Class-action suit targets WaMu securities Nov 4, 2009
According to the suit, WaMu issued securities backed by its own single-family residential mortgages whose interest rates adjusted (after an initial fixed rate period) and included a negative amortization feature. The certificate that came with securities issued by WaMu claimed that they were made up of a pool of residential mortgages that were subject to underwriting guidelines, including a borrower s creditworthiness and reviews of loan applications, the suit alleges. (San Jose Business Journal, CA)
Wachovia Borrowers See Foreclosure Delays Oct 9, 2009
Wachovia at one point held more than $120 billion of these risky negative amortization loans, which offer borrowers the option of paying less than the loan's interest every month, which increases the loan's balance. A bulk of Pick-A-Pay loans are tied to properties in California and Florida and other regions devastated by sliding home values. (SmartMoney)
$30 billion home loan time bomb set for 2010 Sep 21, 2009
" Of the 10 metro areas nationwide with the most option ARMs, three are in the Bay Area, according to Fitch Ratings, a New York research firm. They are the East Bay counties of Alameda and Contra Costa, the South Bay area of Santa Clara and San Benito counties, and the counties of San Francisco, Marin and San Mateo. Together, these areas account for the second-most option ARMs in the country, although they are still far behind the greater Los Angeles area (including Los Angeles, Riverside, San... (San Francisco Chronicle)
New Disclosures Help Mortgage Consumers Know Risk Sep 3, 2009
Closed-end mortgage disclosures will focus on potentially risky features including adjustable rates, prepayment penalties, and negative amortization (a feature that cause a loan's balance to rise). Lenders would have to. (RealtyTimes)
Washington Report: Protecting Consumers Aug 24, 2009
It would have the power to impose tougher underwriting requirements for mortgage financings the agency considers high-risk, for example, piggyback combinations of first and second mortgages, loans with negative amortization terms and even loans with adjustable rates. The agency would also have full federal responsibility for overseeing the Real Estate Settlement Procedures Act, including complex "affiliated business" relationships among realty brokers, title companies, home builders, escrow and... (RealtyTimes)
Callahan & Willcox: A Consumer Financial Protection Agency — It’s About Time! Aug 18, 2009
The effect was that Mr. Escobar had exchanged a standard fixed rate loan for one with a negative amortization. When he challenged the transaction, the company pulled out the TILA document, claiming that they had complied with federal law. (Roll Call)
LA priest's mission: Saving flock from foreclosure Aug 6, 2009
His daily discourse is as likely to include talk of balloon payments and negative amortization as Hail Marys and The Lord's Prayer ... Their purchase of a $488,000 townhouse has resulted in negative amortization - the loan balance is increasing because the monthly interest exceeds the principal payment. (Anchorage Daily News)
Oregon Governor Signs Consumer Protection Bills Jul 31, 2009
The law prevents loan issuers from granting negative amortization loans before making sure borrowers can pay back the loans. A negative amortization loan is structured so that payments start out smaller than the interest due. (ABC News -- Wire)
Beware the hidden agendas of 'experts' May 30, 2009
All that risk management modeling, interest-only negative amortization, asset allocation rebalancing and second derivative negative correlation analysis turned out to about as valuable as a share of bank stock. Further, its still very difficult to identify the conflicts of interest that sank borrowers and investors of all shapes and sizes in the latest market collapse. (MSNBC -- Business)
Redwood Trust Announces Pricing of Common Stock Offering May 28, 2009
Important factors, among others, that may affect our actual results include: changes in interest rates; changes in mortgage prepayment rates; the timing of credit losses within our portfolio; our exposure to adjustable-rate and negative amortization mortgage loans; the state of the credit markets and other general economic conditions, particularly as they affect the price of earning assets and the credit status of borrowers, and the success of government actions aimed at stabilizing them; the... (PR Newswire)
BankUnited Was One of the Last 'Dead Banks Walking' May 23, 2009
As it did with California's Downey Savings & Loan and First Federal Financial, as well as national giants Wachovia and Washington Mutual, the blizzard of option-ARMs buried BankUnited's borrowers in negative amortization. The bank was dragged down with them. (Law.com)
Green River Mortgage settles with state May 13, 2009
The complaint alleged that Yakubovich designed the advertisements to make the low teaser rates look like fixed interest rates, and that Green River induced two elderly couples to enter into unsuitable option ARM loans by misrepresenting the teaser rate as a fixed interest rate and by failing to disclose the risks associated with the loans, including possible negative amortization and hefty prepayment penalties for refinancing ... Although the borrower retains the option of continuing to make low... (Denver Business Journal, CO)
Do-It-Yourself Flex-Pay Mortgages May 4, 2009
Problems arose because the only payment that proved to be affordable was the interest-only (negative amortization) payments, so borrowers were not paying down the principal. The term-extension strategy does not carry the same risks, because homeowners pay down principal and build equity with every payment. (RealtyTimes)
Washington Report: Mortgage System Changes Apr 28, 2009
The core idea here, say supporters of the legislation, is to cut down on mortgages with high risk features -- negative amortization, interest-only, and short-term adjustables -- that are made with minimal documentation. But McMillan and other industry leaders told Frank that too narrow a definition of qualified could restrict consumer options for financing real estate. (RealtyTimes)
Washington Report: Mortgage Reform Bill Apr 6, 2009
Supporters say the 151-page bill would have gone a long way to preventing mortgage lending excesses during the housing boom, especially no-documentation, negative amortization and zero downpayment deals, had it been federal law before the boom started in 2002 or 2003. The bill, which is expected to pass the House easily this month and go to the Senate in May, would change home mortgage lending fundamentally. (RealtyTimes)
Congress takes another try at mortgage reform Apr 6, 2009
The rules would encourage lenders to make fully documented 30-year, fixed-rate loans with prevailing market rates, instead of loans with higher-risk features such as adjustable payments and negative amortization. The bill would also impose a new federal "duty of care" standard requiring loan officers to offer applicants only terms and rates that are appropriate to their income and ability to repay. (San Francisco Chronicle)
Student loans to go monthly Apr 2, 2009
Students avoid negative amortization and graduate with substantially less debt. Of the 684 college students interviewed for the study, 23 percent primarily relied on student loans to cover tuition. (Northeastern News, MA)
Oregon targets high-risk mortgages Apr 2, 2009
By a 34-25 vote, the House passed a measure that would prohibit mortgage and loan officers from making a negative amortization loan without verifying the borrower's ability to pay ... A negative amortization loan is structured in a way that early payments are smaller than the interest due. (OregonLive, OR -- News)
Palo Alto digs in for train-tunnel battle Apr 1, 2009
Are these the same folks who were "forced" into negative amortization mortgages. We are truly kidding ourselves. (Palo Alto Online, CA)
New student loans require payments sooner Mar 21, 2009
This is because the interest payments students make while in school would avoid negative amortization, where the loan balance grows because of deferred interest. The loans will be available for the 2009-2010 calendar year. (AZCentral -- Business)
Senate Passes Cap On Interest Rates Mar 20, 2009
SB 1284 would provide the following protections for buyers of subprime loans: prohibits prepayment penalties for subprime loans; prohibits flipping of a loan by a lender, meaning they cannot refinancing a loan that provides no tangible net benefit to the consumer; prohibits negative amortization loans in which the principal continues to grow despite monthly payments from the borrower for subprime loans; prohibits lender financing of credit insurance; requires lenders to schedule a face-to-face... (KFOXTV.com, TX)
The Hazards of Payment Option Home ... Mar 11, 2009
Neg am is trade talk for negative amortization. But regardless of the increased sophistication, an option payment ARM (adjustable rate mortgage) still has the risk of negative amortization ... The most commonly used indices are the T-Bill (Treasury Bill), the LIBOR (London International Bank Offering Rate), or the COFI (Cost Of Funds Index), also called the coffee loan" by mortgage brokers. Then the lender adds to that what is known as a margin. The margin is disclosed in advance, and varies... (Suite101.com)
State must aid homeowners Mar 7, 2009
While the bill offers some help, it stops short of curbing such practices as negative amortization and balloon payments. It also is too narrow. (Atlanta Journal-Constitution -- Opinion)
Bill puts regulatory cop on mortgage-loan-originator beat Mar 7, 2009
The bill also prohibits any type of adjustable-rate loan where the potential exists for negative amortization, and it outlaws interest-only loans and balloon loans where everything becomes due and payable in a certain year. Industry representatives are particularly pleased about one other amendment the exclusion of points and fees on federal mortgage rescue programs when calculating total allowable points and fees for loans. (New Mexico Business Weekly, NM)
Homeowners: Would you walk away? Mar 6, 2009
2 million are near that drowning point, known as "negative amortization.". A basic cost-benefit analysis predicts that these people will abandon their homes and accept foreclosure. (CNN -- Money)
The HSBC deal that gave legitimacy to subprime Mar 6, 2009
HSBC resisted some of the worst innovations and stuck mostly to fixed-rate mortgages rather than negative amortization loans with exploding interest rates. But that discipline applied only to loans originated by its own offices. (International Herald Tribune)
* Florida retirees see American dream shattered Mar 2, 2009
Unfortunately many of the older citizens did not understand the terms of the loans that they took out, did not understand that they were adjustable, that they were negative amortization, that the amount on payment did not include the payment for taxes and insurance, she said. Some of the elderly were tricked into finding mortgages that they could have never qualified, she said, pointing to predatory lending by some brokers. (Taipei Times, Taiwan -- Business)
Failed Banks Showed Red Flags Early... Feb 28, 2009
By the end of 2007, Washington Mutual held $48 billion in payment option adjustable rate mortgages that resulted in negative amortization, meaning monthly payments weren t enough to cover monthly interest charges. Report Recommends Improvements. (Suite101.com)
Archie Mae Responds To Obama Administration's Billion Dollar Housing Stability Plan Feb 22, 2009
Originally, interest-only, negative amortization, as well as option ARM loans were offered as wealth management tools ... negative amortization. (Yahoo News -- Press Releases)
The Loan Ranger Feb 18, 2009
If that sounds like an Option ARM to you, you're catching onmany of these loans are in a state of "negative amortization," in which the total amount owed grows instead of shrinking over time. Sooner or latersooner, if one hopes to be able to sell the housethe total comes due. (Slate)
CNBC: How housing boom was a house of cards Feb 13, 2009
The program had a name only a banker could love: the pay option negative amortization adjustable rate mortgage ... Even this so-called negative amortization loan seemed to be acceptable to investors as long as home prices continued to go up. (MSNBC -- Business)
The housing crisis: How we got here Feb 8, 2009
What happened: U.S. and state banking-oversight agencies, including the Fed here too, are accountable and probably deserve some blame for allowing excesses to multiply, from lax underwriting to the prevalence of mortgages with negative amortization and other risky features. Also, regulators didn't seem especially concerned by the concentration of some banks' lending portfolios in real estate a problem that plagues Arizona. (AZCentral -- Business)
