Mortgage news that matters

I don't know about you, but most of what I've read on the mortgage crisis is from reporters with limited information and an editor looking for a story. Finally we have scientific data that has revealed some interesting trends. Like all real research this is a dry read, but I'll highlight a few points.

First, the credit and link. In a Press Release found on Yahoo;

"First American CoreLogic, a member of The First American Corporation (NYSE: FAF - News) family of companies, released a new study today that investigates the impact of mortgage payment reset and provides insight into which loans will be most affected when adjustable-rate mortgages convert from low introductory interest rates to higher prevailing market rates. The study, titled "Mortgage Payment Reset: The Issue and the Impact," is a definitive and comprehensive analysis of the issues surrounding mortgage payment reset during the next five to seven years." (It's 18 pages and you need to give your email to receive the pdf.)

"The research predicts that, due to payment reset in the absence of equity, 32 percent of teaser loans will default, 7 percent of market-rate adjustable loans will default and 12 percent of subprime loans will default over the next six to seven years.

The analysis concludes, however, that while those involved with the riskiest loans may suffer, on a national basis, the losses will translate to less than 1 percent of total U.S. mortgage lending projected for that period and will not significantly impact the economy or the mortgage lending industry.

It also shows that market place remediation has already begun. Borrowers are, on their own refinancing out of risky loans and lenders are working with clients to modify or refinance loans to avoid default." This is good news. Lenders ahve the ability to restructure loans to make them workable. It appears that some are.

This is an indication once again that our market forces will work themselves out. Sure, there will be many destroyed lives and lost equity in some areas, but we will rebound and be stronger for it. Look at it as a thinning of the ranks of those who just wanted to make a quick buck.

Before you purchase or refinance, make sure that your lender is truly looking out for your best interests.