Today's Mortgage Rates

I live in Arizona and pretty much every home within a 2 square mile radius of my home has dropped 50-60% in value since 2006.

Which means terms like loan modification, short sales and foreclosure pretty much dominate every neighborhood bar b q party at the local park.

Recently, I was at a neighborhood gathering and someone was telling their story of trying to get their loan modified but the lender wouldn’t budge, so they tried to short sell it but got denied and were about to have their house sold at auction in the near future.

I couldn’t help but wonder “I wonder if the lender really wants to foreclose” or if they just didn’t have the right help.

And I didn’t think too much more about it.

Until I saw that same person who had been told “no, no, no” again yesterday.

I was expecting him to tell me how his pending-foreclosure date was impacting his mental health but instead he had a smile on his face and opened our conversation with” you will never believe what happened – my lender approved my short sale!”

And then he told me how the lender that had told him “no, no, no” suddenly had a change of heart because his Real Estate Agent had gotten on the phone with the right person at the lender and made them understand that they had bad information and needed to re-evaluate.

Which was just a simple reminder:

When hiring people to help you with your loan modification, short sale or foreclosure – there can be a world of difference between the knowledge, skills and experience of each “expert”.

And when some just hear “no, no, no” and give up… some actually get to “yes” because they don’t give up.

And there can be a fine line between “no” and “yes” and that fine line can make all the difference.

It wasn’t all that long ago that a busboy could walk into a mortgage lender, say he made $100,000 per year and get a home loan based on that number.

The loan programs that were available had all different kinds of names, but they all pretty much did the same thing — allow people to get qualified for a mortgage without proof that they could qualify.

Fast forward to today’s mortgage market. Guidelines are tighter than they have been in years, loans are tougher to get and people are generally less apt to go out on a limb when financing their home.

And stated income loans are virtually non existent.

Who is hurt by the fact that stated income loan options do not exist?

Generally speaking, I would say that the small business person is hurt by not having stated income loans available. And what is even worse – now that virtually every lender requires that you allow them to verify your tax returns with the IRS, I suspect that there isn’t a stated income loan program anywhere on the immediate time horizon.

So if you are a small business owner and you have an accountant who helps make sure that you are minimizing your tax liability to the IRS, if you didn’t already know that this was impacting your ability to get a home loan — now you know.

One of the unexpected victims of the elimination of the stated income loan program appears who they were designed for in the first place:

The small business owner.

The percentage of mortgage loans that were delinquent at the end of the fourth quarter 2009 fell to a seasonally adjusted rate of 9.47% from 9.64% the previous quarter, according to the Mortgage Bankers Association (MBA). The data seem to indicate that fewer homeowners are getting behind on mortgage loan payments.

Included in the figure are loans that are at least one payment past due, but not loans in the foreclosure process. There were 4.58% mortgage loans in the foreclosure process at the end of the fourth quarter. The survey recorded the highest combined percentage (15.02%) of mortgage loans that were in foreclosure and at least one payment behind.

The data give some hope that the housing market could be improving. Jay Brinkmanm, MBA’s chief economist, said in a statement:

The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight.  We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors.  Not only did we not see that spike but the 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent … If the normal seasonal patterns hold for the first quarter, we should see an even steeper drop in the end of March data.

Time will tell if more homeowners will avoid becoming delinquent on loans or ending up in foreclosure. Unemployment rates are still high and some people who have been without a job for a long time have given up on finding anything and dropped out of the work force. So until more people find steady full-time employment, the housing recovery is still on shaky ground.