College grads and their loans

While not real estate oriented, many of our readers have college-age students or have just graduated college. The AP is reporting on college grads and their loans.

“Graduating into a barren job market is stressful enough. When massive student loans await, the rite of passage can be downright terrifying.”

The AP provides some tips for college new grads confronting their loans.

Step 1: Know what you owe. “Although the interest rate on federal loans tends to be favorable, it kicks into gear as soon as the loan is taken out. That means you've got four years of interest on top of your loans by the time you graduate.”

Step 2: Pick a plan, but not just any plan. Picking a short term repayment plan is smartest. “If you can't keep up with the payment schedule you picked, you can always switch plans. You're allowed at least one change a year with federal loans.”

Step 3: Consider postponing payment. Payment can be deferred on federal loans under “select circumstances.” On private loans, deferment terms are set by the lender.

Step 4: See if you should consolidate. “A consolidation loan lets you combine loans to make a single monthly payment. You also get a fixed interest rate for the life of the new loan.” The drawback—“consolidation usually extends repayment, meaning the overall cost of the loan will be higher.”

Step 5: Avoid default. Defaults do turn up on your credit report and they could impact other credit applications. “The good news is that defaults on student loans can be rehabilitated and erased from your credit report. With federal loans, that requires nine full payments during a span of 10 months. Private lenders might not offer rehabilitation programs.”

For the full article, read The Asbury Park Press, Know Your Loan Options. We hope you find it helpful.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Defaults after mortgage modification worse than expected?

The Wall Street Journal addresses mortgage modifications and earlier predictions about high redefault rates. In fact, according to WSJ, "some redefault rates may reach 75%."

A central tenet of Washington economic policy for the past three years has been that the key to ending the recession is stopping mortgage foreclosures, whatever the cost. Well, another new study shows that mortgage-servicing companies are having a terrible time of it, not least because the mortgages are continuing to sour at a rate nearly as fast as they can be modified.

Yesterday's Journal reports that Fitch Ratings looked at mortgages bundled into securities between 2005 and 2007 and managed by some 30 mortgage companies. Fitch found that a conservative projection was that between 65% and 75% of modified subprime loans will fall delinquent by 60 days or more within 12 months of having been modified to keep the borrowers in their homes. This is an even worse result than previous reports by federal regulators. Even loans whose principal was reduced by as much as 20% were still redefaulting in a range of 30% to 40% after 12 months.

The reasons for the high redefault rate aren't surprising. Many of the borrowers never could afford these homes in the first place, yet the political pressure has been strong to modify loans even for these borrowers. As home prices continue to fall in some markets, borrowers remain underwater and many of them simply walk away from the home and thus redefault.

This study has to come as a blow to the Federal Deposit Insurance Corporation, which has invested a great deal of political capital in the modification thesis. It also means that to the extent that public money has guaranteed any of these loan modifications, the taxpayer will be an even bigger loser. Banks don't like to foreclose on borrowers, so the best public policy was always voluntary renegotiation. As for the housing market, the quickest way to begin a recovery is to more quickly let prices find a bottom. On the evidence so far, the mortgage modification fervor has been a giant political exercise with little impact on housing prices.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Attorney Advertising

The courts in New Jersey have been debating for some time now the role that advertising plays in the practice of law. What an attorney can say in an ad, where it can, and can you be called a "superlawyer" are questions for the courts to decide.

In the meantime, Esquire Magazine has looked at "Five Lawyer Ads That Make Any Supreme Court Candidate Look Brilliant." The ads are taken from YouTube and are worth a look, even if your only purpose is to get a chuckle.

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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The Big Surprise- Coping with business bankruptcy

Bankrate.com discusses the impact of business bankruptcy on the average Joe.

"How's this for a nightmare scenario? You go to pick up your dry cleaning on the morning of a job interview only to find the lights out and the doors locked. A small sign on the door reads: "Closed for good."

"Recent high-profile bankruptcies by Circuit City and Linens 'n Things have woken Americans up to an unpleasant reality: Businesses go out of business, and they often create big problems for their customers in the process."

There's no easy answer as to what to do "if a business shuts down when it has your stuff or owes you money, goods or services."

If you have property that's in the possession of a closed-down business -- clothing at a dry cleaner or a car at an auto shop -- the first thing to do is try to contact the usiness and retrieve your property.

Extended warranties, gift cards and certificates, and advance payments are another frequent casualty of busted businesses.

Read the full article, Coping with a business bankruptcy, by Claes Bell at Bankrate.com

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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The New York Times takes on MERS

In an attack piece on MERS, short for Mortgage Electronic Registration Systems, The New York Times talks of "the murky realm of MERS," and how a "legal maneuver that has saved banks more than $1 billion over the last decade but made life maddeningly difficult for some troubled homeowners."

Looking for a scapegoat for America's real estate ills, MERS is a good candidate.

"Created by lenders seeking to save millions of dollars on paperwork and public recording fees every time a loan changes hands, MERS is a confidential computer registry for trading mortgage loans."

Of course it's "confidential," who wants outsiders looking at their mortgage documents?

"But with the collapse of the housing market, the name of MERS has been popping up on foreclosure notices and on court dockets across the country, raising many questions about the way this controversial but legal process obscures the tortuous paths of mortgage ownership."

And shades of Abu Ghraib, "controversial" and "tortuous?"

Here's where the Times reporting gets silly:

"In Brooklyn, an elderly homeowner pursuing fraud claims had to go to court to learn the identity of the bank holding his mortgage note, which was concealed in the MERS system."

Is the American homeowner that ignorant that he does not know to whom his payments are being made? And what difference does it make to the homeowner if his loan is part of a pool put together by Goldman Sachs or any other company? The servicer is the servicer; that's where decisions are made.

Read the full article, Tracking Loans Through a Firm That Holds Millions

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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