These six tips will help prospective buyers find out if they are ready for homeownership.

1. Take a first-time home buyer class. It will make repairing a credit score and shopping for a loan less stressful.
2. Be conservative. Borrowing too much can mean stretching and even sacrificing — to the point that it’s hard to even keep a six-pack of beer in the fridge.
3. Organize documents. First-time buyers should keep a pay stub, W-2, and bank and retirement account statements on hand to expedite the loan application process.
4. Get pre-approved. Before starting the homebuying process, consumers should get pre-approved by at least one lender. Being pre-approved won't lock buyers in to a loan but it may save them the heartache of falling in love with a home they really can't afford.
5. Play house. Every month, prospective buyers should bank the amount that they'd have to pay if they owned a home. It's good practice so they'll be ready for the real thing.
6. Consider all the costs. It's not just a mortgage payment they have to worry about. Repairs, assessments, and other costs of homeownership can add up quickly.

Source: Star-Tribune, Kara McGuire (02/02/07)

Subprime Loan Defaults Hit Decade High
Home owners with subprime loans are missing payments more often than any time in the last 10 years, according to a report by investment bank Friedman Billings Ramsey & Co.

The default rate on subprime loans that have been packaged into bonds to be sold to investors rose to 10.09 percent in November, up from 6.62 percent a year earlier. It's the highest default rate in a decade, exceeding the 10.05 percent level reached in November 2001 at the end of the last U.S. economic recession, the report says.

Defaults are rising as rates on many adjustable-rate mortgages reset and personal savings decline. The savings rate last year fell to negative 1 percent, the lowest since 1933, during the Great Depression, Commerce Department data show.

"There are no signs of pressure abating (in) the subprime arena, and there are some signs that problems are accelerating," says Angelo Mozilo, chief executive of Countrywide Financial Corp., the largest mortgage lender, on a Jan. 30 conference call.

Source: Reuters News

Appealing an Assessment Can Be Worth It
Experts say appealing a tax assessment isn’t particularly difficult and it can significantly reduce what a home owner pays.

Procedures are unique to each community, but Stanley J. Fineman, president of Wilkes Artis, a Washington D.C.-based real estate law firm offers this advice that is true everywhere.

• Start by calling the tax assessors. Ask how the property is assessed and discuss your specific concerns.
• Make sure the assessors have the correct physical description of the house, including the proper square footage and the correct number of bathrooms and bedrooms.
• Tell the assessors about things that an inspection from the outside the home doesn’t reveal, such as the leaky basement, the crack in the foundation, or other problems that can’t be easily resolved.
• Point out other homes in the neighborhood that are of a similar in size and quality, but have lower assessments.

Source: The Washington Post, Dina ElBoghdady

Mortgage Lenders Network files for bankruptcy protection
Subprime lender also faces action by state banking regulators

Inman News
Mortgage Lenders Network USA Inc., which closed down its wholesale lending division on Dec. 29 after losing access to financing, has filed for Chapter 11 bankruptcy protection.

The company is seeking relief from creditors while it reorganizes, including Merrill Lynch Bank, Ixix Real Estate Capital Inc. and Lehman Brothers Bank, the Hartford Courant reported today.

Mortgage Lenders Network had said they planned to continue operating a profitable mortgage servicing business, but the Courant said that the company has also lost a portion of the $19 billion servicing portfolio.

On Jan. 30, Connecticut's banking commissioner suspended the subprime lender's licenses, saying the company failed to fund "in a timely fashion" 97 loans in Connecticut and 1,409 loans in other states. MLN has the right to a hearing to respond to the allegations, which state officials say could result in up to $7.6 million in civil penalties.

MLN has laid off more than half of its workforce of 1,800 nationwide, including about 475 employees in Connecticut, where the company is based, the Courant reported.