Mortgage Rate News

It’s been an interesting day for mortgage market news. As we are all aware things are getting worse in terms of Alt-A loans and also for subprime mortgage loans. But just knowing this information doesn’t really put a human face on the issues that are afflicting the mortgage market. Consider two items that appeared in my news reader this morning: a HELOC bankruptcy and military foreclosures.

HELOC bankruptcy

When it comes to home equity lines of credit, rules (especially with regard to bankruptcy) are a little different from what you have with a first home mortgage loan. So when National City tried to foreclose on a HELOC, and the borrower filed for Chapter 7 bankruptcy, the lender thought that it would recover most of its money. Not so much.

The judge decided that even though the borrower lied about income (this was for a stated income HELOC), the guidelines National City had didn’t provide for due diligence in making sure that the borrower really did have adequate income. Hmmm…You mean mortgage lenders have to be responsible, too? Well played!

Military foreclosures

This next bit of info just really annoyed me. Some of the highest rates of foreclosure in the country can be found in communities with a lot of military service men and women. This is not right. The constant tours and crappy pay make it difficult for military personnel to keep up on their home mortgage loan payments.

Sure, their homes can’t be foreclosed on while they are on active duty, and sure they have 90 days when they get back. But it doesn’t seem sufficient. You get back from your second (or third) tour of duty in Iraq, only to discover that you have to fix your financial situation in three months. Most of us can’t do that and we haven’t see the hell of war.

Seems to me like our brave military men and women deserve something a little more substantial.