Foxton Lending Closes over Housing Slump
Another one has bit the dust. Asbury Park Press writes:
Foxtons, a West Long Branch-based real estate company that made a splash with its discounted commissions, said Wednesday night it is closing because of a downturn in the housing market.
The company said it is contemplating bankruptcy for an orderly shutdown, and it will continue only with a skeleton crew; it is laying off 350 of its 380 employees.
“The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern,” said John D. Blomquist, Foxtons’ senior vice president and general counsel.
The decision marks the latest casualty in the softening real estate industry, and it brings a stunning end to a company that was a lightning rod among real estate agencies.
With lenders dropping like flies it’s getting harder every day for borrowers to find home loans. Even states that have come rather unscathed out of the housing crunch (such as Utah) are hard to borrow in. Often borrowers find it useful to take out a Utah home equity loan in order to help build equity in their prior property towards purchasing another home.
Foxtons was a novel lender once, with a flat 2% commission paid by consumers, and salaries issued to employees rather than paying employees with commissions. Apparently such a setup failed to render enough profit to keep the lender from contemplating bankruptcy.
Germany to Suffer From British Banking Bust
Fallout from the UK banking disaster could soon affect the German economy as well. One must wonder how far it will spread. Is Utah next?
SpiegelOnline reports:
The crisis at the British mortgage financer Northern Rock could also affect German investors and banks, SPIEGEL has learned.
As a result of the US subprime mortgage crisis (more…), the fifth-largest British mortgage lender got into refinancing problems last week and had to be bailed out with a financial injection from the Bank of England.
Like financial institutions in the US, Northern Rock had been re-selling mortgage debt to investors for years, in the form of exotic financial instruments bearing confidence-inspiring names like Granite, Dolerite and Whinstone.
Among those investing in such securities were German investment funds, who were attracted by their generous interest rates. According to its half-year report, funds offered by the Deutsche Bank subsidiary DWS Investments have stakes in Granite, while Allianz Global Investors has funds with investments in Granite and Dolerite.
A banking bust here in the United States could cause depositors to lose any deposits beyond $100k. For that reason, it’s often wise to invest excess funds in your own home. This can be accomplished using a Utah home equity loan.
Online Advertising to Benefit From Housing Crunch
One of the few areas other than Utah that stands to actually benefit from the housing mess looks to be Online Advertising. Finfacts reports:
Online advertising spending in the US is forecast is continue its strong growth even if a US economic downturn squeezes the advertising sector as a whole.
It is claimed today that pressure on companies to cut costs if the economy softens could even accelerate the switch in spending from traditional media to more targeted and measurable digital forms.
The Financial Times says that some of the US mortgage lenders embroiled in the recent lending crisis have stepped up online spending, attracted by the ability to entice people to click on ads.
“If marketing budgets shrink, and they are often the first to be cut in a downturn, digital will still continue to grow,” Eric Bader, managing director of digital at MediaVest, told the FT. “The focus will be on advertising that can be measured for effectiveness, and online will gain share relative to television, newspapers or radio.”
Paying down a home early in Utah with a Utah home equity loan may leave one to having extra to invest, in which case an investment in Online Advertising may prove profitable.
Northern Rock Lines Barely Moving
For those in Utah that haven’t yet heard Britain’s fifth largest bank, Northern Rock, is on the verge of collapse. This has resulted in a run on the bank, and widespread panic regarding the economy. Unlike the United States’ FDIC insurance, Britain has relatively small protection for individual deposits.
The Telegraph offers a short recap of the lender and its Bank of England bailout:
Northern Rock’s shares fell by 31 per cent, leading to the bank - the fifth largest lender - being put up for sale.
• Other major lenders, including Bradford & Bingley, Alliance & Leicester and Paragon, issued statements insisting they were not in similar trouble.
• The Chancellor appealed for calm and insisted that both the banking system and the economy were stable.
The Bank’s decision to help Northern Rock - by guaranteeing funds of up to £31.5 billion - is the first time since 1973 that it has bailed out a High Street lender.
Should such panic spread overseas, Utah residents would benefit from possessing a Utah Home Equity Loan as a form of a backup for emergencies.
An Easy Way to Afford a Down Payment
Calling a lender in Utah these days generally leaves a buyer frustrated with the incredible requirements for qualifying on a home loan. 20% down payments have become an absolute necessity, and one which many borrowers have trouble meeting. One little known method for affording such a large down payment can be found in borrowing based on a prior property’s equity using a Utah Home Equity Loan.
If you do not already own a home, you can consider drawing off of an IRA in order to afford the down payment. First time home buyers can draw on their retirement funds tax free, which is an excellent way to come up with the necessary funds to afford 20% down.
An IRA owner who is exempt from the early-distribution penalty (which applies to IRA distributions that occur before the IRA owner reaches age 59.5) for distributing funds from his or her IRA to buy, build, or rebuild a home when having had no interest in a main home during the two-year period ending on the date of acquisition of the home for which the distribution is being made. The definition of a main home is difficult to track down.
The maximum amount that may be distributed from the IRA on a penalty-free basis for this purpose is $10,000. This is a lifetime limit. For married couples, the limit conveniently applies separately to each spouse. This states that the combined lifetime limit for a married couple is $20,000.
Utah Tells Consumers to Stop Falling for Predatory Lending
Rather than cracking down on lenders acting illegally, the state of Utah is warning consumers against working with lenders that encourage fraud.
In a set of tips offered by the state, they warn:
Ten Tips for Avoiding Mortgage Fraud
• DON’T provide false information about your employment, credit score, income, or whether you will occupy the home.
• DON’T use a false identity to get a loan for yourself or let someone use your identity (name, social security number or credit score) to get a loan for them.
• DON’T borrow more money in mortgage loans than you can afford to pay.
• DON’T sign blank or incomplete documents or documents you do not understand.
• DON’T expect to get “paid” for buying a home.
• DON’T conspire to sell your home at an artificially inflated value.
• DO be cautious about promises of “high rates of return” in real estate “investments”.
• DO read and keep copies of all documents you sign.
• DO ask questions and make sure you understand everything you sign.
• DO work with professionals who are licensed in good standing with the State.
While encouraging consumers to be honest can certainly cut down on mortgage fraud, it seems like the state’s time would be better spent regulating lenders. Those seeking a Utah home equity loan are encouraged to carefully document and monitor the lending process so as to avoid any trouble.
Dollar May Fall as a Result of Housing Problems
Bloomberg has the bright forecast that the dollar may soon fall in value as debt matures and investors bail. Here’s an excerpt:
Borrowers in the commercial paper market are struggling to sell new notes because of concern some of the short-term debt is linked to U.S. subprime mortgage assets. The shortage of investors in the market has spurred expectations the Federal Reserve will cut interest rates, sending the dollar lower, the analysts said in a report.
“The situation is really exacerbating the strains on the dollar,” Michael Hart, one of the authors of the report, said in a telephone interview from London. “After an initial phase where people were viewing Treasuries and the dollar as a safe haven, we’re entering a second phase where concerns over the U.S. financial system are causing a weaker dollar.”
While a weaker dollar is bad news for those involved in lending and banking, it can actually be good news for home owners. As inflation takes hold, that monthly mortgage gets increasingly cheaper to pay down. Lenders lose money if the inflation rate exceeds the interest rate they charge on home loans. Home owners, on the other hand, benefit from being better able to afford their homes.
Those in Utah hoping to take advantage of this situation by leveraging low interest rates may wish to consider a Utah Home Equity Loan.
Lender Found Blameless for not Warning Workers of Imminent Collapse
In a case that has immediate relevance on the firings of thousands of mortgage workers, the following has been ruled:
The Wall Street investment bank Bear Stearns & Co. has won an important legal decision against former workers of National Finance Corp., the Halfmoon mortgage lender that collapsed in 1999.
Former NFC employees had sued Bear Stearns nearly five years ago, arguing that the bank, which was providing financing to NFC before its demise, should have provided workers with advance warning they would be laid off under the federal Worker Adjustment and Retraining Notification Act.
Many employees out of work are now wondering whether the laws meant to protect them from being lied to and fired would do so. It would appear, that based on this ruling, there is little to no protection for employees of the rapidly collapsing mortgage lenders and companies.
One option for Utah workers concerned with the possibility of out of national lenders laying them off would be to obtain a Utah Home Equity Loan as a hedge against possible unemployment.
Lehman Lays Off Workers, Changes Name So No One Notices
Blownmortgage reports:
“Today Lehman Brothers announced the completion of the restructuring plan for its residential mortgage origination business. The plan sizes the business appropriately for the current market environment. The Firm also announced that it will rename its existing mortgage origination and servicing businesses in the U.S., Japan and Europe, including Aurora Loan Services, Lehman Mortgage Capital.”
Now there is a creative method of avoiding negative press, rename yourself! Kind of like the restaurant down the street that changes its name every time the paper publishes that it has failed the latest health inspection and been closed for severe contamination.
Considering the large amount of confusion now faced in the lending market, one should be picky when obtaining a Utah home equity loan, or any mortgage loan. Careful research can prevent future problems, as well as help smooth the lending process.
Carefully documenting your communications with a lender, as well as studying and reviewing all the papers you receive will help protect you during the lending process, as well as make sure you don’t get stuck with the lender that changes its name every month.
Waging War Against Subprime
Axon Capital Management, an $11 billion hedge fund has posted an incredible 22% gain so far this year. Such gains were achieved by correctly anticipating the downfall of the subprime market. Wise investments in industries that would escape or benefit from subprime trouble. Unfortunately, they could have witnessed larger gains had they not invested several hundred million in a company that was involved in subprime lending.
Such action can be emulated by borrowers outside the investment circles. With a knowledge that the housing market is in trouble, one can act intelligently to avoid trouble in the future. Utah up until now has largely avoided the housing crash. With that in mind, a Utah home equity loan issued now could work to help pay down the interest one holds in a Utah home.
Investing in your own home can serve as an excellent retirement vehicle, as well as long term investment. With the stock market’s future difficult to foresee, it’s safe to bet that your home will eventually grow in equity and one day sell for more than it is now worth. As an added bonus, one can see residual income from renting their home once they fully own it for a set monthly income.