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Three Lurking News Stories That Could Make or Break a Refinance Attempt

[Oct 7, 2009.]


For the past year and a half, homeowners looking to refinance have faced severe difficulties, in the form of plagues of foreclosures, falling home prices, and whole neighborhoods left empty.

Now, at least a little, the conditions have become somewhat more stable. Government mortgage assistance program guidelines have become somewhat clear, allowing lawyers and their assistants to get a load of business. Banks are somewhat more willing to lend than in January of 2009.

Here are three lurking news stories that could change a refinance process in a hurry:

1. Secret Wave of Bank-Owned Properties

People who speak with their neighbors know that there are a lot of houses "in foreclosure" that have not been foreclosed upon. That is, the person living in the house stopped paying the mortagage a long time ago, but is not destroying the property, therefore the bank doesn't immediately foreclose.

Check out this terrific story about a spike in bank-owned property that could flood the market.

While that doesn't automatically mean that all home values would decline, it is logical to assume that home values in heavily affected areas will be hit hard and fast. As new people move into these homes, it is hopeful to think that new owners will help bring property values back up. But in the meantime:

A flood of bank-owned properties can kill a refinance dead in its tracks.

2. Decline and Degradation of the U.S. Dollar

It has become quite mainstream, over the past month, to make fun of the U.S. dollar. World news has corroborated more anecdotal accounts of how American dollars are sloshing all about, limp as fish, not really doing much of anything.

Believe it or not, this audible ridicule of the dollar's decline may actually be positive for the dollar's value. Because America would sell more goods into foreign markets, for example, but also because worries about a declining dollar are a factor in the rise in the American savings rate.

Millions of Americans are saving more money and cleaning up their credit reports as best they can, the virtual equivalent of New Orleans returning home after Katrina.

That's good for refinancing because it's indicative of a cultural change: people are committed to paying their bills better now than in the past.

3. Settlement Stories Go Viral

People who are in debt, any kind of a debt, from a mortgage to a personal loan, now know that it is possible to settle debt at reduced prices. Short sales of homes are a version of this.

However, if debt settlement becomes too big a part of the national psyche, it is to be expected that mortgage lenders will view that scenario with disgust. That can result in tighter refinance terms.


About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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