As a support to their clients’ efforts to meet the requirements of the Federal Deposit Insurance Corporation’s (FDIC) Large Bank Pricing Rule, specifically in the subprime loan reporting that will start effective Oct 1, 2011, Experian is creating a complete product to be made available to its banking clients. The company, known for being a leader in global informatio

n services, will allow its clients to use its credit attributes together with its debt-to-income insight model (SM) in order to deliver the complete reporting requirements needed on subprime loans.

The latest reporting requirements for large banks, qualified as having at least $10 billion in assets, describes a subprime loan as a type of installment or revolving loan with one or more of the following properties: First, at least two 30-day delinquencies in the past year or at least one 60 day delinquencies in the last two years. A second requirement is foreclosure, judgment, charge-off or repossession in the previous 24 months. The third is bankruptcy in the last five years. Fourth is a debt service to income ratio of at least 50% which limits the ability to pay for the living expenses of the family once the entire amount of the debt-service monthly requirement is deducted.

With the company’s combined delivery of the needed reporting characteristics, the clients are provided with an option that they can rely on and easily access as they address their requirements in reporting. With this, clients must also check with their regulatory and legal compliance specialists regarding their specific reporting requirements.

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Michele Pearson, Experian’s Consumer Information Services Vice President, says that once the new regulation takes effect, the FDIC rates of the bank will be directly affected by the composition of its assets. This then becomes a different situation from the present environment, where the charges in the insurance rates of deposits are based on its size. The implication of this is that banks that have subprime loan amounts which are considered of a higher risk may have higher charges in their FDIC insurance rates. Pearson further adds that their company is committed to provide their clients with the complete products that will help them comply and maintain their usual business without experiencing any interruption.

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Mortgage loans that were obtained between 2005 and 2007 account for almost two-thirds of delinquent balances said Equifax. Although there is a decrease in the number of past due accounts of at least 30 days, those for 60 and 90 days are still continuously increasing.

In 2010, first mortgage loan write offs, installment loans and revolving accounts of home equity totaled to $304.6 billion. According to the analysis of Equifax, the number will keep on rising without any indications on when it will reach its peak. This number is way above the $126.7 billion total of loan write offs in the year 2006 and 2007.

According to the estimates of Equifax, as of May 2011, the total amount of first mortgage in the early stages of foreclosure is at $319.7 billion. This started in the years 2006 and 2007, a not surprising fact since those were the years when subprime lending activity started to rise.

REO properties is a main obstacle to the recovery of the economy, says Equifax. The reason for this is that REO rates stay high while lenders are struggling to get rid of their properties through short sales and auctions.

The completion rate of foreclosure is at 1.45%. This is in the same level as bankruptcies which are at 1.6% at the present time. Equifax says that the same rates indicate that most REO properties are brought about by the bankruptcy proceedings.

Equifax Mortgage Services’ senior vice president and general manager Craig Crabtree says that real estate owned properties and shadow inventory are performing a main role in the current mortgage market and slowing down the road to recovery of the economy.

Even if there are some stabilized lending sectors, there is still a high volume of past due first mortgage loans which has caused a slowing down of the foreclosure process. The mortgage market will keep on impacting the growth of the economy until the foreclosures are processed.

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• Three roadblocks to a refinancing boom (finance.fortune.cnn.com)
• Consumer bankruptcies on the rise: Equifax (marketwatch.com)

Home Loan Refinancing Options for Individuals with Bad Credit

Over the past few years, many Americans have refinanced their home loans to take advantage of the low interest rates. But, the low rates are not offered to all homeowners. Currently, the 30 year fixed interest rate is around 4.35%. This is only available to borrowers with good credit. Those with poor credit standing are usually given higher rates than the average.

People with bad credit who are seeking a refinance loan from Bank of America or Countywide must know that they need a credit score of at least 740 to qualify for the 30 year fixed interest rate of 4.5% or below. Moreover, their debt to income ratio must fall below 40% in order to be qualified for this refinance rate.

Sadly, the reality is, these are very difficult requirements to meet for people with poor credit. However, if they are determined to take advantage of good rates, they must try to boost their score by paying down their debts especially the ones incurring high interests. These include credit cards, payday loans and personal loans.

Moreover, even if Bank of America is considered as one of the country’s major financial institution, the low rates are not only exclusive to them. It is a common misconception of Americans with bad credit that not many lenders would want to work with them. In fact, there are plenty of institutions that are looking for customers and would welcome anyone regardless of his or her credit standing.

The website of FDIC provides a list of the mortgage lenders who can help in refinancing a home loan no matter what the status of the borrower’s credit is. There are about 7000 financial institutions all over the country with FDIC insurance that can provide assistance in home loan refinancing with the lowest mortgage rates of interest.

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• Homeowners Shortening Mortgage Terms At Record Rates (inquisitr.com)
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Positive Economic News Despite Wall Street Challenges

Although it may seem unbelievable, economists have some positive news despite the challenging week in Wall Street.

One of this is the chance of Americans with good credit ratings to obtain the best bargains in housing prices. In the latest survey of Freddie Mac, it showed that there has been a reduction in the average rate of 30-year fixed rate mortgages. Currently, it is only at 4.32%. Aside from this, home prices are even lower compared to the previous year. According to the S&P/Case Shriller 20-city composite, prices all over the country have become lower by 46.5%. Low mortgage rates and home prices will help more individuals and families afford their first home purchase. For those that already own a home, they can also benefit from low rates by refinancing their mortgages so that their monthly payments will become lower.

The impact of lower rates also extends to the retail industry. The data of the Commerce Department from the previous week shows that there is an increase of 0.5% in their July sales. This is one of their strongest numbers since March this year.

Moreover, another report from last week showed that state unemployment benefit claims declined by 7,000 resulting to only a total of 395,000. Although it seems high, this is still a better number than what most economists are expecting.

Also, a weaker dollar is a silver lining at this time. This means that U.S manufacturers can effectively and better challenge their competitors in countries with strong currencies.

Finally, there is no better news than oil price reduction. During the spring time, prices of oil and gasoline increased. Currently, the prices are more reasonable at around $85 per barrel. Compare this with the $114 high price that it reached several months ago. The lowering oil price is evidence that there is re-balancing in the economy. When oil is cheaper, gasoline is more affordable. This will help consumers save more money.

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Why is it Time to Refinance? Is it the best time to get a Mortgage Refinance?

Interest rates on mortgages have continuously declined to reach its lowest level in recorded history. This is a strong proof that it is already the best time for homeowners to consider refinancing in order to generate some savings.

The rate for a 30-year fixed mortgage was at an average of 4.39% during the end of the Aug 4 week. Similarly, the rate for a 15 year fixed mortgage decreased to 3.54% despite the reduction in bond yields and signs that show a weaker economic standing than what is expected said the Primary Mortgage Market Survey of Freddie Mac.

The president of Metropolitan Boston Real Estate, Nebury Street brokerage, said that this is good news because this will serve as a motivation for anyone who is considering refinancing knowing that the low rates won’t stay very long.

Here are the possible savings that homeowners can generate: for a mortgage of $250,000 with 5% interest, they could save about $160 monthly and $2,020 yearly if they refinance the loan for 4.39%. These savings provide a guaranteed cash in the bank during these present times when traditional savings account have nearly zero percent in returns and the gyrations in the stock market have exhausted the investment accounts.

Bankrate.com’s senior financial analyst Greg McBride said that anybody who decides to refinance at these very low rates are sure beneficiaries of the economic concerns and Wall Street challenges.
The three lenders listed in Bankrate.com that offers 30 year fixed loans with less than 4.39% interest are AimLoan.com at 4.19%, Loan Depot at 4.25% and American Interbanc.com at 4.35%. All three are offered with zero points.

Albano said that even if the low rates are great news for most mortgage owners who pass the requirements of credit and equity to qualify for refinancing, potential buyers will still not leave the sidelines. He thinks that people who are observing the rates and decides that they are not ready to purchase at 4.5% will change their mind when the rates fall at 4.3%.

If you are looking to refinance your mortgage, then you may want to consider doing it soon. As you may know, last Friday, Standard and Poor’s downgraded US treasuries from AAA to AA+. This is the first time in history that the U.S. has had a downgrade.

Then, on Monday, Standard and Poors also downgraded Fannie Mae and Freddie Mac. While it is unclear as to the final effects of the downgrade, many financial experts are prediciting that the cost of money will go up, effectively raising interest rates.

If this happens, it could be problematic for an already sluggish economy,a nd could further depress the already lagging housing market. Higher interest rates would effectively make home ownership more expensive.

As for those with bad credit or poor credit, these changes could put you completely out of the market. While the agencies push to regain their credit ratings, they may be forced to be even more conservative with lending practices, and that would make credit or loans for people with bad credit almost out of reach.

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• Economy sends mortgage rates down to new 2011 lows (hsh.com)