Mortgage - Home Loan, Commercial Loan

INDIANAPOLIS, Feb. 22, 2008 (PRIME NEWSWIRE) — On February 19, 2008, the Board of Directors of the Federal Home Loan Bank of Indianapolis (FHLBI) elected Paul D. Borja, Executive Vice President and Chief Financial Officer of Flagstar Bank, Troy, Michigan, to fill the unexpired director term of Mark A. Hoppe, who had been elected by the Michigan shareholders to a term ending December 31, 2010. Mr. Hoppe became ineligible to serve as a director of the FHLBI when he ceased being an officer of a member institution.

At Flagstar Bancorp, Inc., Mr. Borja has served as Executive Vice President of the company and the bank since May 2, 2005, and also as its Chief Financial Officer since June 20, 2005. Previously, he was a partner with the law firm Kutak Rock LLP, Washington, DC, from 1997 through 2005.

Mr. Borja received his master’s degree in tax law from Georgetown University in 1991, his law degree from Georgetown University in 1990, and his bachelor’s degree in accounting from the University of Notre Dame in 1982.

Also on February 19, 2008, the Federal Housing Finance Board announced the appointment of Elliot A. Spoon, Esq. to one of the two open appointed director positions on the FHLBI’s board for a term ending December 31, 2010. Mr. Spoon is Of Counsel with Jaffe, Raitt, Heuer & Weiss, PC, a law firm in Detroit, Michigan, and also is a professor at Michigan State University DCL College of Law.

Mr. Spoon graduated cum laude with a JD from the University of Michigan in 1975, having earned his bachelor’s degree with high distinction from the University of Michigan in 1973.

Building Partnerships, Serving Communities.

The Federal Home Loan Bank of Indianapolis (FHLBI) is one of 12 regional banks that make up the Federal Home Loan Bank System. FHLBanks are government-sponsored enterprises created by Congress to ensure access to low-cost funding for their member financial institutions. FHLBanks are privately capitalized and funded, and receive no Congressional appropriations. The FHLBI is owned by its financial institution members, which include commercial banks, credit unions, insurance companies, and savings banks headquartered in Indiana and Michigan. For more information about the FHLBI and its Affordable Housing Program, visit http://www.fhlbi.com.

If you want to borrow a lot of money for college, you are not going to like what the mortgage mess is doing to you.

The credit crunch, which started with a panic over people missing home loan payments several months ago, has spread like a disease, infecting a broad range of loans. Now it may poison opportunities for college students to obtain some loans and is adding painfully high interest costs to many.

So far federal student loans, or the low-interest college loans offered under government rules, are still plentiful. Students who get Stafford loans pay 6.8 percent interest, which is relatively low compared to other loans available for college.

But concerns developed earlier this month because some lenders have decided to stop giving out student loans. The lenders reached the decision because they had trouble borrowing money themselves. And they need to borrow money in order to lend money to students.

The issues sprang from mortgage problems. As homeowners have been missing payments, banks and other lenders have taken billions of dollars in losses. Lenders have become gun-shy, fearful that if they lend money they won’t be paid, and concerned because bond investors won’t buy the packages of loan payments that are critical in funding new loans.

These investors are aware that during the last few years, lending practices became sloppy. They aren’t sure what loans to trust and what loans are suspect. As a result, the process of handing out money — whether to homebuyers, college students or car buyers — has been paralyzed.

Until lenders and investors start feeling safe again, they are expected to hold on tightly to money.

That could mean that students who seek loans may have difficulty. They might have to turn more to higher-interest private loans. And in this environment, families without good credit could be turned away or charged a lot, said Mark Kantrowitz, publisher of FinAid.org.

There is no way to know if the problem will subside quickly or last into summer, a time when incoming college students might be seeking loans. The credit-crisis problems have been worsening since last summer.

Two months ago, “I would never have said that colleges could run short” of student loan money, said Andrew Davis, executive director of the Illinois Student Assistance Commission. “Now, I’m not so sure.”

For the moment, the federal government is trying to reassure students. A spokesman for the Department of Education said that if there is any slack in lending, it will step in by granting more loans at the 6.8 percent rate.

But it is also hinting at potential problems. Although the program could accommodate additional schools and the students and families they serve, the spokesman said, “The department is concerned the benefits of the (Federal Family Education Loan program) could diminish as a result of fewer lender participants.”

In other words, it’s possible the government wouldn’t be able to pick up all the slack if the credit crunch lasts long.

To appreciate this, you must understand that students receive federal Stafford loans in two ways. About 20 percent come from the government directly. The other 80 percent come from lenders who follow government rules, such as charging no more than 6.8 percent interest. But those lenders depend on borrowing money. The government doesn’t have to borrow money from any source but the U.S. Treasury.

Davis said it would be a “bureaucratic nightmare” for the government to try to take on a 400 percent increase in loans.

He suggests that families immediately fill out their FAFSA forms, the financial aid forms students must complete, along with a tax return for their family, in order to qualify for a low-interest federal loan. That way a student may qualify early for aid instead of taking a chance on a shortage later. “Rest assured, if you are the last guy to ask for a loan, you might not get one,” Davis said.

He suggests staying on top of the process by following up with a student’s college financial aid office.

The Moorpark City Council unanimously voted Wednesday to reinstate a loan program that funds repairs on mobile homes in the city.

The program is funded through a CalHome grant administered by the Department of Housing and Community Development. It originally was approved in fiscal year 2002-03 to provide $420,000 in loans for repairs on 25 mobile homes in the Villa del Arroyo area on Collins Drive. Funds have typically been used for roofing, plumbing, water heaters, electrical repairs, heating and air conditioning, and skirting around the mobile homes.

Payment on the original loans was deferred for 15 years, but money repaid so far has been deposited into a special reuse account, as required by CalHome regulations.

The council’s approval to reinstate the loan program will allow about $74,324 that was repaid to be used by Villa del Arroyo mobile home owners. Only low- or very low-income applicants can qualify for the loans.

Nancy Burns, senior management analyst for the city, said residents at Villa del Arroyo have contacted the city staff to inquire about the availability of funds for needed repairs.

“Because of the nature of these homes, not being permanently attached to real property, obtaining loans for repairs can be more difficult than obtaining a loan for repairs on a conventional home,” Burns said.

(ARA) - As the drum beat of news continues about the credit crunch in the mortgage market, millions of homeowners are worried about their adjustable-rate mortgages that will adjust to higher interest rates, leaving many struggling to make their payment. As a result, there’s a lot of confusion about what to do, or not do, before an ARM resets.

According to industry statistics, $75 billion in ARMs are slated to adjust higher through the rest of 2007. Another $500 billion will adjust higher in 2008.

What should a consumer do if their ARM is about to reset? There is no “one size fits all” answer, so it’s imperative that homeowners educate themselves and take action before that happens.

To help consumers find answers, Quicken Loans, one of the nation’s largest mortgage lenders, has launched its new Home Loan U (http://www.quickenloans.com/homeloanu.html) Web site. The site offers a wealth of free informational guides providing easy-to-understand information and advice on a wide range of housing topics, including refinancing.

“With so many ARMs adjusting higher in the near future, a lot of folks are confused and worried about what to do. Their first impulse may be to immediately refinance but, in some cases, that might not be the best option,” says Bob Walters, chief economist for Quicken Loans. “There are several factors to consider when an ARM resets, such as the new interest rate and how long they plan to stay in their home.”

Walters notes that the first thing someone with an ARM should do is consult an experienced mortgage lender who can review their current loan program, discuss financial goals and explore available options to determine the best course of action to meet their immediate and long-term needs.

For more information on refinancing an arm and additional mortgage guides, visit Home Loan U online.

Daniel Mudd, chief executive of Fannie Mae, knows the feeling when a physician attends a party and a guest wants a diagnosis for a rash or some other unexplained ailment.

In Mudd’s case, people want to know about the housing market. Often they ask him if it’s a good time to refinance their mortgage loan.

Mudd may be the go-to guy at parties because he heads the Federal National Mortgage Association, or Fannie Mae.

Fannie Mae and the Federal Home Loan Mortgage Corp. (Freddie Mac) purchase mortgages from lenders. This in turn allows the lending institutions to provide more home loans.

Naturally, people think Mudd, who runs the larger government-sponsored enterprise, would know about the best time to get a mortgage since Fannie Mae is crucial to the mortgage industry.

But as Mudd points out, he’s operating in the back end of the mortgage process after the loans have been originated.

“I’m not retail,” he tells people.

Frequently, mortgage rates are the topic at parties — and just about anywhere else — because many homeowners are desperate to know the opportune time to get out of the loans that they won’t be able to afford once their teaser rates expire.

Of late, Mudd is fielding questions about a new law that has the potential to lower interest rates for jumbo mortgage loans. He certainly was pressed about it during a lunch meeting recently at The Washington Post.

First, some background.

A jumbo loan is a mortgage that exceeds $417,000, which is the purchase limit for both Fannie Mae and Freddie Mac. Loans of $417,000 and below are considered conforming because financial institutions can easily sell them to Fannie or Freddie.

Jumbo loans are needed for areas where home prices exceed that $417,000 limit, such as high-priced housing markets on the West Coast and East Coast. Because jumbo loans are not purchased by Fannie or Freddie, they typically carry higher interest rates.

As of Thursday, the national average for a 30-year fixed-rate jumbo loan was 6.97 percent, compared to 6.01 percent for a fixed-rate conventional loan, according to Bankrate.com. Many jumbo borrowers have adjustable-rate mortgages. A jumbo ARM that adjusts after five years was 5.79 percent compared with 5.12 percent for a nonjumbo ARM with the same term.

In an effort to help lower rates for borrowers needing jumbo loans, the recent economic stimulus bill included a provision to allow Fannie Mae and Freddie Mac to buy mortgages above the $417,000 limit.

The new jumbo loan limits won’t be the same for all areas. The limits will vary but can’t be more than $729,750.

Many jumbo loan holders are certainly anxious to know if rates will fall soon. However, Mudd wasn’t sure many homeowners with jumbo loans would actually see lower rates anytime in the near future.

“There will be some benefit,” Mudd said. “How much? I don’t know.”

Mudd questioned whether investors would buy bundles of jumbo loans. Given the current mortgage crisis, investors might fear that these larger loans would be more risky, he said.

And with tighter lending standards some borrowers won’t qualify because their home values have dropped. Or they might not meet other stricter underwriting requirements.

Still, during our discussion about jumbo loans, I pushed Mudd to provide some idea of when jumbo loan borrowers might approach lenders to refinance.

“I don’t know,” he said.

Then Mudd added a very helpful tip that I thought I would pass along.

He said if you are worried about a 50 basis point difference in your interest rate (that’s half a percentage point), you might be living at the wrong place.

Mudd wasn’t talking about bargain shoppers who negotiate hard for a good loan deal or who are calculating whether a refinancing would make sense long term.

Let’s say a jumbo rate of 7 percent for 30 years comes down half a percentage point as a result of the new loan limit. On a $500,000 mortgage, that’s a savings of about $166 a month.

In other words, you shouldn’t be buying a home or refinancing into a mortgage that leaves you with little cash cushion. That’s what led so many to be in trouble now.

If you have a jumbo mortgage and a half-percentage-point difference is going to mean a great deal to you financially — that is, it will free up money you need to pay for essentials — you’re in too much house.

It means you are living above your means. Cornering mortgage professionals or other real estate experts at parties to press them for the best time to refinance your huge mortgage is nonsensical. You need to be asking when you should sell.

Announcements that U.S. mortgage applications are down and the Consumer Price Index is up are ominous signs that the economy is cooling. Investors and consumers are tugging at their collars over news that fewer houses will become homes and those homes will probably gonna hold less stuff.

On Tuesday, the Mortgage Bankers Association said its index of mortgage applications fell to its lowest level since early January, dipping 22.6% to 822.8 for the week that ended Feb. 15. Short-term interest cuts by the Fed aren’t helping would-be home-owners because their mortgages tend to be linked to longer-term rates and the 10-year yield has been rising on fears of inflation. (See “Bernanke Watch Next Week”) Bush’s stimulus plan is generous, but it isn’t expected to redirect what appears to be an economy with a downward trajectory. (See “A Lifeline In The Mortgage Mess”)

The terms of loans aren’t sweet enough to entice a borrower staring down the barrel of a depressed economy. Borrowing costs on a 30-year fixed rate mortgage are up .37% from last week. Excluding fees, costs averaged 6.09%, the highest since late December. The silver lining on this announcement is that interest rates stayed below year-ago levels of 6.19%.

The MBA Index also reported that refinancing applications are down 27.9% to 3,533.8 for the week.

The news brought home loan company Washington Mutual (nyse: WM - news - people ) down 29 cents, or 1.75%, to $16.69. Homebuilder KB Home (nyse: KBH - news - people ) is also down 43 cents, or 1.81%, to $23.72. Pulte Homes (nyse: PHM - news - people ) is down 28 cents, or 1.98%, to $13.88.

As if news of more Americans being forced to rent and not own isn’t depressing enough, the U.S. Labor Department Consumer Price Index announced more bad news Tuesday. January’s CPI rates were only a point up, but the psychology of getting less for a each buck is likely to put a damper on the mood of investors and consumers alike. Headline inflation for January was .4% and it was expected to be .3%. Core inflation, excluding food and energy, is .3% instead of the projected .2%. Year-on-Year headline inflation is up 4.3%, and core CPI is up 2.5%.

Tuesday, the Automobile Association of America and the Oil Price Information Service reported that a gallon of gas hit an average of $3.032 in U.S.. Last month it was $3.015 and last year it was $2.256. More increases at the pump are likely because oil futures have shot up in price despite a reported decline in demand has to do with concerns about future supply.

By Eileen Putman

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

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

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

Mortgage insurance is required by government and private lenders on home purchases in which the buyer makes a down payment of less than 20 percent.

For the first nine months of 2007, about 16.7 percent of the estimated $1.98 trillion in new mortgages originating during that period had private mortgage insurance (commonly known as PMI) or government mortgage insurance, according to Inside Mortgage Finance Publications, which researches and tracks the residential mortgage business.

Typically, homeowners pay an average of $50 to $100 a month in mortgage insurance on a median single family home price of $217,600, according to the Mortgage Insurance Companies of America (MICA), a trade association.

The new tax deduction could save taxpayers who itemize as much as $300 to $350 in federal taxes, MICA estimates.

There are restrictions. Only taxpayers with adjusted gross incomes of $100,000 or less can take the full deduction, which gradually decreases for incomes above that and is eliminated altogether for those with AGIs over $109,000.

And only insurance on mortgages taken out in 2007 — new or refinanced — qualifies for the deduction. If you simply continued paying mortgage insurance in 2007 on a loan taken out in an earlier year, you cannot deduct those payments.

To be deductible, the insurance must have been paid on “home-acquisition debt” — debt incurred to buy, build or substantially improve a principal residence or second home.

Most tax experts interpret this provision as meaning that if in 2007 you refinanced your home to take out extra cash from your equity — then used that cash toward building a home addition or making a substantial home improvement — insurance on that added mortgage debt is deductible along with insurance on the old mortgage amount.

But if you simply refinanced your home to take out extra cash for other purposes, the portion of a mortgage-insurance premium that covers that additional amount isn’t deductible, only the amount that covers the original mortgage debt.

Late last year, Congress approved a measure to help homeowners fighting foreclosure as the mortgage crisis took its toll. Taxpayers who were granted forgiveness of mortgage debt in 2007 don’t have to pay taxes on the amount of that forgiveness, up to $2 million ($1 million for a married person filing a separate return). Only debt forgiveness on a principal residence is eligible.

The provision applies to restructured mortgage agreements after Jan. 1, 2007. Previously, such loan forgiveness was often taxed as income.

Several other common tax benefits are in effect for homeowners who itemize. They include:

• Mortgage-interest deduction: Interest you paid to the lender in 2007 on mortgages for your principal home and a second home for your personal use, providing the mortgages are secured by the home.

• Points: Certain fees, computed as a percentage of the loan amount, that you paid to obtain your mortgage; for second homes, these must be amortized over the life of the loan. (There are nine tests, spelled out in Publication 936.)

• Refinancings: Points paid for refinancing are usually not deductible in full during the year you refinance, but are instead amortized over the life of the loan. But if you refinanced in 2007 and used part of the refinancing proceeds to substantially improve your home, you can deduct in full the points on that part of the loan; the remaining points are amortized.

Many homeowners will be able to write off hundreds of dollars of mortgage insurance premiums on their taxes starting with their 2007 returns – a reward for steering clear of exotic “piggyback” loans.

Congress initially approved the tax break for only 2007, then extended it for three years in late December as the housing market sagged.

However, many people who pay for PMI, or private mortgage insurance, won’t benefit. Only insurance contracts issued after Jan. 1, 2007, qualify.

And the tax break is available only to homeowners with adjusted gross income of less than $100,000; after that, it phases out gradually until income hits $110,000.

For details, see IRS Publication 936.

READING, Pa. (AP) - Two Berks County couples have sued a mortgage broker awaiting sentencing on fraud charges.

Prosecutors say Wesley Snyder ran a Ponzi scheme that defrauded homeowners and investors out of more than $29 million over two decades. The 71-year-old pleaded guilty to a federal charge of mail fraud and will be sentenced in March. He faces up to 30 years in prison.

In the lawsuit, the two couples say they were cheated by Snyder and SunTrust Mortgage Inc. They are seeking credit for tens of thousands of dollars they say they paid on their mortgages.

SunTrust claims it never got the money and now is demanding it.

The suits also seek class-action status for all Pennsylvania mortgage customers whom SunTrust got through Snyder’s company, which collapsed in September.

WASHINGTON (AP) — Rates on 30-year mortgages dipped slightly this past week, the fifth decline in the past six weeks. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 5.67 percent, down from 5.68 percent the previous week. The 30-year mortgage, which ended last year at 6.17 percent, has been below 6 percent for five weeks, a stretch that has not been seen since 2005. Analysts attributed the declines in mortgage rates to growing fears that the country could be slipping into a recession. Other mortgage rates also declined this past week. Rates on 15-year mortgages, a popular choice for refinancing, dipped to 5.15 percent, compared with 5.17 percent the previous week. Rates on five-year adjustable-rate mortgages declined to 5.21 percent, down from 5.32. One-year adjustable-rate mortgages fell to 5.03 percent, down from 5.05 percent.