Archive for July 14th, 2010

After Bankruptcy And Bad Credit And The Economy

Millions of people are dealing with bad credit… and it isn’t getting any better. Worse off, many people have been left in shreds and trying to get back on their feet after bankruptcy.

Looking out into the economic forecast, one question many are asking is, regardless of whether I have bad credit, or went through a bankruptcy, what can I expect with the economic recovery, and what about the fears of a double dip recession?

Federal Reserve policies have greatly increased the amount of reserves that banks have available since the economic crisis began. Banks now have over $1 trillion in excess reserves on their balance sheets and are being paid 25 bps on these reserve balances.

With interest rates on safe treasury bills now near zero, banks are holding large quantities of excess reserves because they wish to show a high level of liquidity to investors and regulators. The Fed should do all it can to encourage banks to lend out these reserves. One way of doing this is to cut back to zero the interest rate that the Fed pays on excess reserves.

The Fed should also engage in open market policies that encourage banks to extend loans to businesses and consumers. This can be done by the Fed buying securitized packages of these loans in the open market.

There is little question that the Federal Reserve’s purchase of more than $1 trillion of conforming mortgages (those under $417,000) has helped keep those rates low. Currently the rate on 30-year fixed rate mortgages has fallen to a modern-day low of 4.69%. For a median priced house of $220,000, this works about to a very affordable payment of $687/month for a mortgage covering 80 percent of home value. These low rates have stabilized the housing market.

But the market for higher priced homes has suffered, as the premiums that lenders have charged for “jumbo loans” has jumped markedly and in some cases these mortgages are not available at any rate. The paralysis of the higher priced housing market hurts the whole industry since it prevents owners of these homes, such as “empty-nesters,” from downsizing. The Fed, by providing a liquid market for jumbo mortgages as well as other high-yielding credit card and auto loans, will encourage banks to lend in these markets.

The most recent Case-Shiller report showed prices rose 2.3% in March, compared with March 2009. The National Association of Realtors recently reported that in April the median existing home price rose 4% in the past year; existing home sales were up 7.6% in April to a seasonally adjusted annual rate of 5.77 million.

• Hurry Up and Close to Get the Home-Buyer Tax Credit

• When Buying a Short Sale, There Are No Easy Answers

• Be Prepared for Bull, Bear or Bust

While it’s too soon to quantify the degree of the effect, the deadline for the home-buyer tax credit likely played into the numbers. Contracts needed to be in place by April 30 to qualify, and some economists say that incentive made buyers move earlier than they would have otherwise. Any bump from a temporary credit is soon over.

How Can I Get A Loan Even If I Have Bad Credit?

I bet you wish you were the federal government right?

You can get all kinds of money. all you do is print it… If you have bad credit, and are trying to figure out how to get a loan, the Federal Government may not be who to ask. But, it may be interesting to note that even the Federal Government is headed the same way you probably were and that is what got you in your financial mess….

See… you were probably running a financial deficit, meaning you were spending more money than you were making, thus putting you in a financial bind, and then causing you to be in a position that you couldn’t afford.

Think Greece, or Spain… Well, it appears that the United Stated Government is headed in that same direction.

Right now, the government is spending more money than it makes, and it may be not long before the feds can’t pay their bills, and are dealing with the same bad credit issues that you were.

If you are looking for a bad credit loan, just rememver that you need to make sure your financial house is back in order first.

Bad Credit Loans And The Financial Reform Bill

One of the things that bad credit loans and people with bad credit have to deal with today is alot of doing from what happened with Wall Street excesses of the past few years.

Yes, it’s true that there are people that have bad credit these days, and some of them were irresponsible, but then again, there are many people out there today that have bad credit because they lost their job, or they got stuck not being able to get any kind of credit since the credit markets have dried up.

And, forget being able to refinance now that you have bad credit. There are many people out there…. good people just like you that are now in the position that they can t get any kinds of loans.

Here is some info on the upcoming Financial Reform Bill which is making it’s way to Presiden’t Obama’s desk as we speak.

Let’s see what happens…

Senate Democrats on Tuesday said they had cobbled together the bare minimum of 60 votes needed to close off debate and advance to a final vote later this week. Supporters included three Republican centrists from the Northeast, Senator Scott Brown of Massachusetts, Susan Collins of Maine and Olympia J. Snowe, also of Maine.

The three Republicans may be joined by others, but the bill is still certain to fall far short of the wide bipartisan majority that some Congressional leaders had predicted given the unanimous agreement among lawmakers in both parties that the rules for Wall Street needed to be rewritten.

In the House, only three Republicans supported the bill. “I think it’s just the times we’re in,” said Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, a main author of the legislation along with Representative Barney Frank, Democrat of Massachusetts and chairman of the Financial Services Committee.

With a fiercely competitive midterm election cycle under way, the shared goal of tightening regulation of the financial industry gave way to charges by Republicans that Democrats were overextending the reach of government and failing to address the root cause of the crisis by not dealing with the mortgage giants Fannie Mae and Freddie Mac.