So-called FHA reform reached an important milestone on Friday when the U.S. Senate overwhelmingly approved its version of the legislation.
The bill, which passed by a vote of 93-1, seeks to make the Federal Housing Administration more relevant in the current housing and mortgage lending environment by expanding the agency, loosening some underwriting standards, and raising its current restrictive loan limit.
The FHA was established in 1934 to help borrowers, particularly those with low incomes, purchase homes by guaranteeing banks that those loans would be repaid should the borrower default. But the agency's loan limits have generally lagged behind those of Freddie Mac and Fannie Mae and as home prices climbed dramatically and lenders with looser underwriting standards proliferated the agency became less and less of a player in the mortgage market.
Related posts:
HR9315 Passes To Full House For Consideration
Monday, December 17, 2007
Friday, November 2, 2007
HR9315 Passes To Full House For Consideration
As expected, the House Financial Services Committee passed HR3915 out of committee to the full House of Representatives with a favorable vote of 45 to 19.
The vote, which came early Tuesday evening will need approval of the full House and then would need to be passed by the Senate and signed by the president before becoming law.
HR3915, which is strongly opposed by some segments of the lending community, sets minimum standards for loans including a reasonable assumption that the borrower will be able to repay the loan. It also mandates a mechanism for licensing mortgage brokers who are not appropriately regulated by the states or by agencies such as the Comptroller of the Currency. The bill also proposes liabilities for those who securitize potentially risky loans.
While the bill seeks to correct some of the longstanding practices that its sponsors feel have contributed to the current subprime situation, there is nothing in HR 3915 to address either fiscally or legislatively the current fallout from those practices.
The bill, if it does pass both houses of Congress, will undoubtedly see many changes before it is sent to the president for his signature.
If you oppose HR3915 you can use the following template, contributed by one of our readers, as a starting point for a letter to your state representative.
Related posts:
HR 3915 Addresses Many Aspects of Predatory and Other Mortgage Lending
The vote, which came early Tuesday evening will need approval of the full House and then would need to be passed by the Senate and signed by the president before becoming law.
HR3915, which is strongly opposed by some segments of the lending community, sets minimum standards for loans including a reasonable assumption that the borrower will be able to repay the loan. It also mandates a mechanism for licensing mortgage brokers who are not appropriately regulated by the states or by agencies such as the Comptroller of the Currency. The bill also proposes liabilities for those who securitize potentially risky loans.
While the bill seeks to correct some of the longstanding practices that its sponsors feel have contributed to the current subprime situation, there is nothing in HR 3915 to address either fiscally or legislatively the current fallout from those practices.
The bill, if it does pass both houses of Congress, will undoubtedly see many changes before it is sent to the president for his signature.
If you oppose HR3915 you can use the following template, contributed by one of our readers, as a starting point for a letter to your state representative.
Related posts:
HR 3915 Addresses Many Aspects of Predatory and Other Mortgage Lending
Tuesday, October 30, 2007
HR 3915 Addresses Many Aspects of Predatory and Other Mortgage Lending
Sides are quickly being drawn over a pending bill before the House of Representatives which, if passed, will put in place some stringent new standards for mortgage underwriting and the regulation and compensation of mortgage brokers.
HR 3915 is expected to be voted on by the House Financial Services Committee on Tuesday, November 6. Favoring the bill are consumer groups such as the National Center for Responsible Lending, and in strong opposition are industry supports like the National Association of Mortgage Brokers (NAMB) and the Mortgage Bankers Association.
HR 3915, introduced by Representative Bradley Miller (D-NC) and cosponsored by 21 other members of the House, modifies three major sections of Truth in Lending Act (15 U.S.C. 1602), Title I deals with mortgage origination; Title II outlines minimum standards for mortgages, and Title III addresses high cost mortgages.
Here is a summary of the bill as it was submitted to the House.
Title I requires licensing or registration of mortgage originators. The Department of Housing and Urban Development is charged with creating a registry for originators who are not covered by state regulation or affiliated with depository institutions. The legislation appears to assume that those originators who are so affiliated are now appropriately regulated.
This section establishes a "Duty of Care" for mortgage originators which requires that they "diligently work to present the consumer with a range of residential mortgage loan products" that the consumer can qualify for and which are appropriate to his current circumstances and that the originator make full, complete, and timely disclosure to each such consumer which includes the comparative costs and benefits of each product, and nature of the originator's relationship with the consumer and that the originator discloses if he is or is not working as an agent of that consumer. The originator must also disclose any relevant conflicts of interest.
Originators are prohibited from "steering." The proposed law states that an originator may not receive, directly or indirectly, any incentives (and in the most controversial provision, expressly includes yield spread premiums in that definition) that are based on or vary with the terms of the loan.
Title II, which sets minimum standards for residential mortgages states that no creditor may make a residential mortgage loan unless he first makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated the consumer has a reasonable ability to repay the loan under its terms and to pay all applicable taxes, insurance, and assessments. This provision also extends to cases where a consumer has multiple loans against the same property; the originator is charged with taking into account the total payments on these obligations. These determinations about ability to repay must be based on a consideration of the consumers' current and expected income, credit history, other obligations, employment status, debt-to-income ratio and other financial resources other than any equity in the secured property. (The emphasis is ours.)
Under this ability to repay provision, adjustable rate mortgages which defer repayment of principal and/or interest (with the exception of reverse mortgages) must be evaluated on the basis of the payment needed to amortize the loan by its final maturity.
Title II also requires the originator of a subprime loan to determine that any refinancing will "provide a net tangible benefit to the consumer." Conventional loans are presumed to meet this requirement so long as the interest rate does not exceed the rate on comparable Treasury bills by 3 points (5 for junior liens) while subprime loans are acceptable if they are income verified, underwritten based on the fully-indexed rate plus taxes and insurance, are not negatively amortizing, and the creditors debt-to-income-ratio after the loan is funded will not exceed 50 percent. Loans must have either a fixed rate for the first 7 years or have a margin less than 3 percent over its index. Such a subprime mortgage is generally known as a Qualified Safe Harbor Mortgage.
Title II also prohibits subprime prepayment penalties and limits prepayment penalties on conventional loans to 3 years (or 3 months before reset on an adjustable rate loan). It bans mandatory arbitration on any residential mortgage and prohibits class actions against and provides other protections from liability for assignees of loans.
Title III creates special protections for high-cost mortgages which are defined as having points and fees in excess of 5 percent of the loan amount; OR an APR exceeding comparable treasuries plus 8 points (10 for junior liens); or a prepayment penalty above 2% of amount prepaid or extending longer than 30 months into the term of the loan.
The section also defines points and fees and sets rules for yield-spread premiums, prepayment penalties, single premium credit insurance, and other fees already contained in the existing Home Ownership and Equity Protection Act (HOEPA.) The definitions exclude bona fide discount points for conventional rate mortgages.
Title III also prohibits the following on high-cost loans: balloon payments; recommending or encouraging default; excessive late fees; call provisions; financing any points and fees or prepayment penalties; abusive modification or deferral fees and requires pre-loan counseling for high-cost mortgages.
The entire text of the legislation can be read here.
Opinions pro and con the legislation can be found at websites maintained by The Center for Responsible Lending (CRL), Mortgage Bankers Association (MBA) and National Association of Mortgage Brokers (NAMB).
Please share your opinions of HR 3915.
If you oppose HR3915 you can use the following template, contributed by one of our readers, as a starting point for a letter to your state representative.
Related posts:
NY Attorney General Files Appraiser Fraud Suit Against First American
HR 3915 is expected to be voted on by the House Financial Services Committee on Tuesday, November 6. Favoring the bill are consumer groups such as the National Center for Responsible Lending, and in strong opposition are industry supports like the National Association of Mortgage Brokers (NAMB) and the Mortgage Bankers Association.
HR 3915, introduced by Representative Bradley Miller (D-NC) and cosponsored by 21 other members of the House, modifies three major sections of Truth in Lending Act (15 U.S.C. 1602), Title I deals with mortgage origination; Title II outlines minimum standards for mortgages, and Title III addresses high cost mortgages.
Here is a summary of the bill as it was submitted to the House.
Title I requires licensing or registration of mortgage originators. The Department of Housing and Urban Development is charged with creating a registry for originators who are not covered by state regulation or affiliated with depository institutions. The legislation appears to assume that those originators who are so affiliated are now appropriately regulated.
This section establishes a "Duty of Care" for mortgage originators which requires that they "diligently work to present the consumer with a range of residential mortgage loan products" that the consumer can qualify for and which are appropriate to his current circumstances and that the originator make full, complete, and timely disclosure to each such consumer which includes the comparative costs and benefits of each product, and nature of the originator's relationship with the consumer and that the originator discloses if he is or is not working as an agent of that consumer. The originator must also disclose any relevant conflicts of interest.
Originators are prohibited from "steering." The proposed law states that an originator may not receive, directly or indirectly, any incentives (and in the most controversial provision, expressly includes yield spread premiums in that definition) that are based on or vary with the terms of the loan.
Title II, which sets minimum standards for residential mortgages states that no creditor may make a residential mortgage loan unless he first makes a reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated the consumer has a reasonable ability to repay the loan under its terms and to pay all applicable taxes, insurance, and assessments. This provision also extends to cases where a consumer has multiple loans against the same property; the originator is charged with taking into account the total payments on these obligations. These determinations about ability to repay must be based on a consideration of the consumers' current and expected income, credit history, other obligations, employment status, debt-to-income ratio and other financial resources other than any equity in the secured property. (The emphasis is ours.)
Under this ability to repay provision, adjustable rate mortgages which defer repayment of principal and/or interest (with the exception of reverse mortgages) must be evaluated on the basis of the payment needed to amortize the loan by its final maturity.
Title II also requires the originator of a subprime loan to determine that any refinancing will "provide a net tangible benefit to the consumer." Conventional loans are presumed to meet this requirement so long as the interest rate does not exceed the rate on comparable Treasury bills by 3 points (5 for junior liens) while subprime loans are acceptable if they are income verified, underwritten based on the fully-indexed rate plus taxes and insurance, are not negatively amortizing, and the creditors debt-to-income-ratio after the loan is funded will not exceed 50 percent. Loans must have either a fixed rate for the first 7 years or have a margin less than 3 percent over its index. Such a subprime mortgage is generally known as a Qualified Safe Harbor Mortgage.
Title II also prohibits subprime prepayment penalties and limits prepayment penalties on conventional loans to 3 years (or 3 months before reset on an adjustable rate loan). It bans mandatory arbitration on any residential mortgage and prohibits class actions against and provides other protections from liability for assignees of loans.
Title III creates special protections for high-cost mortgages which are defined as having points and fees in excess of 5 percent of the loan amount; OR an APR exceeding comparable treasuries plus 8 points (10 for junior liens); or a prepayment penalty above 2% of amount prepaid or extending longer than 30 months into the term of the loan.
The section also defines points and fees and sets rules for yield-spread premiums, prepayment penalties, single premium credit insurance, and other fees already contained in the existing Home Ownership and Equity Protection Act (HOEPA.) The definitions exclude bona fide discount points for conventional rate mortgages.
Title III also prohibits the following on high-cost loans: balloon payments; recommending or encouraging default; excessive late fees; call provisions; financing any points and fees or prepayment penalties; abusive modification or deferral fees and requires pre-loan counseling for high-cost mortgages.
The entire text of the legislation can be read here.
Opinions pro and con the legislation can be found at websites maintained by The Center for Responsible Lending (CRL), Mortgage Bankers Association (MBA) and National Association of Mortgage Brokers (NAMB).
Please share your opinions of HR 3915.
If you oppose HR3915 you can use the following template, contributed by one of our readers, as a starting point for a letter to your state representative.
Related posts:
NY Attorney General Files Appraiser Fraud Suit Against First American
Wednesday, October 24, 2007
NY Attorney General Files Appraiser Fraud Suit Against First American
We explored foreclosure fraud pretty thoroughly several years ago (search the website for "appraisal fraud") and learned that no one was more upset over the pressure on appraisers to bring in inflated property values than honest appraisers themselves who were blogging on the subject and gathering signatures on petitions for regulatory action. But what had been a hot topic, threatening to involve lenders, loan officers, and real estate agents in addition to appraisers died down, probably because property prices were rising so rapidly that the appraisers couldn't legitimately inflate prices fast enough to keep up with reality.
Until now.
With foreclosures mounting, homeowners finding they cannot refinance because of negative equity, and investors and regulators asking questions about the numbers of loans granted at 100 to 125 percent loan to value, the appraisers and those who employ them are once again under scrutiny.
On November 1, New York State Attorney General Andrew M. Cuomo announced that he is bringing suit against one of the largest real estate appraisal management companies in the country and its parent corporation for mortgage fraud.
The company, eAppraiseIt (EA) a subsidiary of First American Corporation is accused in the suit of caving into pressure from Washington Mutual (WaMu) to use a list of "Proven Appraisers" who were willing to provide inflated appraisals of residential real estate. Cuomo said that the scheme was outlined in numerous emails that showed EA executives knew that their behavior was illegal but were willing to break the law to lock up WaMu's business.
"The independence of the appraiser is essential to maintaining the integrity of the mortgage industry. First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike," said Attorney General Cuomo. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market. By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion."
According to a press release issued by the Attorney General's office, EA began processing appraisals for WaMu in April of last year and the mortgage lender quickly became EA's biggest customer. (EA is also provides title insurance services). However, WaMu soon complained that the appraisals were not coming in at high enough values and pressured EA to switch to employing only appraisers from a new panel of "Proven Appraisers" that WaMu had hand picked specifically because they inflated property values. These higher prices allowed WaMu to close more loans at higher values. Between April 2006 and October 2007, EA provided approximately 262,000 appraisals for WaMu and received over $50 million in fees.
In one example from the 31 page complaint, which was quoted by Amir Efrati in the Wall Street Journal on-line, New York State alleges that EA increased its estimate of a property to $2.3 million from $1.6 million after the company was allegedly told by the Washington Mutual the higher number would help the loan go through.
The press release provided the following details from what were described as "numerous" in-house emails regarding the "Proven Appraisers" program.
* On February 22, 2007, EA's president told senior executives at First American in regards to the program that "we have agreed to roll over and just do it..."
* On April 4, 2007, eAppraiseIT's executive vice president stated in an e-mail to First American: "we as an AMC [Appraisal Management Company] need to retain our independence from the lender or it will look like collusion... eAppraiseIT is clearly being directed who to select. The reasoning... is bogus for many reasons including the most obvious - the proven appraisers bring in the values."
* On April 17, 2007, eAppraiseIT's president wrote an e-mail to First American explaining why its conduct was illegal: "We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation." E-mail evidence also shows that WaMu pressured EA to inflate appraisals as a condition for doing future business together:
* On September 27, 2006, First American's vice chairman reported that a WaMu executive told him: "if the appraisal issues are resolved and things are working well he would welcome conversations about expanding our relationship..."
The lawsuit seeks to end the illegal relationship between First American and EA and WaMu. It also seeks penalties and disgorgement from First American and EA. The lawsuit alleges that First American and EA violated appraiser independence laws, which regulate the conduct of real estate appraisers.
According to Efrati, Seattle-based WaMu is not named as a defendant in the suit, although the suit indirectly targets the lender because as a subsidiary of a federally chartered bank, is federally regulated. According to the complaint, however, the bank, which generated $116 billion in residential mortgage loans in the first three quarters of this year, ran afoul of federal guidelines set in 1994 by Treasury Department agencies to protect appraiser independence.
Cuomo's lawsuit was filed in the Supreme Court of New York, New York County, Manhattan.
Related posts:
Current State of the Mortgage Market
Until now.
With foreclosures mounting, homeowners finding they cannot refinance because of negative equity, and investors and regulators asking questions about the numbers of loans granted at 100 to 125 percent loan to value, the appraisers and those who employ them are once again under scrutiny.
On November 1, New York State Attorney General Andrew M. Cuomo announced that he is bringing suit against one of the largest real estate appraisal management companies in the country and its parent corporation for mortgage fraud.
The company, eAppraiseIt (EA) a subsidiary of First American Corporation is accused in the suit of caving into pressure from Washington Mutual (WaMu) to use a list of "Proven Appraisers" who were willing to provide inflated appraisals of residential real estate. Cuomo said that the scheme was outlined in numerous emails that showed EA executives knew that their behavior was illegal but were willing to break the law to lock up WaMu's business.
"The independence of the appraiser is essential to maintaining the integrity of the mortgage industry. First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike," said Attorney General Cuomo. "The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market. By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion."
According to a press release issued by the Attorney General's office, EA began processing appraisals for WaMu in April of last year and the mortgage lender quickly became EA's biggest customer. (EA is also provides title insurance services). However, WaMu soon complained that the appraisals were not coming in at high enough values and pressured EA to switch to employing only appraisers from a new panel of "Proven Appraisers" that WaMu had hand picked specifically because they inflated property values. These higher prices allowed WaMu to close more loans at higher values. Between April 2006 and October 2007, EA provided approximately 262,000 appraisals for WaMu and received over $50 million in fees.
In one example from the 31 page complaint, which was quoted by Amir Efrati in the Wall Street Journal on-line, New York State alleges that EA increased its estimate of a property to $2.3 million from $1.6 million after the company was allegedly told by the Washington Mutual the higher number would help the loan go through.
The press release provided the following details from what were described as "numerous" in-house emails regarding the "Proven Appraisers" program.
* On February 22, 2007, EA's president told senior executives at First American in regards to the program that "we have agreed to roll over and just do it..."
* On April 4, 2007, eAppraiseIT's executive vice president stated in an e-mail to First American: "we as an AMC [Appraisal Management Company] need to retain our independence from the lender or it will look like collusion... eAppraiseIT is clearly being directed who to select. The reasoning... is bogus for many reasons including the most obvious - the proven appraisers bring in the values."
* On April 17, 2007, eAppraiseIT's president wrote an e-mail to First American explaining why its conduct was illegal: "We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation." E-mail evidence also shows that WaMu pressured EA to inflate appraisals as a condition for doing future business together:
* On September 27, 2006, First American's vice chairman reported that a WaMu executive told him: "if the appraisal issues are resolved and things are working well he would welcome conversations about expanding our relationship..."
The lawsuit seeks to end the illegal relationship between First American and EA and WaMu. It also seeks penalties and disgorgement from First American and EA. The lawsuit alleges that First American and EA violated appraiser independence laws, which regulate the conduct of real estate appraisers.
According to Efrati, Seattle-based WaMu is not named as a defendant in the suit, although the suit indirectly targets the lender because as a subsidiary of a federally chartered bank, is federally regulated. According to the complaint, however, the bank, which generated $116 billion in residential mortgage loans in the first three quarters of this year, ran afoul of federal guidelines set in 1994 by Treasury Department agencies to protect appraiser independence.
Cuomo's lawsuit was filed in the Supreme Court of New York, New York County, Manhattan.
Related posts:
Current State of the Mortgage Market
Saturday, October 20, 2007
Current State of the Mortgage Market
What a fascinating and tumultuous time is upon us! Both the housing and the mortgage market are convulsing wildly! There are so many facets to the "big picture" that I would never presume have all the answers, so the following disclaimer is in order: I am a mortgage broker and the following is my opinion based on my experience and my knowledge. You might agree with me, you might not. But I urge you not to jump to any conclusions based on what I or anyone else has to say about the current state of affairs. No one can predict accurately how this is all going to turn out. My point of view is incredibly cynical in some ways, yet leaves room for optimism with the famous caveat of "it depends." In other words, my cynical prognostications can all be erased if certain entities take certain actions. Last thing is that this article is written for the masses, laypersons included. If you are an industry insider, I apologize, but I will be stopping to explain some things you definitely already know. Away we go...
The Beginning
In this case, the beginning is not an exact date or marked by an exact event, but rather the confluence of two important factors: the incredible loosening of lending standards and the overly-exuberant boom in the housing market. Yes, there are other important factors, and yes, I will discuss them, but these two are the big two in my mind.
Let's start with the loosening of lending standards. People with large amounts of money (banks, etc...) put systems into place to evaluate the potential risk associated with a loan. They've been evaluating the risk on loans since well before I was born. In the mortgage industry, this is called underwriting. There are underwriters (human beings), and underwriting systems (computers) that render decisions. Be they human or machine, the underwriting systems are employed and acting on the instruction of the money source.
"Money source" is a purposely ambiguous term so I can make the following point. Where does the money for mortgage loans really come from? If Wells Fargo gives you a mortgage loan, you might guess the money for that mortgage came from Wells Fargo, and you'd partly be right. Wells did indeed have the money to fund that transaction, and they may actually hold on to your loan forever, but there is a deeper layer to the money source than that. Even big banks need LIQUIDITY in order to continue doing business. When Wells needs liquidity, they obtain their money at a certain rate based on the appetites of the bond market. Sometimes this means "selling" your mortgage. Ultimately, the actual market metric is what's known as the "mortgage-backed security."
Mortgage-backed-securities (MBS's) are bought and sold just like stocks and bonds. By the time someone buys a MBS, its underlying risk and obligation have passed hands many times. It's gone from the consumer's intention to finance a house, to a mortgage broker, to a mortgage lender's underwriting staff, to the corporate structure of that lender, to be packaged in a "pool." Then it's either sold or held. When it's sold, it can be sold multiple times. The point is that those that are buying and selling them cannot simply call up the consumer that got the loan and ask them if they are a good credit risk. They are many times removed.
So this creates the necessary and crucial task of "judging" how sound of an investment the MBS is. After all, if a bank was selling a pool of loans with an average interest rate of 8%, the effective interest rate would only be 8% if none of the loans defaulted. Just based on historical statistics, a certain percentage of loans go into default. This risk of default is factored into the value of an MBS. In determining risk of default, investors look at several aspects of the mortgages that comprise MBS's: loan amount, credit score, whether income was documented or not, liquid assets, amount borrower compared to appraised value, whether cash was taken out, and many more.
Over time, default rates on certain "standard issue" mortgages have become very predictable. While there are many different types of mortgages, in recent history, but still before the period of so-called "meltdown," a certain type of mortgage was by far the most common. This is a 30 year fixed mortgage, with documented income and assets, with a down payment of some sort (or compensating factors to offset it), and with a reasonably strong credit history. In general, these are the components of a "Conforming" loan. A conforming loan is any loan that "conforms" to the guidelines set forth by Fannie Mae or Freddie Mac, huge Government-Sponsored-Enterprises put in place to help the American public realize the dream of home-ownership while protecting investors. So life is good right? Fannie and Freddie have their conforming loan guidelines in place. Investors can anticipate a predictable default rate and people can buy houses.
Enter the Problem #1
Unfortunately, not every family's scenario fits the conforming guidelines. In the not too distant past, there were little or no financing options for these families. To make a long story very short, investors saw great potential for this untapped market demographic. Alternative loans started to emerge with different standards than conforming loans. Interest rates were raised to account for increased risk of default and investors "guessed" at what would be the best indicators of likelihood of default. They knew it would be higher, but unlike the years and years of historical data behind conforming-type loans, there was no track record for these alternative loans.
What followed was a cataclysmic downward spiral of overly-exuberant underwriting standards. To keep up with competition, lenders got more and more aggressive, all the while operating in a market segment with a non-existent track record. Default rates were being guessed at, and were becoming evident in real time. Also evident was the fact that "experts" underestimated the actual default rate of these new alternative loans. Ratings Agencies (wall street analyst companies), were listing these new MBS's as much better than they were (because no one really knew how they would turn out). This goes back to the point of the investor being so far removed from the consumer. Wall Street analysts were saying that MBS's from these new alternative loans were a hot buy, so investors bought more. And more demand among investors drove an increase in the aggressiveness of loan programs and underwriting standards. It was a downward spiral in which anyone with a pulse could finance a house.
If this existed in a vacuum, it might not be so devastating, but it does not. This fire happened to be ignited at the same time that a large amount of gasoline, in the form of a real estate boom was occurring. There can be numerous "chicken versus the egg" arguments about the housing boom and the loosening of the mortgage market. The fact is they occurred at relatively the same time and they fed off each other.
Problem #2
People talk about the real estate boom that began around 2001 and ended about mid 2006. People and "experts" talk about the boom as if it's something that's happened before. "There have been up times and down times" they say. "This is just another boom." Those "experts" are wrong. There has never been a period like this. We have just experienced the largest housing boom in history. Might there be another one that supersedes it in the future? Possibly, but I would argue that the current time period will serve as a sobering lesson for us in the future. I would argue, this is as big as it gets. And it's not because I have the experience to have lived through previous ups and downs. It's not because I have decades of experience tracking these issues (because I don't). It's not because I have the foresight to predict the future of the markets. It is due to a simple truth: this "boom" is so much more inflated than any previous booms that it will stand as an obvious outlier in historical home price data. That is to say, compared to other upturns and downturns, the current boom is a much much larger digression from the mean than we have ever seen.
Here is an absolutely brilliant graph by the Yale economist Robert Shiller:
As you can see, there have been ups and downs. All have been within a certain standard deviation of the mean. The highest highs and the lowest lows have not deviated more 35% from the mean. Now take a look at the last 5 years. Adjusting for inflation a house today costs twice as much as the average value of a home for the last 100 years! We're over 100% away from the mean. I don't remember a lot from my statistics class in business school, but I do remember the concept of regression, or a return to the mean. It will happen. But remember this doesn't mean a house will eventually return to the same price it was in 1940, it means it will return to the same inflation-adjusted price. Even so, we are in the middle of a housing price correction right now that will likely continue. The severity of the correction and the length of the correction are two things that no one can accurately predict. That is where opinion comes in. You will hear a lot of opinions on the news, especially the economic focused news outlets. They vary, but I don't really think the "experts" realize just how bad things are. This is where my opinion comes in. but first, we need to talk about the interconnectedness of the mortgage market and the housing market.
There are a couple of caveats to the negativity. First, the mean housing data does not necessarily take into consideration that houses are much bigger and nicer (in general) than they were in the past. This may ease some of the regression to the mean. Furthermore, it's very important to note that different real estate markets around the country have behaved very differently. Although the media is national and national home data seems to spell doom for the entire nation, there are pockets around the country where the real estate market should be staying more steady. Some have already hit past the bottom, some have leveled out, and some will actually continue to grow. It just depends where you are and what market forces at play in your local market.
Mortgages and Home Prices: How They Are Connected
In the late 90's, the demand for housing began to rise steadily. Builders rushed to meet that demand by building more homes, yet the demand continued. The mortgage market had to do it's part by making sure more people could qualify to buy homes, so lending guidelines loosened. This also coincided with a period of decreasing interest rates. All the ingredients for the meltdown were in place. The lower interest rates drove an already high demand for homes higher. The easy lending guidelines made sure everyone could get the loan they wanted. Existing homeowners tapped their home equity to finance their lifestyles. Home equity was apparently an infinite well of money. Everyone, including industry professionals, made future plans on the assumption that values would continue to increase and money would continue to be easy to obtain.
There is an obvious downward spiral here. It is now culminating with one of the most dangerous gambles the mortgage market took. Before you read the following sentence, let me say that there is nothing wrong with adjustable rate mortgages (ARMS) if used for the appropriate purpose in the appropriate market. That said, ARMS are one of the main contributors to the meltdown. Short term ARMS were created that allowed someone to have a fixed payment for 1, 2, or 3 years. The introductory rates on these were low enough to allow first time homebuyers to buy homes well beyond their means. Brokers and banks assured these borrowers not to worry because their home would increase in value and they could refinance in 2 to 3 years to a more favorable loan. It seemed like a workable plan as long as everything stayed steady.
It Didn't Stay Steady
The new alternative loans (remember the ones with no track record to judge risk), started to show their track record, and it was worse than expected. When a loan-type has a worse than expected track record, it leads to investors not wanting to buy it any more. As a result, the money to fund these alternative loans began drying up and lenders began to go out of business. This led to a gut-check among all alternative loans and investors preemptively pulled the plug on other less-aggressive products as well. So starting in 2007, it has become much more difficult to obtain any sort of alternative financing. For instance, in 2005, a homebuyer could finance 100% of their home's value, without proving their income, with a 620 credit score. Now, lenders don't even do stated income loans to 100% with ANY credit score! That's a major change that's happened in just a short 3-4 month period.
At the same time, builders had become so exuberant that they had (and still have) immensely over-built for current housing demand. There is far more inventory on the market in terms of new homes than demand can meet. Even if there was demand for these homes, people can't get financing any more. Also, let's not forget about the scores of families that bought homes with short term fixed loans with the hopes of their values increasing, their credit improving, and refinancing into a better loan. In general their credit has not improved. In general, their house has not appreciated, and consequently they cannot refinance into a better loan. BUT they also cannot afford their payment.
Gloom and Doom
Now we have existing homeowners forced into default or short sale scenarios. This has a direct effect on banks and investors. Guidelines are further tightened to prevent future woes and this prevents even more people from getting financed right now. So their foreclosed or short-sold homes are coming onto the market and bringing prices down. Also, let's not forget about the huge inventory of new homes on the market. Builders are languishing and they are forced to drop prices as well. About the only thing that has stayed positive are interest rates. Historically speaking they are near an all time low, but it doesn't matter because they are only low on the Conforming programs. The lending standards are returning to the mean. Home prices are returning to the mean as well.
All that is to be expected, but here is why it's so bad. The volume of adjustable rate mortgages that are "coming due," or in other words, hitting their adjustable period where the payment goes up above what the homeowner can afford, will be even higher in 2008 than it is in 2007. At the same time, loans are harder to obtain than ever. Many of these people will be forced into foreclosure or short sales. These sales hitting the market at incredibly low prices lower the comparable sales data. The builders with too much inventory on their hands also lower the comparable sales data average.
And That's Why It's Worse Than Most People Think
We have hundreds of thousands of families across the nation in homes that are worth less than what they owe. They need to refinance to get out of their ARMS, but cannot due to both lending guidelines and home values. These families default or short sell which causes the lenders to take serious damage, which in turn causes lending guidelines to be further restricted. We are only just on the way down now. The crash landing has not yet occurred. As I said, there are more ARMS coming due in 2008 than there were in 2007, coupled with a tougher financing environment. When these come due and default or short sell, it further drives down the already decreasing value of real estate. This in turn harms builders who now have to take much less profit than expected and in some cases, losses. D.R. Horton's CEO said "2007 is going to suck," and he was right.
I argue that the aspects that make 2007 "suck" are the in greater supply in 2008. "Experts" and analysts incessantly like to state that housing only comprises a small percent of the entire American economy. This may be true in terms of jobs, but these "experts," all with much more education than me and much more air time are failing to see the biggest one of several critical factors in all of this: HOME EQUITY HAS FINANCED CONSUMER SPENDING. When we talk about the housing market being a small portion of the economy, that may be true inasmuch as construction jobs, but what about all of the ancillary effects?
Where do these experts think consumers are getting the money to buy the plasma TV? Maybe it's on a credit card, but eventually consumers want to consolidate that credit card with home equity. In the past they have done this, used home equity to increase their lifestyle, run up the credit cards again, and get bailed out again by home equity. BUT this will not be available in 2008! The simple fact that housing is a small part of the economy does not take into effect the interconnectedness it has with the rest of the economy. Builders losing money hurts the economy on it's scale, but what about lenders going out of business? Less people can get financed, so more people default, so more investors lose money, and less people can pump money into our economy, both on the end consumer level and the investor level.
It's a bad, bad situation. Intervention can come from many places. There are several congressional bills that have passed or that are proposed that would re-work Fannie Mae and Freddie Macs guidelines to allow some aid to the troubled areas of the mortgage market. It's not a panacea, but it will help. One thing is for sure: home prices MUST eventually return to their mean on the inflation adjusted index. Also, lending guidelines MUST return to a sustainable and predictable level of risk assessment. These two things are in the process of happening now, but they have definitely not already happened. It will be well in to 2008 and probably into 2009 before they do.
Should you worry? If you are one of the Conforming borrowers that is strong in 2 of at least the 4 following areas, you will be fine:
1. Income
2. Assets
3. Equity or Down Payment
4. Credit History
These 4 aspects are compensating factors for conforming loans and you will be able to get a decent 30 year fixed loan. That means that even someone with a 600 credit score and no down payment can get a loan right now if they have a good debt to income ratio and have several thousand dollars in liquid assets. But don't expect your home value to be going up like it used to (of course there are different markets all throughout the country, this assertion is general in nature). So buckle in for a bit of a bumpy ride. It's not the end of the world, and it will pass, but it certainly will be the most violent correction of home prices and lending standards this country has seen to date, and it's not over.
Recent posts:
Mortgage taxation. Law and judicial decisions, Arizona and Arkansas
The Beginning
In this case, the beginning is not an exact date or marked by an exact event, but rather the confluence of two important factors: the incredible loosening of lending standards and the overly-exuberant boom in the housing market. Yes, there are other important factors, and yes, I will discuss them, but these two are the big two in my mind.
Let's start with the loosening of lending standards. People with large amounts of money (banks, etc...) put systems into place to evaluate the potential risk associated with a loan. They've been evaluating the risk on loans since well before I was born. In the mortgage industry, this is called underwriting. There are underwriters (human beings), and underwriting systems (computers) that render decisions. Be they human or machine, the underwriting systems are employed and acting on the instruction of the money source.
"Money source" is a purposely ambiguous term so I can make the following point. Where does the money for mortgage loans really come from? If Wells Fargo gives you a mortgage loan, you might guess the money for that mortgage came from Wells Fargo, and you'd partly be right. Wells did indeed have the money to fund that transaction, and they may actually hold on to your loan forever, but there is a deeper layer to the money source than that. Even big banks need LIQUIDITY in order to continue doing business. When Wells needs liquidity, they obtain their money at a certain rate based on the appetites of the bond market. Sometimes this means "selling" your mortgage. Ultimately, the actual market metric is what's known as the "mortgage-backed security."
Mortgage-backed-securities (MBS's) are bought and sold just like stocks and bonds. By the time someone buys a MBS, its underlying risk and obligation have passed hands many times. It's gone from the consumer's intention to finance a house, to a mortgage broker, to a mortgage lender's underwriting staff, to the corporate structure of that lender, to be packaged in a "pool." Then it's either sold or held. When it's sold, it can be sold multiple times. The point is that those that are buying and selling them cannot simply call up the consumer that got the loan and ask them if they are a good credit risk. They are many times removed.
So this creates the necessary and crucial task of "judging" how sound of an investment the MBS is. After all, if a bank was selling a pool of loans with an average interest rate of 8%, the effective interest rate would only be 8% if none of the loans defaulted. Just based on historical statistics, a certain percentage of loans go into default. This risk of default is factored into the value of an MBS. In determining risk of default, investors look at several aspects of the mortgages that comprise MBS's: loan amount, credit score, whether income was documented or not, liquid assets, amount borrower compared to appraised value, whether cash was taken out, and many more.
Over time, default rates on certain "standard issue" mortgages have become very predictable. While there are many different types of mortgages, in recent history, but still before the period of so-called "meltdown," a certain type of mortgage was by far the most common. This is a 30 year fixed mortgage, with documented income and assets, with a down payment of some sort (or compensating factors to offset it), and with a reasonably strong credit history. In general, these are the components of a "Conforming" loan. A conforming loan is any loan that "conforms" to the guidelines set forth by Fannie Mae or Freddie Mac, huge Government-Sponsored-Enterprises put in place to help the American public realize the dream of home-ownership while protecting investors. So life is good right? Fannie and Freddie have their conforming loan guidelines in place. Investors can anticipate a predictable default rate and people can buy houses.
Enter the Problem #1
Unfortunately, not every family's scenario fits the conforming guidelines. In the not too distant past, there were little or no financing options for these families. To make a long story very short, investors saw great potential for this untapped market demographic. Alternative loans started to emerge with different standards than conforming loans. Interest rates were raised to account for increased risk of default and investors "guessed" at what would be the best indicators of likelihood of default. They knew it would be higher, but unlike the years and years of historical data behind conforming-type loans, there was no track record for these alternative loans.
What followed was a cataclysmic downward spiral of overly-exuberant underwriting standards. To keep up with competition, lenders got more and more aggressive, all the while operating in a market segment with a non-existent track record. Default rates were being guessed at, and were becoming evident in real time. Also evident was the fact that "experts" underestimated the actual default rate of these new alternative loans. Ratings Agencies (wall street analyst companies), were listing these new MBS's as much better than they were (because no one really knew how they would turn out). This goes back to the point of the investor being so far removed from the consumer. Wall Street analysts were saying that MBS's from these new alternative loans were a hot buy, so investors bought more. And more demand among investors drove an increase in the aggressiveness of loan programs and underwriting standards. It was a downward spiral in which anyone with a pulse could finance a house.
If this existed in a vacuum, it might not be so devastating, but it does not. This fire happened to be ignited at the same time that a large amount of gasoline, in the form of a real estate boom was occurring. There can be numerous "chicken versus the egg" arguments about the housing boom and the loosening of the mortgage market. The fact is they occurred at relatively the same time and they fed off each other.
Problem #2
People talk about the real estate boom that began around 2001 and ended about mid 2006. People and "experts" talk about the boom as if it's something that's happened before. "There have been up times and down times" they say. "This is just another boom." Those "experts" are wrong. There has never been a period like this. We have just experienced the largest housing boom in history. Might there be another one that supersedes it in the future? Possibly, but I would argue that the current time period will serve as a sobering lesson for us in the future. I would argue, this is as big as it gets. And it's not because I have the experience to have lived through previous ups and downs. It's not because I have decades of experience tracking these issues (because I don't). It's not because I have the foresight to predict the future of the markets. It is due to a simple truth: this "boom" is so much more inflated than any previous booms that it will stand as an obvious outlier in historical home price data. That is to say, compared to other upturns and downturns, the current boom is a much much larger digression from the mean than we have ever seen.
Here is an absolutely brilliant graph by the Yale economist Robert Shiller:
As you can see, there have been ups and downs. All have been within a certain standard deviation of the mean. The highest highs and the lowest lows have not deviated more 35% from the mean. Now take a look at the last 5 years. Adjusting for inflation a house today costs twice as much as the average value of a home for the last 100 years! We're over 100% away from the mean. I don't remember a lot from my statistics class in business school, but I do remember the concept of regression, or a return to the mean. It will happen. But remember this doesn't mean a house will eventually return to the same price it was in 1940, it means it will return to the same inflation-adjusted price. Even so, we are in the middle of a housing price correction right now that will likely continue. The severity of the correction and the length of the correction are two things that no one can accurately predict. That is where opinion comes in. You will hear a lot of opinions on the news, especially the economic focused news outlets. They vary, but I don't really think the "experts" realize just how bad things are. This is where my opinion comes in. but first, we need to talk about the interconnectedness of the mortgage market and the housing market.
There are a couple of caveats to the negativity. First, the mean housing data does not necessarily take into consideration that houses are much bigger and nicer (in general) than they were in the past. This may ease some of the regression to the mean. Furthermore, it's very important to note that different real estate markets around the country have behaved very differently. Although the media is national and national home data seems to spell doom for the entire nation, there are pockets around the country where the real estate market should be staying more steady. Some have already hit past the bottom, some have leveled out, and some will actually continue to grow. It just depends where you are and what market forces at play in your local market.
Mortgages and Home Prices: How They Are Connected
In the late 90's, the demand for housing began to rise steadily. Builders rushed to meet that demand by building more homes, yet the demand continued. The mortgage market had to do it's part by making sure more people could qualify to buy homes, so lending guidelines loosened. This also coincided with a period of decreasing interest rates. All the ingredients for the meltdown were in place. The lower interest rates drove an already high demand for homes higher. The easy lending guidelines made sure everyone could get the loan they wanted. Existing homeowners tapped their home equity to finance their lifestyles. Home equity was apparently an infinite well of money. Everyone, including industry professionals, made future plans on the assumption that values would continue to increase and money would continue to be easy to obtain.
There is an obvious downward spiral here. It is now culminating with one of the most dangerous gambles the mortgage market took. Before you read the following sentence, let me say that there is nothing wrong with adjustable rate mortgages (ARMS) if used for the appropriate purpose in the appropriate market. That said, ARMS are one of the main contributors to the meltdown. Short term ARMS were created that allowed someone to have a fixed payment for 1, 2, or 3 years. The introductory rates on these were low enough to allow first time homebuyers to buy homes well beyond their means. Brokers and banks assured these borrowers not to worry because their home would increase in value and they could refinance in 2 to 3 years to a more favorable loan. It seemed like a workable plan as long as everything stayed steady.
It Didn't Stay Steady
The new alternative loans (remember the ones with no track record to judge risk), started to show their track record, and it was worse than expected. When a loan-type has a worse than expected track record, it leads to investors not wanting to buy it any more. As a result, the money to fund these alternative loans began drying up and lenders began to go out of business. This led to a gut-check among all alternative loans and investors preemptively pulled the plug on other less-aggressive products as well. So starting in 2007, it has become much more difficult to obtain any sort of alternative financing. For instance, in 2005, a homebuyer could finance 100% of their home's value, without proving their income, with a 620 credit score. Now, lenders don't even do stated income loans to 100% with ANY credit score! That's a major change that's happened in just a short 3-4 month period.
At the same time, builders had become so exuberant that they had (and still have) immensely over-built for current housing demand. There is far more inventory on the market in terms of new homes than demand can meet. Even if there was demand for these homes, people can't get financing any more. Also, let's not forget about the scores of families that bought homes with short term fixed loans with the hopes of their values increasing, their credit improving, and refinancing into a better loan. In general their credit has not improved. In general, their house has not appreciated, and consequently they cannot refinance into a better loan. BUT they also cannot afford their payment.
Gloom and Doom
Now we have existing homeowners forced into default or short sale scenarios. This has a direct effect on banks and investors. Guidelines are further tightened to prevent future woes and this prevents even more people from getting financed right now. So their foreclosed or short-sold homes are coming onto the market and bringing prices down. Also, let's not forget about the huge inventory of new homes on the market. Builders are languishing and they are forced to drop prices as well. About the only thing that has stayed positive are interest rates. Historically speaking they are near an all time low, but it doesn't matter because they are only low on the Conforming programs. The lending standards are returning to the mean. Home prices are returning to the mean as well.
All that is to be expected, but here is why it's so bad. The volume of adjustable rate mortgages that are "coming due," or in other words, hitting their adjustable period where the payment goes up above what the homeowner can afford, will be even higher in 2008 than it is in 2007. At the same time, loans are harder to obtain than ever. Many of these people will be forced into foreclosure or short sales. These sales hitting the market at incredibly low prices lower the comparable sales data. The builders with too much inventory on their hands also lower the comparable sales data average.
And That's Why It's Worse Than Most People Think
We have hundreds of thousands of families across the nation in homes that are worth less than what they owe. They need to refinance to get out of their ARMS, but cannot due to both lending guidelines and home values. These families default or short sell which causes the lenders to take serious damage, which in turn causes lending guidelines to be further restricted. We are only just on the way down now. The crash landing has not yet occurred. As I said, there are more ARMS coming due in 2008 than there were in 2007, coupled with a tougher financing environment. When these come due and default or short sell, it further drives down the already decreasing value of real estate. This in turn harms builders who now have to take much less profit than expected and in some cases, losses. D.R. Horton's CEO said "2007 is going to suck," and he was right.
I argue that the aspects that make 2007 "suck" are the in greater supply in 2008. "Experts" and analysts incessantly like to state that housing only comprises a small percent of the entire American economy. This may be true in terms of jobs, but these "experts," all with much more education than me and much more air time are failing to see the biggest one of several critical factors in all of this: HOME EQUITY HAS FINANCED CONSUMER SPENDING. When we talk about the housing market being a small portion of the economy, that may be true inasmuch as construction jobs, but what about all of the ancillary effects?
Where do these experts think consumers are getting the money to buy the plasma TV? Maybe it's on a credit card, but eventually consumers want to consolidate that credit card with home equity. In the past they have done this, used home equity to increase their lifestyle, run up the credit cards again, and get bailed out again by home equity. BUT this will not be available in 2008! The simple fact that housing is a small part of the economy does not take into effect the interconnectedness it has with the rest of the economy. Builders losing money hurts the economy on it's scale, but what about lenders going out of business? Less people can get financed, so more people default, so more investors lose money, and less people can pump money into our economy, both on the end consumer level and the investor level.
It's a bad, bad situation. Intervention can come from many places. There are several congressional bills that have passed or that are proposed that would re-work Fannie Mae and Freddie Macs guidelines to allow some aid to the troubled areas of the mortgage market. It's not a panacea, but it will help. One thing is for sure: home prices MUST eventually return to their mean on the inflation adjusted index. Also, lending guidelines MUST return to a sustainable and predictable level of risk assessment. These two things are in the process of happening now, but they have definitely not already happened. It will be well in to 2008 and probably into 2009 before they do.
Should you worry? If you are one of the Conforming borrowers that is strong in 2 of at least the 4 following areas, you will be fine:
1. Income
2. Assets
3. Equity or Down Payment
4. Credit History
These 4 aspects are compensating factors for conforming loans and you will be able to get a decent 30 year fixed loan. That means that even someone with a 600 credit score and no down payment can get a loan right now if they have a good debt to income ratio and have several thousand dollars in liquid assets. But don't expect your home value to be going up like it used to (of course there are different markets all throughout the country, this assertion is general in nature). So buckle in for a bit of a bumpy ride. It's not the end of the world, and it will pass, but it certainly will be the most violent correction of home prices and lending standards this country has seen to date, and it's not over.
Recent posts:
Mortgage taxation. Law and judicial decisions, Arizona and Arkansas
Wednesday, October 10, 2007
Mortgage taxation. Law and judicial decisions, Arizona and Arkansas
Revised Statutes, 1901. In Arizona (sec. 3847)
property under mortgage or lease is listed by and
taxed to the mortgagor or lessor, unless it is listed
by the mortgagee or lessee. With certain enumerated
exceptions (sec. 3834) all property is subject to taxa-
tion, but double taxation is not permitted. Liabilities
may be deducted from solvent debts (sec. 3835).
Arkansas
Constitution, 1874, art. 16, sec. 5. All property sub-
ject to taxation shall be taxed according to its value,
that value to be ascertained in such manner as the gen-
eral assembly shall direct, making the same equal and
uniform throughout the state.
Present Law. Dig. of St., 1904. In Arkansas
mortgages are taxed as personal property. The law
requires (sec. 6873) that all property, including mon-
eys and credits, shall be taxed, and credits are defined
(sec. 6872) as the excess of the sum of all legal claims
and demands over and above the sum of legal bona
fide debts which the person owes. Every person (sec.
6899) is required to list all moneys loaned by him, but
is not required (sec. 6902) to list a greater portion of
any credits than he believes can be collected.
Court Decisions. A note given for land, and the
land itself, are both subject to taxation; the note as
property of the holder, and the land as property of the
purchaser. Ouachita County v. Rumph, 43 Ark. 525,
1884.
Related posts:
Mortgage taxation. Law and judicial decisions, Alabama
property under mortgage or lease is listed by and
taxed to the mortgagor or lessor, unless it is listed
by the mortgagee or lessee. With certain enumerated
exceptions (sec. 3834) all property is subject to taxa-
tion, but double taxation is not permitted. Liabilities
may be deducted from solvent debts (sec. 3835).
Arkansas
Constitution, 1874, art. 16, sec. 5. All property sub-
ject to taxation shall be taxed according to its value,
that value to be ascertained in such manner as the gen-
eral assembly shall direct, making the same equal and
uniform throughout the state.
Present Law. Dig. of St., 1904. In Arkansas
mortgages are taxed as personal property. The law
requires (sec. 6873) that all property, including mon-
eys and credits, shall be taxed, and credits are defined
(sec. 6872) as the excess of the sum of all legal claims
and demands over and above the sum of legal bona
fide debts which the person owes. Every person (sec.
6899) is required to list all moneys loaned by him, but
is not required (sec. 6902) to list a greater portion of
any credits than he believes can be collected.
Court Decisions. A note given for land, and the
land itself, are both subject to taxation; the note as
property of the holder, and the land as property of the
purchaser. Ouachita County v. Rumph, 43 Ark. 525,
1884.
Related posts:
Mortgage taxation. Law and judicial decisions, Alabama
Sunday, October 7, 2007
Mortgage taxation. Law and judicial decisions, Alabama
History. In Alabama prior to 1903 mortgages were
subject to taxation as personal property (Code, 1896,
vol. 1, sec. 3911, sub sec. 7). In 1903 (Acts, 1903,
p. 227) a privilege tax of fifteen cents on every one
hundred dollars was imposed at the time of record-
ing. The present law was passed in 1907, and is but
a slight modification of the law of 1903.
Constitution, 1901, art. 11, sec 1. All taxes levied
on property in this state shall be assessed in exact pro-
portion to the value of such property.
Present Lau>, Acts, 1907, p. 455, sec. 1. No mort-
gage, deed of trust, contract of conditional sale, or
other instrument in the nature of a mortgage executed
so as to convey real property or any interest in real
or personal property situated within the state is to be
received for record unless a privilege tax has been
paid. This tax amounts to fifteen cents, if the in-
debtedness secured is one hundred dollars or less ; and
an additional fifteen cents is added for every addi-
tional one hundred dollars or fraction thereof. The
law states definitely that the tax is to be paid by the
lender. When the mortgage is presented to the judge of
probate of the county in which any of the property
conveyed is situated and the tax is paid, the probate
judge makes a certification to that effect on the instru-
ment, and then the mortgage may be recorded in any
county where property given as security is situated
without any additional tax, except the fee for record-
ing. An extension or renewal contract is subject to
the same tax as the original mortgage. If the tax
prescribed by this act has been paid, neither the mort-
gage nor the debt secured is to be subject to an ad
valorem tax, either for state, county, or municipal
purposes. The probate judge receives 5 per cent of
the amount collected by him as compensation for his
services. Of the remainder, one-third is paid to the
county treasurer of the county in which the taxes are
collected, and two-thirds to the state treasurer. If
the land which is given to secure the debt is situated
in more than one county of the state, then, this one-
third is divided among the county treasurers in pro-
portion to the value of the property given as security
in each county. In cases where only part of the prop-
erty is within the state, the proportional part within
and without is determined by the state board of com-
promise, and the taxes paid accordingly.
It is made a misdemeanor, punishable by a fine, for
the probate judge to file for record any mortgage upon
which the taxes have not been paid.
Related posts:
Mortgage commercial real estate loans
subject to taxation as personal property (Code, 1896,
vol. 1, sec. 3911, sub sec. 7). In 1903 (Acts, 1903,
p. 227) a privilege tax of fifteen cents on every one
hundred dollars was imposed at the time of record-
ing. The present law was passed in 1907, and is but
a slight modification of the law of 1903.
Constitution, 1901, art. 11, sec 1. All taxes levied
on property in this state shall be assessed in exact pro-
portion to the value of such property.
Present Lau>, Acts, 1907, p. 455, sec. 1. No mort-
gage, deed of trust, contract of conditional sale, or
other instrument in the nature of a mortgage executed
so as to convey real property or any interest in real
or personal property situated within the state is to be
received for record unless a privilege tax has been
paid. This tax amounts to fifteen cents, if the in-
debtedness secured is one hundred dollars or less ; and
an additional fifteen cents is added for every addi-
tional one hundred dollars or fraction thereof. The
law states definitely that the tax is to be paid by the
lender. When the mortgage is presented to the judge of
probate of the county in which any of the property
conveyed is situated and the tax is paid, the probate
judge makes a certification to that effect on the instru-
ment, and then the mortgage may be recorded in any
county where property given as security is situated
without any additional tax, except the fee for record-
ing. An extension or renewal contract is subject to
the same tax as the original mortgage. If the tax
prescribed by this act has been paid, neither the mort-
gage nor the debt secured is to be subject to an ad
valorem tax, either for state, county, or municipal
purposes. The probate judge receives 5 per cent of
the amount collected by him as compensation for his
services. Of the remainder, one-third is paid to the
county treasurer of the county in which the taxes are
collected, and two-thirds to the state treasurer. If
the land which is given to secure the debt is situated
in more than one county of the state, then, this one-
third is divided among the county treasurers in pro-
portion to the value of the property given as security
in each county. In cases where only part of the prop-
erty is within the state, the proportional part within
and without is determined by the state board of com-
promise, and the taxes paid accordingly.
It is made a misdemeanor, punishable by a fine, for
the probate judge to file for record any mortgage upon
which the taxes have not been paid.
Related posts:
Mortgage commercial real estate loans
Thursday, October 4, 2007
Mortgage commercial real estate loans
Mortgage loans for commercial real estate
* You do not have to save money for years to buy commercial real estate or draw money out of your company's turnover-you can buy today, using the money the bank
* We will help you buy commercial real estate, as in the secondary, and in the primary property market
* The cost of your property in the future will only grow
* Your company will make a profit using acquired real estate
general requirements for a borrower
- The status of the borrower may be capable individuals possessing documents substantiating person, valid on the territory of the Russian Federation in order to be able to perform and real estate transactions.
Age-age borrower and individuals whose incomes are taken into account when calculating the solvency of not less than 20 years.
Maximum-on the date of repayment should not exceed the age of retirement set by law (60 years for men and 55 years for women). If the insurance company decision on the date vozyrata age can be increased.
The work - a permanent place of work or work under labor agreements (seniority at the last place of work not less than 1 month).
Credit history is the lack of negative information about the borrower (loan recipients), which previously enjoyed loans.
Nationality, registration, have no meaning if the borrower permanently resides and works in the territory of Moscow (Moscow Region), and has a temporary registration. If the borrower fails to live, but not in Moscow (MO), the credit is only possible if there is documented income.
To get a commercial mortgage loan should contact our specialist with the agency and to come to the office
Specialists advise all of our agencies wishing for a mortgage on commercial real estate.
Related posts:
Mortgages
* You do not have to save money for years to buy commercial real estate or draw money out of your company's turnover-you can buy today, using the money the bank
* We will help you buy commercial real estate, as in the secondary, and in the primary property market
* The cost of your property in the future will only grow
* Your company will make a profit using acquired real estate
general requirements for a borrower
- The status of the borrower may be capable individuals possessing documents substantiating person, valid on the territory of the Russian Federation in order to be able to perform and real estate transactions.
Age-age borrower and individuals whose incomes are taken into account when calculating the solvency of not less than 20 years.
Maximum-on the date of repayment should not exceed the age of retirement set by law (60 years for men and 55 years for women). If the insurance company decision on the date vozyrata age can be increased.
The work - a permanent place of work or work under labor agreements (seniority at the last place of work not less than 1 month).
Credit history is the lack of negative information about the borrower (loan recipients), which previously enjoyed loans.
Nationality, registration, have no meaning if the borrower permanently resides and works in the territory of Moscow (Moscow Region), and has a temporary registration. If the borrower fails to live, but not in Moscow (MO), the credit is only possible if there is documented income.
To get a commercial mortgage loan should contact our specialist with the agency and to come to the office
Specialists advise all of our agencies wishing for a mortgage on commercial real estate.
Related posts:
Mortgages
Monday, October 1, 2007
Mortgages
Mortgages
You do not have to save money for years to buy an apartment, you can buy today
We will help you buy an apartment, as in the secondary, and in the primary property market
The cost of your property in the future will only grow.
Mortgage-loan mortgage (apartments, houses, etc.). As a rule issued by the bank loan, but the lender of an obligation may be secured mortgage and any other person entitled to carry out such activities. The borrower mortgage lien loan guarantees payment of real property (apartment, house, etc.), it belongs to the property rights including those acquired in mortgage lending program.
In Russia the term mortgages and mortgage loan means in the bank for the purchase of residential real estate (apartment or house). In English, there is a special word, the meaning of the transferor type of credit mortgage. This category does not get loans from other target designation granted bail of real estate: for example, to buy cars, household appliances, furniture or other needs.
how to get mortgage
The main stages of a mortgage specified in our pages. We encourage our experts to contact for more information on mortgage lending.
Our client receives:
the best choice proposals on mortgage lending
assistance in applying for a mortgage
the time for the consideration of credit applications and award mortgage from the 1 st day.
Related posts:
commercial real estate
You do not have to save money for years to buy an apartment, you can buy today
We will help you buy an apartment, as in the secondary, and in the primary property market
The cost of your property in the future will only grow.
Mortgage-loan mortgage (apartments, houses, etc.). As a rule issued by the bank loan, but the lender of an obligation may be secured mortgage and any other person entitled to carry out such activities. The borrower mortgage lien loan guarantees payment of real property (apartment, house, etc.), it belongs to the property rights including those acquired in mortgage lending program.
In Russia the term mortgages and mortgage loan means in the bank for the purchase of residential real estate (apartment or house). In English, there is a special word, the meaning of the transferor type of credit mortgage. This category does not get loans from other target designation granted bail of real estate: for example, to buy cars, household appliances, furniture or other needs.
how to get mortgage
The main stages of a mortgage specified in our pages. We encourage our experts to contact for more information on mortgage lending.
Our client receives:
the best choice proposals on mortgage lending
assistance in applying for a mortgage
the time for the consideration of credit applications and award mortgage from the 1 st day.
Related posts:
commercial real estate
Saturday, September 29, 2007
commercial real estate
Acquisition of commercial real estate properties acquired on bail or on bail existing housing in recent times has become a reality.
To secure a pledge taken in the formal properties:
* property complexes (Moscow and the Moscow region);
* buildings, structures (Moscow and the Moscow region);
* of the buildings, facilities (Moscow and the Moscow region)
The loan is granted for a period of up to five years.
The loan amount ranges from 60 to 80% of the market value of real estate.
The loan amount of 30 thousand up to 2 million USD (or equivalent in rubles)
Interest rates (depending on the amount and term loan):
* 14-17% per annum for ruble credit.
* 13-16% per annum for foreign currency loans.
* for individuals 13% per annum
Dates credit:
* to 10 years for natural persons
* from 3 to 5 years for legal persons
For individuals such credit may be granted bail available in the commercial real estate property, for the acquisition of commercial real estate, for the acquisition of commercial real estate at the time of investment, for the purchase of residential properties in the secondary market, followed by a translation into commercial.
Related posts:
The history of mortgage
To secure a pledge taken in the formal properties:
* property complexes (Moscow and the Moscow region);
* buildings, structures (Moscow and the Moscow region);
* of the buildings, facilities (Moscow and the Moscow region)
The loan is granted for a period of up to five years.
The loan amount ranges from 60 to 80% of the market value of real estate.
The loan amount of 30 thousand up to 2 million USD (or equivalent in rubles)
Interest rates (depending on the amount and term loan):
* 14-17% per annum for ruble credit.
* 13-16% per annum for foreign currency loans.
* for individuals 13% per annum
Dates credit:
* to 10 years for natural persons
* from 3 to 5 years for legal persons
For individuals such credit may be granted bail available in the commercial real estate property, for the acquisition of commercial real estate, for the acquisition of commercial real estate at the time of investment, for the purchase of residential properties in the secondary market, followed by a translation into commercial.
Related posts:
The history of mortgage
Thursday, September 27, 2007
The history of mortgage
The term "mortgage" first appeared in Greece in the early VI. before tea (it has imposed Archon Solon), and was associated with the responsibility of the debtor to the creditor certain land holdings (in Athens originally served as collateral security identity debtor, in the event of non-compliance with obligations feared slavery).
For this commitment proceeding, and on the border of land owned by the borrower territory raised poles with a sign that the said property is a secured creditor's claim in the amount naimenovannoy. At such a column, called "mortgage" (from the Greek. Hypotheka-stand, kickstand), there were all debts land owner.
Later for that purpose to the use of special books, known as mortgage. Already in ancient Greece ensured transparency, which allowed each individual concerned readily ascertain the status of this land.
The new development has received the Institute of mortgages in the Roman Empire. As I in. He. e. created mortgage institutions that issue credit on bail property to private individuals.
During the period of Emperor Anthony Piya (II in. Yet. Et.) Was developed by special legislation to mortgage banks that existed along with other specialized banks and other lending institutions - proobrazami bank and savings associations.
The state often has greater support mortgage lending. Thus, when Emperor Trayane were established special funds to support widows and orphans, granting mortgage loans under 5% per annum (similar financial systems were formed in Russia at the XIX. Be true support, mainly representatives adresovalas noble Estate).
Mortgage Institute, in a relatively small time has been the evolution of the way fidutsii (from Lat. Fiducia transaction on trust, trustee for the transaction) to a more advanced stage-pignusa (from Lat. Pignus-informal pledge), and continue until mortgage.
When fidutsii object moved into property lien creditor, the latter had the right to return or to the debtor's estate after the performance of the contract, or to sell it, abandoning the monetary demands.
Pignusa Treaty provided for transferring real estate is no longer in the property and take possession of it as a guarantee for the loan obligations. The lender had no right to keep the subject in their own bail and could sell the property only in the event of failure made debtor obligations, returning the difference between the sales price and the balance of the borrower's debt.
The emergence of a classic mortgage institution was associated with the change of the policy environment of the time: the weakening of the slave economy and the massive transfer of land tenants. Initially, the new form of collateral falls tools, which lands tenants for objective reasons not to allocate land owners (landholders). Later transferred to the beginning of mortgages and real estate.
With mortgage assets remained in the possession of the debtor and the creditor receives the right to seek zakladyvaemuyu thing to follow with the sale of its bidding and compensation vyruchennoy balance of the borrower's debt. Some of the form of collateral Institute exists to date.
Along with the mortgage, caused by the agreement of the parties, imposed various legal mortgage, acting under Act (mortgage investor to invest a mortgage on the property tax non-payers, mortgages on the property custodian, mortgages wife to the husband's estate, etc.). There mortgages, subordinated to the outbreak of (the contract) or to the degree of importance (by law). Developed subsequent pledge of the same real estate more persons.
The role of the State in respect for the rights of participants in mortgage transactions has been high. Suffice it to the complex structure of the transaction required control and regulation, smooth registration system. In response to the weakening of the state functions from the twilight era of ancient world, the institution has ceased to exist mortgages in the next few centuries, before re-appear in the medieval European law.
In Germany, it appears no earlier XIV century, in France since the end of XVI century acted quiet mortgages. Mortgage extended to real estate (usually real), regardless of the change in ownership, and even then was reliable proprietary right, but only after making a special recording of a mortgage in a special book.
Related posts:
What is a mortgage
For this commitment proceeding, and on the border of land owned by the borrower territory raised poles with a sign that the said property is a secured creditor's claim in the amount naimenovannoy. At such a column, called "mortgage" (from the Greek. Hypotheka-stand, kickstand), there were all debts land owner.
Later for that purpose to the use of special books, known as mortgage. Already in ancient Greece ensured transparency, which allowed each individual concerned readily ascertain the status of this land.
The new development has received the Institute of mortgages in the Roman Empire. As I in. He. e. created mortgage institutions that issue credit on bail property to private individuals.
During the period of Emperor Anthony Piya (II in. Yet. Et.) Was developed by special legislation to mortgage banks that existed along with other specialized banks and other lending institutions - proobrazami bank and savings associations.
The state often has greater support mortgage lending. Thus, when Emperor Trayane were established special funds to support widows and orphans, granting mortgage loans under 5% per annum (similar financial systems were formed in Russia at the XIX. Be true support, mainly representatives adresovalas noble Estate).
Mortgage Institute, in a relatively small time has been the evolution of the way fidutsii (from Lat. Fiducia transaction on trust, trustee for the transaction) to a more advanced stage-pignusa (from Lat. Pignus-informal pledge), and continue until mortgage.
When fidutsii object moved into property lien creditor, the latter had the right to return or to the debtor's estate after the performance of the contract, or to sell it, abandoning the monetary demands.
Pignusa Treaty provided for transferring real estate is no longer in the property and take possession of it as a guarantee for the loan obligations. The lender had no right to keep the subject in their own bail and could sell the property only in the event of failure made debtor obligations, returning the difference between the sales price and the balance of the borrower's debt.
The emergence of a classic mortgage institution was associated with the change of the policy environment of the time: the weakening of the slave economy and the massive transfer of land tenants. Initially, the new form of collateral falls tools, which lands tenants for objective reasons not to allocate land owners (landholders). Later transferred to the beginning of mortgages and real estate.
With mortgage assets remained in the possession of the debtor and the creditor receives the right to seek zakladyvaemuyu thing to follow with the sale of its bidding and compensation vyruchennoy balance of the borrower's debt. Some of the form of collateral Institute exists to date.
Along with the mortgage, caused by the agreement of the parties, imposed various legal mortgage, acting under Act (mortgage investor to invest a mortgage on the property tax non-payers, mortgages on the property custodian, mortgages wife to the husband's estate, etc.). There mortgages, subordinated to the outbreak of (the contract) or to the degree of importance (by law). Developed subsequent pledge of the same real estate more persons.
The role of the State in respect for the rights of participants in mortgage transactions has been high. Suffice it to the complex structure of the transaction required control and regulation, smooth registration system. In response to the weakening of the state functions from the twilight era of ancient world, the institution has ceased to exist mortgages in the next few centuries, before re-appear in the medieval European law.
In Germany, it appears no earlier XIV century, in France since the end of XVI century acted quiet mortgages. Mortgage extended to real estate (usually real), regardless of the change in ownership, and even then was reliable proprietary right, but only after making a special recording of a mortgage in a special book.
Related posts:
What is a mortgage
Tuesday, September 25, 2007
What is a mortgage
What is a mortgage? This is a long-term loan against mortgage for the purchase of housing.
Most people believed most profitable mortgage way to solve housing problems.
Participants mortgage system are: banks (Review the borrower's ability to pay), insurance companies (undertake to insure risks in the mortgage lending), the company estimates (estimate the market value of apartments).
Advantages of mortgage lending:
* opportunity fairly quickly become the owner of housing and moving to a new apartment;
* loan for a long period, the amount for which the monthly payment does not change in case of increase in the cost of apartments;
* the opportunity to pay for their own apartment, rather than rent someone else's real estate, while interest on the loan are comparable to monthly rent for a similar apartment;
* opportunity to sign up (to register) in the apartment, on the acquired mortgage, the borrower and the members of his family;
* favorable investment (real estate prices rising steadily at 15-30% per year);
* receive tax benefits for the duration of the mortgage, with the amount in 1000000 rubles tax deduction, as well as the amount of interest payable for a term of the loan payment.
The main terms of the mortgage loan:
* credit issued for a period of 6 months to 27 years;
* loan amount up to 95% of the cost of purchased housing;
* interest rate on mortgages in rubles, from 15% per annum, the currency of 10% (defined individually);
* apartment is the subject of collateral which becomes the property of the borrower;
* payment from the borrower's own funds in the amount of 5% to 40% of the cost of purchased apartments (initial cash contribution);
* repayment of the loan is carried out in equal monthly installments over the life of the loan agreement, which includes interest on the loan and part of the debt and do not exceed 30-50% average borrower's monthly income;
* in determining the amount of the loan as a borrower's income may be included on the basic wage job, income from part-time work, income in the form of interest on deposits, income from the rental of real estate, and others over the past 2 years;
* Providing the borrower documents to assess its creditworthiness (information on income, family composition, educational qualifications, women who have worked, a copy of a passport, etc.)
Related posts:
Mortgages expiring
Most people believed most profitable mortgage way to solve housing problems.
Participants mortgage system are: banks (Review the borrower's ability to pay), insurance companies (undertake to insure risks in the mortgage lending), the company estimates (estimate the market value of apartments).
Advantages of mortgage lending:
* opportunity fairly quickly become the owner of housing and moving to a new apartment;
* loan for a long period, the amount for which the monthly payment does not change in case of increase in the cost of apartments;
* the opportunity to pay for their own apartment, rather than rent someone else's real estate, while interest on the loan are comparable to monthly rent for a similar apartment;
* opportunity to sign up (to register) in the apartment, on the acquired mortgage, the borrower and the members of his family;
* favorable investment (real estate prices rising steadily at 15-30% per year);
* receive tax benefits for the duration of the mortgage, with the amount in 1000000 rubles tax deduction, as well as the amount of interest payable for a term of the loan payment.
The main terms of the mortgage loan:
* credit issued for a period of 6 months to 27 years;
* loan amount up to 95% of the cost of purchased housing;
* interest rate on mortgages in rubles, from 15% per annum, the currency of 10% (defined individually);
* apartment is the subject of collateral which becomes the property of the borrower;
* payment from the borrower's own funds in the amount of 5% to 40% of the cost of purchased apartments (initial cash contribution);
* repayment of the loan is carried out in equal monthly installments over the life of the loan agreement, which includes interest on the loan and part of the debt and do not exceed 30-50% average borrower's monthly income;
* in determining the amount of the loan as a borrower's income may be included on the basic wage job, income from part-time work, income in the form of interest on deposits, income from the rental of real estate, and others over the past 2 years;
* Providing the borrower documents to assess its creditworthiness (information on income, family composition, educational qualifications, women who have worked, a copy of a passport, etc.)
Related posts:
Mortgages expiring
Saturday, September 22, 2007
Mortgages expiring
What happens if during the 12 months you more than three times, even slightly expired mortgage payment?
You know that this may be grounds for recovery inherent property?
* you propose to be a guarantor for the loan?
The person for whom you should poruchitsya says that this is an empty formality, and that the answer he would have no debts. Was that true?
And you know what Clients are jointly and severally liable with the borrower on the loan?
Why do people turn to the bank for the loan?
Because it wants to have his apartment (house, land, a lot of money on bail) (Desired-stress). This is all exactly clear.
No question about it. And that serves as the main incentive to apply to the bank and get a loan?
* Actual calculation?
* Sample and colleagues on the board work (Vasey neighbor, school buddies, driving a relative)?
* Broskaya advertising?
Unfortunately, in most cases, do not own calculation, and an example of "neighbor Vasey, buyers of credit already a third apartment, or out roll-advertising play a crucial role in the treatment of mortgage. And that is why a mortgage instead of a source of good, threatens to become a source of trouble.
Mortgage: bondage or benefit?
Imagine that you took the money: they want you to urgently enough, and while you need a "decent" amount. (For completeness, a feeling I podstavlyu-ka figures: need 100000 dollars)
Where they can?
* Option One: money.
Bertie monthly salary: deduct from it the necessary expenses: for food, clothing, family maintenance, rent, etc.. That something deferred for unforeseen expenses.
How much remains?
Now imagine the funds and the money to do that every month can put off. How much time will be required to obtain the necessary amount of money?
* Option Two: go into the streets with a large hat (the amount of money required to fit there) and ...
No? Outdoor razdobyt not get?
* Option Three: to take with friends. (Here is where druzhba-to checked). What does not get? A custody tried to hold interest? They also can not?
Although it managed to take something? Excellent: were good friends!
* Then still another option: take the money in the bank.
In most cases, this option is more effective than mentioned above. How to get credit in the bank - this, indeed, is devoted to the project "On MORTGAGES"
That is, it turns out that the bank can-do, as there are only best friends!
That is, mortgage-can be good.
But mortgage-can be and bondage. Indeed, if the loan had to pay 9 / 10 of its income, it is not like the good think.
If it is not possible to pay on the loan, but because the court imposes cover not only planted on the bank property, but also the fact that there was - and in which the loan funds are not spent, what is the benefit f?
A small conclusion:
Withdrawal from the above, a simple enough: Mortgage is a tool.
The skilful use of this tool can make a life-crash, better, better.
Not able-use can lead to serious losses.
Neither neighbor Vasya covering as cool to live in his flat, nor Bank, on whose custom-made beautiful advertising is not paying your debts.
This is your choice and your risk!
To mortgages would be good-you need to think independently.
Related posts:
A distinctive feature of a mortgage
You know that this may be grounds for recovery inherent property?
* you propose to be a guarantor for the loan?
The person for whom you should poruchitsya says that this is an empty formality, and that the answer he would have no debts. Was that true?
And you know what Clients are jointly and severally liable with the borrower on the loan?
Why do people turn to the bank for the loan?
Because it wants to have his apartment (house, land, a lot of money on bail) (Desired-stress). This is all exactly clear.
No question about it. And that serves as the main incentive to apply to the bank and get a loan?
* Actual calculation?
* Sample and colleagues on the board work (Vasey neighbor, school buddies, driving a relative)?
* Broskaya advertising?
Unfortunately, in most cases, do not own calculation, and an example of "neighbor Vasey, buyers of credit already a third apartment, or out roll-advertising play a crucial role in the treatment of mortgage. And that is why a mortgage instead of a source of good, threatens to become a source of trouble.
Mortgage: bondage or benefit?
Imagine that you took the money: they want you to urgently enough, and while you need a "decent" amount. (For completeness, a feeling I podstavlyu-ka figures: need 100000 dollars)
Where they can?
* Option One: money.
Bertie monthly salary: deduct from it the necessary expenses: for food, clothing, family maintenance, rent, etc.. That something deferred for unforeseen expenses.
How much remains?
Now imagine the funds and the money to do that every month can put off. How much time will be required to obtain the necessary amount of money?
* Option Two: go into the streets with a large hat (the amount of money required to fit there) and ...
No? Outdoor razdobyt not get?
* Option Three: to take with friends. (Here is where druzhba-to checked). What does not get? A custody tried to hold interest? They also can not?
Although it managed to take something? Excellent: were good friends!
* Then still another option: take the money in the bank.
In most cases, this option is more effective than mentioned above. How to get credit in the bank - this, indeed, is devoted to the project "On MORTGAGES"
That is, it turns out that the bank can-do, as there are only best friends!
That is, mortgage-can be good.
But mortgage-can be and bondage. Indeed, if the loan had to pay 9 / 10 of its income, it is not like the good think.
If it is not possible to pay on the loan, but because the court imposes cover not only planted on the bank property, but also the fact that there was - and in which the loan funds are not spent, what is the benefit f?
A small conclusion:
Withdrawal from the above, a simple enough: Mortgage is a tool.
The skilful use of this tool can make a life-crash, better, better.
Not able-use can lead to serious losses.
Neither neighbor Vasya covering as cool to live in his flat, nor Bank, on whose custom-made beautiful advertising is not paying your debts.
This is your choice and your risk!
To mortgages would be good-you need to think independently.
Related posts:
A distinctive feature of a mortgage
Thursday, September 20, 2007
A distinctive feature of a mortgage
A distinctive feature of a mortgage is the key: there is the mortgage bond, no collateral, no mortgage
The term mortgage:
The term "Mortgage" means a loan issued on bail.
The main difference is not of mortgage mortgage-mortgage: that is, the availability of collateral. Moreover, the mortgage loan can be granted bail as of the property owned by the borrower or on bail purchased property (where mortgages are drawn up in conjunction with the acquisition of property).
To better understand the difference between the mortgage and no mortgage, cite:
Under the existing mortgage apartment Bank credit, "consumer credit", which the borrower can use for just about everything.
This mortgage or no mortgage?
There is a bail-means there is a mortgage and loan-mortgage.
Another example:
The Bank has issued a loan to buy real estate.
But in this real estate collateral is not required. No collateral, no mortgage. And credit is not a mortgage.
Again, I stress that the mortgage is not different from the existence of the mortgage lien.
Mortgage: a bit of history
The term "mortgage" - Greek origin.
Even in ancient Greece could obtain loans on bail, such as land. The borrower receives money from the lender (mortgage), and to avoid the temptation to get bail money to the same land from other creditors, was bound at the site, collateral mortgage, a special label (or stone pillars). This sign opoveschal that the station is in the pledge that under his mortgage bond has been received.
What is the difference between "mortgage" and "collateral"
As already mentioned, the mortgage is the key. But not every pledge-mortgage. The fact is that the mortgage is a mortgage, which is public. When the real estate mortgage, the registrars transaction, make appropriate entries that encumbered property lien. Any interested person may request a bank statement from the State Register of real property rights and transactions. In this extract, if the property is found, be sure to indicate that there encumber: Collateral.
Related posts:
The mortgage terms and formulas
The term mortgage:
The term "Mortgage" means a loan issued on bail.
The main difference is not of mortgage mortgage-mortgage: that is, the availability of collateral. Moreover, the mortgage loan can be granted bail as of the property owned by the borrower or on bail purchased property (where mortgages are drawn up in conjunction with the acquisition of property).
To better understand the difference between the mortgage and no mortgage, cite:
Under the existing mortgage apartment Bank credit, "consumer credit", which the borrower can use for just about everything.
This mortgage or no mortgage?
There is a bail-means there is a mortgage and loan-mortgage.
Another example:
The Bank has issued a loan to buy real estate.
But in this real estate collateral is not required. No collateral, no mortgage. And credit is not a mortgage.
Again, I stress that the mortgage is not different from the existence of the mortgage lien.
Mortgage: a bit of history
The term "mortgage" - Greek origin.
Even in ancient Greece could obtain loans on bail, such as land. The borrower receives money from the lender (mortgage), and to avoid the temptation to get bail money to the same land from other creditors, was bound at the site, collateral mortgage, a special label (or stone pillars). This sign opoveschal that the station is in the pledge that under his mortgage bond has been received.
What is the difference between "mortgage" and "collateral"
As already mentioned, the mortgage is the key. But not every pledge-mortgage. The fact is that the mortgage is a mortgage, which is public. When the real estate mortgage, the registrars transaction, make appropriate entries that encumbered property lien. Any interested person may request a bank statement from the State Register of real property rights and transactions. In this extract, if the property is found, be sure to indicate that there encumber: Collateral.
Related posts:
The mortgage terms and formulas
Tuesday, September 18, 2007
The mortgage terms and formulas
The mortgage terms and formulas. Effective interest rate.
When people went to the bank, he drew attention to the interest rate, called the bank. This naturally: overpay for the use of credit nobody wants. And commit great mistake. Because the interest rate banks declared differs from the one on which the borrower actually pays. The fact is that in many banks there are additional commissions: somewhere there is a commission for issuing credit, somewhere, for the conduct of loan accounts.
How to calculate what the program really profitable?
This is done by using the effective interest rate, it can objectively compare the profitability of a loan.
There are different definitions of the effective interest rate. I believe that such a definition is best: the effective interest rate is the annual interest rate on the loan, taking into account all costs incurred during the use of credit.
Call your attention that because when calculating the effective interest rate takes into account all fees and commissions banks, it is very important to the amount of time that you use credit.
* For example, the commission for issuing credit in the amount of 1000 dollars, when the amount of credit to 100000 dollars, may increase the rate of interest on: 365% if the loan enjoyed only one day;
* 0.1% if the loan enjoyed 10 years.
Now veselimsya because: to calculate the effective interest rate, there are many ways. Imagine that you BANK 1 said that the effective rate of interest in their bank is 16%, while Bank BANK 2 employees were told that they had an effective interest rate of 20%.
Does this mean that the bank loan in the first profitable than in the second?
Not at all: they may have felt differently interest rates.
Related posts:
Mortgage: terms for market participants usage
When people went to the bank, he drew attention to the interest rate, called the bank. This naturally: overpay for the use of credit nobody wants. And commit great mistake. Because the interest rate banks declared differs from the one on which the borrower actually pays. The fact is that in many banks there are additional commissions: somewhere there is a commission for issuing credit, somewhere, for the conduct of loan accounts.
How to calculate what the program really profitable?
This is done by using the effective interest rate, it can objectively compare the profitability of a loan.
There are different definitions of the effective interest rate. I believe that such a definition is best: the effective interest rate is the annual interest rate on the loan, taking into account all costs incurred during the use of credit.
Call your attention that because when calculating the effective interest rate takes into account all fees and commissions banks, it is very important to the amount of time that you use credit.
* For example, the commission for issuing credit in the amount of 1000 dollars, when the amount of credit to 100000 dollars, may increase the rate of interest on: 365% if the loan enjoyed only one day;
* 0.1% if the loan enjoyed 10 years.
Now veselimsya because: to calculate the effective interest rate, there are many ways. Imagine that you BANK 1 said that the effective rate of interest in their bank is 16%, while Bank BANK 2 employees were told that they had an effective interest rate of 20%.
Does this mean that the bank loan in the first profitable than in the second?
Not at all: they may have felt differently interest rates.
Related posts:
Mortgage: terms for market participants usage
Saturday, September 15, 2007
Mortgage: terms for market participants usage
Mortgage: terms that market participants use
To deal with the fact that such a mortgage, we have to understand a number of terms (and if necessary, and learn). To make it easier, I created a small dictionary of terms. It should make little effort to understand these terms, and the answer to the question: "what is a mortgage? - will be simple and direct.
So, for the cause!
Please note that the same terms can mean very different things and concepts. The same with the mortgage term, using bank officer-could mean one, with the insurance activities mean more.
For example, "underwriting" - in mortgage is: a set of conformity assessment requirements of the submitted data bank;
but "underwriting" - in the adoption of insurance-insurance liability for loss or damage claimed reward (premium). Usually performed after determining the acceptability of the proposed size and the risk premium. (Glossariy)
Here, I will explain only the meaning of the terms used in the mortgage.
Many terms are "combination": consisting of two or more terms. Example: Mortgage "borrower" it is "chargor." Therefore, we can say "zaemschik-zalogodatel" bank-credit, so relative to the borrower's bank is not just a bank, but "credit-bank."
Related posts:
Mortgage money transferring ways
To deal with the fact that such a mortgage, we have to understand a number of terms (and if necessary, and learn). To make it easier, I created a small dictionary of terms. It should make little effort to understand these terms, and the answer to the question: "what is a mortgage? - will be simple and direct.
So, for the cause!
Please note that the same terms can mean very different things and concepts. The same with the mortgage term, using bank officer-could mean one, with the insurance activities mean more.
For example, "underwriting" - in mortgage is: a set of conformity assessment requirements of the submitted data bank;
but "underwriting" - in the adoption of insurance-insurance liability for loss or damage claimed reward (premium). Usually performed after determining the acceptability of the proposed size and the risk premium. (Glossariy)
Here, I will explain only the meaning of the terms used in the mortgage.
Many terms are "combination": consisting of two or more terms. Example: Mortgage "borrower" it is "chargor." Therefore, we can say "zaemschik-zalogodatel" bank-credit, so relative to the borrower's bank is not just a bank, but "credit-bank."
Related posts:
Mortgage money transferring ways
Wednesday, September 12, 2007
Mortgage money transferring ways
Different ways of transferring money.
* Cash vendor, before the filing of documents in the CIS. registration hands;
* Cash seller after the transaction hands;
* At the seller's expense before the transaction;
* From the buyer to the seller as in Russia, both at home and abroad;
* Through the mediator, for example, through the real estate agency;
* At the seller's account after the transaction;
* A cell depositary bank;
* A letter of credit.
Through negotiations, the buyer and seller reached a compromise.
There are rare cases where the seller is needed money, a buyer much like apartment, but the deal sagged just because way to transfer money proposed by a party, are not happy another.
And vice versa.
The compromise is not reached, the deal sagged.
In the case of mortgage-way transfer of money determines the bank. Sometimes all, but often only the part that grants in the form of credit. But there are possible alternatives.
And do pledge?
If bank credit, but does not require collateral design, the mode of transmission of money you choose themselves: as themselves agree with the seller, and distribute.
A credit agreement with the bank: Please get the money in cash. And give the money themselves seller apartment.
When needed bail?
* Pledge want the bank, but the bank initially gives the borrower money and gives it time to the one after the conclusion of the contract of sale flats laid its bank:
As collateral is not buying apartments at the same time as the bank simply gives money and transmit them to the seller as feels like it.
However, until collateral many banks prefer podstrahovatsya: and request that the borrower at the time, while rentals will be no lien bank - would provide sureties, or be handed over to any other property as collateral. In doing so, until bail apartments, acquired on credit, the borrower's interest rate increases.
* Security deposit occurs simultaneously with the borrower flat:
This is the most widely distributed transactions, is used in 9 cases out of 10. Under such a scheme, a way to transfer money calls the bank.
Related posts:
What you need to buy an apartment?
* Cash vendor, before the filing of documents in the CIS. registration hands;
* Cash seller after the transaction hands;
* At the seller's expense before the transaction;
* From the buyer to the seller as in Russia, both at home and abroad;
* Through the mediator, for example, through the real estate agency;
* At the seller's account after the transaction;
* A cell depositary bank;
* A letter of credit.
Through negotiations, the buyer and seller reached a compromise.
There are rare cases where the seller is needed money, a buyer much like apartment, but the deal sagged just because way to transfer money proposed by a party, are not happy another.
And vice versa.
The compromise is not reached, the deal sagged.
In the case of mortgage-way transfer of money determines the bank. Sometimes all, but often only the part that grants in the form of credit. But there are possible alternatives.
And do pledge?
If bank credit, but does not require collateral design, the mode of transmission of money you choose themselves: as themselves agree with the seller, and distribute.
A credit agreement with the bank: Please get the money in cash. And give the money themselves seller apartment.
When needed bail?
* Pledge want the bank, but the bank initially gives the borrower money and gives it time to the one after the conclusion of the contract of sale flats laid its bank:
As collateral is not buying apartments at the same time as the bank simply gives money and transmit them to the seller as feels like it.
However, until collateral many banks prefer podstrahovatsya: and request that the borrower at the time, while rentals will be no lien bank - would provide sureties, or be handed over to any other property as collateral. In doing so, until bail apartments, acquired on credit, the borrower's interest rate increases.
* Security deposit occurs simultaneously with the borrower flat:
This is the most widely distributed transactions, is used in 9 cases out of 10. Under such a scheme, a way to transfer money calls the bank.
Related posts:
What you need to buy an apartment?
Sunday, September 9, 2007
Mortgage and apartment
Mortgage and apartment.
The purpose of the borrower no mortgage, but apartment. This mortgage is a means to an end. Virtually every paragraph narrative we would expect their machination. The result is that for the mortgage banks importantly, the apartment is seen by banks as a pledge, that is, as a way of ensuring compliance. You may have noticed that at the table of contents of each item is "underwater pebbles", which in one way or another connected with the concept of "mortgage". Apartment is your ultimate objective of obtaining a mortgage, but it is not the goal of the bank!
Somehow the "mortgage underwater" not attach special significance, while others - can undo all previous steps in achieving the goal.
So let us look at all the conditions and stages of the mortgage a mortgage with a critical point of view.
It is already in the selection of the bank must take into account that there is a mortgage on terms you can make an impact, but there are conditions mortgage, which you can not influence.
The first step. First pitiful.
I suggested that you start with realtors and mortgage broker (often in one person), so you had a reliable assistant and ally. Realtors and mortgage broker you choose.
At the same time, everyone else chooses Bank. (Bank selects and appraisers, and insurers, and the need for a notary, and the way to transfer money, including specific depository. mortgage At these conditions you will not be able to affect. Is that the estimator choose one of two proposed bank, or choose one of two insurers offered by the bank.)
But! Too few realtors while working with mortgage customers. Great running on the likelihood of such who have only a theoretical idea of what such a mortgage. Apartment, chosen such rieltorom may not satisfy neither the bank nor the insurance company and the pleasure of buying-delayed for a long period. The benefit of any such realtors.
Step Two. Pitiful second. Bank sees you.
In what the bank will go? At that where space interest? And in what form you get the money, intended? A must wonder: Some banks offer money to the transaction in bumazhkah, and some lists at the expense of the seller when the seller sell the apartment. Imagine for a moment that you are the seller. You sell the apartment without seeing the entire transaction to the amount of money?
Step third. Pitiful third. Looking for an apartment.
Flats you find it easy, but whether this apartment suit your bank?
That is, you must select an apartment, taking into account all the requirements of your bank.
Step Four. Pitiful fourth. Evaluation.
Evaluation of the apartment is also a necessary condition for mortgages, but can be evaluated differently.
Example:
You are searching for an apartment, find, as you think, the cheapest of 100000. Based on your income bank willing to give you a loan 90000. The remaining money you have.
And what if the appraiser assess your apartment is not in 100000, and 90000?
The Bank will give you credit 90% of the cost of an apartment, but not from what you pay, but from the one that called the appraiser:
90 000 X 90% = 81 000
You expected 90000 loan, and you give 81000.
And where to get the 90000 -81 000 = 9000?
Step Five. Pitiful fifth. Apartment Approves Bank and the insurance company.
Apartment found, the documents collected and sent for testing in the bank and the insurance company. Keep in mind that you are willing sellers apartments seen as a buyer only when reaffirm their desire to buy a flat payment of a sum of money.
Amount symbolic, as compared to the value of the apartment (of the ruble equivalent of $ 500 and 10% of the value of apartments). But if the documents in order, but this apartment, for whatever reason, are not happy with your bank, you could lose the money that made vendors as a prepayment.
It must also be noted that the documents in the apartment was considering not only the bank, but also the insurance company. Accreditation of a bank insurance company is also a prerequisite for a mortgage that you can not influence. Some banks are working with several insurance companies, and then a borrower has a choice: where the insured, where the insurance deal, and the apartment, while some banks are working with a single insurance company.
If the documents are comfortable Bank, but not satisfied with an insurance company, the two options are possible:
if the Bank is working with several insurance companies, the borrower can apply to the other: all of a sudden one insurance company refuses to insure, and the other ensures that?
if the bank is cooperating with the sole insurance company, its refusal to insure, the bank will automatically mean the refusal to issue credit.
Therefore, you must clear about what points could not arrange bank and collaborating with the insurance company. Better before in a specific bank contact.
Step six. The credit agreement.
Mortgage only one that your choice: either sign a contract in the form in which you can give (or receive money under the terms and conditions mortgage, which offers the bank) or not to sign (and the money is not available). Sometimes, in the credit agreement inserted such items, it is better not to sign such a treaty. Argue with the bank on the day of signing a treaty that does not suit you removed items practically useless. So even when choosing the bank to become more familiar with the loan agreement fish photo you bank.
Step seventh. Progress pitiful. Money.
The issue seriously and will be devoting a separate page.
Step eighth. Notary certificate.
Need a notary selects Bank. If the bank insists that the permit was Notary transaction or mortgage-argue useless: it is also "mortgage condition." In doing so, the notary also defines a specific bank.
Step ninth. The state registration.
Step tenth. Insurance.
Sometimes this step precedes the transaction. And if you refuse to insure the insurers, for example due to the state of health?
That happens sometimes, too.
Related posts:
Credit for apartment
The purpose of the borrower no mortgage, but apartment. This mortgage is a means to an end. Virtually every paragraph narrative we would expect their machination. The result is that for the mortgage banks importantly, the apartment is seen by banks as a pledge, that is, as a way of ensuring compliance. You may have noticed that at the table of contents of each item is "underwater pebbles", which in one way or another connected with the concept of "mortgage". Apartment is your ultimate objective of obtaining a mortgage, but it is not the goal of the bank!
Somehow the "mortgage underwater" not attach special significance, while others - can undo all previous steps in achieving the goal.
So let us look at all the conditions and stages of the mortgage a mortgage with a critical point of view.
It is already in the selection of the bank must take into account that there is a mortgage on terms you can make an impact, but there are conditions mortgage, which you can not influence.
The first step. First pitiful.
I suggested that you start with realtors and mortgage broker (often in one person), so you had a reliable assistant and ally. Realtors and mortgage broker you choose.
At the same time, everyone else chooses Bank. (Bank selects and appraisers, and insurers, and the need for a notary, and the way to transfer money, including specific depository. mortgage At these conditions you will not be able to affect. Is that the estimator choose one of two proposed bank, or choose one of two insurers offered by the bank.)
But! Too few realtors while working with mortgage customers. Great running on the likelihood of such who have only a theoretical idea of what such a mortgage. Apartment, chosen such rieltorom may not satisfy neither the bank nor the insurance company and the pleasure of buying-delayed for a long period. The benefit of any such realtors.
Step Two. Pitiful second. Bank sees you.
In what the bank will go? At that where space interest? And in what form you get the money, intended? A must wonder: Some banks offer money to the transaction in bumazhkah, and some lists at the expense of the seller when the seller sell the apartment. Imagine for a moment that you are the seller. You sell the apartment without seeing the entire transaction to the amount of money?
Step third. Pitiful third. Looking for an apartment.
Flats you find it easy, but whether this apartment suit your bank?
That is, you must select an apartment, taking into account all the requirements of your bank.
Step Four. Pitiful fourth. Evaluation.
Evaluation of the apartment is also a necessary condition for mortgages, but can be evaluated differently.
Example:
You are searching for an apartment, find, as you think, the cheapest of 100000. Based on your income bank willing to give you a loan 90000. The remaining money you have.
And what if the appraiser assess your apartment is not in 100000, and 90000?
The Bank will give you credit 90% of the cost of an apartment, but not from what you pay, but from the one that called the appraiser:
90 000 X 90% = 81 000
You expected 90000 loan, and you give 81000.
And where to get the 90000 -81 000 = 9000?
Step Five. Pitiful fifth. Apartment Approves Bank and the insurance company.
Apartment found, the documents collected and sent for testing in the bank and the insurance company. Keep in mind that you are willing sellers apartments seen as a buyer only when reaffirm their desire to buy a flat payment of a sum of money.
Amount symbolic, as compared to the value of the apartment (of the ruble equivalent of $ 500 and 10% of the value of apartments). But if the documents in order, but this apartment, for whatever reason, are not happy with your bank, you could lose the money that made vendors as a prepayment.
It must also be noted that the documents in the apartment was considering not only the bank, but also the insurance company. Accreditation of a bank insurance company is also a prerequisite for a mortgage that you can not influence. Some banks are working with several insurance companies, and then a borrower has a choice: where the insured, where the insurance deal, and the apartment, while some banks are working with a single insurance company.
If the documents are comfortable Bank, but not satisfied with an insurance company, the two options are possible:
if the Bank is working with several insurance companies, the borrower can apply to the other: all of a sudden one insurance company refuses to insure, and the other ensures that?
if the bank is cooperating with the sole insurance company, its refusal to insure, the bank will automatically mean the refusal to issue credit.
Therefore, you must clear about what points could not arrange bank and collaborating with the insurance company. Better before in a specific bank contact.
Step six. The credit agreement.
Mortgage only one that your choice: either sign a contract in the form in which you can give (or receive money under the terms and conditions mortgage, which offers the bank) or not to sign (and the money is not available). Sometimes, in the credit agreement inserted such items, it is better not to sign such a treaty. Argue with the bank on the day of signing a treaty that does not suit you removed items practically useless. So even when choosing the bank to become more familiar with the loan agreement fish photo you bank.
Step seventh. Progress pitiful. Money.
The issue seriously and will be devoting a separate page.
Step eighth. Notary certificate.
Need a notary selects Bank. If the bank insists that the permit was Notary transaction or mortgage-argue useless: it is also "mortgage condition." In doing so, the notary also defines a specific bank.
Step ninth. The state registration.
Step tenth. Insurance.
Sometimes this step precedes the transaction. And if you refuse to insure the insurers, for example due to the state of health?
That happens sometimes, too.
Related posts:
Credit for apartment
Saturday, September 8, 2007
What you need to buy an apartment?
What you need to buy an apartment?
Yes money, of course!
Money adds Bank, in the form of credit.
And what do I get a loan borrower?
Money to repay the loan.
Bank afraid. Afraid that the money (data + you interest for the use of credit), it has not come back.
Bank of danger.
Ready, therefore, that before you will give at least some money, if you ask the question many times:
"And what is your income?"
What are asked so indiscreet question?
Because the loan depends on the borrower's ability to recover bank debt.
Banks believe that the person accepting the loan (the borrower) could spend on servicing of the loan (reducing debt to the bank and payment of monthly per cent), about half of revenue.
Of course, everything depends on the income, and from one bank (there are banks who believe that the borrower and 80% of their income can spend in the form of payments on the loan). The higher incomes, the more they can spend part of the borrower to repay the loan. And vice versa. For example, if a borrower's monthly income of more than 2 thousand dollars, it is such a salary borrower may 60-80% pay at providing credit. If the same salary (again, in terms of dollars) less than 700, the bank believes that more than a third of wages per month for the repayment of loan (with interest), the borrower will not be able to spend.
Maybe raised another question: At what cost you are looking for an apartment and how much money you have (in the initial payment) already? "
In fact, this is the same question in another form.
A specialist to whom you were referred about the credit, before the eyes of the table. Before you a little piece of tabular one of the banks. This table is easy to draw up on any mortgage program, any bank taking advantage of information publicly available, but you are unlikely to need.
The table shows that no matter what there was, everything boils down to your income. And the higher your income, so at great credit can count.
The last time banks prefer not to be such a table in hard copy, make a "loan calculators."
But vse-ravno, in whatever form, these data may be a bank employee, a potential borrower's loan depends on the borrower's income, and how much money for the initial payment from the borrower is.
Related posts:
Mortgage and apartment
Yes money, of course!
Money adds Bank, in the form of credit.
And what do I get a loan borrower?
Money to repay the loan.
Bank afraid. Afraid that the money (data + you interest for the use of credit), it has not come back.
Bank of danger.
Ready, therefore, that before you will give at least some money, if you ask the question many times:
"And what is your income?"
What are asked so indiscreet question?
Because the loan depends on the borrower's ability to recover bank debt.
Banks believe that the person accepting the loan (the borrower) could spend on servicing of the loan (reducing debt to the bank and payment of monthly per cent), about half of revenue.
Of course, everything depends on the income, and from one bank (there are banks who believe that the borrower and 80% of their income can spend in the form of payments on the loan). The higher incomes, the more they can spend part of the borrower to repay the loan. And vice versa. For example, if a borrower's monthly income of more than 2 thousand dollars, it is such a salary borrower may 60-80% pay at providing credit. If the same salary (again, in terms of dollars) less than 700, the bank believes that more than a third of wages per month for the repayment of loan (with interest), the borrower will not be able to spend.
Maybe raised another question: At what cost you are looking for an apartment and how much money you have (in the initial payment) already? "
In fact, this is the same question in another form.
A specialist to whom you were referred about the credit, before the eyes of the table. Before you a little piece of tabular one of the banks. This table is easy to draw up on any mortgage program, any bank taking advantage of information publicly available, but you are unlikely to need.
The table shows that no matter what there was, everything boils down to your income. And the higher your income, so at great credit can count.
The last time banks prefer not to be such a table in hard copy, make a "loan calculators."
But vse-ravno, in whatever form, these data may be a bank employee, a potential borrower's loan depends on the borrower's income, and how much money for the initial payment from the borrower is.
Related posts:
Mortgage and apartment
Monday, September 3, 2007
Credit for apartment
The first step
This step can be skipped, and start with the next. But I do recommend it to do.
I recommend that appeal to the mortgage broker, who knows about mortgages almost everything. Time to choose a bank then will need far less likely to obtain a loan-rise, and in some banks, credit will be available for Special Programs: distinguishable best conditions. The benefits of this treatment may be many times more than the monetary cost of the services of a broker.
Next, I recommend that you go into real company and enter into an agreement with rieltorom to buy an apartment on credit was easy and not be turned into an endless "walking on the meal." When buying an apartment on credit characteristics of the mass must be taken into account: if professional realtors working with a mortgage, all those characteristics, he knows.
Of course, the work of the mortgage broker, realtors and costs money, but in the case of a mortgage, this is better than saving.
Although, it's up to you.
Step Two. Bank sees you.
By issuing money, the bank risks. Therefore, the money issue is not all. Consideration takes from three to five days to six weeks, depending on the bank and of the source of your income.
Step third. Looking for an apartment.
Apartment easy to find: There are many sites on the Internet, and print media where ads sold on the flats. But! Flats to test, you must gather all the documents on it. And, as happens in the purchase of an apartment loan, rather than cash, rentals should not only upset you, but Bank.
This case when there is a positive decision on the previous step. If a negative decision-looking another bank, and the previous step going with another bank
Step Four. Evaluation.
The Bank must be sure that credit is not more than so much per cent of the cost of an apartment, but provided his credit program. Therefore, the apartment must be assessed. Certificate of Assessment is transmitted to the bank.
Step Five. Apartment Approves Bank.
Apartment found, the documents collected and sent for testing in the bank and the insurance company. Security Service Bank, together with the legal department, as well as members of an insurance company considering your chosen apartment. If they are satisfied, then you can buy this apartment.
Step six. The credit agreement.
Before you sign the loan transaction contract. Under this treaty Bank prepares you for the necessary money to the seller apartment (in the case of the sale of an apartment) could get one.
Step seventh. Money.
Depending on the merchant bank transferred the money in different ways. Either through deposit box or at the seller's expense. If deposit box through a bookmark-laundering occurs in a cell before state registration.
Step eighth. Notary certificate.
The Treaty is not subject to mandatory Notary Permits. In most cases, sales contracts are drawn up in the apartment beznotarialnoy form, the bank may require that a notary certificate, it would be. - Will have to certify require notarized. The Bank also may require that has been certified by a notary signature on the mortgage. But even if the bank did not require this, the visit to the notary vse-ravno have to do: to verify the consent of spouses to the deal, or vice versa: write a statement that the participants in the transaction were not married.
Step ninth. The state registration.
The move comes at a time right state registration. Registration transactions lasts from a week to a month.
Step tenth. Insurance.
Sometimes this step precedes the transaction.
Bank of risks and wants to reduce their risks. Bank reduces their risks, as, is, for your account. That is, with the insurance organization rasplachivaetes you.
Related posts:
Mortgage and credit
This step can be skipped, and start with the next. But I do recommend it to do.
I recommend that appeal to the mortgage broker, who knows about mortgages almost everything. Time to choose a bank then will need far less likely to obtain a loan-rise, and in some banks, credit will be available for Special Programs: distinguishable best conditions. The benefits of this treatment may be many times more than the monetary cost of the services of a broker.
Next, I recommend that you go into real company and enter into an agreement with rieltorom to buy an apartment on credit was easy and not be turned into an endless "walking on the meal." When buying an apartment on credit characteristics of the mass must be taken into account: if professional realtors working with a mortgage, all those characteristics, he knows.
Of course, the work of the mortgage broker, realtors and costs money, but in the case of a mortgage, this is better than saving.
Although, it's up to you.
Step Two. Bank sees you.
By issuing money, the bank risks. Therefore, the money issue is not all. Consideration takes from three to five days to six weeks, depending on the bank and of the source of your income.
Step third. Looking for an apartment.
Apartment easy to find: There are many sites on the Internet, and print media where ads sold on the flats. But! Flats to test, you must gather all the documents on it. And, as happens in the purchase of an apartment loan, rather than cash, rentals should not only upset you, but Bank.
This case when there is a positive decision on the previous step. If a negative decision-looking another bank, and the previous step going with another bank
Step Four. Evaluation.
The Bank must be sure that credit is not more than so much per cent of the cost of an apartment, but provided his credit program. Therefore, the apartment must be assessed. Certificate of Assessment is transmitted to the bank.
Step Five. Apartment Approves Bank.
Apartment found, the documents collected and sent for testing in the bank and the insurance company. Security Service Bank, together with the legal department, as well as members of an insurance company considering your chosen apartment. If they are satisfied, then you can buy this apartment.
Step six. The credit agreement.
Before you sign the loan transaction contract. Under this treaty Bank prepares you for the necessary money to the seller apartment (in the case of the sale of an apartment) could get one.
Step seventh. Money.
Depending on the merchant bank transferred the money in different ways. Either through deposit box or at the seller's expense. If deposit box through a bookmark-laundering occurs in a cell before state registration.
Step eighth. Notary certificate.
The Treaty is not subject to mandatory Notary Permits. In most cases, sales contracts are drawn up in the apartment beznotarialnoy form, the bank may require that a notary certificate, it would be. - Will have to certify require notarized. The Bank also may require that has been certified by a notary signature on the mortgage. But even if the bank did not require this, the visit to the notary vse-ravno have to do: to verify the consent of spouses to the deal, or vice versa: write a statement that the participants in the transaction were not married.
Step ninth. The state registration.
The move comes at a time right state registration. Registration transactions lasts from a week to a month.
Step tenth. Insurance.
Sometimes this step precedes the transaction.
Bank of risks and wants to reduce their risks. Bank reduces their risks, as, is, for your account. That is, with the insurance organization rasplachivaetes you.
Related posts:
Mortgage and credit
Saturday, September 1, 2007
Mortgage and credit
Last time, is increasingly heard: "I want mortgages."
But mortgage and loan-different concepts. The term "mortgage" means mortgage, and specifically credit received on bail of a debtor's assets and money credit is issued to creditors for repayment conditions, and payment of urgency.
It is not always money is that there is a need to lay something: Pledge procedure itself requires certain costs, and these are not always cost-justified.
Mortgage. Mortgage loan.
So, a little theory.
Mortgage-word of Greek origin, meaning, in the pledge.
In our conversation we will talk about mortgage lending, in the case of real estate.
That is, say "mortgage" and understand that credit is issued against mortgage.
A lay-loan real estate. Can settlement with the bank bail-go, no-inherent property can be sold, and proceeds from the debt will be charged to the Bank, including interest for the use of credit.
They say "mortgage" understand "pledge."
Let's talk about the terms in more detail.
Mortgage is the mortgage. There is the mortgage bond, no collateral, no mortgages, and credit is not a mortgage.
To better understand the difference between the mortgage and no mortgage, cite:
Bank credit on bail of available apartments, "consumer credit", which the borrower can use for just about everything.
This is a mortgage loan?
Mortgage!
Even though the borrower may spend the money for any purpose: mortgage is the key.
Example Two:
The borrower bank credit to buy an apartment. Bail is not required acquired apartments.
Such a mortgage loan, or not?
No, this is not a mortgage: a pledge of no means no mortgage.
Which is more important: mortgage or loan?
Which is more important to the borrower-buyer flat: a loan or mortgage?
Of course credit! There is a shortage of money-taking the credit.
And more importantly for the bank?
Mortgage!
Because the mortgage is the key.
Bail is a way of ensuring commitment: not return a borrower loan-collateral is sold subject. And Bank, the inherent value of the assets will offset its losses, and returning the loan, the borrower and unpaid interest.
Loans: trust and not trust
With mortgage, as you know, you can get additional benefits on taxation. Want to use the tax incentives provided in mortgage lending? That possibility is there.
What are the benefits in question, what I describe in some detail on page Priyatnosti mortgages
Let me just draw your attention to the fact that benefits for the borrower's mortgage lending is not for the fact that the borrower purchased using credit apartment: it is not enough. Benefits are provided for the loan borrower spent for the acquisition or construction of housing and the loan trust! What does it mean to "target"?
Take credit "for immediate needs" bought an apartment not trust credit: no concessions;
if, however, took credit for the purchase of real estate properties and the acquisition of its spent - and then have the right to benefits.
They say "mortgage" understand "credit".
Butter Sandwich without happens, a mortgage without collateral?
?
What do we mean by "mortgage"?
Turning to the bank for a mortgage (with the mortgage), who are interested in little collateral!
Purpose-apartment to buy a flat-needed money, their money is not enough, take the credit.
So?
(Interesting look at the person who is not drawn to the bank to get a loan and to pay bail in the apartment!)
Therefore, when a borrower is drawn to the bank for the mortgage, the employees of banks offer mortgages as well as mortgage loans is not: it is the objective of the borrower-house, the borrower mol what difference will be mortgage (mortgage) or not?
The borrower-credit: This is what you want! A mortgage in the sense of "collateral" is not a goal of the borrower.
As part of our continuing conversation, I too will not adhere so strictly correct interpretation of terms.
The aim is to purchase and, therefore, talk of a mortgage we will be as a loan, regardless of the fact whether a pledge of an apartment or not.
At the same time, draw your attention to some fundamental points:
* In the real estate mortgage as soon formalized in the borrower's property. (And not when the borrower Has with the bank.)
* Bank could not on its arbitrariness confiscating the property the borrower.
The borrower may lose its only real estate laid by the court, and then only in the event that violates the credit agreement.
And ways of acquiring apartments in installments, in which the buyer can live in an apartment, paying for only a fraction of its value, but will not be the owner of the apartment until it pays the full cost, we will not consider. This is certainly not mortgages.
But mortgage and loan-different concepts. The term "mortgage" means mortgage, and specifically credit received on bail of a debtor's assets and money credit is issued to creditors for repayment conditions, and payment of urgency.
It is not always money is that there is a need to lay something: Pledge procedure itself requires certain costs, and these are not always cost-justified.
Mortgage. Mortgage loan.
So, a little theory.
Mortgage-word of Greek origin, meaning, in the pledge.
In our conversation we will talk about mortgage lending, in the case of real estate.
That is, say "mortgage" and understand that credit is issued against mortgage.
A lay-loan real estate. Can settlement with the bank bail-go, no-inherent property can be sold, and proceeds from the debt will be charged to the Bank, including interest for the use of credit.
They say "mortgage" understand "pledge."
Let's talk about the terms in more detail.
Mortgage is the mortgage. There is the mortgage bond, no collateral, no mortgages, and credit is not a mortgage.
To better understand the difference between the mortgage and no mortgage, cite:
Bank credit on bail of available apartments, "consumer credit", which the borrower can use for just about everything.
This is a mortgage loan?
Mortgage!
Even though the borrower may spend the money for any purpose: mortgage is the key.
Example Two:
The borrower bank credit to buy an apartment. Bail is not required acquired apartments.
Such a mortgage loan, or not?
No, this is not a mortgage: a pledge of no means no mortgage.
Which is more important: mortgage or loan?
Which is more important to the borrower-buyer flat: a loan or mortgage?
Of course credit! There is a shortage of money-taking the credit.
And more importantly for the bank?
Mortgage!
Because the mortgage is the key.
Bail is a way of ensuring commitment: not return a borrower loan-collateral is sold subject. And Bank, the inherent value of the assets will offset its losses, and returning the loan, the borrower and unpaid interest.
Loans: trust and not trust
With mortgage, as you know, you can get additional benefits on taxation. Want to use the tax incentives provided in mortgage lending? That possibility is there.
What are the benefits in question, what I describe in some detail on page Priyatnosti mortgages
Let me just draw your attention to the fact that benefits for the borrower's mortgage lending is not for the fact that the borrower purchased using credit apartment: it is not enough. Benefits are provided for the loan borrower spent for the acquisition or construction of housing and the loan trust! What does it mean to "target"?
Take credit "for immediate needs" bought an apartment not trust credit: no concessions;
if, however, took credit for the purchase of real estate properties and the acquisition of its spent - and then have the right to benefits.
They say "mortgage" understand "credit".
Butter Sandwich without happens, a mortgage without collateral?
?
What do we mean by "mortgage"?
Turning to the bank for a mortgage (with the mortgage), who are interested in little collateral!
Purpose-apartment to buy a flat-needed money, their money is not enough, take the credit.
So?
(Interesting look at the person who is not drawn to the bank to get a loan and to pay bail in the apartment!)
Therefore, when a borrower is drawn to the bank for the mortgage, the employees of banks offer mortgages as well as mortgage loans is not: it is the objective of the borrower-house, the borrower mol what difference will be mortgage (mortgage) or not?
The borrower-credit: This is what you want! A mortgage in the sense of "collateral" is not a goal of the borrower.
As part of our continuing conversation, I too will not adhere so strictly correct interpretation of terms.
The aim is to purchase and, therefore, talk of a mortgage we will be as a loan, regardless of the fact whether a pledge of an apartment or not.
At the same time, draw your attention to some fundamental points:
* In the real estate mortgage as soon formalized in the borrower's property. (And not when the borrower Has with the bank.)
* Bank could not on its arbitrariness confiscating the property the borrower.
The borrower may lose its only real estate laid by the court, and then only in the event that violates the credit agreement.
And ways of acquiring apartments in installments, in which the buyer can live in an apartment, paying for only a fraction of its value, but will not be the owner of the apartment until it pays the full cost, we will not consider. This is certainly not mortgages.
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