Croobert News: Jane White: Move Your Mortgage, Not Just Your Money, to a Community Bank

Jane White: Move Your Mortgage, Not Just Your Money, to a Community Bank HPFB.init();

HuffPost's QuickRead... ShareBox.ad = function (tag_id){if ($(tag_id) == undefined) return; if ($(tag_id).innerHTML != '') return;ad_spec = {"zone_info": "huffpost.business/blog;business=1;nickname=jane-white;entry_id=764706;adjustable-rate-mortgages=1;barney-frank=1;chris-dodd=1;community-banks=1;foreclosure=1;move-your-money=1","ord": 1287178581,"tile": 3,"width": 300,"height": 250,"el_id": tag_id + "_js","class_name": "ad_block ad_wide top","type": "iframe"}HuffPoUtil.WEDGJE.write(ad_spec, tag_id);};Loading... BIG NEWS:Housing Crisis|Auto Bailout|Goldman Sachs|Foreclosures| Energy Debates| More... | LogoutLog In| Sign Up The Huffington Post October 15, 2010 Front PagePoliticsBusinessMediaEntertainmentComedySportsStyle WorldGreenTechFood TravelLiving ArtsBooks ReligionImpactEducation College NY LA Chicago Denver Blogs

Jane WhiteAuthor, America, Welcome to the Poorhouse

Posted: October 15, 2010 04:39 PMBIOBecome a FanGet Email AlertsBloggers' Index

Every day we see more drama in the foreclosure debacle, with increasing number of lenders being pressured to put them on hold.

But what's the strategy for those of us who are still paying our mortgages and not in danger of losing our homes? This should be a perfect opportunity to take Arianna Huffington's wildly successful "Move Your Money" campaign one step further by "shopping for a lower-cost mortgage" and refinancing with a more responsible lender. This won't just punish those who loaned recklessly and reward those who didn't, i.e., community bankers, it will likely save you big bucks if interest rates have dropped at least two percentage points below the rate you are paying on your mortgage.

In the first seven days alone of the "Move Your Money" campaign which began in December 2009, about 340,000 people searched zip codes to find community banks that are highly rated. More importantly, they also moved big bucks out of big bad banks: according to Dennis Santiago of Institutional Risk Analytics, who created a search engine on the site, more than $1 billion was moved in the first three months of 2010. Finding a bank couldn't be easier. When you go to Move Your Money you simply need to enter your zip code to find a list of sound local banks and credit unions to choose from.

There's a big difference between the Too Big To Fail banks that got bailed out and the Small Banks Who Failed. For one thing, the community banks tried to stop these reckless lending practices while the big banks threw bucks at Congress to try to stop reform, James MacPhee, chairman of the Independent Community Bankers of America (ICBA).

"Along with several ICBA member bankers and staff, I have testified numerous times in the past three years in front of Barney Frank, Chairman of the House Financial Services Committee, and Chris Dodd, Chairman of the Senate Banking committee," MacPhee said. "Conversely, the American Bankers Association and the largest Wall Street firms ran a full court press trying to stop (reform) from ever being passed."

Have community banks failed? Yes, MacPhee maintains, but it wasn't because they were reckless but because their prudent loans were "bundled" with bad loans.

"As these debt instruments became worthless, hose buying our debt stopped purchasing, and foreclosures ran in the tens of thousands. When that occurred, the market value of the solid loans became worth less, as foreclosed homes were being sold well under their market value. As the job market dried up, even good loans had to be written down by the community banks. The resulting loss of capital dropped below regulatory standards, and the banks were closed and then typically merged into other banks by the Federal Deposit Insurance Corporation. "

The good news -- or let's hope so -- is that the exposure of reckless practices will humiliate the bad banks into changing their practices. If it doesn't? All the more reason to "boycott" them and only do business with those who put their customers first.

Ready to consider refinancing? Consider taking these steps.

Before you do any "mortgage shopping," get a copy of your credit history at AnnualCreditReport.com. If you have a low score, you might want to consider postponing refinancing until you've built a better bill-payment history; it could literally cut your mortgage cost in half.

Consider only fixed-rate mortgages. Some "experts" may claim that adjustable rate mortgages are okay if you're only going to stay in your home for three years or less, but your home is not a disposable item like a cell phone. If you're only planning to live in one place for three years or less, you should rent, not buy. MacPhee agrees with me that one of the biggest ripoffs in the banking industry -- that the media STILL isn't covering -- is the adjustable rate mortgage. "If (a bank is) going to write an ARM mortgage because someone cannot afford a home under standard bank rates, who are you kidding? The custom is happy for three years, or the period of the ARM balloon, the bank makes big fees, and then sells off both the credit risk and the interest rate risk and walks away."

As I pointed out in my book, America, Welcome to the Poorhouse, another big bargain is the little-talked about 15-year mortgage. Savings are significant both because the loan features a shorter payback period and because these mortgages generally feature lower rates. For example, assuming a 6% interest rate, your total interest costs on a $100,000 30-year mortgage are nearly $116,000. If that same mortgage were converted to a 15-year term, it would require somewhat higher monthly payments -- $844 instead of $600 -- but you'd save nearly $64,000 in interest payments.

Never take out an interest-only mortgage. While you pay no principal during the interest-only period, your payments will rise when that period comes to an end. Furthermore, the mortgage has to be paid off during a shorter term -- 25, 23, or 20 years -- so your monthly payments will be higher.

Avoid one of the riskiest mortgages, a balloon loan. Talk about bait and switch: typically, after the end of a three- or seven-year period, you owe the bank all the remaining principal, in one lump sum. If the value of your home drops you won't be able to find another mortgage to repay that loan and you risk foreclosure. And let's hope that this option won't even be broached by your responsible community banker.

Move Your MoneyForeclosure Crisis More in Business...

Wells Fargo 'Robo Signers' Apparently Used In...

One Man's HAMP HELL: 'Just Wait This...

Foreclosure Fraud: Megabanks At Risk As Analyst...

Insiders Ignored Foreclosure Crisis Signals For Years function returnCommentDetails(params) {// this is the proxy method. just proxyreturn CommentsSharer.getHoveredCommentDetails(params);};function callback_for_loaded_Badges(params) {//console.log("callback_for_loaded_Badges() called");CommentsSharer.badge_object = params.badge_object; // not actualy used, by could be usefulCommentsSharer.badge_holder_id = params.badge_holder_id; // not actualy used, by could be useful}diggstumbleredditdel.ico.usCommentsSharer.initBadgeBox("comment_share_popup"); Comments 1 Pending Comments 1 View FAQ

Login or connect with: More Login OptionsLogin with: Google Account Huffpost Account Yahoo AccountYou must be logged in to comment.Post CommentPreview CommentTo reply to a Comment: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to.

Share your Comment:

Post to Facebook.Post to Blogger.Post to Twitter.Post to WordPress.Post to TypePad.Post to Tumblr.Post to Yahoo! View All Recency | Popularity UhOh1 10 minutes ago (4:57 PM) 49 Fans just do it! w/out our money, big banks can't bleed us dry. keep it local. UhOh1: just do it! w/out our money, big banks can't bleed http://www.huffingtonpost.com/social/UhOh1/move-your-mortgage-not-ju_b_764706_63846494.html Permalink | Share it New comments on this entry — Click to refresh

Loading comments… Loading twitter module...

Most Popular on HuffPost1D6W1lj5M6WK9G8HrrNmPpYjwnutIsA46NL64OmpEOjb1lq3M1nnXYWa6ECwo6MFPMKZvtZvH%2FOga4ajExuSlg%3D%3DCvAnOteXEp223IerqcDhw5BVOrc3vXju10iC2cbJapU6B2b9At1MelsEPLZvDpM%2BbN082UuNrgrnp2%2FSYYRy2w%3D%3D1 of 2 Joy Whoopi Walk Off

Whoopi, Joy Walk Off 'The View' After Heated Fight With O'Reilly
14,076 Comments Gavin Rossdale Gay Affair

Gavin Rossdale Admits To Gay Fling
1,159 Comments

Helen Thomas Cries, Calls Obama 'Reprehensible'
5,642 Comments Gambling

11 Freedoms That Drunks, Slackers, Prostitutes And Pirates Pioneered
253 Comments

Michael P. McDonald Early Voting Off to a Fast Start in...
2,181 Comments Traffic

'Suburban Nation'
283 Comments Christine Odonnell

WATCH: Christine O'Donnell Stumped, Can't Name A Recent SCOTUS Decision She Disagrees With
15,209 Comments Npr Rallies

NPR Bans Employees From Stewart, Colbert Rallies
8,136 Comments Jennifer Aniston Joan Collins

Jennifer Aniston's Camp Responds To Joan Collins' Insults
1,317 Comments Don't Miss HuffPost Bloggers1 of 5

Bishop Gene Robinson How Religion Is Killing Our Most Vulnerable Youth

Robin Quivers Nutty for Nutrition

Rev. Jesse Jackson GOP Runs on the "Big Lie"

Dan Rather Help Not Wanted?

Bernard-Henri Lévy Sakineh’s Son Arrested: The Great Silence of Conformist Thinkers

Henry Louis Gates, Jr. Faces of America: Mehmet Oz and the Immigrant Story Pedigree

Al Gore Standing Up Against the Oil Lobby, in California and Beyond

Alec Baldwin Waiting for "Superman": A Monumentally Important Film

Melinda Gates Why We Tell Success Stories (VIDEO)

Ted Danson A Pacific Gem, ProtectedHot Trends bosses day 2010 electric cars foreclosure crisis foreclosure fraud wells fargo robo signers #ad_most_pop_234x60_req_wrapper {border:1px solid #cccccc;margin-bottom:10px;padding:30px 22px 10px;background-color:#ffffff;background-image:url('/images/slug_most_popular.gif');background-repeat:no-repeat;background-position:center 10px} Follow Huffington Post

Today's MarketsLoading..S&P 500NASDAQNYSEGainersLosersMost ActiveSEARCH WIKINVEST POWERED BY

Wikinvest data is provided as-is, delayed, and subject to Terms TOP VIDEO PICKS1 of 5

Foreclosure Freeze: Home Values at Risk

Private equity eyeing Yahoo

Foreclosure "Robo-Signers" Unqualified?

Kim Zolciak's Wardrobe Malfunction (VIDEO)Video Ike Texas

Obama To Press For Stimulus Payments For SeniorsEconomy Test Drive Honda

Honda Recalls Brazil Compact Cars For Faulty PedalsAuto Bailout North Korea Celebrations

North Korean Workers' Party 65th Anniversary Celebration (PHOTOS)North Korea Baby Orangutan

Animal Photos Of The WeekCats Mozilo Sec

Angelo Mozilo, Countrywide Ex-CEO, Settles With SEC For $67.5MHousing Crisis Pentagon Dont Ask Dont Tell

Pentagon To Gay Troops: Stay Silent Or Trouble Could Find YouMilitary Angelina Hungary

Angelina Jolie & Brad Pitt In Hungary (PHOTOS)Angelina Jolie

HuffPost Lightbox

View the original article here

Croobert News

Sunday, October 17, 2010

Jane White: Move Your Mortgage, Not Just Your Money, to a Community Bank

No comments:

Post a Comment