| While you weren't watching ... ... mortgage rates were tumbling
With long-term mortgage rates sinking to their lowest level since March 2004, it looked like one of those golden opportunities to refinance the home or condo this week.
But many who rushed out to their banker or mortgage broker discovered that it is much more difficult to borrow money than it was even a few months ago.
The real estate crisis dragging down the rest of the U.S. economy has frozen the market for many borrowers. As prices fall and lenders wallow in a sea of losses, only those with gold-plated credit ratings and ample equity in their homes are sailing through the application process, mortgage bankers said.
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The Subprime Blame Game: Where Were the Realtors?
You can always refinance in two years,'" she said. "He never told them their payment would jump 30% in month 25, or how hard it may be to refinance.... And in two years, the borrower blames the lender for their fix, not the agent who steered them to a higher priced home and a 2/28 loan." Many subprime borrowers are now finding they cannot refinance to escape their rising payments. In some cases, their homes have fallen in value so they cannot borrow enough to pay off the older loans. Others cannot qualify for the fixed-rate "prime" loans they need, or they are prohibited from refinancing by prepayment penalties meant to assure the lender that the borrower's high payments would continue for a minimum number of years. Running Afoul of the Code Real estate agents typically spend much more time with home buyers than mortgage brokers and lenders do, and presumably could issue warnings about risky loan products.
Jackson blasts Bush mortgage plan
Bush's recent bailout plan doesn't go far enough to solve the problem of foreclosures, Jackson said, pointing to the voluntary nature of Bush's program to freeze adjustable mortgage rates for five years. "By and large they will not do it because it's voluntary," Jackson said. "There is no structure in place to in fact begin to exact from them exploitative amounts of resources. There must be some government plan in place because it's about sparing the nation a recession." Glenn Mueller, a professor at the Burns School of Real Estate and Construction Management at the University of Denver, went even further. He told The Denver Post "the liars have won," saying that the mortgage plan rewards the lenders, whom he called cheaters. However, Robert Steel, the undersecretary of the treasury for domestic finance, told National Public Radio that the Bush plan will buy affected homeowners time to refinance their mortgages.
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