Colorado home loan
Tuesday, March 25th, 2008The Colorado home loan market saw very little change in rates today and it will be interesting to see what Colorado home loan rates will do tomorrow. I believe that these rates will be impacted by what investors know about the up and coming economic data due out at the end of the week. Colorado home loan rates will decrease if the news turns out to be negative and obviously rates will increase if the news is positive. I have addressed this issue in my previous blogs so tonight I would like to take a minute and talk about what is going on in the Political arena. It is important to see what our future leaders are talking about doing to improve what the media has labeled the Mortgage Crisis. Mortgage Crisis is an interesting term used in the media, obviously we have an issue in the market today but Crisis not sure if I would label it that. Did you know that although default and foreclosure numbers are up, that they still account for a very small portion of total loans currently in the market? For example most Colorado home owners currently holding a Colorado home loan continue to make their payments on time and will be making their payments on time as expected. Both Political parties have promised some drastic measure to help support the portfolios which were underwritten by lenders with lets say ‘Loose guidelines”, and because of this, lenders have put credit ratings on these portfolios at risk. Like any other election year it is amusing to see that each party has a strong idea of what needs to be done, but both parties seem to be deliberate in making their opponents solutions appear to be less then favorable. I want to believe that there is truth to both parties and that these parties should focus less on the disagreements and more on what they do agree on to find the right solution. Colorado home loan mortgages like any other mortgage in the U.S. requires some type of guarantee in order to attract investors back into the Mortgage Backed Securities market for the long term. It has been proposed by congress that the government should guarantee these loans and offer investors the difference on any shortage that results in foreclosure. Obviously this will have a positive impact for investors. The government already has a program in place that guarantee’s loans for banking institutions. FHA loans have been structured to do just that for decades and theFair Housing Administration continues to guarantee these loans to the banks that offer and service them. FHA programs historically offer premium rates to Colorado home loan transactions because of the guarantee. Though the concept proposed by Congress sounds good ultimately like anything else we pay for it. What this will do is add additional risk to an already risky Colorado home loan portfolio and future interest rates in this program will drastically increase. We are already seeing these increases as FHA loan limits have increased. These FHA increases were initiated in the Economic Stimulus package and initially were rejected by lenders. Lenders have now begun to accept the new loan limits but remain very cautious and have added about a .75% interest rate increases for these Colorado hom loan programs. Over the years FHA loans have proven to be a great vessel for people that stuggled to get premium rates in order to qualify for a home. These loans were specific to people that had good credit intentions and had their credit under control for an appropriate period of time. Home ownership instantly increased with the introduction of FHA and has allowed the right people to buy. If Congress is succesful in implementation a program that will guarantee high risk loans, FHA rates change for the worse over night. This will not have a good long term effect and ultimately will be a bigger problem then solution. I don’t have a simple solution for what would help the Colorado home loan market today, but simple economics taught me that the market will ultimately work out the problem itself and adding layers of government bureaucracy to anything forces the market out of alignment. I know that their intentions are good but in the long run this will prove to be a liability. The responsibility for guaranteeing these Colorado home loans should fall on the lenders that approved to do these Colorado home loans in the first place. If it causes lenders to close their doors then so be it. Free markets reward good business practices and penalize poor buisness choices. We still have plenty of lenders that do business the right way to make it through these difficult times. I would love to be in a business where every time I make a mistake I have the guarantee of the government to pull me through. Lenders are beginning to learn from the mistakes made in the past and underwriting requirements have tightened up. We will see these new mortgage portfolios perform well and investors confidence will come back hopefull sparking demand for mortgage backed securities. This will only mean good things for Colorado home loan programs as interest rates decrease. I think it is good that have obstacles to overcome it will allow the market to be stonger I just hope that we do not fall back into old habits. I hope that this was helpful and remember if you have Colorado home loan questions simply send me a comment and I will address each question. Check out my other blog site when you have time. I write different information on both and you may find that Colorado home loan information useful as well. Check out www.coloradohomemortgageloan.net/news Have a great evening and God bless.
