We briefly last week that the National Association for the Advancement of Colored People (the NAACP) has filed a class action suit against more than a dozen subprime lenders in an effort to stop those lenders from engaging in what the suit calls "systematic, institutionalized racism in making home mortgage loans."
The NAACP suit specifically names 14 lenders: Ameriquest, Wells Fargo...
Amortization refers to the distribution of a monetary lump-sum over multiple smaller monetary installments, which include both a payment and an payment. In terms, positive amortization results in the entire loan eventually being paid in full. Negative amortization results in the borrower owing more in the future than they do in the present.
Positive amortization refers to a gradual reduction in a loan's principal balance. This is done by paying off the full interest plus a small principal amount on a regular basis. Positive amortization, also referred to as simply "amortization" is the process most loans and mortgages operate under.
While positive amortization doesn't guarantee your monthly payments will gradually go down, it does mean you will eventually pay off your loan. It also means your mortgage payments should stay relatively stable, unless you have an and there is a dramatic change in your mortgage's .
As its name suggests, negative amortization is the oposite of positive amortization. With a negatively amortized loan, the does not pay off the full interest obligation with their regular payments. As a result, the excess unpaid interest is eventually added to the principal amount, resulting in a higher principal .
In recent years, rapidly increasing property values and low interest rates resulted in the rise of negative amortization mortgages, also known as "neg am" loans. The argument for neg am mortgages was that ever-growing property values would give a homeowner steadily growing positive equity, which could then be used to and off-set any payment increases. But this assumption did not take a decline in property values into account.
Some loan programs, such as the , give homeowners the choice of paying off the monthly interest and some principal, paying the full monthly interest, or paying less than the monthly interest owed. The latter option results in negative amortization.
Sadly, too many borrowers did not understand the nuances of negative amortization. This has resulted in some homeowners facing overwhelming mortgage payment increases or even loosing their to . As a result, negatively amortized mortgages, including Option ARMs, should be approached with caution.
Negatively amortized mortgages are often advertized with unbelieveable interest rates, such as 1%, or with extremely low monthly payments. For example, a $200,000 mortgage with a monthly payment of $500 refers to a negative amortization mortgage, and could result in future stress or misery for the borrower.
For more information about mortgages consult with America's Lending Partners, an established and trusted authority in the mortgage industry. ALP's team of experienced and ethical can help you avoid the pitfalls of harmful mortgages, and find you a competitive home loan which suites your short and long term needs.
Here is the rundown...
According to the Freddie Mac Primary Mortgage Market Survey for the previous week, long term interest rates were down for the third week in a row. However, the Weekly Mortgage Market Survey released by the Mortgage Bankers Association reported quite the opposite results with rates up sharply from a week earlier.
"Long-term mortgage rates continued to move lower for a third consecutive week, in part reflecting a moderation in core inflation," said Frank Nothaft, Freddie Mac vice president and chief economist. "In the statement accompanying their decision to leave the target federal funds rate unchanged, the Fed noted that..."
The Office of the Chief Economist of Freddie Mac issued its monthly economic outlook for July on Monday and, in the narrative provided a helpful analysis of the reasons for the confusing messages emerging from various reports on current house prices.
Each of the reports that the housing industry, the stock market, and the media relies on has advantages...
The Mortgage Bankers Association released the results of two surveys covering the mortgage world in the second half of 2006 on Tuesday.
84 lenders participated in the Mortgage Originations Survey, including almost all of the top 30 mortgage originators. During the survey period these respondents originated $681 billion in first mortgages and $163 billion in second mortgages.
The survey found that...
The Federal Reserve Board released the final statement of federal regulatory agencies on subprime mortgage lending recently. The release was done on behalf of the Federal Reserve's Board of Governors, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, Office of Thrift Supervision, and the National Credit Union Administration (the Agencies.)
The guidelines were first published for comment in March of this year. The proposed statement provided guidance on the measures lenders should use in assessing a borrower's ability to repay a loan and...
Another big mortgage corporation has sent out early warning signals about its financial health in the wake of the virtual collapse of the subprime mortgage market.
So what? Subprime lenders have been falling under the bus for months; at least a dozen have shuttered offices, had warehouse lines closed by big banks, or stopped accepting loan applications and started auctioning portfolios. But American Home is not a subprime company. In fact in March the company issued a press release to clear up any "confusion" about the type of loans it offers: at that point subprime mortgage represented less than 1% of its total loan portfolio.
The company specializes in so called Alt-A loans.
Mortgage rates decreased for the second week in a row according to the results of Freddie Mac's Primary Mortgage Market Survey for the previous week.
According to Frank Nothaft, Freddie Mac vice president and chief economist, "Mortgage rates edged down slightly for the second week in a row after having risen over the previous month and a half, and as financial markets prepared for the June 28th Federal Open Market Committee's announcement on monetary policy."
"This week we saw further effects of the current housing recession..."
Every few years there is a calamitous fire high in loss of life that pushes fire sprinkler systems into the public discussion. Recently it was the furniture store fire in Charleston, South Carolina that killed nine of that city's firemen.
...So, with such overwhelming evidence that residential sprinklers can save both lives and property, why the reluctance to mandate them in all new residential construction?
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