Good news for the economy, we’re all hoping. Apparently Tuesday left many floor traders and financial gurus shining, because it was a good day on Wall Street, which means that it’s a good day for the economy and America as a whole usually. The reason for the upturn? Apparently there has been an upturn in housing, as reported by periodic data on the housing and mortgage situtation here in the US.
Lately it’s been all gloom and doom in this arena, which often follows a bland stock market and a bad economy, but upturns in housing data made consumers more confident and spurred economic activity and stock trading.
Investors also liked the fact that oil prices were broadcast as getting lower. Since energy prices are dipping again, this usually causes a surge in the stock market. Translation : this is a good thing!
What’s happening in the mortgage industry today can only be described as financial disaster. Mortgage companies that specialize in lending money to customers with poor credit histories have done no favor to the economy on a personal level for individual families. On a larger scale, these companies are scrambling for financing and finding their own lines of credit cut.
When the housing boom was in full gear, an individual that had trouble making their high interest payments could either sell their property or refinance their mortgage. As the housing market slowed, home values declined and the borrowers were left owing more on their mortgages than their homes were worth.
Foreclosures have now hit an all time high. According to the Mortgage Bankers Association, the percentage of payments that were 30 days or more past due has jumped to 4.95 percent in the October to December quarter.
For the families faced with foreclosure, the results are devastating. Even if their credit histories were tarnished coming into the mortgage, they are now facing the loss of their home and possible bankruptcy. Counting payments or figuring payment info on a mortgage calculator should be everyone’s first step in figuring out what they can realistically afford on an ongoing basis.
New Century Financial Corporation, who is the nation’s second largest subprime lender, has stopped accepting all new loan applications. Until recently, they were able to package the loans up and sell them. This company’s stock has declined in the past month from $30 per share to $1.66 per share on March 12th.
As a result of the mortgage mayhem, some lawmakers are looking into setting higher standards to avoid risky, high interest mortgages which have been made to people with poor credit histories. Members of the housing coalition are hoping to work with the banks to refinance risky loans and help people avoid foreclosure.
Well, you know how some of those tax preparation companies promise to find you every nickel and dime you are “owed” from the government? This new lawsuit, and an apparent recent crackdown by the IRS on tax evasion, tax fraud, and understatment of income as well as other tax evasion techniques, may make you think twice about bending the rules, even if you think it it harmless or can somehow be justified.
Several Jackson Hewitt offices were shut down in the wake of an IRS investigation into questionable practices, including looking past false documents such as falsified W2’s and other false documents that inflate returns or make them plain old fraudulent. The firm is actually the second largest preparer of federal and state taxes for people here in the United States, so this comes as quite a blow, and also as a perceived victory for the IRS, who I’m sure is glad they’ve sort of “set an example” that they can’t be messed with.
They say that the deceptive and downright allegedly fraudulent practices of the tax prep firm costs the government and other taxpayers about 70 million dollars (no chump change). How are you coming on your taxes? Tax deadline’s comin’ up unfortunately - hopefully you’re getting something back and dont’ forget to claim mortgage interest and property taxes if you can! Or if not, I hope it’s not too big a bill to bear 
A well known, what we call “subprime” mortgage lender by the name of New Century Financial Corp has filed for bankruptcy and announced that it will be letting go thousands of employees and trying to cut expenses in other ways in an effort to make them more appealing to potential buyers. Apparently business isn’t going so well in the subrpime mortgage lending market?
With all the measures against predatory lending going on lately, and the negative publicity that many lenders have suffered through due to high foreclosure rates (which means they overestimated client’s abilities to pay them back, most likely in an effort to drum up more business), it’s really wrecked havoc on quite a few, previously solid mortgage lending institutions.
The company, which is said to be the second largest subprime mortgage loan lender in the US, like many other mortgage lenders who miscalculated risks, has seen some very volatile markets right now, due to poor decision making on the lenders end to assume responsibility for loan repayment, as well as increasing rates on ARM mortgage loans, which the unforseen spikes in interest rates have made it nearly impossible for some borrowers to make substantially larger payments as of late.
The housing industry hopefully will be on an upturn here over the next few months, and definitely over the next few years, as the mortgage lending and housing industry as a whole has fallen on some very hard times thanks to a poor economy as well as low consumer confidence and purchasing power. Come on economy - we need you to pick up the pace!