...MORTGAGE A Mortgage is defined as a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front. Mortgages are also known as liens against property, or claims on property. It can be further described as the debt instrument giving conditional ownership of an asset, secured by the asset being financed. The borrower gives the lender a mortgage in exchange for the right to use the property while the mortgage is in effect, and agrees to make regular payments of principal and interest. The mortgage lien is the lender's security interest and is recorded in title documents in public land records. The lien is removed when the debt is paid in full. A mortgage normally involves real estate and is a long-term debt, normally 25 to 30 years, but can be written for much shorter periods. Originally written exclusively as fixed-rate fully amortizing loans, mortgages have evolved into more flexible contracts. Since the mid-1970s, the financial industry's funding sources have become more volatile and market sensitive, and legislation and regulation have relaxed the prohibitions on alternative types of mortgage financing, such as variable rate and adjustable rate mortgages. Recent innovations in packaging of mortgage loans for resale in the...
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...Asia Pacific Equity Research 25 February 2005 Australian Mortgage Industry Volume 1 A Lot of Fat ! JPMorgan Australian Banks Team Brian Johnson (61-2) 9220-1605 brian.d.johnson@jpmorgan.com Richard Wiles (612) 9220 1525 richard.e.wiles@jpmorgan.com Ed Henning (61-2) 9220-1933 ed.a.henning@jpmorgan.com Fujitsu Australia Team Martin North (61-2) 9293-0617 martin.north@au.fujitsu.com Tom Dissing (61-2) 9293-0423 tom.dissing@au.fujitsu.com This report is the result of a joint effort between Fujitsu Australia and JPMorgan, focusing on developments in the Australian mortgage industry. We use the Fujitsu Mortgage Market and Yield Improvement Modelling. See page 30 for analyst certification and important disclosures, including investment banking relationships. JPMorgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Brian Johnson (61-2) 9220-1605 brian.d.johnson@jpmorgan.com Asia Pacific Equity Research 25 February 2005 Table of Contents Executive Summary .................................................................3 Industry Overview ....................................................................5 Mortgage Brokers................................................................
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...SUBPRIME MORTGAGE CRISIS The beginning of 2000s, commodity, especially “petrol” and agricultural products prices was soared unexpectedly. Economic growth of high population countries such as India and China raised demand of agricultural and merchandise products and thus, this demand caused increasing of these products prices. In 2008, not only food prices but also gold and petrol prices reached the highest level in history. On the other hand, while these prices was increasing, the value of the United States Dollar fell than almost all currency units. It was paralelled that the market of real estate particularly “housing prices” decreased a great value in the US in 2006. Hovewer, housing prices started to increase gradually early 2000s in the US because of mortgage. Due to the this increment, banks provided credits to their low income family in order to purchase a new house, but when housing prices fell into decline suddenly, a new credit market which is called subprime mortgage collapsed. In 2006, home mortgage foreclosures were at record highs. From 2006 to 2007 foreclosures fillings grew 75 percent and leaving more than 1 percent of all households in some stage of foreclosure. Foreclosures in the subprime mortgage market were leading the way. In the end of 2006, about 300,000 foreclosure proceedings were initiated, with subprime mortgages accounting for more than half. Majority of these subprime borrowers were low and moderate...
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...Mortgages Brianna Hammar Rolfs Southern New Hampshire University The Right Mortgage for Me Choosing the right mortgage can become an overwhelming and daunting task for any person or family to undertake. The old cliché, “knowledge is power”, applies to the process as it enables the property owner to understand their options and feel more in control and, thus, less at the mercy of the intricate process of securing a mortgage. There are big decisions to be made and everyone has various options that are available to them depending on credit status, military service connections, loan to income ratios, and the total amount desired to borrow. My family needs a home large enough to adequately support a family of 7 and have a mortgage that is under $2,800.00 a month, which would include the principle payment, interest payment, and escrow taxes and insurance. Ideally, avoiding points, unnecessary closing costs, private mortgage insurance and pre-payment penalties is also a priority because it helps to keep short and long term costs lower. After thorough research of market options, we were able to secure a VA funded loan for our home. The total loan amount is for $360,000, which is 100% loan to value. One of the added benefits of a Veterans Administration loans is that it is one of the only loans available that allows a borrower to borrow up to 100% of the home’s current market value. There are not many lenders that allow “no...
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...Introduction Purchasing a home is one of the largest investments one will make in their lifetime. The extreme difficulty to amass enough savings to purchase a home up front causes most people to obtain a mortgage, a loan to finance the purchase of your home. There are various types of mortgages and many pros and cons that come with each. To determine whether or not you are eligible for a mortgage loan, you must consider your credit history, how much money you can put toward a new home, and the new costs that come with owning a home. You also have to consider the principle, the sum of money you borrow to buy your home, the interest on your mortgage payments, property taxes, and homeowner’s insurance. Understanding the financial considerations that go along with buying a home and creating a financial plan prior to your decision is the base for a successful start. Discussion The key to successfully buying a home is to determine how much you can afford and starting your research early. I would start by calculating my mortgage limit by finding what the principle, interest, taxes, insurance, as well as my other liabilities to establish a plan and limit on the price I’m willing to pay. I would then determine the area in which I wish to live based on the location of my work, home prices, and housing trends, such as price fluctuations and how long homes have been on the market, in certain areas. I would also have to consider the financial setback buying a house would cause. Not only...
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...Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Ann Fulmer March 2010 Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Mortgage fraud is bank robbery without a gun. 1 It is a high-yield, 2 low risk enterprise that has been reported in all 50 states, Puerto Rico, Guam, American Samoa, 3 Canada, 4 New Zealand, 5 Australia, 6 and England. 7 In the United States, it is committed by organized international and domestic rings, 8 street gangs, 9 terrorists, 10 drug traffickers, 11 real estate agents, 12 closing attorneys, 13 appraisers, 14 mortgage brokers, 15 The targeted victims distinguish mortgage fraud from predatory lending. In predatory lending cases the borrower is victimized by the illegal practices of the lender or its agents with respect to fees and disclosures relating to the cost of the loan. It is unfortunate that the media, consumer activists, legislators and law enforcement personnel frequently conflate mortgage fraud with predatory lending since it adds unnecessary confusion to an already complex issue and diverts attention and badly needed resources from the fight against true mortgage fraud. 2 The average “take” on a bank robbery is approximately $3,000.00. By contrast, the average straw borrower receives a “cut” of at least $10,000 and the orchestrator’s “take” in a mortgage fraud transaction frequently exceeds $100,000. In a few cases the orchestrator’s take was in excess of $1...
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...decide on a purchase price you would be willing to pay (assuming you have the means). Find a current market interest rate for a 30-year fixed-rate mortgage having a down payment of 20 percent of the purchase price. 2. Compute the down payment, amount financed, and the monthly mortgage payment (showing how to use the appropriate financial formula). 3. Compute the monthly amount of real estate taxes and add to the monthly mortgage payment to get the total monthly amount paid. 4. Suppose that in order to qualify for the loan, the total monthly amount paid cannot exceed 30 percent of monthly income. What is the minimum monthly income needed to qualify for the loan? What is the minimum annual income needed? (Note: This is a simplified minimum income requirement calculation, for the purposes of this project, as it does not take into account other costs such as insurance or other loans or assets currently held.) 5. Construct an amortization table (using spreadsheet software or online resources. 6. Assume that the first payment is made in January of the current year. Find the month and year of the last payment. Find the date of the first month when the amount applied to the principal exceeds the amount of interest paid. How many of the 360 payments have been made at this point? 7. Assuming that the mortgage is held for the full 30 years, compute the total principal paid and the total interest...
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...------------------------------------------------- Kenya School of Monetary Studies TERM PAPER DETERMINANTS OF MORTGAGE INTEREST RATES IN KENYA PREPARED BY: * MBURU LEONARD GATHUNGU HD336-040-0040-2012 * TAYARI AMOS MATANGA HD336-040-0043-2012 * KIBET JOSHUA HD336-040-0044-2012 SUBMITTED TO: * DR. NYAMONGO Abstract This paper provides an analysis of the determinants of mortgage rates in Kenya. The study was restricted to the period 2006-2012 quarterly data. During the analysis, mortgage rates were regressed against the CBR rate, inflation, bond rate and Household income for the period under study. The study utilized the Ordinary Least Squares method of econometric estimation to estimate the model. This method is chosen because of its simple and straightforward ability to show the linear relationship among Mortgage Rates, bond rates, inflation, Household income and CBR rate. The regression was done on the logs of the data variables because they change by rates other than certain amounts; this made it logical to take logs because the regression was to seek a linear relationship. From the results it can be concluded that bond rates and inflation had a negative influence on Mortgage rates in Kenya for the period under study. CBR rate and Household income depicted a positive influence on the same. This led to the conclusion from the study that CBR rate and Household income had direct influence on the mortgage rate than inflation and bond rates; other variables like loan to value ratio...
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...Rights and Duties of Parties Prior to Foreclosure Theories of Mortgages 1) Title Theory of Mortgages: a. Mortgagee holds legal title to land until the debt is satisfied. Equitable title remains in borrower. When mortgage is paid off, lender loses legal title. b. Significance: With legal title, lender has superior claim to the rents over anybody else’s interest that arises later. The lender has the right to take possession upon foreclosure, and doesn’t need ancillary remedies. 2) Lien Theory of Mortgages (restatement) a. Mortgagee retains legal and equitable title to the land when a mortgage is executed. Lender has a lien. The lender has no claim on possession or rents (unless the borrower mortgaged the rents). 3) Intermediate Theory a. Lien theory until default and title theory thereafter. As a practical matter, these states are really title theory states because nothing happens until default anyways in a title theory state. Ancillary Remedies (available to lender before foreclosure) 1) Mortgagee taking possession a. Takes possession & manages property; includes collecting rents & profits b. Lender must use legal process & cannot use self-help, even if so stated in mortgage or contract. c. Not available in lien theory states, unless: i. MR abandons property (public policy) ii. Consent of MR iii. Result of Good faith invalid foreclosure ...
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...Running head: SCOTT MORTGAGE Scott Mortgage James Jones Organizational Behavior 14 June 2010 Abstract This paper discusses the nature of change in a mortgage lending firm. It takes a look at the reaction to change from the employee and organizational view points. The characteristics of Ethical Intensity are reviewed as pertaining to the decision making process. It identifies the Decision Making Model and Approach to Change that Scout Mortgage used in revamping its human capital structure. Nature of Change The 21th Century has ushered in several factors that have been the catalyst for a dynamically transforming environment. Scout Mortgage, a loan mortgage broker since 1999 (Hellriegel & Slocum, 2009) has experienced the bullish and the bearish economic environment. In a work environment, the typical factors of change are driven by technological advancements which enable global-market-reach or globalization. With the increase of information technology and global communications, the world is communitively smaller. Any situation that affects a local market can be transformed into a national or international issue. The domestic housing sector economic downturn along with other Wall Street unethical and irresponsible actions have not only lead to a national but international recession and market collapse. In the case of Scout Mortgage, the technological advances have changed the way the company’s Loan Officers conducts business. Technology has automated a lot of task...
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...JARAF The Journal of applied research in accounTing and finance V O L U M E 3 , i s s U E 1 , 2 0 0 8 Old Wine in New Bottles: Subprime Mortgage Crisis – Causes and Consequences Michael Mah-Hui Lim Information Lost: A Descriptive Analysis of IFRS Firms’ 20-F Reconciliations Marlene Plumlee and R. David Plumlee Negative Goodwill: Issues of Financial Reporting and Analysis Under Current and Proposed Guidelines Eugene E. Comiskey and Charles W. Mulford Electronic copy available at: http://ssrn.com/abstract=1263280 JARAF The Journal of applied research in accounTing and finance Publication Information JARAF - The Journal of Applied Research in Accounting and Finance is a scholarly peerreviewed journal jointly published by The Centre for Managerial Finance at Macquarie Graduate School of Management and the Faculty of Economics and Business at The University of Sydney. All journal articles published in JARAF are subjected to double-blind peer-reviews by qualified international experts. Months of Distribution: July – December Current Edition: Volume 3, Issue 1 (2008) ISSN 1834-2582 (Print) ISSN 1834-2590 (Online) Editors Tyrone M. Carlin Professor of Financial Reporting & Regulation Faculty of Economics and Business The University of Sydney NSW 2006 Australia Nigel Finch Director, Centre for Managerial Finance Macquarie Graduate School of Management Macquarie University NSW 2109 Australia Editorial Advisory Board Edward I. Altman Max L. Heine Professor...
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...obtaining subprime adjustable interest rates for a set period (UNC). This money lending boom led to a situation that Coleen Colombo and five other female employees of BNC found themselves in. Coleen, a senior mortgage underwriter that was routinely receiving “exceed expectations” on her performance reviews, started seeing a troublesome pattern. Coleen alleges that in 2005 a male mortgage wholesaler began bringing her questionable loan applications that contained incorrect applicant information including salaries and home values. When she questioned these actions, she was offered bribes, known as spiffs, in an attempt to entice her to approve these fraudulent loan applications. Coleen refused to partake in mortgage fraud and her relationship with her coworker soured. Her salary plummeted; her complaints to her senior manager went unresolved and led to a hostile work environment. This environment cumulated with Coleen and five of her female coworkers suing for sexual harassment (Hellriegel &Slocum 250). Around that time these subprime loans started going bad and the lenders were forced to buy back these risky loans. Interest rates rose, and housing prices dropped leading to increased foreclosure rates (UNC). Finding of fact number 1: Sexual Harassment Refusing to partake in mortgage fraud, Coleen alleges that the wholesaler who attempted to bribe her started sexually harassing her. The EEOC defines sexual harassment as unwelcome sexual advances, requests for sexual favors and other...
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...How are mortgages secured? A debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Mortgages are also known as "liens against property" or "claims on property." If the borrower stops paying the mortgage, the bank can foreclose Securitized Mortgage A mortgage that is packaged into a mortgage-backed security (MBS). One mortgage may be securitized over several MBSs, and each MBS contains many securitized mortgages. A securitized mortgage gives the holder of the security, rather than the bank originating theloan, the right a claim on the principal and interest payments on that mortgage. Mortgages are securitized to remove them from a bank'sbalance sheet (which reduces risk) and to improve its cash flow. Mortgage securitization plays a large role in the U.S. mortgage market. Mortgage securitization results in mortgage backed securities, which allow banks to sell their loans quickly while allowing investors to invest in the mortgage market. Investors should understand the source of any mortgage backed securities they might own, and homeowners should know where their mortgage payments go 2-What is speculation ...
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...Beginning in 2008, mortgage companies had begun to start making loans to individuals as a way to promote home ownership. With the help of Fannie Mae and Freddie Mac, there was increased pressure on these mortgage companies to loan to individuals who did not meet certain requirements that would qualify them. For obvious reasons, these qualifications were in place so that a crisis like this would have never happened. Additionally, the mortgage backed securities and collateralized debt obligations attracted investors due to their high return on investment because of the higher interest rates charged to the mortgagor. When these subprime mortgages had defaulted, both the mortgage/lending and the investing sector crashed which led to the nations recession. As a result of the subprime mortgage crisis, mortgage loan originations have been at their lowest level since 2001. This is due to the tighter requirements needed to qualify individuals for mortgage loans. However on the other hand, foreclosure and delinquencies have increased enormously which, as an extension, has resulted in an increase in mortgage fraud aimed at distressed homeowners. However, as of 2010 the majority of the prevalent schemes per FBI Cases open were Loan Origination Schemes, followed by Title Escrow Settlement fraud, then Real Estate Investment, Short Sale, Commercial Real Estate Loan Fraud, and a few other categories. Loan Origination Schemes are divided into two main categories: fraud for property/housing...
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...The mortgage crisis began in the early 2000’s when homes were increasing in value. Interest rates on mortgages were also low during that time. People thought it was a sure investment to buy a home with the low rates and increasing values. People simply thought the values would never stop going up. During this time people with bad credit could also qualify as subprime borrowers; in addition to this, there was people who also took on high risk loans and were qualified without much documentation checks (Pritchard). Banks also sold the loans so they were not liable anymore for the bad loans. These were sold as mortgage backed securities and were sold to a variety of different entities such as hedge funds, individuals, banks, and pension funds. Because they were spread throughout different sectors, it had an even more profound effect (Pritchard). House values stopped going up and people started to realize they bought too much home than they could afford. Rates also started to go up on adjustable rate mortgages. People would either get defaulted on the load, try to renegotiate the loan, or walk away from the home. As this started to happen more and more, the banks started to lose money. The banks wanted to limit their exposure to this market and stopped lending because they didn’t know if they would get their money back. One thing that has been done to ease the crisis is the HARP (Homeowner Affordable Refinance Program), introduced by the Obama Administration in 2009 (Amadeo). This...
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