Consumers shopping for a home might want to pick up the pace: Getting a mortgage will likely become more challenging and costly next year. Loan limits for popular mortgages are scheduled to drop in January, according to a Wall Street Journal report this week. The Federal Housing Finance Agency is planning to slash the maximum size of mortgages eligible to be backed by Fannie Mae and Freddie Mac, which currently run as high as $417,000 in most parts of the country and up to $625,500 in pricier cities, including New York and San Francisco. That same month, new mortgage rules by the Consumer Financial Protection Bureau go into effect, which restrict the types of mortgages lenders can provide. The changes could leave next year’s mortgage applicants with fewer and more expensive financing options to choose from than what’s currently available, experts say. Read more.
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Standard & Poor downgraded the U.S.'s credit rating on Friday, despite Congress reaching a deal in the final hours on the debt ceiling crisis last week. And now many of your customers may be asking: What does this mean for interest rates? The impact on your wallet of the Standard & Poor's downgrade of the nation's credit rating is similar to what would happen if your own credit score declined: The cost of borrowing money is likely to go up,” the Washington Post explained in the aftermath of S&P’s decision. S&P downgraded the U.S.'s top-notch AAA credit rating for the first time in history, moving it down one notch to AA+; the rating reflects a downgrade in S&P’s confidence in the U.S. government’s ability to repay its debts over time. It’s not clear, however, whether S&P’s downgrade will instantly effect rates, analysts say. Read more.
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A recent analysis in the Wall Street Journal concludes that Kentucky was one of the most difficult states in 2010 for borrowers to get a loan or refinance. Nationwide, lenders denied 26.8 percent of loan applications in 2010. In Kentucky that number was 31.1 percent of borrowers. The most common reason for denying loans, according the Journal, was 'insufficient collateral'. Read more.
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The Obama administration on Thursday halted payments to three of the largest U.S. banks until they make “substantial” improvements to their performance in a mortgage assistance program.
J.P. Morgan Chase & Co., Bank of America Corp., and Wells Fargo & Co. can no longer receive fees from the program known as the Making Home Affordable Program, until they make changes to ensure their processes work better, the Treasury Department announced. The program seeks to help troubled borrowers avoid foreclosure.
The big banks have been broadly criticized for foreclosure documentation errors, and in many cases, institutions have assigned only a single employee to rapidly approve numerous foreclosures. Read more.
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Low interest rates, defaults and refinancings have shaved more than $100 billion off the nation's annual mortgage bill — an amount comparable to all unemployment benefits for one year or this year's Social Security payroll tax cut. 'This is a form of economic stimulus that goes to Main Street rather than Wall Street,' says Nicholas Carroll, a journalist on consumer finance and author of Walk Away From Debt for a Better Future. When freed from a mortgage payment, people's first purchases tend to be necessities, such as socks and underwear, he says. Read more.
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