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Over the past 10 years, Americans have witnessed the explosion of home prices across the country. Subsequently they witnessed the largest collapse in real estate prices of all time. With real estate prices remaining at historically high rates across Canada, many Canadians are wondering if the Canadian marketplace will fall victim to the same collapse as the United States.

To answer this question, we’re going to look at some of the causes of the American real estate collapse

1) Interest Only Mortgages
In the US, interest only mortgages became quite popular early in the new millennium, with many families opting to purchase homes that they really couldn’t afford, with interest only mortgages. Rather than renting, they would spend roughly the same amount on owning their own home. Unfortunately, as soon as the house prices fell slightly, this caused the momentum to continue. With people holding mortgages for more than homes were worth, it was simply in their best interest to walk away from the home and cut their losses. This compounded the problem and drove already falling housing prices even lower.

In Canada: You cannot have an interest only mortgage in Canada. Most mortgages require a 25% downpayment. Therefore, unless housing prices suddenly tumble by more than 25%, this isn’t a risk

2) Failing Economy
There have recently been major issues with the US economy, particularly as manufacturing moves overseas and factories continue to close. The US economy has lagged in recent years and is projected to continue to experience slow growth for at least the next 5 years.

In Canada: While Canada’s economy was impacted by the recession of 2008, the effects have been much more minor than in the US. Canada’s economy is based heavily on natural resources, rather than manufacturing, and therefore isn’t as volatile as the American economy.

3) Failing Banks
American banks have been failing left, right and centre. The financial industry has continued to do poorly since the 2008 collapse. In fact, this is what spurred many of the widespread occupy Wall St protests.

In Canada: Canadian banks are some of the most secure in the world.

If we look at these three triggers for the American real estate collapse, we can see that a collapse in Canada of similar magnitude is highly unlikely. Furthermore, Canada has an incredibly high immigration rate, which continues to push housing prices higher in major centres. For example, in Toronto alone, more than 40,000 new dwellings are needed each year to keep up with demand.

Overall, Canadian Real Estate prices are at an all time high, and it appears that they will continue to rise for the foreseeable future.

Washington, DC, United States (AHN) – The three-year investigation into whether mortgage giants Fannie Mae and Freddie Mac properly disclosed their exposure to risky subprime loans is about to end. Reports said that the regulators are near a settlement with the two companies.

A proposed settlement with the Securities and Exchange Commission reportedly includes no monetary penalties for the two companies. Also being considered is no admission of fraud.

Despite these terms, Fannie Mae and Freddie Mac’s possible agreement to a settlement are tacit admissions they had a major role in the housing market crash, observers said.

The observers added that it would also be an awkward moment for the two mortgage giants because the government overseer of Fannie and Freddie filed a lawsuit last week against 17 big financial companies for luring the two to purchase troubled loans. The charges are similar to the accusations that the SEC made against Fannie and Freddie that the two companies misled investors.

The investigators are not keen on imposing a fine on the two mortgage giants because of their weak finances, with the government infusing more than $100 billion into the two companies since they came under government control in 2008.

Beginning Oct. 1, the two firms are scheduled to reduce the size of loans they buy from lenders, which would force future borrowers to enter into more expensive and difficult-to-get large loans.

The old limits of $417,000 for single-family residences were hiked in 2008 in some high-cost housing markets to boost the economy. The limits reached $729,750 in some areas, but by October the cap will go down to $625,500.

Other major lenders such as Bank of America, Wells Fargo and JPMorgan Chase have stopped accepting new applications to ensure that those in process would reach the Sept. 30 deadline.

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New York, NY, United States (AHN) – The Federal Housing Finance Agency (FHFA) is set to sue a dozen banks over risky mortgage-backed securities they sold and that lost value during the housing collapse, according to reports from the Wall Street Journal and the New York Times. The suit alleges the banks misrepresented the securities’ quality and stability.

The suits from the FHFA, which oversees mortgage buyers Freddie Mac and Fannie Mae, are expected to be filed within days.

Reports say the securities named in the suit are those sold and backed by risky and subprime loans, but classified as safe by rating agencies.

Banks said to be targeted include Bank of America, JP Morgan Chase, Deutsche Bank and Goldman Sachs.

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New York, NY, United States (AHN) – More American homeowners are reducing the terms of their mortgages because of low interest rates and a desire to reduce debts. According to Freddie Mac, 34 percent of refinancers changed to 20- or 15-year loans. It is the highest level in switches in seven years.

Similarly, online mortgage broker Lending Tree reported requests for 15-year mortgages are up 30 percent compared to 12 months ago.

The shift to shorter-term loans came despite the average rate for 30-year, fixed-rate mortgage at 4.32 percent last week, which is almost a record low.

Changing to shorter-term loan is a better alternative than investing money in the volatile stock market, savings accounts or Treasury securities, while cutting terms of mortgages save the homeowner hundreds or thousands of dollars in interest cost, industry experts said.

To qualify for refinancing, borrowers must have a credit score of 720 or higher at least 20 percent in home equity, but only about 46 percent of homeowners with a mortgage have equity of 20 percent of less in their homes.

Washington is expected to retain playing a major role in the U.S. mortgage market. According to reports, U.S. President Barack Obama asked advisers to develop a proposal that would extend federal loan subsidy for most homebuyers.

Previously, senior economic and housing advisers of the president favored preserving Fannie Mae and Freddie Mac, but under different names and with new constraints.

A White House spokesman said that all three main options in the white paper on reforming the country’s housing finance system are still under active consideration and advisers are still making deeper analysis of how each option could potentially be implemented.

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Washington, D.C., United States (AHN) – The U.S. Department of Housing and Urban Development has made available a $1-billion lifeline to American homeowners who have problems with their mortgage payments.

The fund, launched in June, is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Its aim is to help homeowners who face foreclosure because they lost their jobs, suffered income reduction, had an economic reversal or a medical condition which make it difficult for them to pay their monthly dues.

The emergency interest-free loan covers a portion of their monthly mortgage up to 24 months or a maximum of $50,000.

According to HUD Secretary Shaun Donovan, the emergency loan program covers 27 states and Puerto Rico. He estimated the program would assist about 30,000 distressed borrowers through an average loan of $35,000.

If recipients of the loan stay in their homes and be current on their payments, the interest-free loan would be written off.

The 30,000 homeowners expected to be helped by the program, however, is only a fraction of the estimated 1.8 million homeowners battling foreclosure. With the HUD expected to be deluged with applications, the department would likely spend the entire fund by the end of Washington’s fiscal year on Sept. 30.

Applicants have until July 22 to submit complete applications. If there are more applicants than what the fund could accommodate, the HUD would use a lottery system to determine beneficiaries of the loan.

There are five additional states that have slightly different rules because they started accepting emergency loan applications earlier under similar programs run by the states. One of them, Maryland, committed $4.2 million to 121 troubled homeowners. Aside from that amount, the state was allocated another $40 million by the HUD.

Another state is Virginia, which has a separate fund aimed to assist 1,223 homeowners. Virginia got another $46.6 million from HUD.

The $1-billion fund complements the Hardest Hit Fund, which made available a larger $7.6-billion fund to troubled homeowners in 18 states and the District of Columbia – which are considered the states hardest hit by the housing crisis.

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United States (ProPublica) – by Marian Wang

While federal and state officials investigating flawed foreclosures have largely focused on holding the banks accountable and bringing relief to wronged homeowners, officials in a few states have begun targeting the more obscure middlemen of the foreclosure scandal.

Prosecutors in California and Illinois have sent subpoenas to Lender Processing Services, one of the largest firms that processed mortgage documents for the banks. (Read more about LPS in our guide to who’s who of the foreclosure scandal.)

As we’ve noted, the firm—which helps handle more than half of all U.S. mortgages—has been accused of using the same “robo-signing” practices as the major banks, such as signing and notarizing documents that appeared inaccurate or invalid. Bank employees have testified under oath that they relied on LPS to vet the information in foreclosure documents.

LPS has had its share of legal troubles over its mortgage processing. Michigan’s attorney general announced an investigation last month into potentially fraudulent mortgage documents processed by an LPS subsidiary. (LPS has said that it discontinued the practices used by the subsidiary.) Along with the big banks, the firm recently received an order from federal regulators to correct problems with its processing of mortgage documents. (Read that consent order.)

Illinois Attorney General Lisa Madigan also sent a subpoena to Nationwide Title Clearing, another firm contracted to provide mortgage services to banks. As we’ve noted, Nationwide Title Clearing employees have testified to robo-signing thousands of mortgage documents—known as assignments—that establish the ownership of a mortgage loan and are key to establishing who has the right to foreclose on a homeowner.

Nationwide Title Clearing said in a statement that its procedures have been “thoroughly audited and examined for accuracy” and that it would cooperate with any investigation. LPS declined to comment.

The latest actions on foreclosure problems as an attempted comprehensive settlement by all 50 state attorneys general has hit a few roadblocks. As we noted in our cheat sheet on bank investigations, the negotiations have been hampered by disagreement with the banks over the size of penalties as well as some disagreement among the attorneys general—at least eight of whom have opposed any settlement that would require banks to cut borrowers’ mortgage debt.

Bloomberg reports today that Bank of America has also received independent scrutiny from the attorneys general of Utah and Connecticut accusing the firm of invalid foreclosures and insufficient loan modifications. Utah warned that it would sue.

– Provided by ProPublica.org

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Prospective borrowers chose an adjustable-rate mortgage on 5.6 percent of the applications tracked in the latest Mortgage Bankers Association’s Weekly Mortgage Applications Survey . ARM share fell from 5.7 percent the previous week. Based on closed loans, Freddie Mac forecasts that ARMs will account for 6 percent of fourth-quarter volume then climb to 10 percent by the end of next year.

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If you are looking to reduce your monthly mortgage payments, you can consider refinancing your home loan to a lower interest rate or from an adjustable-rate into a fixed rate loan by learning more about Bank of America refinance programs. Bank of America offers good refinancing programs to suit your needs. Furthermore, the bank also has good rates and excellent customer service. The bank takes good care of its returning clients so if you are searching for a mortgage or a refinancing scheme, you may do well to sign up with this bank.

So, how do you know if you qualify for refinancing? Well, you can refinance your mortgage if you have already built up at least 10% of the equity of your home. After all, refinancing means you are cashing out on the equity of your home. That’s why you need to have at least 10% of equity before you can refinance your mortgage. Also, most banks will look at your home equity before considering your application for refinancing. This is because the lender wants to use your home equity as collateral for the loan. You will also need to be current on your home loan payments and not defaulting in the payments.

Next, you can learn what is Bank of America Refinance program and how many programs the bank offers. So, even if you do not have enough equity in your home and have been current on your mortgage payments for at least 12 months, you may still be eligible for refinancing under the bank’s Home Affordable Refinance program. This program is part of the federal government’s Making Home Affordable program and it was developed to help those who can’t qualify for a traditional refinance. The program will be able to help reduce the monthly mortgage payments for borrowers. However, you are only eligible under this program if your loan is owned by Fannie Mae (Federal National Mortgage Association) or Freddie Mac (Federal Home Loan Mortgage Corporation). Other than this, your first mortgage has to be 105% or less of your home value, your home is a single-family home unit and you have not been more than 30 days late on your monthly mortgage payments for at least 12 months.

To apply for the Home Affordable Refinance program, you can call the bank and inform it of your current financial information so that it could check on your eligibility for it. The bank may also appraise your home, pull up a credit report to verify your financial situation and then it will notify you of your eligibility within 75 days of your initial call. It will take the bank another 75 days to evaluate your application and once it makes a decision, it will send you a letter. If you have been approved, you will get a call from the bank to schedule the closing of the loan. The closing process is similar to what you experience when you apply for the first mortgage when you purchased your home. You will need to sign the closing documents and you will also be required to pay the closing costs, unless it can be financed into the loan amount.

There are also other Bank of America lender refinance programs such as interest-only refinance loans, jumbo loans, combo loans and other specialized loan programs to suit your specific financial needs and situation. With so many specialized programs including fixed-rate and adjustable rate refinancing schemes available at the bank, it is really worth your while to check it out in your search for a mortgage refinance program.

It is possible for individuals to get instant bad credit mortgage loans. This is an important fact that everybody must know, simply because everybody requires an automobile or a house at some point in time. If you have an extremely a bad credit score, it can seem like there’s no way anybody will provide you with a mortgage. Much more than likely, you’re correct in assuming that a financial institution isn’t going to provide you with a mortgage. Banks by no means wish to give out a mortgage to somebody they see as a high danger to default, but with the current state of the economic system, banks are even much more unlikely to go near anybody wanting instant bad credit mortgage loans. You’re as unlikely to obtain a mortgage from a credit union as you’re a financial institution.

Should you go on the web, you are able to discover several businesses who specialize in instant bad credit loans. These businesses provide various services and rates, but they all promise to provide you with a mortgage no matter how poor your credit score is. You need to do plenty of research prior to you determine to accept the services of one of these businesses, simply because they’ll need that you spend greater interest since you’re greater danger. Be careful simply because some of these businesses aren’t legitimate, and you could wind up losing cash you cannot afford to lose.

Depending on what you are looking to do with the loan, could also factor in to the answer you receive about approval. A lot of lenders will want to have some type of collateral in return. If you are looking to buy a car, it could be easy for you to get approved, as the finance departments have a special department for bad credit applicants. Often times the rate of interest will probably be high, and you will need to have a down payment for it, but the finance departments have a pretty good success rate at getting people approved regardless of what their credit situation. You just need to be willing to cooperate if you need to get proof of income or anything of that nature.

When you have a bad credit score, it’s a lot simpler to obtain a secured mortgage, simply because banks and other lenders know you’ll try very hard to spend them wisely so they cannot seize whatever you put up as collateral. Unsecured loans are harder to obtain, particularly nowadays with such a poor economic system. Your earnings level is another factor in obtaining instant bad credit loans. If a lender thinks that your earnings isn’t sufficient for you to spend all your bills, you’ll by no means get the mortgage. Payday loans frequently do not need a credit check, but these might not be sufficient cash for your wants. Do not give up though; you will find loans out there for anybody and should you maintain looking, you’ll discover some thing. Instant bad credit loans are obtainable for every thing from a automobile to a new house, so by no means stop attempting.

Diversified Financial and its owner have skirted residential mortgage requirements and disclosures by writing up loans as “commercial.” But a Pierce County, Wash., judge pro tem determined that the lender misrepresented a residential loan as commercial and ordered a payment to the borrower of $211,538. A judge in another county ruled that the lender’s actions were in “bad faith,” ordered $110,932 in damages and awarded the borrower the home back free-and-clear.

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