US Federal Reserve Bank eases lending
Posted on September 18, 2007
Filed Under Economy, Home Finances, Subprime Mortgage |
Good news today on the lending and borrowing front. The Fed cut interest rates by 1/2%. That can make a significant difference in the overall cost of a home loan over its lifetime. In fact, it can make a big difference in getting a loan at all. Hint…
If you are thinking about getting mortgage quotes for a home purchase or refinance - or any other type of loan quotes - now is a good time.
Don’t worry, the uncertainty in the economy is not over. With the pains that Britian’s Northern Rock Bank is feeling with withdrawl runs on it, there will be much more. The addage that misery loves company exists for a reason.
Talk about bank bailouts abounds. And there has been talk about bailing out lenders as well. Regardless of whether in the United States or in the UK, I would not hold my breath for either. As long as capitalism and free market economies are hoped to endure, bailouts should be kept off the table (or at least locked up in an air-tight vault). However, that is not to say that assistance might not be a viable solution.
In the case of individual lenders, lending institutions should make efforts to put procedures in place to review and revise [within reason] loan arrangements to make the borrower successful in paying back their loan. That by no means means forgiving the loan, but rather amending the terms in regards to lightening up the interest somewhat or forgiving late payment penalties.
Often I hear people say with great skepticism that the mortgage companies want their borrowers to fail in making their payments so they can foreclose on them and take their homes and then resell them for a profit. This however is not the case for any lender who wants to make money or stay in business. In fact, I have only ever heard of one company that tried it, and they got their butts sued off.
Instead, lenders are successful when their borrowers are successful. If you find yourself in a pinch in regards to making payments, then you will do well to pro-actively contact your mortgage company or bank and discuss matters with them. In working their long list of troubled loans, they would prefer to note your account as a “special plan”. That way they can sick their attorneys on the borrowers of the other loans who did not call in.
Not to worry, you are not alone. In fact I have been their myself in certain borrowing situations. And I can honestly say it is a phone call well spent.
Best Regards,
Stephen Dunbar
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