit card debt will be a part of the equation. As it appears today, defaulted mortgages, auto loans and business loans will get much of the attention, making the credit card divisions of these lending institutions in the step children of the bailout. As this is a scary concept to credit card holding Americans that often use their cards to float their monthly expenses; this halt to credit affects merchants and the global economy even more. Just as the inability to use a credit card on a daily basis and the need for cash is an inconvenience at best; for businesses, it can cripple them in both the short and long term. Ecommerce merchants that depend on credit cards for roughly 99% of their transactions would be nearly out of business immediately. Again, we're not saying that this will happen; however this is a very real card on the table of banks that can be played at any time.

Shortly after the ecommerce bubble had burst and businesses had found it harder to process customer credit cards at a fair rate, many found it easier and cheaper to process their daily transactions overseas. Non-domestic or offshore credit card processing isn't for illegal and illicit online businesses, like we all used to think. Today, with so many ecommerce merchants selling globally, international merchant accounts are very normal and often offer low rates, better security and services that many US domestic banks may only offer for a fee. While our economy is looking bleak, the global banking industry has proven in the past and may have to prove once again that working together can be better than domination.

Sager G. Loganathan is a freelance Search Engine Optimization writer specializing in the banking and finance industry. Sager Loganathan, a United States Marine Corp Veteran, has a Bachelor of Arts degree in Communications from the State University of New York at Buffalo.

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Although $700 Billion Bail-Out is Only 'First Step' on Long Road to Repair Financial Markets, CornerCap Sees Opportunities for Smart Investors

PRNewswire/ -- Although the $700 billion bail-out legislation signed into law earlier this afternoon by President Bush should help set an orderly process for disposing mortgage assets, it is at best a first step to allow for stability and recovery of the nation's financial markets says Atlanta-based CornerCap Investment Counsel's chief investment officer, J. Cannon Carr, Jr.

Writing for the firm's quarterly newsletter, Carr says that even with the government's plan, credit markets are likely to remain tight until home prices and debt levels fall to rational levels.

"That will take time," Carr says. "Only the market can stabilize home prices." Moreover, with extreme risk aversion among lenders, Carr still anticipates a difficult year ahead for the economy.

"Despite the uncertain market, this is not a time for broad selling," Carr notes. "In fact, there are real opportunities available for the patient and disciplined investor."

The full text of Carr's commentary is available online and may be downloaded at no cost from www.cornercap.com/library/Newsletters/n2008fall.pdf .

Carr points out that the nation has experienced 10 recessions since 1945. In all but the most recent recession (2001) stocks slid as the economy slowed, but began their assent before the recession ended.

"Recognizing that it is impossible to call a market bottom, we believe the probabilities are in our favor and now is the time to take advantage of some increasingly attractive opportunities to make selective buys," Carr said.

His firm began increasing its exposure to consumer stocks earlier in the year, and now sees opportunities in Industrials and Basic Materials stocks, which are among the hardest hit on recession fears.

"While there are still potential land mines out there, a healthy balance sheet and flexible cost structure are keys to helping determine which stocks can weather the storm," Carr said.

According to Carr the nation's financial system cracked due to two issues: too much debt and falling housing prices. "Once the housing process stabilizes, the financial system can more accurately price transactions, and more importantly, evaluate asset risk and debt obligations," Carr said.

What started as "apparently" isolated problems in subprime mortgages over a year ago has mounted to a crescendo of scary news about the health of the U.S. financial system and the global economy Carr writes.

Even if the government successfully plugs the holes in the nation's financial dam, the pressure causing the fissures must still drop before the dam can truly hold, Carr says.

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Duke: Treasury Action Should Work, But at High Cost to Taxpayers, Professor Says

The Treasury’s proposed action to use government money to purchase mortgage-backed securities held by financial institutions should work, but at an unnecessary cost to taxpayers, says Steven Schwarcz, the Stanley A. Star Professor of Law & Business at Duke University.

Schwarcz has studied systemic risk for more than a year and has suggested, in congressional testimony last October, that the government should consider acting as a market liquidity provider of last resort, but to do so at the outset of a financial market panic. His article, “Systemic Risk,” will be published next month in the Georgetown Law Journal.

“The focus from the outset should have been on treating loss of confidence in the financial markets, which is the underlying cause of problems in the financial system,” Schwarcz says. “While it may have been necessary under the circumstances for the Fed to act to prop up AIG and Bear Stearns, among others, preventing financial institution failure amounts to treating symptoms of the disease, not its underlying cause. By delaying, the government missed a vital opportunity to nip the problem in the bud at a much lower cost to the American taxpayer.”

The Treasury’s proposed bailout plan is a semi-strong version of Schwarcz’s proposal, which he said would work most effectively if used at the outset of a market panic. The current panic has become so entrenched, however, that financial institutions now distrust the creditworthiness of other financial institutions; they do not know how much in mortgage-backed securities those institutions hold or the value of those securities.

The Treasury, therefore, needs to address both this counterparty risk perception and the market collapse. It is proposing that government money be used to purchase, at a deep discount, mortgage-backed securities held by financial institutions, which would stabilize market prices and reduce counterparty risk.

'This should work," says Schwarcz, "but it will be much more expensive than if the government had stabilized the market at an earlier point."

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Algon Group Predicts 'Perfect Storm' in Homebuilding Industry Will Lead to Significant Bank Failures in Next 24-36 Months

At Alabama Bankers Convention, Algon Group founder Troy Taylor predicts substantial bank losses; in July Taylor tells American Bankruptcy Institute - Southeast Members that 25-50% of Atlanta, GA banks may fail or merge by 2011.

PRNewswire/ -- Citing excess inventory and the substantial erosion of housing asset value - particularly in certain Southeastern areas - Algon Group founder and president Troy Taylor predicts that the inability of homebuilders to satisfy loans will lead to increasing bank failures in these markets over the next 24-36 months.

Addressing the Alabama Bankers Convention in June 2008, Taylor said that based on what Algon Group clients and other homebuilders were experiencing in Florida and Georgia, he expects banks to suffer substantial losses as builders default on loans. In July 2008, Taylor told Southeastern members of the American Bankruptcy Institute that he predicts 25-50% of Atlanta-based banks will fail or merge by 2011. Taylor said that the ongoing problems Algon Group has seen over the past two months have only furthered his belief that the worst is yet to come.

Taylor and Algon's Managing Director Larry Comegys - a housing industry veteran and former President of Pulte-Florida and Meritage Homes-Florida - have since January 2008 advised homebuilders, banks, hedge funds, and trustees in eight separate real estate-related engagements. Taylor attributes the housing industry crisis to a "perfect storm" created by the confluence of subprime mortgages, real estate speculation, new home prices outpacing income, and overbuilding. As an example, he points to select Florida counties where the supply of vacant developed lots increased from 12 months in the second quarter (Q2) of 2005 to 80 months in Q2 2008, and the inventory of future lots increased from 64 months in Q2 2005 to 391 months in the fourth quarter of 2007. During this same period, the average price of new homes in the sample areas fell by 27 percent.

Taylor said that although home sales in the Florida panhandle may be helped by the eventual opening of the proposed airport, most developers do not have enough working capital to last until recovery. "To survive this crisis, banks can't wait until the interest reserve runs out," said Taylor. He advises banks to recognize that housing assets will re-price, raise capital, and clean up their balance sheets.

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Mortgage Applications, Refi’s Increase in Latest MBA Weekly Survey

RISMEDIA --The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending June 6. The Market Composite Index, a measure of mortgage loan application volume, was 557.1, an increase of 10.9% on a seasonally adjusted basis from 502.3 one week earlier. On an unadjusted basis, the Index increased 23% compared with the previous week and was down 16.5% compared with the same week one year earlier.

The Refinance Index increased 8.4% to 1622.1 from 1496.1 the previous week and the seasonally adjusted Purchase Index increased 12.8% to 376.2 from 333.6 one week earlier. The Conventional Purchase Index increased 11% while the Government Purchase Index (largely FHA) increased 17%.

The four week moving average for the seasonally adjusted Market Index is down 2.8% to 568.6 from 597.9. The four week moving average is up 1.7% to 353.8 from 354.3 for the Purchase Index, while this average is down 8% to 1835.6 from 2035.6 for the Refinance Index.

The refinance share of mortgage activity decreased to 39.8% of total applications from 40.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 10.3 from 8.7% of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages increased to 6.24% from 6.17%, with points increasing to 1.12 from 1.06 (including the origination fee) for 80% loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages increased to 5.78% from 5.7%, with points increasing to 1.12 from 1.06 (including the origination fee) for 80% LTV loans.

The average contract interest rate for one-year ARMs increased to 6.87% from 6.8%, with points decreasing to 1.42 from 1.44 (including the origination fee) for 80% LTV loans.

For more information, visit www.mortgagebankers.org.