Affordable Financial Services Blog » delinquencies

Affordable Financial Services’ Weekly Finance Review

Brian — Fri, 29 Apr 2011 13:00:02 +0000

Home prices are falling in most major U.S. cities, as reported by Bloomberg BusinessWeek. At least 10 major U.S. markets, including New York, are at their lowest point since the housing boom of 2006-2007. According to The Standard & Poor’s/Case-Shiller city index, home prices fell in 19 out of the 20 major cities. The record number of foreclosures is to blame for the decline in home prices in all of these cities except for Detroit, which was the only market to show a monthly gain.

According to Housing Predictor, Freddie Mac purchased fewer loans in March and reduced its share of the mortgage market. The number of mortgages Freddie Mac bought in March dropped 4.7% to $2.14 trillion. Citing the bills in Congress to abolish, or at least reform, Freddie Mac and Fannie Mae, Freddie Mac is now on a path to reduce the number of mortgages it buys. The unpaid principal balance of Freddie Mac- and Fannie Mae-related home mortgages in their portfolios fell $4.1 billion as lenders were forced to buy back more mortgages that were determined to be underwritten at low quality levels.

Mortgage delinquencies on single-family homes dropped in March, as did first-quarter homeowner vacancies, as reported by Realtor.org. Delinquencies on single-family homes fell to 3.63% last month compared to 3.78% in February, as reported by Freddie Mac. Meanwhile, overall vacancies remain high, even though the percentage of empty homes dropped in the first three months of the year. The South held the highest rates for the first quarter with 2.8%, followed by the Midwest with 2.7%.

MarketWatch recently reported that the average mortgage rates fell again. According to the latest Freddie Mac survey, the average rate for a 30-year fixed-rate mortgage was 4.78% for the week ending April 28, down from 4.8% in the previous week. Meanwhile, the rate for 15-year fixed-rate mortgages fell from 4.02% last week to 3.97% this week. This week’s rate was at its lowest level since early December 2010.

It’s Not Just Your Credit Score That Determines Loan Approval

Brian — Wed, 18 Aug 2010 16:25:09 +0000

Why is someone declined for credit when their credit score is just as high, if not higher, than others who were recently approved? With so much potential loss for credit card companies, insiders say that a credit score alone is not sufficient to determine approval. So, what other factors are used to determine who will be approved and who will be declined? According to industry officials, there are six other leading factors, in addition to a credit score, that determine a consumer’s likelihood to be approved for credit.

• Credit Card Utilization. If your existing credit cards are maxed out, you may be more of a risk than someone who has the same exact credit score but not maxed out.

• Recent Hard Inquiries. If you have several recent inquiries, it suggests that you were denied or you did get the credit and it wasn’t enough to meet your needs.

• Age of Oldest Trade. The ability to maintain accounts in good standing speaks volumes about the borrower. Lenders like to see a long history of open accounts, which, in many cases, means more than two or three years. In that short amount of time, you probably haven’t been laid off, or experienced a major life event. On the other hand, if you have 10 years of credit history and maintained your accounts, it says a lot about your level of responsibility and financial management.

• 30-Day Delinquencies. If you have a habit of paying late regardless of your score, be prepared to suffer the consequences when it comes to credit approval. This is why you should ALWAYS pay bills on time.

• Presence of a Mortgage. Mortgages denote stability and suggest that your credit is strong enough to support a high dollar loan.

• Presence of an Installment Loan. Just like a mortgage, installment loans demonstrate the breadth of experience you have with accessing and managing credit. Installment loans show a level of planning not displayed in credit cards since installments have a fixed monthly payment, which often requires more discipline and budgeting, both of which are often a plus.

Signing up for the FES Protection Plan will automatically show you how you rate in each of these categories and how to further improve your credit score. To see whether you qualify for a loan, visit http://www.vrtmg.com/lfigueroa.

Foreclosures Push Home Ownership to Record Lows

Brian — Wed, 28 Jul 2010 15:16:17 +0000

The second quarter of 2010 proved to be the most brutal time period in home ownership in a decade. Bloomberg News recently reported that 18.9 million homes were vacant in that period. The U.S. Census Bureau reported that the home ownership rate — that is, households that own their own residence — was 66.9 percent, the lowest level since 1999. That is down from the previous quarter of 67.1% and a record-high level of 69.2% in the fourth quarter of 2009.

The Census Bureau further reported that 3.7 million homes were vacant in the second quarter of this year as the result of foreclosures, up from 3.5 million in the first quarter of 2010. Two million empty homes were for sale in the second quarter.

In Q2 2010, a record 269,962 homes were seized as homeowners went into foreclosure, according to a report from RealtyTrac. The California-based data company goes on to say that foreclosures will probably top the 1 million mark before the end of the year.

More bad news: the Mortgage Bankers Association report from May 19 showed a record 4.6% of mortgages in foreclosure and 14% as the result of foreclosures and home loan delinquencies.

The economy and the elimination of the federal tax credit could be attributed to the decline in home ownership. It’s been said that owning a home is the American dream, but that dream has since become more unattainable.