The Bush administration appears willing to go along with an agreement by House Democrats and Republicans to boost the conforming loan limit.But while Fannie Mae and Freddie Mac will apparently be allowed to romp in what is now jumbo loan territory, it’s unclear exactly what the ground rules will be, or whether FHA loan guarantee programs will be expanded as well.

In announcing a breakthrough in negotiations on a $150 billion economic stimulus package Thursday, Speaker of the House Rep. Nancy Pelosi’s office originally said a side agreement included a temporary, one-year increase in the conforming loan limit, from $417,000 to $625,500.

Rep. Barney Frank, D-Mass, later said the agreement would raise the conforming loan limit by up to 75 percent in some high cost markets, allowing Fannie and Freddie (”the GSEs”) to guarantee or purchase mortgages of up to $729,750, or 125 percent of the median home price — whichever is less — until the end of the year.

The Associated Press initially reported that the agreement was between House leaders, and that the Bush administration and Senate had not signed on. A Treasury Department spokeswoman told Reuters that the administration had not changed its stance against raising the conforming loan limit until Congress passes legislation strengthening oversight of the GSEs. The White House released a fact sheet on the agreement that is silent on the issue.

But at a press conference Thursday afternoon, Treasury Secretary Henry Paulson told reporters that while he had been opposed to raising the conforming loan without a GSE reform bill, “I got run down by a bipartisan steamroller — I mean, Republicans and Democrats reunited on this.”

So the Bush administration IS playing along. Paulson said that Democrats Rep. Barney Frank and Sen. Chris Dodd promised not to get in the way of a GSE reform bill. Although the administration has now lost a key bargaining chip by agreeing to raise the conforming loan limit, the big stumbling block to GSE reform has been a separate debate over limits on growth in Fannie and Freddie’s combined $1.5 trillion loan portfolios.

If you’re a homeowner in need of some additional cash, there are several options available. You can consider cash-out refinancing, which allows you to borrow funds over the amount of your existing mortgage – money that can be used for any purpose. A home equity line of credit or HELOC is another possibility. One of the most popular options is the home equity loan, often referred to as a 2nd mortgage.

In general, these types of loans feature a low fixed rate, and are paid to the borrower in a single lump sum, which is convenient for large-scale expenses such as home improvements or purchasing a new vehicle.

Depending on the amount of equity you have invested in your home, you’ll be offered a loan based on a percentage of the home’s total value. Lenders have a fair amount of discretion when deciding how much they are willing to lend, so be sure to take advantage of online comparison services that provide multiple loan offers without obligating you to sign up.

What kind of payments can I expect?

When comparing a second mortgage loan to a HELOC, for example, bear in mind that payments on the 2nd will most likely be fixed for the duration of the loan, while the HELOC’s rate varies, like the APR on a credit card account. Sit down and calculate what type of payments you can afford, taking into consideration your first mortgage, your car and personal loan payments, and your household expenses. Taking on the responsibility of a second mortgage shouldn’t fly in the face of common sense or throw your budget into a tailspin.

Consolidating debt with a 2nd Mortgage

One of the most common uses for a home equity loan is to pay off higher interest balances such as credit card and student loan debt. By consolidating this debt into a single manageable payment, you could enjoy better monthly cash-flow and a sense of control over your finances. But bear in mind that debt consolidation only works if you make a break with old spending habits and don’t run up your credit card accounts again. Otherwise, you could be left with two sets of mortgage payments and credit card payments each month!

Whether you decide on a second mortgage loan or a HELOC, it pays to watch interest rates before signing on the dotted line. You may prefer the stability of a home equity loan over fluctuating HELOC payments, but remember – with either loan – you are using your home investment to borrow. If you don’t proceed with caution and keep spending habits in check, you risk getting further into debt and even the possibility of losing your home.

By: Home Loan Center Editorial Staff -

For more information about second mortgage loans, interest rates, and handy mortgage calculators, visit Home Loan Center.

A bad credit mortgage refinancing where the owner intents to use the cash from the home’s equity to pay off bills is called a debt consolidation loan.

The value of the home being refinanced must have grown so that the home’s appraised worth will justify a larger loan. The new loan amount must be high enough that the owner can cover the loan’s closing costs and still have enough left over to pay off the credit card debt.

Refinancing a bad credit mortgage under these circumstances may be a good idea if the following two statements are true.

1. The new loan will carry an interest rate two or more percentage points lower than the current loan.

2. The homeowner plans to stay in the house for three or more years.

It is a common financial scenario across households in the Western world. Multiple debts have started to build up: a car loan here, a department store loan there; a bank loan here and several credit cards there. While all may have seemed manageable on the optimistic day you took them out, or spent on them, suddenly you realise that you cannot keep up with the monthly payments. You miss out on a payment or two, and suddenly you have a bad credit record. A few more missed payments and you start to feel the pressure, so start thinking about refinance.

1. First of all, you need to make sure it is really necessary. You should take a long hard look at your outstanding debts. List them out, total the amounts owed, total the monthly payments, and total the amount in arrears. Your cheapest and simplest way out will be to put your current financial house in order without resorting to new, and possibly expensive, borrowing.

No Down Payment & Bad Credit Mortgage LoansSub-prime lenders now offer financing packages with zero down. Interest rates are higher on these types of loans, but they make purchasing a house easier. And unlike a conventional loan, there is no private mortgage insurance required. There are two types of zero-down mortgage packages, each with their own requirements.

Types Of Zero-Down Loans

100% financing, as it names implies, offers complete financing of your property. The other option, 80/20, finances your mortgage with two loans.

Both loans may be carried by your lender, but sometimes the seller or a second lender is required to carry the 20% mortgage.

A Brief Commercial Mortgage Guide
Commercial mortgage loans are used when purchasing structures such as office buildings, apartment complexes, health care facilities and retail outlets. Whether it’s a hi-rise tower or a family-owned restaurant, buyers typically need additional funding to complete the transaction. Commercial mortgages are what they pursue.

Similar in many ways to residential loans, commercial mortgages require far more paperwork. Both types of loan require that the properties being purchased undergo a thorough appraisal. Both require collateral to secure the loan and protect the lender against default.

Like residential mortgages, commercial mortgages can be refinanced to take advantage of more favorable terms, or they can be re-mortgaged to establish a line of credit to use for running the business. And like residential mortgages, the lender will hold the deed to the property until such time that the loan is repaid in full.

This list was made by Ted Janusz, a former Mortgage Salesman interested in helping borrowers get a fair deal:

1. Not knowing which mortgage fees the borrower can and cannot negotiate.

2. Choosing and trusting the first loan officer the borrower interviews. Shop around.

3. Using an interest-only or “payment option” adjustable-rate loan primarily to qualify for a more expensive house.

4. Thinking the interest rate is always the main thing.

5. Not comparing the final fees listed on the closing documents to the up-front estimates and good faith estimate to avoid the lender “packing” the loan with added-on fees without the borrower’s knowledge.

6. Not knowing if the mortgage has a pre-payment penalty until it’s too late, like, when the borrower decides to refinance or otherwise pay the mortgage off early.

7. Thinking that renting is always “just throwing money away.” In the short run it can cost thousands less to rent.

8. The borrower does not know if he or she is paying a back-end yield spread or service release premium, fees paid to brokers and loan officers for making loans with higher interest rates.

9. Paying for mortgage life insurance, credit insurance or other expensive but unnecessary lender add-ons.

10. Paying hundreds of dollars to have a company set up a biweekly mortgage payment plan, something the borrower can generally do for herself or himself — at no cost.

A few simple things need to be sorted out before you apply for a mortgage.

Here’s a round up of the essentials in three simple steps:

Check your credit report:

Your credit score is an important factor that helps you qualify for a loan. So, you need to take care that your credit score is a correct one. For that, you should ask for your credit report from any of the credit reporting agencies.

Review the report and if you find any error, get it disputed from the agency. You may also try to get it corrected by sending a mail to the creditor so that the latter can make the correction and inform the credit reporting agency accordingly.

Collect your documents:

You should gather all relevant documents that the lender needs to check while processing your loan. Some of these documents are:

Tax returns for the past 2 years.
W-2 income statements
Pay stubs for the past 1 month.
Recent credit card statements
Bank and investment account statements.
Divorce decree
Child support statements
Prepare a budget:

You need to sit and think about how much you can spend and still be financially sound. There’s a difference between the maximum payment one can make in a month and the amount one can afford comfortably. So, one needs to understand the difference in the payments and how it can affect him. This is why one needs to prepare a budget and proceed accordingly to select a loan program with reasonable rates and fees.

Mortgage lenders are tightening standards for loans to the 15 percent of potential borrowers who have the worst credit.

Even with the more rigorous standards, many credit-impaired borrowers can find willing lenders — albeit at higher rates than were being quoted a month ago.

“I think for the vast majority of people, they don’t need to worry about it,” says Jim Sahnger, mortgage consultant with Palm Beach Financial Network in Stuart, Fla.

But a few people have reason to worry. They include homeowners with poor credit histories who want to refinance, but who have less than 5 percent or 10 percent equity in their houses. People with poor or fair credit, and who don’t want to verify their incomes or assets, are also finding it more difficult to qualify for loans. Especially if they want to borrow more than 95 percent of the house’s value.

The stricter lending standards are the fallout from the subprime mortgage market meltdown. About 15 percent of mortgage borrowers are in the subprime category. Those are the least creditworthy people, with credit scores less than 620 (on a scale of 300 to 850). About 85 percent of mortgage borrowers have credit scores of 620 or higher. So far — knock on wood — most of these prime customers needn’t worry about being turned down for home loans on the basis of their riskiness as borrowers, so long as they’re willing to let the lender verify their incomes and assets.

Several subprime lenders have gone belly up in the past two months because they approved too many loans for borrowers who ended up missing their first or second or third house payment. These are called “early payment defaults.” Investors, who buy mortgages on the secondary market, demanded that the lenders buy back loans with early payment defaults. The lenders didn’t have enough cash. At least 20 subprime lenders have gone out of business or declared bankruptcy since the middle of December.

Other subprime lenders, having witnessed their erstwhile competitors swinging from the gallows, are trying to slip the noose by making it slightly harder for people with bad credit to get loans.

“We’re certainly starting to see tightening up in underwriting requirements, and they’re starting to raise the rates a little more because the loans are risky and the investor community wants higher yield on these loans,” says Jeff Lazerson, president of Mortgage Grader, a mortgage brokerage in California.

The stricter standards come in the form of higher minimum credit scores, lower maximum loan amounts and requirements for bigger down payments. In many cases, lenders raise the minimum credit score by 20 points or even 40 points to qualify for a type of loan.

But that’s not much of a deterrent to mortgage brokers, who originate most subprime loans, says Christopher Cruise, who trains mortgage brokers and loan officers. Brokers have multiple lenders to choose from, and if one lender makes a certain loan program unavailable, a broker probably can find another lender that still offers it.

“It’s not like, ‘Oh, my goodness, we don’t have this product anymore,’” Cruise says. “We just have to find another place to place the product.”

Lenders haven’t only tightened standards. They have boosted rates. Rates on the most popular type of subprime loan, called a 2/28 mortgage, have gone up about 1.5 percentage points to 2 percentage points since mid-January, says Jim Svinth, chief economist for LendingTree.com. That rise is purely a reflection of credit risk.

Svinth says one type of subprime customer could end up in big trouble: “If you were a 2/28 borrower a couple of years ago, and you can’t document your income and don’t have enough equity to put 10 percent down, and your credit hasn’t got any better, you’re in a bad spot,” he says.

Brokers can’t believe how lax the subprime lending requirements were just a short time ago. Investors were eager to buy mortgages, especially high-rate, risky home loans with prepayment penalties, because they were profitable. So investors pushed loan officers and mortgage brokers to find borrowers with lousy credit. Brokers and loan officers were paid handsomely — practically bribed — for delivering subprime borrowers.

“So long as these loans are legal, we’ll continue to sell them,” Cruise says. “Yeah, we do cringe. But so long as people qualify for the loans and they want them — we don’t even have an obligation to educate people on the risks of these loans, although some of us do. You still have the freedom to do things that are stupid in America. Unfortunately, many people are exercising that freedom with abandon.”

 - Bank rate

Canada Mortgage and Housing Corp. is making it easier for self-employed Canadians to buy homes.

Newly announced improvements to its approval system will make it easier for business owners to obtain mortgage loan insurance and, as a result, benefit from competitive interest rates.

Pierre Serre, a CMHC vice-president, says the program, known as Self-Employed Simplified, will help self-employed borrowers and commissioned salespeople obtain CMHC-insured mortgages in much the same way as borrowers who receive salaries or hourly wages from employers.

The national housing agency says the changes, to be implemented March 30, come in response to a growing proportion of self-employed people in the workforce.

The program is designed for borrowers who have at least two years in the same type of work and a proven track record of managing debt.

Mounting concerns on Wall Street that mortgage lenders might be hurt by increasing defaults and delinquencies sent investors fleeing Monday from some of the biggest names in the industry.The meltdown among lenders that specialize in home loans to people with weak credit, known in the industry as subprime lenders, again ravaged stock prices. Financial institutions from Britain’s HSBC Holdings PLC to subprime leader Countrywide Financial Corp. sank amid reports of strained portfolios as loans went bad.

The latest to rattle the markets was New Century Financial Corp., the second-largest U.S. subprime lender. The Irvine, Calif.-based company disclosed a criminal probe into the trading of its securities, and into the lender’s accounting procedures.

Already beleaguered investors were swift to react. New Century’s shares lost 60 per cent on Monday — wiping $532-million (U.S.) from its market value. Wall Street, still wobbly after last week’s huge plunge, also punished the rest of an industry, blamed for loosening their lending standards amid an eroding housing market.

“We see increasing evidence that this industry is now in a downward spiral whereby each negative development fuels additional deterioration in key fundamentals including origination volume, pricing, credit and most importantly, funding,” Stifel Nicolaus analyst Christopher Brendler said.

The troubles at New Century had been mounting since February, when it announced that it lost track of how severely the loans in its portfolio were losing value. The company on Friday disclosed it is being investigated by the U.S. Securities and Exchange Commission and the U.S. Attorney for the Central District of California on its accounting methods and the trading of its securities ahead of a Feb. 7 earnings restatement announcement.

Investors who buy the company’s mortgage loans in the secondary market have been selling the loans back when borrowers default, New Century said. The company said that because of accounting errors, it underestimated how many loans would be resold and how much value those loans would lose before ending up back in New Century’s portfolio.

Concerns of a meltdown at New Century include the possibility it will not be able to meet covenants with major financial backers, the company said. Subprime lenders enter into agreements with big banks to finance their operations. These backers require subprime lenders meet minimum financial targets, or face breaching loan agreements that would force banks to pull out of the deals.

This dragged down shares in afternoon trading of some of the top U.S. banks and investment banks.

Morgan Stanley Inc., which had a 5.5-per-cent stake in New Century as of Dec. 31, dropped $1.33, or 2 per cent, to $72.03. State Street Corp., with a 3.8-per-cent stake, shed 12 cents to $64.96. Citigroup Inc., with a 3.5-per-cent stake, traded as low as $49.56 before recovering to post a 27-cent gain, at $50.24.

Other subprime lenders also tumbled. Countrywide Financial fell $1.03, or 2.8 per cent, to $35.99, and is down about 14 per cent since January. Novastar Financial Inc. shares plunged $2.17, or 30 per cent, to $5.07, and are down about 40 per cent this year.

Higher U.S. interest rates and a stagnant housing market began to take their toll on borrowers who had been relying on the rising value of real-estate markets to help them refinance their mortgages.

Last year, 13.5 per cent of mortgages originated in the U.S. were subprime, according to the Mortgage Bankers Association. This is up from 2.6 per cent in 2000. The subprime market accounted for about 20 per cent, or $600-billion, of the $3-trillion mortgage market.

The New Century case is of particular concern because of fears that trouble in the subprime business could spread to prime mortgages, causing pain for many more lenders. Leading those concerns was HSBC, Europe’s largest bank with significant operations in the U.S., which warned in February its profits would be weaker because of subprime lending.

The world’s third-largest bank on Monday reported its highest annual profit of $15.79-billion for 2006. Bad-debt charges jumped 36 per cent to $10.57-billion, roughly in line with expectations.

Chief executive officer Michael Geoghegan attempted to fend off criticism that the bank had provided loans in the United States to people who were not in a position to pay their debts.

“This is not trailer park lending,” Mr. Geoghegan said, adding that the typical HSBC Finance customer has average household income of $83,000, is 41 years old, has two children and a home worth $190,000. “This is Main Street America.”

Concern about subprime exposure also has spilled into major U.S. investment houses. Standard & Poor’s on Monday downgraded Lehman Brothers Holdings Inc. and Merrill Lynch & Co., partly on subprime mortgage woes. S&P noted that subprime loans are a small piece of the company’s overall assets, but was still concerned about recent market trends.

According to data compiled by Private Equity Real Estate, the leading magazine covering the global real estate investment industry, private equity real estate funds have raised a total of US$59.5 billion in 2006, far surpassing the US$37 billion raised in 2005.According to proprietary data from Private Equity Real Estate magazine, last year’s record fundraising looks set to continue in 2007.

According to data compiled by Private Equity Real Estate, the leading magazine covering the global real estate investment industry, private equity real estate funds have raised a total of US$59.5 billion in 2006, far surpassing the US$37 billion raised in 2005.

“Given the amount of leverage typically employed by private equity real estate firms, the funds raised in 2006 have buying power of approximately US$180 billion,” said Paul Fruchbom, editor of Private Equity Real Estate. “A significant amount of this money will be spent in international markets as firms spend more and more resources building up their capabilities in the emerging markets of Eastern Europe and Asia.”

The growing influence of private equity real estate firms is being felt around the world. Funds with a global mandate accounted for approximately 45 percent of the capital raised in 2006. Private equity real estate funds targeting Europe and Asia also accounted for a substantial amount of equity, raising approximately US$6 billion and US$4 billion, respectively.

Funds currently in the market or coming to market within the next 12 months are targeting approximately US$80 billion in capital, according to Private Equity Real Estate (www.privateequityrealestate.com), suggesting that 2007 could rival 2006 in terms of fundraising and deal activity.

“Blackstone is raising a US$10 billion fund,” said Fruchbom. “Morgan Stanley is raising an US$8 billion vehicle. And Lone Star is rumored to be raising US$6 billion. Each of these funds on its own would surpass the largest private equity real estate fund ever raised. Together, they demonstrate that the private equity real estate industry is mirroring the growth in the broader private equity asset class.”

About Private Equity Real Estate:

Private Equity Real Estate (PERE) is a monthly publication dedicated to opportunistic investing in the global property markets. The only monthly magazine dedicated to private equity-style investing in real estate, PERE tracks the investors, managers and deals that are helping to make this one of the most dynamic parts of the global real estate investment industry. The magazine also offers a free, daily news service at www.privateequityrealestate.com