All Posts Tagged With: "ARM"
It’s Time To Raise Loan Disclosure Standards
It’s usually argued that full and fair disclosure is one of the best forms of consumer protection, but when it comes to mortgage loans there’s often much that borrowers don’t know — especially with today’s newer loan formats. Now a study by the Government Accountability Office says new standards of consumer education should be required [...]
22Sep2008 | Peter G. Miller | 0 comments | Continued
Foreclosure Numbers at New Highs: Are Toxic Loans To Blame?
Foreclosures used to be a rarity and for the most part that’s still the case. As of the second quarter of 2008 only about 2.75 percent of all loans were in the process of being foreclosed, according to the Mortgage Bankers Association. That term “in the process of being foreclosed” is important. Neither borrowers nor [...]
19Sep2008 | Peter G. Miller | 0 comments | Continued
Toxic Loans Threaten Home Values
Stashed away amid the tons of paperwork generated each day in Washington — reading which no one argues is a threat to Shakespeare — is HUD’s 2007 Budget Summary, a document which ought to make a lot of people take notice. “Congress recognizes that today’s high cost loans negatively impact consumers, communities, and the economy. [...]
18Sep2008 | Peter G. Miller | 0 comments | Continued
What’s A 5/25 ARM?
An ARM is a loan product with payments and interest rates that adjust at certain intervals. A fixed-rate loan has one interest rate and a set monthly payment for the life of the loan. A 5/25 ARM is a loan product with a fixed rate during its first five years, and then an adjustable rate [...]
31Aug2008 | Peter G. Miller | 0 comments | Continued
How does an ARM conversion program work?
Many ARMs come with conversion programs. For a fee, say $250 to $500, you can convert to a fixed-rate. The conversion rate won’t be the best in the world, it’s typically about 5/8ths of a point higher than a given index, but it may be better than the fixed rate at the time you applied [...]
31Aug2008 | Peter G. Miller | 0 comments | Continued
What Is Mortgage Loan Negative Amortization?
We usually think of mortgages as debts that are paid off over time. This happens because monthly payments usually cover interest costs and a reduction of principal. Loans that are re-paid over their terms are called “amortizing” or “self-amortizing.” With some adjustable-rate mortgages (ARMs), however, we can have a situation where monthly payment increases are [...]
31Aug2008 | Peter G. Miller | 0 comments | Continued
What Is Loan Re-Casting?
ARM loans have adjustable payments but a set loan term — usually 30 years. Many ARM products are arranged so that every five years the loan is “re-cast.” This means the payments are adjusted to assure the loan can be re-paid in the remaining loan term. The reason re-casting is necessary is that monthly payments [...]
30Aug2008 | Peter G. Miller | 0 comments | Continued
What’s A “Combo” Mortgage?
Usually, when one talks about a “combo” loan such as 5/1, 7/1, or 10/1 financing, what’s meant is a deal that works like this — a fixed rate for the first five, seven, or ten years and then a transition to a one-year ARM, usually based on the Treasury or LIBOR index, for the balance [...]
30Aug2008 | Peter G. Miller | 0 comments | Continued
How Does The FHA ARM Program Work?
The FHA ARM is a 30-year mortgage with payments that adjust annually. The program uses a Treasury or LIBOR index and a margin to determine annual rates. Unlike toxic loans, with the FHA ARM there are no prepayment penalties and no exploding re-sets. While the FHA ARM is a better financial product than a toxic [...]
28Aug2008 | Peter G. Miller | 0 comments | Continued
Toxic Loans & The Art of Denial
There’s an idea which has been voiced with more and more frequency and it generally goes like this: I have a toxic loan but why worry? After four years or so — just before the monthly cost of this loan doubles — I’ll just go out and get another interest-only or option ARM, begin the [...]
26Aug2008 | Peter G. Miller | 0 comments | Continued
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