`Great Time’ to Buy a Home in U.S., Pallotta Says

‘Payment Shock’ on HELOCs Is a Looming Concern for Regional Banks

By Kate Berry
Jan 22, 2014

A new report from Moody’s suggests that roughly a dozen regional banks are at risk of sustaining meaningful credit losses on home equity lines of credit that were originated in the boom years and are scheduled to reset over the next three years.

Analysts with Moody’s Investors Service are warning that banks face higher delinquencies and incremental losses on home equity lines because borrowers are susceptible to “payment shock,” when the loans start resetting after 10 years and the borrowers have to start paying both interest and principal. Continue reading at National Mortgage News.

Shortening the Long and Winding Road to HARP Assistance

By Frank T. Pallotta
APR 17, 2013

In the early ’80s, 30-year mortgage rates were an eye popping 12½%. Of course the Prime Rate was 11%, 12 month CDs were paying 10% and the 10-year Treasury note was yielding a lofty 11%—so everything truly was relative. In fact most industry participants in 1983 never thought we’d see mid-single digit mortgage rates again.

More than a generation later, mortgage rates have again dropped to “Kennedy-era” levels and the Home Affordable Refinance Program—if executed to its full potential—can help get housing back on a long-term road to recovery.

In its purest form, HARP is considered one of the best “government-sponsored” programs in a generation. It is stimulative to the economy at the very least, and a much needed lifeline to struggling homeowners at its best.

Skeptics however, see HARP as another way for the country’s largest banks to again line their pockets—after a bailout of only a few years ago, helped save their hides. Why do skeptics feel this way?—because far too many eligible borrowers are still not able to find HARP relief. It’s time for the country’s largest servicers to aggressively target their own high risk, “HARP eligible” homeowners. It’s time for payback.

Social Security, the GI Bill, and the creation of the U.S. Highway system are three noteworthy government programs that helped countless tens of millions of Americans build wealth, secure their financial future, and build a base from which to prosper. While HARP may not have the same long-term, financial impact on the country, it does have the ability to provide immediate financial relief. Continue reading at National Mortgage News.