Marc's Mortgage Matter's

Here is an interesting site for Realtors, or anyone looking to compare housing costs in different states and communities. CompareCommunities Try entering Brooklyn NY and Utica NY. If you're thinking what I'm thinking, I'm leaving on Tuesday! ;)

The housing mess got a lot messier last week as JPMorgan Chase halted 56,000 foreclosures amid doubts that it had correctly followed laws on the foreclosure process. The announcement came soon after GMAC Mortgage suspended an undisclosed number of foreclosures to gain time to review its legal procedures. There may be more suspensions to come.

It is hard to be shocked. During the bubble, banks and other lenders ignored loan standards and stuffed the mortgage pipeline with toxic loans and related securities. Since the bubble burst, efforts to rework bad loans have been slowed by the lenders’ resistance, and by their incompetence.

Now we learn that foreclosures, the end of the mortgage pipeline, have also been handled with a disregard for rules and standards. There is a pattern here — one that lawmakers and policy makers must change.

Grim headlines about the housing market can make that final mortgage payment seem like a distant dream. But a growing number of homeowners are refinancing into shorter-term mortgages designed to make the dream become a reality sooner. Mortgages that last 15 years, rather than the gold standard of 30 years, have grown popular in recent months — a counterpoint to the foreclosures, “underwater” nightmares and aversion to debt.

With interest rates at or near their lowest levels in decades, we are seeing a lot more interest in refinancing into short-term mortgages. It’s people who are established in their residences and are not going to be moving and are comfortable in their income stream.

With a shorter-term mortgage, more of your payments go toward the principal, so you cut interest costs significantly, typically by tens to hundreds of thousands of dollars. While 15-year loans are the most popular shorter-term product, use of 10- and 20-year loans has also spiked. Customers were shortening their mortgage while often barely increasing their payments or perhaps just a few hundred dollars more. Little to many, a lot to most!

By erasing your mortgage debt faster, you remove a major financial stressor by the time retirement or children’s college tuition rolls around. And you build up equity in your house quickly, instead of hoping the market will later rise and do that for you. It’s the higher-end people doing it, like somebody who makes $250,000 a year or more. It’s older, secure types, people who want to go into retirement with a clean slate.

The downside, of course, is that you are locked into higher monthly payments. So if job insecurity or a cash crunch is looming, it may not be a good idea. Most homeowners think it’s prudent to keep the flexibility of a 30-year mortgage, but build up equity by making extra payments. I tend to agree with that train of thought!

The big employment report doesn't come until next week, and it's the big gorilla in a fairly empty room. Stock and bond markets enjoyed unexpectedly favorable conditions in September, which is not noted to be a historically great period for equities. October's been known to be a difficult period, too, but if September's any indicator, perhaps the markets are simply becoming accustomed to being in active crisis, and can find reasons to celebrate when we're not. Here's hoping that the rally's got more substance behind it than that, but there's nothing wrong with a little optimism showing somewhere.

If things are showing sporadic signs of life as we suspect, the employment report might just not be as poor as so many have been this year... and last year... and the year before that. Even minor improvements would go a long way toward mending the shattered confidence which is holding the economy back.

Mortgage rates will of course remain near record lows, and averages should remain fairly unchanged for the week.

Speeding in Oregon:

GOOD: A Bend, Oregon policeman had a perfect spot to watch for speeders, but wasn't getting many. Then he discovered the problem: a 12-year-old boy was standing up the road with a hand painted sign, which read "RADAR TRAP AHEAD". The officer also found the boy had an accomplice who was down the road with a sign reading "TIPS" and a bucket full of money. (And we used to just sell lemonade!)

BETTER: A motorist was mailed a picture of his car speeding through an automated radar post in Pendleton. A $40 speeding ticket was included. Being cute, he sent the police department a picture of $40. The police responded with another mailed photo of handcuffs.

BEST: A young woman was pulled over for speeding. An Oregon State Trooper walked to her car window, flipping open his ticket book.

She said, "I bet you are going to sell me a ticket to the State Trooper's Ball."

He replied, "Oregon State Troopers don't have balls."

There was a moment of silence. He then looked into the distance, closed his book, tipped his hat, got back in his patrol car and left.