Disturbing news this week from the pages of the Los Angeles Times–it appears as if no lessons have been learned from the mortgage/credit crisis the U.S. (the world??) finds itself in.

According to the paper, there is a virtual “blizzard” of advertising aimed at homeowners to induce them to refinance. And, while these ads are not targeting the sub-prime crowd, they apparently take pretty much the same tone and make the same potentially dangerous promises that got us into this mess in the first place.

The paper quotes a flier from a mortgage brokerage sent to a homeowner: “You have been selected to substantially reduce your mortgage payment…” But, as the Times points out, what you need a magnifying glass to read is the fine print that discloses that paying the lower amount offered the homeowner would actually increase the loan balance! Nice move…for the brokerage company.

Or, how about this flier from Countrywide - “No need to show bank statement or verify other assets…no paycheck stubs or proof of income required…no new appraisal needed (in most cases.)

Sound familiar? It should. Offering mortgages to would-be homeowners who lacked the income to make the monthly payments is partly what ignited the housing crisis as more and more homeowners realized that the math just didn’t add up and they could not afford the payments.

Says the Times, “In the current refinancing push, lenders are promoting some of the same exotic products that gained notoriety during the housing boom.”

What’s going on?

Simple really. The figures show fewer and fewer homes being sold–so, to make money, the mortgage firms are now trying to make some bucks convincing homeowners to refinance.

Isn’t there a folk song with the tag line, “when will we ever learn,when will we ever learn?” Guess the answer is, never!

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Tags: Housing, mortgage, mortgage mess, refinance

A manufacturing report came out today that was weaker than expected, raising renewed talk that the Fed might cut rates later this month¹.

What does this mean for you?

As rates have come down recently, now is a good time to look at doing a refi. If you can afford to wait, and signals continue to point towards another rate cut, I’d even suggest waiting out the next few weeks to see if the fed does indeed make a rate cut by month’s end. If you’re stuck in an ARM loan that is slated to reset in the next few months, maybe you should look at locking yourself into a long term 30-year fixed loan before the loan adjusts.

Dropping rates will certainly help out American consumers in dealing with credit and loan issues, however, as we continue to cut rates, confidence in the Dollar will likely decline further. While rate cutes may prove to save many consumers and homeowners, they may, in fact push foreign investors even further away from investing in our currency.

I continue to believe that we are headed for recession, and any moves that the Fed take now are simply too little too late.

Here are a few simple ways to plan for the possibility

1 - Be smart with your finances.
2 - Protect your home by locking in rates while they are low.
3 - Pay off your credit cards.
4 - Cut unnecessary spending.
5 - Learn to begin saving and investing.

All of these tips should be taken into consideration regardless of whether or not we do go into a recession. All are key ways in the long run to build your wealth and net worth.

Sources: Yahoo Finance - “Stocks Soar on New Hopes for Rate Cut”

Tags: Credit, credit card, fed, Interest Rates, mortgage, net worth, refinance, wealth

In the current housing bubble, hundreds of thousands of people, if not millions got themselves into risky mortgages. Often times people will not realize that they cannot afford their home until it is too late! If you’re having problems paying your mortgage and you want to refinance, do it before falling behind or making that late payment.

According to The Mortgage Blog, “banks really look at whether or not you can handle a mortgage payment responsibly. If you’ve been late on your mortgage more than 30 days, what we call a 30 day late, that counts against you.”

That’s a tip we should all keep in mind!

Auto Loan Refinance lower your monthly bill

Tags: bank, bubble, housing, late, lender, loan, mortgage, refinance, toxic